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Operator: Greetings. Welcome to the Firefly Aerospace Second Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please note, this conference call is being recorded. I will now turn the conference over to Michael Sheetz, Firefly's Director of Investor Relations. Michael, you may begin. Michael Sheetz: Thank you, operator. Hello there. I'm Michael Sheetz, and welcome to Firefly's inaugural quarterly financial results call. I'm pleased to be joined on the call by CEO, Jason Kim; and CFO, Darren Ma, as we report our second quarter 2025 results for the period ending June 30, 2025. Today's call will include forward-looking statements, including, but not limited to, statements the company will make about its future financial and operating performance, growth strategy and market outlook. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause the actual results and trends to differ materially are set forth in the annual and quarterly reports filed with the SEC. Firefly assumes no obligation to update any forward-looking statements, which speak only as of their respective dates. Also in this call, we will discuss both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in the second quarter 2025 filing. Unless otherwise stated, financial information referenced in this call will be non-GAAP. Our earnings press release, SEC filings and a replay of today's call can be found on our Investor Relations website at investors.fireflyspace.com. Now I'll turn the call over to Jason. Jason Kim: Thank you, Michael, and welcome to our second quarter 2025 earnings call. We're proud to be reporting quarterly results for the first time on the heels of our historic IPO, the largest by U.S. space and defense company and one of the largest of any industrial company in the 21st century, raising $1 billion in gross proceeds to supercharge our growth. For those new to our journey, Firefly is a space and defense company delivering rockets and satellites to perform the hardest missions in space for national security, exploration and commercial technology built to keep America as the leader in the space. Our products position us to support the $175 billion Golden Dome opportunity as well as NASA's moon to Mars plan. We have four revenue-generating products: our small lift Alpha rocket, medium lift Eclipse rocket, Blue Ghost lunar lander and Elytra satellite orbiter. Today, these products have a robust backlog of $1.3 billion. Our backlog consists of high-quality customers with critical missions that shape the world we live in. Alpha is differentiated as the only operational 1-ton-to-orbit rocket. It is the first and only rocket to successfully perform a technically responsive space launch with a 24-hour notice for the U.S. Space Force. Alpha's 1-ton capability gives our customers more options to perform critical high stakes missions to help deter threats and maintain our freedom. Earlier this year, Kratos onboarded Alpha to the Missile Defense Agency's MACH-TB 2.0 contract to launch hypersonic missile tests, further diversifying the upside opportunities to our backlog. All of Alpha's proven technologies are scaled up to our larger reusable Eclipse rocket capable of carrying 16 tons of orbit. This medium lift rocket is built to support commercial constellations, exploration and the National Security Space Launch Program. Eclipse is a right-sized launch vehicle, meeting the growing customer demand for dedicated missions. Earlier this year, Firefly became the first company in the world to successfully land on the moon. In total, Blue Ghost sent nearly 120 gigabytes of data back to earth, supporting 10 NASA payloads and unlocking new insights that will have a substantial impact on future human and robotic missions to the moon, Mars and beyond. Blue Ghost's Mission 1 was not only the longest commercial operation on the moon to date, but also set the tone for the future commercial exploration across Sisler space. The other spacecraft in our portfolio is Elytra, a multi-orbit multi-mission satellite capable of high-performance maneuvering missions. Elytra will support national security capabilities, including space domain awareness with Rendezvous proximity operations, resilient long-haul communications and high-resolution planetary observation. Now turning to our business update. In the second quarter, we completed a host of program milestones while also winning new contracts across our product lines. I'll start with spacecraft. In April, I had the honor of testifying before the United States Congress speaking to the House Committee on Science, Space and Technology about the success of Blue Ghost Mission 1 and its historic role in NASA's commercial lunar payload services initiative. The bipartisan congressional support for more lunar missions is a welcome boon to Firefly as we ramp up annual cargo deliveries to the moon surface. NASA continues to be an outstanding customer, especially as Blue Ghost delivers research and science to maximize returns on investment. Firefly is working with NASA to pave the way for international and commercial partners to build the logistics that support the lunar economy on and around the moon. And Firefly is steadily working on our next lunar missions. Blue Ghost Mission 2 valued at $130 million will deliver our lander to the far side of the moon, marking the first such mission by a U.S. lander. The structures for this mission entered assembly in our spacecraft clean room after completing the crucial integration readiness review earlier this year. The first payloads arrived with Australian company Fleet Space delivering its SPIDER payload and NASA's Jet Propulsion Laboratory delivering their user terminal. We are also conducting Spectre engine testing in preparation for Blue Ghost Mission 2. Additionally, we signed another customer to Blue Ghost Mission 2 through our contract with the United Arab Emirates Mohammed Bin Rashid Space Center to fly their Rashid 2 Rover. This UAE contract carries dual significance. It represents both Firefly's expansion of Blue Ghost services to commercial and international customers. It also shows how we can add value to core NASA contracts by selling additional capacity on our lander. In December, NASA awarded Firefly's third Blue Ghost contract valued at $180 million. Our team completed a systems requirements review, allowing us to move forward with design and development of the lander system. And as you will hear more about later, NASA awarded a $177 million contract for Blue Ghost Mission 4 in July. All of these missions support the growing NASA CLPS initiative, which recently received a $250 million budget increase for fiscal year 2026. Moving to Elytra product line under Firefly's spacecraft business. In the second quarter, we secured a contract from the Pentagon's Defense Innovation Unit for Elytra Mission 3, flying in 2027 to demonstrate responsive Rendezvous proximity operations using our Elytra vehicle. This mission positions us well for upcoming opportunities like the Space Force's RG-XX geosynchronous space domain awareness program of record. Notably, the high threat maneuverability, ample fuel reserves and generous payload capacity of Elytra are well suited for future Golden Dome space-based interceptor hosts. We also unveiled our Ocular imaging service, which Elytra will host on upcoming Blue Ghost missions. This groundbreaking commercial lunar imaging capability enabled through telescopes provided by Lawrence Livermore Laboratory uses our Elytra vehicles and lunar orbit to provide high-resolution data. Ocular will map the surface of the moon and provide space domain awareness services for customers to purchase during 5-year missions. Finally, we're looking forward to Elytra's first demonstration mission. The spacecraft completed testing and is preparing to launch. Elytra Mission 1 will test and validate Elytra's core capabilities as well as demonstrate Xtenti FANTM-RiDE dispenser for the National Reconnaissance Office. Shifting to the launch side of our business. The FAA approved Alpha to return to flight. Alongside the FAA, government agencies, customers and industry experts, our independent review Board conducted a thorough mishap investigation that found Alpha's flight safety system performed as expected through all phases of flight and pose no risk to public safety. In the words of our Alpha Chief Engineer, technical challenges are not roadblocks. They are catalysts and opportunities to improve. As a result, we increased the thermal protection system thickness on Stage 1 and will reduce our angle of attack during key phases of the flight. Above all, safety and quality are of the highest importance. With FAA approval to return to flight and corrective actions implemented, Firefly is now working to determine the next available launch window for Alpha Flight 7. We are ramping Alpha flight cadence to meet the strong demand for launch services, especially for responsive national security missions and our best-in-class customers. We expect to launch Alpha two more times this year and are building ahead with several additional Alpha vehicles in production. Earlier this year, Alpha won a Space Force award for the Victus Soul mission, a $22 million contract under the growing Tactically Responsive Space program. That program received a $135 million budget increase for fiscal year 2026. In the second quarter, Alpha won an award from the Air Force Research Laboratory. This contract will work on developing a ceramic rocket engine nozzle, which aims to reduce nozzle mass by up to 50% through use of lightweight materials. We are finding ways to enhance performance as we scale up Alpha production to deliver a more robust vehicle and a faster launch cadence for our customers. Additionally, the United States and Sweden signed a technology safeguards agreement. We've already partnered with the Swedish Space Corporation to launch Alpha vehicles from Europe. This critical regulatory milestone unlocks international growth opportunities and supports higher alpha launch cadences. Moving to our Eclipse launch vehicle. Northrop Grumman invested $50 million into Firefly to further advance production. Alongside Northrop, we continue to make progress in developing Eclipse flight hardware with qualification testing underway. Eclipse is steadily completing milestones to our inaugural launch next year. We built and fit check the first stage tanks for Eclipse's debut flight, and we've begun structural and load testing of the engine bay that will house our seven Miranda engines. These powerful Miranda engines are progressing through our rigorous test campaign with more than 90 hot fire tests completed to date, including full power and mission duty cycle firings. Our team is hard at work executing on Eclipse development, especially as we prepare to compete for national security launches alongside our partner, Northrop Grumman. Our 200-foot tall 15-foot wide Eclipse fills an important gap for dedicated missions for our customers. With that business summary, I'll turn it over to Darren for a review of the second quarter financials. Darren Ma: Thank you, Jason. With this being our first earnings call, I'm going to review the financials from the second quarter and discuss our revenue outlook for 2025. A more detailed presentation of our financial results is contained in the financial tables included in the news release we published earlier. Before we start, I will take a few minutes to explain how operational metrics drive the financial performance of the company. Key operational metrics include the number of launches and execution on key program milestones across both our spacecraft and launch businesses. For example, in our spacecraft business, we focus on delivery milestones because the revenue is generally recognized as a percentage of completion under each contract. For the launch business, we focus on the number of launches. Revenue for our operational Alpha vehicle is recognized at a point in time when the launch occurs. For Eclipse, which is in development, we recognize revenue as a percentage of completion based on program milestones as part of the Northrop Grumman partnership. Once the Eclipse vehicle is operational, we will recognize revenue as launches occur. It is important to note that the timing of revenue could be impacted by things that are outside of our control, especially on the launch side. Now turning to our second quarter financial results. We generated revenue of $15.5 million. This compares with $55.9 million in the first quarter and $21.1 million in the same quarter a year ago. As a reminder, the successful launch of Blue Ghost Mission 1 drove an increase to our first quarter revenue. Spacecraft revenue for the second quarter was $9.2 million based on achieving key contract milestones. Launch revenue was $6.3 million, driven by nonrecurring engineering for Eclipse development. We ended the second quarter with a total backlog of approximately $1.1 billion. In addition, we have a robust pipeline of revenue opportunities that is incremental to the backlog conversion. For example, our backlog increased in July of this year when we secured our fourth Lunar mission from NASA of approximately $177 million, bringing our current backlog to $1.3 billion. Second quarter gross margin was 25.7%. This compares with 4% in the prior quarter and 14% in the same quarter a year ago. The sequential gross margin increase was primarily driven by a customer requested contract modification that results in an overall increase in contract value for our Blue Ghost Mission 2. I should point out that gross margin in the near term could fluctuate from quarter-to-quarter based on the timing of Alpha launches and primarily because of the current accounting classification of our Alpha launches. As a reminder, Alpha costs are currently expensed as R&D. In the future, we expect Alpha costs to be capitalized as inventory and recognized as cost of goods sold at the same time as launch. Non-GAAP operating expenses for the second quarter were $55.8 million compared with $57.9 million in the first quarter and $51.4 million in the same quarter a year ago. We expect operating expenses for the remainder of 2025 to increase, driven by Eclipse development, Alpha material purchases and spacecraft development. The primary difference between GAAP and non-GAAP operating expenses are onetime expenses such as IPO expenses, stock-based compensation expense and other onetime expenses. Non-GAAP operating loss was $51.8 million compared with a loss of $55.7 million in the first quarter and a loss of $48.5 million in the second quarter a year ago. Our non-GAAP net loss in Q2 was $57.1 million. This compares with a net loss of $56.3 million in the prior quarter and $53 million in the same quarter a year ago. Adjusted EBITDA in the second quarter was negative $47.9 million compared with negative $47.1 million in the first quarter and negative $47.7 million in the second quarter a year ago. Turning to our balance sheet. As of June 30, our cash and cash equivalents and restricted cash were approximately $221.5 million. While we are not presenting an updated balance sheet as of today, I do want to note that we raised nearly $1 billion in gross proceeds through our successful IPO in August. Following the IPO, we used $148.1 million to pay off our term loan, leaving us with approximately $1 billion in cash, cash equivalents and restricted cash as of the end of August. In addition, after the close of the IPO, we secured a $125 million revolving line of credit, which gives us additional liquidity to support our growth objectives. CapEx was $9.2 million compared with $2.7 million in the first quarter and $17.3 million in the second quarter a year ago. The sequential increase was primarily driven by investments for Eclipse infrastructure and our East Coast launch facility in Wallace, Virginia. Free cash flow was a negative $37.3 million compared with a negative $59.2 million in the first quarter and a negative $37.6 million in the second quarter a year ago. The sequential improvement was primarily driven by customer payment for Blue Ghost Mission 1. Now turning to our revenue guidance for fiscal 2025. We currently expect revenue will be in a range of $133 million to $145 million. In summary, our capital-efficient operating model, combined with disciplined execution continues to support revenue growth, margin expansion and strong cash flow conversion potential over time. Firefly's fortified balance sheet positions us to scale our market-leading products and fuel strategic growth in the years ahead. Now I will turn the call back over to Jason for his closing remarks. Jason Kim: Since the end of the second quarter, Firefly is pushing forward with additional wins. NASA's award of Blue Ghost Mission 4 in July represents back-to-back Lunar lander contracts for our team. The contract will see Blue Ghost deliver five NASA payloads to the Moon's south pole in 2029 and increases our backlog to $1.3 billion. As with Blue Ghost Missions 2 and 3, Elytra will support our fourth mission. Our Blue Ghost lander enables NASA to evaluate the Moon's south pole resources such as hydrogen and water as well as study the radiation and thermal environment. We are honored to be supporting yet another critical NASA mission. We are proud to support the United States building a sustainable long-term presence on the lunar surface and fortify U.S. leadership of the ultimate high ground. In late breaking as of this morning, I am pleased to share that NASA added $10 million to our Blue Ghost Mission 1 contract as an addendum to acquire high-value data. This goes above and beyond the base contract to include large amounts of lunar surface images. This is significant as it shows how each NASA CLPS mission has opportunities for additional high-margin recurring revenue generation. This addendum contract also demonstrates the market for our Ocular commercial lunar imaging surface deploying as part of upcoming Blue Ghost missions starting in 2026. As a U.S. Air Force veteran, I'm proud that Firefly is an American-based company with American manufacturing and supported by American suppliers. Firefly is vertically integrated with production hardened facilities and engineering teams that are based in Austin, Texas. The unique co-location of our manufacturing, testing and integration allows us to deliver our products on cost, schedule and at increasing capacity. We have core technology advantages through our carbon composite technology used across all of our product lines as well as patented, scalable top-off cycle engines that are shared across our launch vehicles. For those who are new to Firefly, thank you for joining us in this journey. And for the many long-time supporters, thank you for your years of belief and continued backing. And to our Fireflies, thank you for your bold can-do attitude and your dedication to our mission. Together, we inspire the world, unlock new categories in space and deliver critical national security capabilities for America and its allies. Michael Sheetz: Thank you, Jason. Operator, we're ready to take questions. Operator: [Operator Instructions] Our first question comes from the line of Sheila Kahyaoglu with Jefferies. Sheila Kahyaoglu: Congratulations on a successful launch in more ways than one. Maybe if we could start on the first question. With the FAA approving return to flight for Alpha, how are you thinking about the timing of Flight 7 and 8? And how does that feed into your targeted launches for '26? What are the range of potential outcomes for next year, thinking about production capacity versus the current backlog? Jason Kim: Thank you, Sheila. We received our FAA return to flight determination at the end of August. We expect to launch Flight 7 in the coming weeks. If you saw our slides in the Alpha slide, you could see that Flight 7 is in a mature state right next to the Flight 8 in a mature state. And so we keep increasing our production capacity, and we're building ahead as well for 2026. So we're working closely with the range and our customer, Lockheed Martin, to share more details on the mission and payload soon. But above all, safety and quality are the highest importance. Sheila Kahyaoglu: Got it. And maybe if we could talk about Golden Dome. We've heard a lot about it, but some companies are starting to solidify what it could mean. How do you think about the opportunity? And what news should we look to hear? What is sort of the framework and expected timing you're thinking about as it relates to Golden Dome? Jason Kim: Yes, being an Air Force veteran, Golden Dome is something near and dear to my heart and the Firefly's. We have three product lines of the company that are well positioned to support the Golden Dome architecture. First off, Alpha. It is a commercially available rocket, and we're increasing our production capacity to deliver more and more Alphas per year. It can support launching surrogate targets for the Golden Dome missions. It can also support launching test missions of things like hypersonic missiles as well as space-based interceptors. And it also can serve as an operational rocket as well. As you know, we were the first and only to launch a 24-hour call-up mission on the VICTUS NOX mission, and that's something that is helpful for the Goldman Dome mission. On the spacecraft side, our Elytra spacecraft with its ample fuel reserves and its high thrust and maneuverability as well as its payload carrying capacity is well suited to support space-based interceptor host missions. And there's optionality there to provide that as a prime or as a subcontractor. And then finally, Eclipse, it's a 16-ton rocket. It is capable of launching constellations, whether they be sensors or space-based interceptors in the future, and that's part of onboarding onto the national security space launch program. Operator: Our next question comes from the line of Seth Seifman with JPMorgan. Seth Seifman: I wanted to ask, starting off, maybe if you could talk a little bit about expectations for either EBITDA or free cash flow for the year? Darren Ma: Seth, this is Darren. So as of now, we're guiding to annual revenue. We're focused on hitting the operational metrics, which, as we discussed previously, was -- is very much linked to our financial performance. And that's essentially what we're guiding to right now. Seth Seifman: Okay. Okay. And then just maybe a little bit more qualitatively, as we think about the path to Eclipse launch and kind of have the potential perhaps to do that next year, can you walk us through maybe some of the milestones along the way as we think about going from where we are now to the collaboration you'll have with Northrop next year to get that launch up? Jason Kim: Yes. Seth, this is Jason. We're extremely grateful and excited to be partnered with Northrop Grumman. They're our co-developer on the Eclipse program. As you remember, in the second quarter, Northrop Grumman, they invested a first-of-a-kind investment into Firefly at $50 million. We are working on the milestones towards our inaugural launch. We've completed our Miranda flight engine testing as of recently, over 90 hot fire tests that include full mission duty cycle hot fire testing at 206 seconds as well as at 100% plus. We're going to move into qualifying that engine and then building the flight engines. We also have developed the engine bay, and that's undergoing testing. So once we complete testing there, we would integrate the 7 flight Miranda engines with the engine bay. We've also done good checks of the integration of our liquid oxygen tank and our RP-1 tank. We've completed the integration of that. And so we're going to -- the next step would be to make the engine bay with the tanks and the a section. From there, we would deliver that to Northrop Grumman to integrate with the second stage, complete the payload faring with the payload -- integrate the payload and jointly conduct the launch campaign at our Wallace pad. Operator: Our next question comes from the line of Colin Canfield with Cantor. Colin Canfield: If you can maybe update us on the time line for [ NSL Lane1 ] and maybe kind of talk about how the team is thinking about their proposal ahead of the December window? And specifically, what are customers saying kind of about the time frame from transition from onboarding to initial contract award? Jason Kim: Thank you, Colin, for that question. We wanted to provide a credible offering. And so one of the requirements of onboarding into the U.S. Space Force's National Security Space Launch program, Lane 1 is to have a credible plan for the first launch. We anticipate that first launch being the late 2026 time frame. And so we're pursuing along with our co-developer, Northrop Grumman, a proposal for late this year to be submitted. Once onboarded, you would need to have a first launch before bidding the first task orders and the first task orders would be around the -- after the first quarter of 2027. Colin Canfield: Got it. Okay. And then in terms of the tax responsive space line item in the supplemental that was mentioned in the script, the $135 million. Can you maybe discuss kind of the velocity of the money and what contracting officers are saying with respect to kind of potential near-term unlock in terms of awards? I think one of the things that we've gotten feedback from other supplemental oriented players is that they're seeing a pretty fast acceleration of that kind of related spend versus base accounts, but happy to hear kind of what your experience sounds like? Jason Kim: We're very positive on this additional $135 million that was put into the reconciliation budget because of our VICTUS NOX experience, and we subsequently have been put on contract for VICTUS Hz and VICTUS SOL. We're very much looking forward to working with the Space Safari, Space Force customer on the next missions. We would like to have as many of our alpha rockets that we can fit in storage at our Vandenberg Space Force base so that we could be ready at any time to launch more tactically responsive space launches in a 24-hour time line so that we can continue to deter our U.S. rivals. Operator: Our next question comes from the line of Kristine Liwag with Morgan Stanley. Kristine Liwag: Maybe on Alpha, you called out that you're going to change the design of the reinforcement of the thermal protection. I was wondering how much of a design change is that? Is that major or minor? And how mature is your progress there? And then second, you talked about changing the angle of attack on the rocket launch. Does that change the -- what kind of missions you could fulfill for your customers? Jason Kim: Kristine, it's Jason. There is no change to the design. It's just adding more layers of the thermal protection system to the bottom of the first stage, and it's negligible in terms of mass. The second part of that question is how does this change the angle of attack. We can control that at different phase -- critical phases of the flight profile. And so that is something that we can plan for and can control as well. Kristine Liwag: Great. Super helpful. And if I could do a follow-on. You guys called out the addendum contract, $10 million from NASA on Blue Ghost, one, I was wondering, are there more opportunity to sell more data to other governments and commercial customers? And can you size the opportunity of these kinds of potential annuities that you could get from these kinds of additional contracts? Jason Kim: So the answer is yes. We -- at Firefly, we own that data. And so we are able to sell that commercial data license to multiple customers. This was really helpful for us because it was the first of many data sales that we plan to do. You heard Ocula, and that is something that is very core to the Ocula's service that we unveiled a couple of months ago. I'll pass it on to Darren to talk more. Darren Ma: Yes. Kristine, I'd say engineering change proposals are common across our firm fixed price contracts. For example, on Blue Ghost Mission 1 prior to this data buy, we've already been -- the team has already been executing on engineering change proposals, increasing that contract from $93.3 million up over $100 million over time. So we fully expect this trend to continue. It really gives us a differentiated revenue stream with higher margin dollars going forward with things like Ocula, as Jason mentioned. Kristine Liwag: Great. If I could sneak a third and last one. With the Blue Ghost 4 contract you got this summer, how did that contract turn out versus your expectations? And can you provide some sort of revenue recognition expectations for that since that's not launching until 2029? And also any sort of profitability metrics that we should monitor? Darren Ma: Yes. So Blue Ghost Mission 4, we had two opportunities to win one to win another additional Blue Ghost contract going forward. We did plan on winning of the two. And it's an example of how we -- the team has converted opportunities in the backlog. It's a significant opportunity that the team has executed on. From a revenue recognition perspective, it's recognized over a percentage completion basis, very similar to Blue Ghost Mission 1, which you guys saw how it plays out in our financials. Operator: Our next question comes from the line of Suji Desilva with ROTH Capital. Sujeeva De Silva: The backlog, can you just update us on the rough mix of launch and spacecraft? And maybe more specifically within the launch Alpha launch backlog, how much of that is national security responsive versus other? If you could give us some rough estimate there, that would be helpful. Darren Ma: Yes. So -- so today, I'd say we haven't really disclosed the split between launch and spacecraft. But if you reference how we -- our revenue split between Q2, it was a majority of spacecraft. So I'd say prior to Blue Ghost Mission 4, most of our backlog was more on the launch side. But with Jason's background as in the spacecraft sector over decades of experience, we would expect that weighting to shift over time and perhaps even outpace the launch side in the future. Sujeeva De Silva: Okay. Great. And then I think there was earlier -- there was an announcement about NASA's VIPER rover launch. And I'm just curious, is there a road map, Jason, kind of how much capacity you can carry to the moon if the Blue Ghost and pairing up with Elytra potentially as we move toward cargo, I know you're taking the UAE Rover yourselves, larger cargo, infrastructure cargo and then over time, [indiscernible]. If you could help us understand the road map you're planning, that would be helpful. Jason Kim: Yes. Thanks, Suji. This is just the beginning. Although we have the most number of commercial lunar payload services contract out of any commercial company right now with NASA. We have a long-term road map where we build big things here at Firefly. If you look at, for example, at our Eclipse rocket, that's a 200-foot rocket like 15 feet diameter. So that's a large structure. If you look at our Blue Ghost 2 mission, we just sent a full stack of our Lunar lander and our [ DPA ] with our electric vehicle, which sits at 22 feet high to get environmentally tested at Jet Propulsion Laboratory. So we're already building bigger and bigger things. We are able to scale our technology because we're using carbon composite structures and tanks and all of our Lunar lander technology that helped us successfully land stable and upright on Blue Ghost 1, is transferable to those bigger systems. So long term, we would like to put not only lunar landers on the moon, but more rovers, potentially light terrain vehicles, infrastructure like power plants. So that is all inclusive of our Lunar lander road map. We see more than just annual missions to the moon, but multiple missions annually to the moon by the end of the decade. Operator: Our next question comes from the line of Edison Yu with Deutsche Bank. Xin Yu: Congratulations on the first earnings call going public. I wanted to ask about the strategy around potentially some M&A. You obviously raised quite a bit of money. Any kind of types of assets out there that you're kind of vetting or interested in? And maybe if you could dimension kind of the size and scope you'd be willing to do. Jason Kim: Thank you, Edison. We look at M&A using our well-defined process as it relates to M&A targets. First and foremost, any M&A target has to fit our strategy. We have a robust long-term strategy. It also has to fit our culture, our Firefly culture, which is one of a can-do spirit as well as speed and collaboration and technology and innovation. Also, there are synergies that the M&A target could provide to our existing product lines. So those are things that we look for in companies. Xin Yu: Understood. And then a follow-up question on Elytra. I think you made a reference to RG-XX in the opening remarks. I was wondering if you could maybe elaborate around that. Is that supposed to be potentially a template for some future program that Elytra would go after? Or how is that -- how should we think about that kind of reference you made? Jason Kim: Well, if you recall, RG-XX is a follow-on to the geosynchronous space situational awareness program, which once was a $6 billion program of record that the traditional prime contractors were developing. It is a requirement that is still needed going forward. But earlier this year, the Pentagon signed out an acquisition decision memo to open up the competition for the next-generation mission called RG-XX to commercial providers like Firefly and bring in our transformative commercial technologies -- it just so happens that earlier this year, we won a DIU contract for our Elytra Mission 3. And that mission is to perform space domain awareness using Rendezvous Group proximity operations. And I already mentioned that Elytra has ample fuel reserves, high thrust maneuverability as well as carrying capacity for different payloads. We're able to apply that same technology to the RG-XX program of record. Xin Yu: Great. If I could sneak in one housekeeping. The $10 million extra, is that going to be recognized in 3Q as revenue? Or what's the, I guess, the rev rec on that $10 million for Blue Ghost? Darren Ma: That's correct, and we did plan for that in our road map. Operator: Ladies and gentlemen, I am showing no further questions in the queue. I would now like to turn the call back over to Michael for closing remarks. Michael Sheetz: Thank you, everyone, for attending today's call. We look forward to speaking with you all again when we report our third quarter financial results applied. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Hello, and thank you for standing by. Welcome to AAR Corp. First Quarter Fiscal Year 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You would then hear an automatic message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to management. You may begin. Good afternoon, everyone, and welcome to AAR's fiscal year 2026 first quarter earnings call. Denise Pacioni: We are joined today by John Holmes, Chairman, President and Chief Executive Officer, and Sean Gillen, Chief Financial Officer. The presentation material we are sharing today as part of this webcast can also be found under the Investor Relations section on our corporate website. Before we begin, I would like to remind you that the comments made during the call include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Accordingly, these statements are no guarantee of future performance. These risks and uncertainties are discussed in the company's earnings release and the Risk Factors section of the company's annual report on Form 10-Ks for the fiscal year ended 05/31/2025. Providing the forward-looking statements, the company assumes no obligation to provide updates to reflect future circumstances or anticipated or unanticipated events. Certain non-GAAP financial information will be discussed during the call today. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in the company's earnings release and slides. A transcript of this conference call will be available shortly after the webcast on AAR's website. At this time, I would like to turn the call over to AAR's Chairman, President, and CEO, John Holmes. John Holmes: Thank you, and welcome, everyone, to our first quarter fiscal year 2026 earnings call. The quarter was a very strong start to the year, and we are proud of the results we delivered as we continue to advance the execution of our strategic objectives. We have accompanying information on the slides that will be referenced as I talk through the details of this release. Turning to Slide three. There are three key takeaways from our Q1 FY '26 I would like to highlight today. First, we delivered significant top-line growth with higher profitability. We are particularly proud of the 17% organic adjusted sales growth that we drove in the quarter. Second, we continue to win and grow in new parts distribution. It has been our fastest-growing activity, averaging more than 20% organic growth in each of the last four years. Our exclusive distribution model resonates with OEMs, and it's helping to drive continued market share gains. Third, our Trakt software solution has continued its momentum on the back of the major win we announced with Delta Airlines in June. Additionally, we further enhanced our software capabilities with the acquisition of AeroStrat, which we completed in the quarter. Turning now to Slide four, I will discuss our strategy execution in more detail. We are executing across our strategic objectives to drive growth through market share and new business, improve margin through cost efficiency and synergy realization, increase the intellectual property in our offerings through software and IP investments, and to continue our disciplined portfolio management. Starting with share gains and new business wins in the quarter. In our Parts Supply segment, we expanded our new parts distribution capabilities through our multiyear exclusive distribution agreement with AmSafe Bridport, a transdome company, becoming the exclusive KC-46 and C-40 platform distributor for the global defense and military aftermarket. This win once again demonstrates the strength of our new parts distribution capabilities across both the commercial and government markets. Also in repair and engineering, we continue to make progress on our Oklahoma City and Miami airframe MRO expansions. Expansions are progressing well and will come online in calendar 2026, adding 15% capacity to our network. Moving to cost efficiency, we are continuing the rollout of our paperless hanger solution, which drove increased throughput leading to another quarter of sales growth out of the same hangar footprint. We have completed approximately 60% of the paperless rollout to date. In component services, now that we have substantially completed the product support integration, our focus is to drive incremental volume through the acquired site, which will lead to additional margin expansion. The quarter, we also maintained consistent cost discipline, reducing SG&A year over year. Our software and IT-enabled offerings, we continue to have success in the market with our Traxx software solutions, particularly after Traxxas selection by Delta validated its ability to scale in support of the world's largest airlines. We do not announce all of Tractor's wins, but this quarter, we're proud to say that JetBlue, a long-time Traxx customer, upgraded to e-mobility and cloud and our cloud hosting solution. Also during the quarter, we acquired AeroStrat, a maintenance planning software provider, which immediately expands the reach of our software offerings and the enterprise resource planning system capabilities of our tracked software solution. AeroStrat brings exciting opportunities for growth, with the potential for further integration and scope expansion among existing track customers. We are proud that this was another quarter of both strong execution and new business capture, and with that, I'll turn it over to Sean to discuss the results in more detail. Sean Gillen: Thanks, John. Looking now to slide five. Total adjusted sales in the quarter grew 13% to $740 million year over year. However, excluding the sale of landing gear, which contributed sales of $19 million in last year's quarter, Q1 organic sales growth of 17%. We drove growth in each of our segments with particular strength in parts supply. Adjusted sales growth to government customers increased 21%, and adjusted organic sales to commercial customers increased 15% over the same period last year. For the quarter, total commercial sales made up 71% of total sales, while government sales made up the remaining 29%. Compared to the same quarter last year, adjusted EBITDA increased 18% to $86.7 million, and adjusted EBITDA margins increased to 11.7% from 11.3%. Adjusted operating income increased 21% to $71.6 million, with adjusted operating margin improving to 9.7% from 9.1%. Our focus on improving operating efficiencies and strong performance in our parts supply segment was a key driver of the improved margins. The combination of sales growth and margin resulted in a year-over-year adjusted diluted EPS increase of 27% to $1.08 from $0.85 in the same quarter last year. With that, I'll turn to the detailed results by segment, starting with parts supply on Slide six. Parts supply sales grew 27% to $318 million from the same quarter last year. We once again saw above-market growth of over 20% in our new parts distribution activities with strong growth across both the commercial and government end markets. In the quarter, we also saw a meaningful pickup in USM sales. First quarter Parts Supply adjusted EBITDA of $43.8 million was higher by 34%, and adjusted EBITDA margin increased to 13.8% from 13.1% in the same quarter last year. Adjusted operating income rose 36% to $40.9 million, and adjusted operating margins also increased from 12.1% to 12.9%. Turning now to slide seven for repair and engineering. Sales decreased 1% to $215 million year over year. However, excluding the impact of the Land and Gear divestiture, organic sales growth in repair and engineering was 8% as demand remained strong for our MRO activities, and we continue to drive efficiency to increase throughput. Adjusted EBITDA of $28.1 million was 1% higher than in the period last year, with adjusted EBITDA margins increasing to 13.1% from 12.8%. First quarter adjusted operating income of $24.9 million was 2% higher than the same period last year, and adjusted operating margin increased to 11.6% from 11.2%. These increases were primarily driven by continued strong efficiencies in our operations. Going forward, we expect to continue to drive margin expansion in this segment from the realization of product support synergies, continued rollout of our paperless hangar initiatives, and the capacity expansions that are in process. Looking now to Slide eight. Integrated solutions sales increased by 10% year over year to $185 million. We saw strong growth in our government end markets, as recent new wins ramped up in the quarter. Integrated Solutions adjusted EBITDA of $14.2 million was 5% higher than the same period last year. Adjusted operating income of $11 million was 5% higher, with the adjusted operating margin decreasing from 6.2% to 5.9%. Turning to slide nine of the presentation. During the quarter, our net debt leverage increased slightly from 2.72 times in the fourth quarter to 2.82 times. This increase was driven by both organic and inorganic investments we made in the quarter. We invested over $50 million in inventory in the quarter to support future growth, particularly in our parts supply segment, as we saw opportunities in both new parts distribution and USM. Additionally, we invested $15 million in the acquisition of AeroStrat, which was signed and closed on August 12. While these investments drove a cash use in the quarter, we expect to be cash positive in Q2 and for the full fiscal year. With that, I will turn the call back over to John. John Holmes: Great. Thank you, Sean. Turning to Slide 10, we have an update on our outlook for Q2. For Q2, we expect sales growth of 7% to 10%, which excludes the impact of landed gear, which generated $20.4 million in sales in Q2 of last year. We expect adjusted operating margin of 9.6% to 10%. For the full fiscal year, given our strong start, we expect organic sales growth approaching 10% as compared to the 9% we cited back in July. In closing, I would like to highlight the strength of AAR as a business and as an investment. We are well positioned in the most attractive segments of the growing aviation aftermarket. We have broad, unique distribution and repair capabilities, including our track software solutions that are unmatched in our industry. We have also continued to optimize our portfolio to deliver stronger growth at higher margins. Finally, we expect to continue to strengthen our offering with targeted acquisitions to accelerate our strategy. I would like to thank our global team of employees for their dedication and hard work, as well as our customers and our shareholders for your continued interest and support of AAR. And with that, we'll turn it over to the operator for questions. Operator: Thank you. A question, please press 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ken Herbert with RBC. Your line is open. Ken Herbert: Yes. Hi, good afternoon, John and Sean. Hey. Maybe just first question. You raised sort of the full year expectation and now approaching 10% versus up 9% coming out of the fourth quarter. Is that all just better results in the parts supply, or maybe you can just parse out sort of what's behind the slight uptick in the full year expectations? John Holmes: Yeah. I would say, parts supply definitely is leading the way. We had a very strong quarter with 27% organic growth in parts supply. We continue to be very, very pleased with our progress in the new parts distribution market. And, you know, the wins that we've got there, you know, continue to gain traction. And really, as you mentioned, parts supply driving the improved outlook for the year. Ken Herbert: And can you just comment on the pipeline for new distribution agreements? I mean, it sounds like OEMs continue to look to maybe find additional partners. Are you taking share to drive that growth, or is it really sort of first-time opportunities where parts are coming through distribution? John Holmes: Yeah. I would say the majority of the wins over the several years have been our taking share. I mean, there definitely are, you know, net new contracts that come on the market. The one we announced this past quarter, Reliance was an example of that. But, the majority have been our taking share. Again, we've got a different model in distribution that exclusive relationship only. Where we have an exclusive relationship with the OEM where we don't represent competing products. And they have an exclusive relationship with us where they don't work with competing distributors. For a given product or a given market. And that model is resonating. And as we continue to win more business, more doors are open to us. And so whereas we might not have been thought of as a leading new parts distributor two or three years ago. We're invited to participate in a lot more conversations now, which is encouraging. Ken Herbert: Great. Thanks, John. Nice quarter. I'll pass it back there. John Holmes: Great. Thank you, Ken. Operator: Please standby for our next question. Our next question comes from the line of Michael Luchamp with KeyBanc Capital Markets. Your line is open. Michael Luchamp: Wanted to ask on the updated guidance framework for 2026. You had called out strong growth in distribution. Across both commercial and government. Do you still expect to outgrow the market within distribution maybe at a mid-teens rate? Or is there any change either way relative to your outlook for distribution? John Holmes: No. I think, yeah, I think you've got it. We would maintain that for distribution and would expect to continue to grow above market there. Michael Luchamp: Okay. And then maybe if you could talk a bit about the cross-selling opportunities you see within repair and engineering for component services specifically. Any way to frame, you know, how much you've had in terms of success to date with cross-selling opportunities and yeah, in any way to frame also how much more there are to come. Thank you. John Holmes: Yeah. Great great question. So, again, a big part of our strategy is to leverage our leadership position in the heavy maintenance world and use that to drive volume into our component repair shop that we acquired with the product support acquisition. And I would say that we are in the early innings of that strategy. Our focus over the last year has really been on the integration. And exiting our facility, our large facility in Long Island and transferring that volume to the two sites, one in Dallas and one in Wellington, Kansas. That work is now complete. We're still ramping up efficiency in the two sites that received the work, but the focus now has shifted to executing on that cross-selling strategy. So we've got a long pipeline of opportunities. I was just with a major carrier yesterday making a pitch myself for, as part of that strategy. And, you know, to date, we're having a lot of encouraging conversations, but you know, the results are going to be more meaningful in the future. So a big pipeline. And like I said, we're in the early innings. Only thing I would just say on that is you know, the parts business, it's a much shorter sales cycle. Obviously, it's highly transactional. You're able to sell parts very quickly. The component repair business, these are longer-term agreements. And it takes a while to get the customers to move the volume that they have been sending to other providers and reallocate it to us. Given the confidence and relationships that we have with our large airline customers, particularly around heavy maintenance, we're confident we can secure that volume over time. Michael Luchamp: Appreciate it. Thank you. Operator: Thank you. Please standby for our next question. Our next question comes from the line of Scott Micas with Melius Research. Your line is open. Scott Micas: John, Sean, nice results. I wanted to circle back on the USM sales. In the opening remarks, you mentioned a meaningful uptick. So just curious, has that trend continued into the current quarter? And then is the visibility on whole assets coming to market improving given that next year, the fleet's gonna need to absorb probably 1,500 narrow-body aircraft through new aircraft deliveries and then also the return to service of GTF grounded aircraft. John Holmes: Yeah. Great great question. And you're citing all the right industry dynamics. So we did start to see a loosening of supply in the fourth quarter, and that continued through the first quarter. That did drive meaningful growth in our USM business for the first quarter. I would say it still remains a dynamic environment. But we definitely are encouraged by the additional assets that we see coming to market that match our criteria. Which is one of the reasons we made the investments that we did during Q1. Scott Micas: Okay. And then also just thinking about the opportunity there. If I'm wrong here, but I think USM has been margin accretive to parts supply's overall margins. So I'm just wondering what's kind of the opportunity for this year from a margin perspective at parts supply if more USM does come available to market? This be a business that's running 14, 15% operating margin business? Or operating margins this year? John Holmes: Yeah. So, again, a good question on parts supply. So distribution from a margin standpoint has been performing extremely, extremely well. In the recent quarters, if you look back through last fiscal year and even in this quarter, margin in USM has actually been depressed. Historically, you're absolutely right. It's one of our higher margin activities. But the supply, even though it's loosening up, it's still actually quite tight. And so the spread that we're able to make on assets in UFM is narrower than it would be historically. As and, again, we believe we're in the very early innings of this. As you see more supply come onto the market, and for the reasons we cited, we do expect that to occur over time. We would expect margins to expand from where they are today on USM. Scott Micas: Okay. Got it. And then if I could squeeze a quick one on AeroStrat. It looks like another nice bolt-on acquisition for the software solutions of your business. Just curious, is there any sort of agreement with the employees that they stay on for an x amount of time? Just making sure that you're retaining the key men there. John Holmes: Yeah. Great great question. And you're hitting on the right theme. And as much as the team that came with AeroStrat are extremely talented, we're really excited about the team that came with it. And we know this publicly. There is an earn-out associated with the transaction that applies to the key team members. And so that's a three-year earn-out, and, you know, we feel pretty good about their financial incentive to stay around. Even more than the financial incentive, I mean, our goal is to fully integrate them into the AAR, the track team, and, you know, really help them grow. And we're encouraged. It's early days, obviously, but we're encouraged by kind of the two-way revenue synergy there. And as much as AeroStrat already is in customers where Traxx is not. And we are going to leverage the software position that AeroStrat has with some large airlines that aren't yet on track to make an entry for track. Conversely, track, you know, provides services to dozens and dozens of customers where AeroStrat is not yet providing services. And so our goal is to add the AeroStrat functionality to the tracked offering and sell that as an additional service to the Trax customer. So a lot of exciting conversations amongst our software team. Scott Micas: Alright. Thank you. Operator: Thank you. Our next question comes from the line of Sam Strawsaker with Truist Security. Your line is open. Samuel Pope Struhsaker: Hi, guys. Thanks for taking the question. On for Mike. Trimole, and nice results as well. John Holmes: Thank you. Samuel Pope Struhsaker: I think in the result you guys mentioned that, you know, you've been investing a little bit in inventory to support the strong demand parts supply. I was just curious how we should think about mean, are you guys kinda satisfied with where you are with inventory or maybe where you might be going with that? As growth continues? John Holmes: Yeah. You know, this was a big investment quarter. We saw a lot of opportunities across, you know, the full parts supply segment, both in distribution as well as in USM. As we mentioned, we are encouraged by the opportunity to make investments in that business to support its continued rapid growth. But at the same time, we've got to focus on being cash positive for the rest of the year. So we want to balance those priorities. Samuel Pope Struhsaker: Great. I'll keep it at one for now. Thank you. John Holmes: Great. Thank you. Operator: Next question comes from the line of Noah Levitt with William Blair. Your line is open. Noah Levitt: Thanks for taking my questions. To start off, this is more strategic. Or high-level question, but a lot of your peers have commented on the notable strength specific to the engine aftermarket. So can you talk about your exposure whether across parts supply, repair and engineering to engine-related aftermarket services, any key themes, or just puts and takes there? Thanks. John Holmes: Yeah. Absolutely. I mean, we have significant engine market exposure. For example, in the USM business, 80% of our parts business in USM are engine parts. In our distribution business, we distribute engine-related accessories. Our largest line of Unison, for example, which is a unit of GE, are all engine-related parts, and that's our largest product line within distribution. So the majority of the parts activity in the parts supply segment is related to engine. Also related in the component services business, we have significant engine-related capability, particularly in our Grand Prairie operation in Texas. And that's an area where we continue to or we expect to continue to develop repair capability either independently or in conjunction with OEMs like GE. So, you know, I would say across the company, engine exposure is helping to drive the significant growth that we've been demonstrating. Noah Levitt: Awesome. And then just another quick one, drilling in on tracks. Can you talk about how far along you are making tracks into more of an e-commerce marketplace? Which can hopefully lead to, you know, more cross-sell opportunities with your parts distribution business? Kinda what trends are you seeing there? Thanks. John Holmes: Yeah. Thanks for asking about that. You know, again, really encouraged with the continued market uptake on TRAX. I mean, the challenge TRAX has right now is just managing and prioritizing all the opportunities that they have in front of them. Which is a great challenge to have. As it relates to the marketplace initiative in general, we are investing in that initiative. It is very important to us. We see significant synergy between the tracked operator base, the data that they traffic in, and ultimately, leveraging their position to offer parts and repair solutions through the Trax interface to their customer base and even beyond the Trax customer base. Those are investments that we're making right now. It's a very active project inside of AAR. And I would expect that in 2026, we'll have announcements to make in terms of the progress that we've made there. Noah Levitt: Great. Thank you. John Holmes: Great. Thank you. Thank you. Operator: Ladies and gentlemen, I am showing no further questions in the queue. I would now like to turn the call back over to management for closing remarks. John Holmes: Great. Thank you, and really appreciate everybody's time today and look forward to discussing our Q2 results in a few months. Thank you. Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good day, ladies and gentlemen, and welcome to the Remgro Annual Results Presentation. [Operator Instructions] Please note that this event is being recorded. I will now hand you over to Mr. Jannie Durand. Please go ahead. Jan Durand: Good morning, everybody. Thank you for joining us this morning, and welcome to our final results presentation for the year ended 30 June 2025. Today, the team and I will unpack our financial performance for this past financial year and has become our set format, we will delve into some detail on the performance of our key portfolio companies that contribute meaningful to our overall performance. With that in mind, the outline of today's presentation will be as follows: First, myself, and then Carel Vosloo will give an overview of the salient features of our results for the year, including a high-level recap of our key strategic priorities, which remains consistent with those that we've communicated at our recent Capital Markets Day and a sense of our progress against these. Secondly, our CFO, Neville Williams, will then unpack in more detail our results for the period. And then thirdly, as mentioned, we will then begin an update on some of our key investments, including Mediclinic, CIVH, Heineken Beverages and RCL Foods. The CFO of Mediclinic, Jurgens Myburgh, will speak to Mediclinic's results. Thereafter, and for the very first time, the CEO of Maziv, Dietlof Mare, will do the same for CIVH. And then just after that, the Managing Director and Finance Director of Heineken Beverages, Jordi Borrut -- incidentally is no relation to Jordie Barrett, All Blacks, center, no relations there as he's Spanish. And then Lucas Verwey will do the same for Heineken Beverages. And then finally, the CEO of RCL Foods, Paul Cruickshank, will provide highlights of the results I reported on the first of this month. I will then close off the presentation by looking at our areas of focus going forward before opening the floor for questions right at the end. If we move on to the performance overview. Today, I will be presenting our results showing strong earnings momentum across our portfolio, which we are very satisfied with. As I reflected on this progress, I came to the view that these outcomes are really a reflection of the resilience of our portfolio in difficult times as well as the focused execution of the strategy we set in motion 5 years ago. This journey has involved enormous challenges, but through patience and resilience, we continue to make very good progress. By the same token, it would be remiss of us not to reflect the impact of the operating environment within which we have operated in the past few years and that we continue to operate in. The environment around us remains challenging, and this is the reality that I'm sure this audience is all too familiar with. Global trade tensions, persistent geopolitical instability and muted domestic growth continues to test South African corporates. Our own portfolio companies are, of course, not immune to this. We're not operating in an island. We have spent some time, as recently as our Capital Markets Day, unpacking the macroeconomic challenges and the resulting impact on our underlying investments. So I'm not going to delve in all of these details today. While these continue -- we know that these continue to persist globally and locally. We have also seen some improvements, including some reductions in interest rates. The significant strides made in driving the structural reform agenda for Operation Vulindlela, including sustained energy availability, which we're all very pleased with, some rehabilitation of the transport logistics and some regulatory reforms. These improvements, together with the renewed and positive sentiment following the establishment of the government of National Unity, has led to an improvement in global investor sentiment towards South Africa, you can see that on some of the currency exchange rate, which -- recently, which, over time, we will believe will contribute to improved growth prospects. South Africa has shown many times that its people can muddle through these challenges and survive. Through civil society, I get the feeling that our people's patience is wearing thin with the current situation, and we can see it in the narrative in social media and also other some recent election results at the local level. All of these factors are outside of our control, but we remain conscious of and continue to assess any indirect impact that these might have on our businesses, while we also play our role in the areas we can influence and where we can provide support. Our focus remains on what is within our control, strengthening the performance of our core businesses, advancing portfolio simplification and managing our capital with discipline. I believe it is improved execution in these areas and much closer engagement of our respective management teams that underpins the results we present today, which I will touch on it a little bit later. I first want to highlight a few of these positive outcomes that this strategic focus has yielded. We have seen some notable gains in some of our key portfolio companies. OUTsurance has again delivered a standout performance. Mediclinic has made some tangible progress in its operating model review and turnaround initiatives. As you also would have seen in Rainbow's recent results announcement, the turnaround strategy execution that Marthinus and his team have been hard at work on has successfully unlocked some robust earnings and linked to that RCL Foods focused portfolio has also delivered a meaningfully improved performance. Building on this momentum in the current year, I'm excited by the progress made in the CIVH-Vodacom transaction and look very much forward to its conclusion, positioning us to unlock further shareholder value through this critical transaction for South Africa's digital future. We have also made some progress in addressing the smaller portfolio holdings. The announced unbundling of eMedia investments was a notable example and subsequent to year-end, the disposal of our remaining shares in BAT and Grindrod has also been done. Lastly, we have de-geared our balance sheet, which we believe sets us up to be more front-footed in capital allocation opportunities into the future. Very importantly, whilst we are not where we want to be yet and while some challenges persist, such as the regulatory environment in Switzerland that threatens Mediclinic sustained recovery and volume decline through aggressive pricing trends we see in the overall beverages market that impacts Heineken Beverages. The positive gains, however, are proof that our focus on the stated priorities is having a positive impact. Carel will talk a little bit more about how we continue to think about these strategic priorities later. I will now move on to our results for the period, which we are very proud of. You will recall when we presented our final results in September 2024, I said that we were not where we wanted to be, and considerable work was being done to bed down the operational performance of a number of key investments in order to drive a sustainable recovery. This morning, however, I'm pleased to be delivering our final results that show a strong performance across the board. This improvement is a reflection of the work that our executive team at our underlying investee companies in partnership with Remgro have been actively driving. For this year, under review, headline earnings increased by 38.6%. With the improved earnings, we have constantly seen better cash earnings at the center, with dividends received up by approximately 24%. And in turn, our final ordinary dividend declared is up by 34.8%. The total dividend for the year is now sitting at -- if we look at the slide, is ZAR 3.44, which is up by 30.3%. I'm also pleased to announce a special dividend of ZAR 2 per share. We have earmarked the proceeds of the sale of the BAT shares to pay this dividend to our shareholders. A significant driver of the increase in headline earnings relate to improved contributions by Mediclinic, OUTsurance, RCL Foods and Rainbow as well as significantly reduced losses by Heineken Beverages. Neville will later provide more detail around these drivers and the headline earnings numbers in his section later on. I want to reemphasize what I said earlier. While we are pleased with the strong contributions that were made by some of Remgro's investee companies, there's considerable work still to be done to improve the operational performance of some of our key investments. We also recognize that our efforts will not be easy as the market dynamics in some of our key businesses continue to be challenging. As mentioned earlier, Mediclinic continues to operate in a Swiss market that is not showing signs of easing, and volumes and pricing remain challenging across the Heineken Beverages portfolio amidst strong competition. Despite these dynamics, we remain confident in the potential for the portfolio to generate sustainable growth and cash earnings over the long term. I will now hand over to Carel to recap on our strategic priorities. Carel Petrus Vosloo: Thank you, Jannie, and good morning, everyone. As Jannie mentioned, I will recap briefly on our progress on these strategic priorities. As Jannie said, they have not changed since we last spoke, but to briefly just mention them. The first one is active performance optimization across the portfolio. Secondly, to follow a considered capital allocation strategy. And then lastly, to lead sustainable businesses and embedding our ESG strategy across our portfolio. So to deal with each of them in turn on active performance optimization, I hope that those numbers that Jannie flashed will be evidence of good progress on this front. We are very happy that the active partnership with our management teams is yielding good results. Credit here absolutely goes to the underlying teams that deliver these earnings, and we're pleased for the partnership with all of those. And as Jannie also mentioned, certainly, the work is far from done here, but this is a big step in the right direction. Also on the optimization of the portfolio, we've had some good progress during the year, and I'll just recap on that over the next page. On considered capital allocation, Jannie has touched on all the highlights there. But again, to say that we feel there's been good progress during the year, you'll be aware that we sold down a portion of our FirstRand shares and use those proceeds to settle all of our outstanding debt. As Jannie mentioned, we will be distributing our eMedia exposure that happens next week. And then also, as Jannie mentioned, we disposed of our BAT shares after a strong recovery in that share price, and that enabled us to pay a special dividend or to propose a special dividend. Lastly, on leading sustainable businesses and ESG, really good strides have been made during this year. I'm hoping that when you see the integrated annual report that will be available next year -- next month, you'll see the improved disclosure and the progress on this front and the maturing strategy around ESG. Much of that maturing strategy has had to do with engaging with our underlying investee companies and making sure we understand the metrics that are important to each of them. This is not a one-size-fits-all solution. We've certainly identified some additional opportunities, some gaps in our approach. But I am confident that we're getting to a place where we are really embedding ESG as part of how we do business and not just a tick box and sort of disclosure exercise. Also under this banner of ESG and particularly under governance, you would know that enhancing our communication with stakeholders and specifically with investors has been something that we've committed to, and we're proud of decent strides there. As Jannie mentioned, we had our capital -- our second Capital Markets Day earlier this year. That gave us the opportunity to engage with -- I think it was around 200 investors that were there either in-person or virtually. to unpack not only the Remgro investment thesis but also delve a bit deeper into a few of our investee companies. Similarly, we've got a good panel of executives from across our portfolio assembled here this morning, and I hope that gives the opportunity to understand in greater detail the performance across the portfolio. Over the slide, looking just specifically on the transformation of the portfolio. We've been sharing a version of this slide, I think, since 2020 when this transition of the portfolio started. So maybe you've seen 10 different versions of it, and you could be forgiven at times for not being entirely sure of these arrows have been moving. Some of this progress has been frustratingly slow, but I'm very hopeful that this will be the last time that we will share this slide with you. And the one important milestone that we achieved in this last year or just shortly after year-end was the approval by the competition authorities of the CIVH-Vodacom transaction. I don't want to jinx this deal. It's still subject to ICASA approval, which we hope will be imminently in hand, but a great milestone, and Dietlof will later talk about what that transaction means for CIVH. We are very excited about the high road, not only for us as investors, but certainly also for the customers of CIVH. I'm not going to talk about any of these other transactions. I think most of them are now firmly in the rearview mirror, and the executives from these companies are here with us today. So they'll give more color on how these businesses are coming along. The one exception perhaps is Rainbow. But as Jannie mentioned, Rainbow has had a really strong start to its life as an independently listed company. I think if they carry on, on this track, then we'll have to find a start on this agenda for Marthinus next year as well. So then just looking at the portfolio performance. Jannie mentioned this, and Neville is going to delve into it in more detail. So I won't steal Neville's thunder. But just on the schematic, you can see that more than 80% of the portfolio has choked up positive earnings momentum in the last year. That sort of range from modest single-digit growth on the right -- the left-hand side of that schematic to very robust growth here on the right-hand side. I think what's particularly pleasing is that some of those companies that contributed very meaningful increases in earnings were probably the companies that a couple of years ago or even as recently as a year ago, we would have said is sort of in the intensive care award, but they are all now in different stages of recovery and really pleased about those contributions to the growth in our earnings. It's almost easier to talk here about the names that are not on the slide. If you say 80% of the companies enjoyed improving performance, then what's the 20% that's not here? And there are two notable companies absent from the schematic. The one would be CIVH. And again, we are very encouraged by the underlying performance improvement at CIVH, but there was interest rate derivative that caused the downwards adjustment to earnings, which resulted in a negative headline earnings result for the year, but the operating performance has got good forward momentum. And the second one would be Total. Again, underlying performance of Total was healthy. But again, there was a stock revaluation adjustment that resulted in the headline result being down for the year. But again, both of those companies, good underlying momentum. And if you had to add that to the 80%, you'd be comfortably ahead of 90%. We realize this will not be the case every year. There will be ups and downs. As Jannie also mentioned, the work is far from done. We know there's much more earnings potential in the portfolio than what we're showing now. But certainly, as I mentioned, a step in the right direction. Then the last slide I want to talk about is just very briefly on capital allocation. We have showed you a version of this slide before. And what we have here is the different priorities of usage of capital for Remgro and also some commentary on our current posture. As we shared with you before, the highest priority for us when it comes to capital allocation is making sure that we've got capital available to pay the debt on our own balance sheet. On that front, I think we're in a good place. You see we give it a green tick or a green blob there. We've fully repaid our debt in the current year. And then secondly, and equally importantly, making sure that we can provide resilience to our portfolio companies and support them with capital when they need it. On that front, again, with improved performance across the portfolio and also the CIVH-Vodacom transaction, which is looking very promising and hopefully, imminently will be approved, we think there's a stronger foundation there as well. So if the foundation in those first two priorities are secured, it does allow us to adopt a somewhat more front-footed posture on the alternative uses for capital, and we've got those in those next sort of four blocks. And as we say, these priorities are dynamic and informed by the specifics of the situation as it unfolds. But certainly, on the cash dividends front, as Jannie showed you, a decent increase in our dividends. There was also the special dividend following the disposal of BAT. Share repurchases, we haven't undertaken any further repurchases this year, but that remains compelling given the discount to INAV. And then follow-on or new investments, obviously, something we remain keenly on the lookout for. We're not giving you any specific color here on how we rank those priorities between those four. I can reassure you this is a topic of live debate amongst the executives and at the Board, and we're very thoughtful about the implications for Remgro and for our shareholders on the trade-offs that we make here, both implications in the short term and the longer term. So this is a live debate and something we'll continue to talk about. So thank you very much. And with that, I will hand over to Neville. Neville Williams: Thank you, Carel, And good morning, everyone. After a challenging FY 2024, the theme for FY '25 is a sustainable momentum in headline earnings growth year-on-year with over 80%, as Carel mentioned, also now of the Remgro's portfolio achieving headline earnings growth. So for the year under review, Remgro's headline earnings increased by 38.6% from ZAR 5.6 billion to ZAR 7.8 billion, while headline earnings per share increased by 38.4% from ZAR 10.18 to ZAR 14.09. The earnings growth momentum experienced in the first half of the year under review continued during the second half, culminating in the 39% increase in headline earnings. If we exclude the negative impact of significant corporate actions, which were implemented during the previous financial years, this year amounting to ZAR 140 million. And you will see on the right-hand side of the graph, the ZAR 140 million versus the ZAR 766 million in the comparative year. And on the left-hand side, you will see the ZAR 766 million, the adjusted headline earnings increased by 24%. And I think this increase provides a better assessment of the underlying financial and operational performance of the portfolio. The graph also depicts an overview of the main drivers of the increase in headline earnings, and this can be summarized as follows: Firstly, improved operational performances from the majority of the investee companies, of which the most significant are increased contribution from Mediclinic, a positive impact of ZAR 362 million this year. OUTsurance Group positive ZAR 318 million. Rainbow Chicken up by ZAR 324 million. RCL Foods, their contribution increased by ZAR 264 million. Then Heineken Beverages, excluding the Heineken IFRS 3 impact, returning to profitability, and this was driven by volume growth and margin recovery. And it's a positive swing of ZAR 406 million this year. However, these gains were partly offset by lower contributions from TotalEnergies, a negative ZAR 359 million, mainly due to higher negative stock revaluations as well as lower dividends from Momentum, a drop of ZAR 160 million following its disposal. Secondly, the positive impact on headline earnings of lower finance costs amounting to ZAR 403 million due to the redemption of the preference shares. So we will provide more detail on these operational results during the presentation. This graph provides an overview of the significant changes in the valuation outcome of our unlisted investments as well as the movement in the market values of our listed investments. The main drivers impacting positively on the growth in INAV are the growth in market values of listed investments. You will see there in the middle of the graph, OUTsurance market value increased by 69%, and that represents approximately ZAR 27 per Remgro share. Discovery is up by 59% or approximately ZAR 6 per Remgro share. The net cash increased by ZAR 4 billion, mainly due to the proceeds of the sale of the FirstRand shares as well as the redemption of the preference shares amounting to ZAR 2.5 billion. The following graphs show the movement in the valuations and multiples of the five largest unlisted investments in Remgro's portfolio. These investments contribute just over 45% of Remgro's investment portfolio, representing approximately 82% of the unlisted portfolio. So the top five represents 82% of the unlisted portfolio. These graphs show all the multiples decreasing, reflecting both earnings recovery, growth of the assets and we believe an appropriately conservative valuation approach. The improved performance has the multiples reducing over time as the businesses increasingly start to deliver the earnings that underpin our valuations with the multiples also aligning to relevant market comparables. You will see that if you look at the slides per pillar that in addition to the intrinsic value and headline earnings disclosure per pillar, we also disclosed the cash dividends received for the financial year as well as the last 12 months headline earnings and dividend yield for improved transparency. The [ healthcare ] platform consisting of Mediclinic is the single biggest investment in Remgro's portfolio and contributes approximately 25% to INAV and 30% to headline earnings. Mediclinic is valued on a sum of the parts basis with a DCF underpinned of the business plans of the three regions as updated during the year, also moderated by a multiple-based market approach applicable to each region. The valuation benefited slightly from lower weighted average cost of capital in the South Africa and Switzerland against a slightly higher WACC in the Middle East. This is an independent valuation conducted by Deloitte as in the prior three periods. In dollar terms, the valuation increased by 4.7% year-on-year and 1.8% in rand terms. The valuation increase represents good delivery against this plan with pleasing performance across the business. Jurgens will expand on this later, but, in short, Middle East is a promising growth story. South Africa, a stable and consistent performer and Switzerland is making good progress on its recovery plan. The implied trailing EV/EBITDA multiple of 9.9x, and that's calculated with reference to Mediclinic's March 2025 published results and is a buildup of the three regions that are reflective of the relevant regions' particular dynamics and aligned to relevant peers in those regions. Jurgens will unpack Mediclinic's results later in the presentation. This platform consists of RCL Foods, Rainbow, Heine-Bev, Siqalo and Capevin and contributes approximately 15% to INAV and 26% to headline earnings with improved contributions from RCL Foods, Heine-Bev, Siqalo as well as Rainbow. Dividends contribution also improved due to the contributions by RCL Foods, Siqalo and Capevin compared to the comparative period. Paul will elaborate in more detail on RCL Foods results later in the presentation. If you look at Rainbow's results, Rainbow listed on the 1st of July 2024. The contribution by Rainbow increased substantially to ZAR 469 million from ZAR 145 million in the comparative period. Rainbow's revenue increased by 9%, and that was driven by a stronger sales performance, up 9.6% in the Chicken division, translating into an EBIT increase of approximately 300%. This strong financial performance was driven by enhanced capacity at Hammarsdale, better product mix and channel diversification with strategic customers. There was also additional improvement due to the enhanced agricultural and operational performance, lower commodity input costs and reduced expenses from loadshedding and the Avian Influenza. Further detail is included in Rainbow's results, which were published on the 28th of August. If you look at Heine-Bev, just some notes on Heine-Bev valuation. Remgro's valuation for its 18.8% interest in Heine-Bev decreased by 4.7% year-on-year. The slight decline in valuation is attributed to a combination of factors, including the continued constrained consumer environment in a highly competitive market across the categories within which Heine-Bev operates and a decrease in the terminal value growth rate as part of the continued process to standardize the valuation approach to all Remgro's unlisted valuations. The DCF valuation benefited slightly from a reduced WACC and the implied EV/EBITDA multiple of 9.6x compares favorably to the observed global peer set average multiple. Lucas and Jordi will elaborate in more detail on Heine-Bev's results later in the presentation. Siqalo Foods, if you look at the valuation there, the valuation increased by 5.1% year-on-year. This valuation is in the context of a persistently challenging trading environment marked by ongoing commodity cost pressures and constrained consumer spending. The valuation benefited from a slightly lower WACC with this benefit being offset by slightly moderated financial forecast and terminal value growth rate. The implied EV/EBITDA multiple of 8.8x compares favorably to the peer set considering Remgro's 100% control of Siqalo. From a results perspective, Siqalo Foods' headline earnings contribution amounts to ZAR 467 million, representing an increase of 3.3%. The trading environment showed signs of recovery during the period under review. And Siqalo was able to offset inflationary cost pressures through a focused savings agenda, and this allowed the business to drive profitable volume growth, resulting in a 1.1% increase in volumes and a 1.7% increase in operational EBITDA for the period. So overall, a pleasing set of results in a challenging trading environment. The Financial Services platform contributes 23% to INAV, 19% to headline earnings and 30% to dividends received at the center, mainly from OUTsurance. OUTsurance is the most significant investment here. Their contribution to headline earnings increased by 29% to ZAR 1.4 billion, and that was mainly due to OUTsurance Holdings normalized earnings increasing by 34%. The increase in earnings was driven by strong operational performances by Youi and OUTsurance South Africa. They released their year-end results on the 15th of September 2025. Infrastructure platform, just some notes on the CIVH valuation. The valuation methodology used is the sum of the past parts based on DCF. Valuation increased by 9% year-on-year to ZAR 15.8 billion. We continue to base the CIVH valuation on the longer-term business plans of the underlying operations, which are substantially unchanged year-on-year, but with operating assumptions refined where appropriate. Just to mention that this valuation does not include the addition of the assets and cash expected to be acquired by Maziv as part of the Vodacom transaction. Although the combined CIVH enterprise value benefited from a decrease in the WACC applied to a slightly moderated forecast for DFA and Vumatel, this increase was partially offset by a slight increase in the net debt with the overall equity value of CIVH before the application of discounts still up. The discounts applied to the equity value in absolute terms were largely in line with the prior year. The Remgro valuation implies a trailing EV/EBITDA multiple of 10.2x, well below the peer set multiple of 11.4x. This valuation of ZAR 15.8 billion is at a discount of approximately 25% to the value at which the Vodacom transaction was ultimately concluded. Dietlof will elaborate in more detail on CIVH's results in the presentation. Industrial platform or portfolio companies are mostly profitable on a sustainable basis and consistent dividend payers with high cash conversion ratios as seen in the contribution to headline earnings and dividends received with attractive earnings yield and dividend yields. The valuations are also not very demanding. Air Products valuation increased by 5.3% to ZAR 6.3 billion and is largely a result of an increase in free cash flow due to continued cost efficiency, the expected solid operational performance and reduced forecast risk assumptions. Total's valuation increased by 22% to ZAR 4.2 billion. The 2025 forecast shows improved cash flow driven by strong network fuel margins, annual fixed cost reductions, annual CapEx cuts, however, negatively impacted by lower sales volume. The decrease in WACC and higher net cash boosted the valuation, partly offset by a marketability discount applied for the first time now. If you look at the results, Air Products contribution to headline earnings increased by 13.6% to ZAR 643 million. Demand from large tonnage gas customers was generally stable, while the Packaged Gases business performed well. coupled with cost efficiency improvements leading to improvement in profitability. The contribution to Remgro's headline earnings by Total is ZAR 194 million, down from a profit of ZAR 553 million in 2024. Excluding the negative stock revaluations, TotalEnergies' contribution increased actually by 20%, mainly due to the scaling down of loss-making refining operations towards the second half of 2024 calendar year, partially offset by supply chain disruptions. The cash at the center increased by ZAR 1.5 billion to ZAR 8.3 billion. The net cash increased by ZAR 4 billion over the reporting period due to the redemption of the preference shares during the year. Then just on the dividends received evolution, the dividends from investee companies increased to ZAR 3.8 billion, representing a 24% increase year-on-year. And this increase was mainly driven by dividends received of ZAR 393 million from RCL Foods, no dividends was received in the previous financial year, and an increase in ordinary dividend of ZAR 254 million received from OUTsurance. OUTsurance also paid a special dividend, of which Remgro received ZAR 188 million. The cash flow bridge, the main driver of sustainable cash earnings at the center is dividends received this year amounting to ZAR 3.8 billion. We've also sold 31 million FirstRand shares for gross proceeds of ZAR 2.5 billion and utilized ZAR 2.5 billion to redeem the last tranche of the preference shares in December '24. Then final and the ordinary dividend. The Board declared a final ordinary dividend of ZAR 2.48 per share, up by 34.8% from the comparative period. So the total ordinary dividend for 2025, therefore, amounts to ZAR 3.44 per share, an increase of ZAR 0.33. And as Jannie mentioned, the Board also declared a special dividend, which they will utilize the proceeds of the sale of the BAT shares, amounting to ZAR 1.2 billion. So that brings me to the end of my presentation, and I will now hand over to Jurgens to talk to Mediclinic results. Petrus Myburgh: Thank you very much, Neville. Good morning, everyone, and thank you very much for your time and for the opportunity. To frame the discussion on Mediclinic, I'll provide a brief overview in industry-wide dynamics, with it also opportunities for new revenue streams. Our strategy is simply aimed at adapting our organization to this changing healthcare environment and preparing to take advantage of these emerging opportunities. To this end, we've already made significant strides in expanding our services to encompass prevention, treatment recovery and enhancement. This past year, we amplified our efforts to enhance operational excellence and adapt to the changing needs of our clients. We continue to focus our efforts around three key strategic goals. Firstly, to strengthen the core of the business, which includes adding new revenue streams, [Technical Difficulty] of care and responding to external pressures through enhanced efficiency. Our second goal is to focus on care, which involves focus on -- and to transform into a client-centered organization by ensuring our clinical care is at the center of all that we do. And our third strategic goal is differentiation on service, which is aimed at ensuring a long-term sustainable competitive advantage through robust service differentiation. With reference to the key priorities discussed at the previous results presentation, we continue to make good progress. In our results for the year ended 31 March 2025, which I'll discuss in more detail in a minute, we've seen strong volume growth across all three divisions and client settings. This is a testament to the operational capabilities of our teams as well as the strategic response to opportunities and challenges in our environment. Alongside strategy execution, we're prioritizing performance improvement through improved efficiency. As communicated during the Capital Markets Day, we're in the process of an operating model review aimed at inter alia driving efficiency, empowering facilities to pursue growth and being agile to respond to market changes. We are targeting total savings of $100 million by the end of our financial year 2027. To achieve this, each division as well as group has set clear objectives through defined initiatives over a 1- and 2-year horizon. This important project continues to receive group-wide attention and oversight. By way of tangible examples, we've already implemented streamlined and delayed governance and reduced our administrative staff component. Through a combination of growth and efficiency, together with disciplined capital allocation, we've reduced leverage and improved return on invested capital, with the latter admittedly not yet where we wanted to be, but seeing incremental improvement as indicated before. Going forward, the pressures of the healthcare environment will continue to put focus on efficiencies and our ability to adapt our cost base accordingly. We embrace this challenge with our disciplined approach to operating model review and actively seeking new revenue streams and finding ways of linking those activities to form healthcare ecosystems. To go into more detail on each of these priorities with each division in turn and starting with Switzerland, we continue to make progress both strategically and operationally to drive an improvement in the business. Our turnaround plan delivered CHF 25 million in savings in FY '25 with an aggregate target exceeding CHF 60 million. We've also made good progress in negotiations with insurers, although our efforts have been delayed in Western Switzerland through complicated and protracted negotiations on doctors' tariffs, which has impacted the entire industry in that region and with that, our FY '26 year-to-date performance. We expect this matter to be resolved in the next couple of months, following which we're targeting a normalization of our operations in this key part of the business. This is another instance where I think we have benefited greatly from our partnership with MSC. In addition to targeting operational efficiencies, we will continue to assess the appropriateness of our hospital portfolio in Switzerland as evidenced by the intended closure of Clinic Rosenberg this month, transferring as many of our activities as possible to nearby [ Stephanshorn ]. From a strategic perspective, we've set our sights on systemic relevance by building our business on delivery regions, driving at clinical powerhouses supported by medium-sized hospital and outpatient facilities, with the latter seen as an area of possible organic and/or acquisitive growth. Turning to the Southern African business. Our Southern African business continues to drive its process of optimization, digitalization and expansion across the continuum of care. Within the context of a challenging economic environment, we have seen strong volume growth on the back of selective network participation. We will continue to be judicious in our engagement with insurers, seeking a balance between volume and pricing. Our related business has now grown to the point of contributing the economics of a medium-sized hospital. We continue to see this as an opportunity to improve our services to clients through broadening our scope and with that increasing and diversifying our revenue. Our core systems replacement project continues to progress under the stewardship of a group-wide oversight to ensure learnings are shared between work streams. We expect this project to complete by the end of our financial year '28. We continue to see opportunities for expansion in our existing facilities and related businesses. This, together with our focus on cost management and efficiencies, will drive the strategic and operational delivery of our Southern African business in the coming years. Turning then to the Middle East, which continues to be a growth market for us. Within our hospitals, we've made positive changes to the specialty mix, improving services to our clients and incrementally increasing revenue. In addition, we followed a regional approach to building powerhouse hospitals, creating leading units or hospitals within the cluster. This improves quality of care and clinical outcomes and ultimately drives volumes for us. In June, we announced the consolidation of our two hospitals in the city of Abu Dhabi, Mediclinic Al Noor Hospital and Mediclinic Airport Hospital, into a single-integrated flagship-medical powerhouse at an expanded Airport Road campus. This strategic integration involves phasing out operations at Mediclinic Al Noor Hospital, which closed its doors earlier this month, and transferring clinical services and expertise to the enhanced Mediclinic Airport Road Hospital location, further strengthening operational efficiency and service delivery. The new consolidated 265-bed facility supported by an additional AED 122 million investment represents a significant commitment to clinical excellence, advanced infrastructure and superior patient experience. This period of consolidation will have a modest impact on our operating and financial performance in the medium term as we transition doctors and staff between facilities but is expected to deliver significant value in the medium to long term. Turning then to our results for financial year ended 31 March 2025 and starting with the group. The group delivered good results against the backdrop of persistently challenging operating environment, driven by strong volume growth across all divisions. Group revenue was up 5% at $4.8 billion and up 4% in constant currency terms. Inpatient admissions and day cases grew by 1.5% and 3.2%, respectively. Adjusted EBITDA was up 9% at $737 million. The group's adjusted EBITDA margin was 15.3%, reflecting good revenue growth and cost efficiency, partially offset by higher consumable supply costs, mainly because of ongoing mix changes. The increase in adjusted EBITDA, with broadly stable depreciation and amortization charges and finance costs, resulted in an adjusted earnings uplift of 21%. Cash and cash equivalents was $737 million at the end of the year, reflecting a high cash conversion of 104%, which is marginally ahead of our targeted 90% to 100%, mainly due to improved collections in Switzerland and the Middle East. The group's leverage ratio decreased to 3.1x at 31 March 2025 from 3.7x a year ago. With net incurred debt decreasing by $184 million, to just $1.35 billion -- just over $1.3 billion, I should say. Looking then at each division in turn and starting with Switzerland, where we continue to build the resilience that I outlined earlier. Revenue for the period increased by 2% to CHF 1.9 billion, reflecting good growth in inpatient admissions of 2.2%. The general insurance mix was marginally higher at 52.6% as growth in generally insured admissions exceeded that of supplementary insurance. The revenue growth delivered a 4% increase in adjusted EBITDA to CHF 266 million at an adjusted EBITDA margin of 13.7%, reflecting disciplined cost management, offset by higher consumable and supply costs driven by increased volumes and mix changes. As part of our year-end closing, we considered changes in the market and regulatory environment in Switzerland that affected key inputs to the estimate of future cash flows and earnings. This gave rise to impairment charges recorded against properties, equipment and vehicles of $195 million and against intangible assets of $84 million. In year-to-date trading, Switzerland, as I referenced earlier, has been impacted by the ongoing negotiations on doctor tariffs in Western Switzerland, affecting our hospitals, in particularly Geneva and Lausanne. Considering the anticipated resolution of this dispute, together with the good volume growth across the rest of the business and continued progress on our turnaround project, we're targeting low single-digit revenue growth and continued improvement in EBITDA margins in FY '26. Turning our attention to Southern Africa. Revenue for the period increased by 8% to ZAR 22.4 billion in a challenging economic environment. Compared with the prior year, paid patient days increased by 1.2% with day cases increasing by 3.2%. Occupancy improved to average 67.7% as admissions growth was partially offset by a 0.3% reduction in average length of stay. Average revenue per bed day was up 6.5% compared to the prior year, reflecting year-on-year price increases and also specialty mix changes. Adjusted EBITDA increased by 8% to ZAR 4.1 billion, resulting in adjusted EBITDA margin of 18.3%. In year-to-date trading, the division has continued to see steady growth in bed days sold and this, together with disciplined cost management, is targeted at delivering revenue growth ahead of inflation and an improvement in EBITDA margins. Finally, looking at the Middle East, where revenue growth for the period increased by 5% to AED 5.1 billion, driven by continued growth in client activity and increased pharmacy revenue. Inpatient admissions and day cases were up 4.8% and 3.5%, respectively, and outpatient cases, which contributes approximately 65% to revenue, increased by 1%. Adjusted EBITDA increased by 10% to AED 788 million, driven by revenue growth and strong cost discipline. The adjusted EBITDA margin increased to 15.4%. In year-to-date trading, the Middle East has experienced strong revenue and EBITDA growth, albeit on a comparative period that was impacted by flooding in April 2024. This strong growth is tempered by ongoing regulatory changes and a traditional second half seasonality. Excluding the consolidation in Abu Dhabi City that I referenced earlier, we target revenue growth in the mid- to upper-single digits, moderated at a divisional level to mid- to lower-single digits by the impact of the closing of the Al Noor Hospital and an incremental improvement in our EBITDA margin. And then to wrap up on Mediclinic. In summary, we remain focused on building out our revenue streams and improving operating performance. This will provide us with a robust position from which to execute on our strategic objectives to compete in a changing environment, take advantage of the opportunities and creating an ecosystem that enhances the quality of life. And with that, I'd like to hand over to Dietlof Mare to go through CIVH. Dietlof Mare: Thank you, Jurgens. Good morning, everybody. I would like to start the presentation focusing on a few strategic points. Then I would like to go into the operations and the market overview, touch on the financial performance and then the main key initiatives we're planning in the next short to medium term. If you look at the Maziv's strategy, we're looking at unlocking scale to deliver South Africa's fiber future. We're sitting in a country where the digital divide is big, and we believe that we can actually make a huge impact in closing that digital divide. We're doing that by combining enterprise stability on the one segment with 15,000 kilometers of metro fiber in covering basically all the main cities in South Africa as well as consumer growth where we cover basically 1.2 million homes in South Africa in the low-LSM and in the high-LSM areas. We believe that the opportunity is on scale expansion, and that's why strategically, we had to look at different ways of expanding this network across South Africa. Supported by the Vodacom transaction, Vodacom's investment will strengthen the balance sheet of Maziv. There's cash that will flow into Maziv. And with that cash, obviously, we will pay back some of the debt in the organization. The second part of the transaction is integrating the two assets that Vodacom will contribute. The assets will be fiber-to-the-home assets of 165,000 homes and then also 5,000 kilometers of metro fiber. And these are all revenue-generating assets that will immediately contribute to the EBITDA growth. Both debt-to-EBITDA then will obviously increase -- reduce and that will then allow us to have access to more capital, and we can expand and scale the network, building homes across -- and network across South Africa. The transaction also committed to -- we committed to 1 million homes that we will build over the next 5 years, spending committed to ZAR 9 billion of new infrastructure that we will build across South Africa. So very positive, I think, for the group, opens up and unlocks a lot of opportunities, driving the strategic objective of scale and expansion, closing that digital divide. From a DFA and enterprise point of view, the strategy for this year was to redesign and re-architecture and upgrade the network. So we focus on quality. We focused on customer experience, giving services to customers quicker from order to delivery date. And I think that was the big focus to differentiate on quality service, reliable service, redundancy and a future-proof network that can compete with the best in the world. We still, on top of that, connected 5,000 new -- net new enterprise links, a little bit lower than last year, but the focus was still on actually expanding this network and redesigning the architecture. From a Vumatel point of view, the strategy was not built this year. We only built 36,000 homes this year. At peak, 2, 3 years ago, we were building that a month. But this year, we focused more on the connectivity side. We could focus on the revenue-generating side of the asset, getting 133,000 net new subscribers onto the network versus the 106,000 previous year, which absolutely drives the strategy for us this year. The CapEx that we spent was on connectivity, last-mile connectivity, taking the homes passed and actually getting an active customer to the endpoint generating revenue. If I deep dive into Vumatel a little bit and look at the market, I think it was a phenomenal result. We increased our uptake from 36% to 42% across the blended base. Stable core growth. We've seen huge expansion and growth in reach, and then we're seeing the opportunities in the key market. Three segments in Vumatel core market, 2.2 million homes. These are households with incomes more than ZAR 30,000 monthly rent per month. The 2.2 million is -- market has matured. It's penetrated. There's actually 33% -- 34% of this market is overbuilt. And we have a market share of 41% of this market. If you take that and look at that on the FNOs in the market, there's more than 70 FNOs in the market, of which 10 of those FNOs are substantial big FNOs. We're still sitting with a 41% market in this segment. And that's because of first-mover advantage and the knowledge of deployment -- early deployment of network in South Africa. On the uptake side, we saw a 2% uptake, taking the uptake to 45%, which is very positive. And we're also seeing our subscriber numbers growing by 4% year-on-year, reaching over 400,000 active subscribers on the network, roughly 900,000 homes in this market -- on the Vuma network. From a reach point of view, 4.8 million market size. These are homes between ZAR 5,000 and ZAR 30,000 monthly rent income per month. This is a growth engine at this point. Small overbuilt, only 1.7 million of these 4.8 million homes have a fiber line that passes that. We have got a 55% market share up to -- between a 55% and a 60% market share in this market. 1.1 million homes that we've built, not a lot of [ built ] happening during the year. A small portion was built that was just closing off projects. But what we've seen that we believe is phenomenal was, in line with the uptake strategy, we saw a growth of 32% on subscribers for the full year, taking it to 443,000 active customers on the network, bigger than the core network at this point, which is for us a big achievement. Uptake also 9%, up year-on-year from 31% to 40%, which is quite a remarkable result. On the key market, this is the untouched market. This is where the scale will happen, 9.7 million homes, very low income, monthly income, under ZAR 5,000 rent per household. Big, large opportunity remains. And if we want to close the digital divide, this is where we have to make the impact. Only 200,000 of these homes have got a fiber line to it, or option of a fiber line to it. We got a market share of 13% of this. And if you go look at the figures, it's still small amounts, only 30,000 homes passed. But more remarkable is the uptake ratios on this is, 43.6%, which is the highest of all our segments. And the time to get this penetration was also the quickest ever, meaning that the need is there for people to be connected in these segments. And I also think this is the opportunity. So we're building our network in Vumatel on first-mover advantage. I think that is critical. We've got 2.1 million homes covered. Two focus areas, drive uptake in the short to medium term and then also expand into these opportunistic markets where we can drive future growth and change South Africa. From a DFA enterprise and carrier point of view, this is the anchor business. It's critical to the 5G rollout. And as we see 5G is expanding, a lot of excitement is around the 5G densification around the world actually and also in South Africa. And fiber to the site is very critical. We've got 47,000 sites in South Africa linked to all the MNOs and the fixed wireless access providers. And we're playing a big part in that. Remember, that's how DFA start, was following the towers and then we expanded from towers into metro into connecting the businesses. These are long-term contracts with MNOs and fixed wireless access providers, which is a very secure business. It's an anchor business for us, long-term 15-year, 20-year contracts, high ARPU and high revenue-generation assets. It's crucial that we enable the 5G rollout and basically 1/3 of these sites are still linked to microwave and the opportunity is there then to obviously convert these microwave sites to fiber in the future. We just have to get the model right. So 12,500 sites connected, 2% year-on-year growth, and we're seeing very stable ARPU, long-term contract scenario in this segment. Business connectivity, 424,000 business connections across South Africa. And we're approaching this in two ways, tying up the metro fiber, linking up businesses and linking up the infrastructure within the metros itself. And this enables us then to obviously get to the fiber to the sites, fiber to the business and then fiber to the homes. And as you expand the fiber to the sites, it obviously opens up more areas to actually connect businesses and also fiber-to-the-home sites in more rural and remote areas in South Africa. We've seen a strong small, medium and enterprise demand for affordable business services where people are moving away from a best effort service, more to a quality service. And that's why we decided to upgrade the network, redesign the network and re-architecture the network to actually address this segment within South Africa because we believe that in time, every business will have a quality service linked to that business because of connectivity and the importance of connectivity to do business in South Africa and compete with the rest of the world. From a financial point of view, if you look at the year ended 31st of March 2025, strong results from Vumatel. You're looking at revenue growing 8% year-on-year to ZAR 3.8 billion. EBITDA growing 11% to ZAR 2.7 billion, very good EBITDA margins within the business. You're seeing operating earnings growing 15% to ZAR 1.3 billion, and you're seeing very good operating leverage coming through in the organization. Headline earnings, 46%, better than the previous year, still ZAR 202 million negative, but you're seeing this trend going positive, and we believe this trend will continue in the near future, which is quite positive. From a DFA carrier and enterprise point of view, revenue 2% up, strong solid revenue. EBITDA flat, and the reason for this was the maintenance and the upgrades and the teams that we had to push into the market into Gauteng specifically to re-architecture and build these networks. We had to do that with additional security because we could only do the upgrades and rehabilitation at night. So we had to put big security teams next to the technicians to actually execute on this. We believe that this will normalize, and this will return to normal in the foreseeable future, in the near future, and we will turn back to our EBITDA growth year-on-year from next year. Operating earnings, 4%, up to ZAR 1.1 billion. And then we're also seeing headline earnings 7%, up to ZAR 370 million year-on-year. Community Investment, CIVH, I think underpinned by the two operating companies: revenue up 6%, to ZAR 6.7 billion; EBITDA 9%, up to ZAR 4.6 billion; operating earnings 11%, operating leverage good. And then you're seeing headline earnings negative 22%, and that's mainly due to interest and then also project costs on the Vodacom and the EUROTEL deal, and we believe that will normalize in the near future. From a cash flow point of view, very, very strong cash generation. We're seeing ZAR 1.5 billion additional cash generated for the year-on-year. So very strong net cash surplus, ZAR 620 million, and that is driven on basically through three pillars. We're seeing EBITDA growth, year-on-year EBITDA growth positive. We've seen very prudent, smart CapEx spend on revenue-generating assets, getting connections up, getting uptake up, getting the penetration to generate revenue. And then, working capital discipline. I think a huge effort within the organization to get the working capital discipline in and that we believe will continue going forward, but a very good story on generating ZAR 1.5 billion additional cash for the year. Corporate activities linked to the strategy, expanding scale, strengthening the capital base to accelerate bridging the digital device. And I think that's the critical thing for us as a group. Two corporate activities that's in process, Vodacom investment in Maziv. I think everybody has read about this in the newspapers for the last 3 years, but conditional approval granted by the Competition Commission Appeal Court. I think if you look at the conditions, I think there's a very good balance between the public interest, benefits and the competition concerns, and a lot of work went into actually aligning those two elements of the deal. ICASA still has to approve this. It's pending ICASA. We don't believe that will take too long, and we're planning to actually get the implementation -- targeted implementation date in on the 1st of November 2025. That obviously will kick off a few actions. We will have to rapidly integrate the assets to maximize EBITDA. We've got these two assets, 5,000 kilometers of metro fiber that we will have to integrate into the network. We got 165,000, nearly 3,000 kilometers of fiber-to-the-home assets that we will have to integrate as quickly as possible. And we will have to execute this as quick as possible because immediately, we will see a revenue and EBITDA uplift because these are revenue-generating assets. The key terms of the deal, Maziv equity value was valued at ZAR 36 billion that included the EUROTEL stake. Vodacom will contribute ZAR 6.1 billion in cash into Maziv and then ZAR 4.9 billion fiber assets, which has been the transfer assets and the fiber-to-the-home assets. A pre-implementation dividend of about ZAR 4.2 billion will be payable to CIVH, and then Vodacom will hold 30% initially, with shares in Maziv, with the option then to increase to 34.95% in future. Acquisition of the additional stake in EUROTEL, it's also very key for us as a strategic pillar within the organization, linking up to scale and then also accelerating the bridge of the digital divide. Competition Commission recommended this for approval and referred this then to the competition tribunal where we have to then follow the normal process. And we believe that is being kicked off at this point. We're waiting for a date for the tribunal still, but I believe that will be fast tracked. And soon, we will actually be at a position where we can give more detail on what's happening there. I think the significance of this deal is the assets in EUROTEL complements the Vumatel assets, and it builds out our scale. So it covers underserved markets where we are not, as a Vumatel, at this point, but it opens up nearly 500 towns or more than 500 towns across South Africa where we can then start building out these different solutions we have on the fiber and connecting different types of LSM households. I think built on this, if you look at our network, you look at our uptake, and you look at the structures, you look at how we're actually driving the scale, I think this is a very good future. There's a very good future for the organization to grow to scale and to close the digital divide and connect South Africa. Thank you, and I would like to hand over to Paul from RCL. Jordi Borrut: I think we will start from Heineken Beverages, right? So thanks, James. And allow me to, in the next few minutes, present the performance of Heineken Beverages and its finance together with my CFO, Lucas Verwey. So moving to the recap of the strategic rationale. It is important to reflect on the fact that this integration of -- with the 3 companies provides a strong opportunity for value creation and growth. First, because it allows us to tap into growing markets in the Southern and Eastern Africa with a combined population of nearly 300 million inhabitants, including South Africa. And secondly, because it combines -- it complements beautifully the portfolios of the 3 companies, allowing us to position #1 or 2 brands in all categories, ciders, beer, wines and spirits with a stronger scale in South Africa, which none of the 2 companies had priorly, giving us a challenger opportunity that we did not have before. It also leverages the strengths of both companies, the global scale, best practices, portfolio partnerships and sponsorships of Heineken with a deep expertise of Distell in the Beyond beer portfolio, which suits the Heineken recent global ambition to expand in Beyond beer. Fair to say that the disruption phase is now at its end. It's been 2 years since the integration. So we've changed and moved from a focus on systems integration and structures much more into market expansion, customers and consumers. Moving to the next slide. So talking about focus on the market. In the recent momentum in the last 6 months, we've seen an improved momentum of our business despite the fact that Jannie mentioned that the market context is challenging with a slower alcohol growth and also the entry of low-cost players that come at low entry points. Nevertheless, we've been able to turn around our beer performance with share stabilization and some gains in beer, which was a key focus for us. A significant improved margins across the 4 categories with a combination of moderate pricing and strong efforts in our variable expenses, fixed expenses below inflation, which is a testimony of the efficiencies and synergies that we can still tap, thanks to the combination of the 3 companies. From a growth perspective, what you see is that the companies in Namibia is showing -- continues to show a very resilient and solid market share, growth and margin expansion. And we continue a very strong growth also in international markets with a stronger momentum, as I mentioned, in South Africa. If we move to the next one, specifically on South Africa, what you see is our key priorities for South Africa remain unchanged. The first one is to win in beer, and that's because our total alcohol share in South Africa, which is above 30%, is not translated yet in beer, where we are -- market share is below 20%. So we've got a significant opportunity to grow in beer, and we're well positioned now with the integration and the brands that we have and also the route to market to do so. The second one is to build brands with pricing power, which is a reflection of our intent to focus amongst the 60 brands that we currently sell and distribute into 13 of them to invest behind these 13 brands in significantly more ABTL to make sure that we have the strength of the brand and the pricing power behind the brands, whilst we continue to trade with the rest of the brands. And those are brands like Savanna, Heineken, Bernini, Amarula, just to mention a few. The third one is to create a direct connection with our end customers, leveraging digitization, but as well as joint business plan with key customers now that we have the scale and the opportunity for growth for these customers as joint business we can see much better opportunities to joint business plan and to co-create growth with these key customers. The fourth one is the operational efficiency. As I mentioned before, both in variable and fixed expenses, we are seeing a significant effort, and we will continue to do so in the years to come. All that cemented with our winning competitive spirit, which is a key enabler, and it talks about the resilience and the engagement of our employees, we've seen post-integration over the last 2 years and improved in our engagement scores, we've measured that for the last 2 years 4 times. And in the 4 times, we've seen improved engagement, which is a testimony of the better momentum and mood of the company. I'll now pass over to Lucas to talk to us more detail on the financials. Lucas Verwey: Thanks, Jordi. Good morning, everyone. This slide shows the financial view of the Heineken Beverages Group, including Namibia Breweries. The financial overview for the 12 months ending June '25 shows very solid progress. Revenue grew by 8%, reaching over ZAR 55 billion, while the reported headline loss narrowed dramatically by ZAR 2.9 billion, signaling improved operational efficiencies and profitability. Our normalized headline earnings turned positive for the first time to ZAR 611 million. The market share in beer has stabilized and margin improvements, like Jordi said, have been achieved through initiatives like our returnable packaging program for mainly bottles and crates. Despite our limiting pricing power due to competitive pressures, cost savings measures have protected our profit. The business remains cash flow positive with stable net debt, positioning it well to capitalize on growth opportunities in South Africa and other African markets, following a complex 2-year integration period. Next slide. You can see the graphs show the revenue contribution by category and also the revenue growth by category on the left-hand side. The revenue growth was achieved across all categories with single to double-digit increases, reflecting very strong brand investment and market dynamics. Beer revenue stabilized, thanks to brand support and returnable packaging, which also helped improve the margin. The cider category continues to expand rapidly with Savanna now the largest cider brand globally by volume and value, and Bernini emerging as a standout performer. Spirits, spirits remain important for profitability despite significant pricing pressures. And on wine, while the premium wine faced challenges as consumer shifts towards more mainstream options. The next slide shows the revenue contribution now by region. So obviously, we've got Heineken Beverages SA business, the Heineken Beverages International business and Namibia Breweries. As you can see there, South Africa remains the dominant contributor to Heineken Beverages, revenue and profit, also producing export stock for other regions. The Namibia business, led by Windhoek and Savanna is profitable and provides operational benefits. The NBL portfolio is growing in volume validating the strategic rationale for Heineken Beverages. HBI, or the international business, has high single-digit volume growth across key African regions, highlighting significant expansion potential, supported by local production capabilities and export opportunities. The geographic and product diversity strengthens the company's position and supports long-term growth ambition across the African continent. This slide here, we detail the movement in reported headline loss for Heineken Beverages, including the Remgro IFRS adjustment. The significant reduction in headline loss from F '24 to F '25 as a result of significant improved earnings before tax of ZAR 2.1 billion. The depreciation and amortization on the purchase price adjustment, or the PPA, is also ZAR 720 million less than the prior year, and that's mainly due to the inventory realizations for ciders and wines coming to an end. The financial improvement underscores the company's progress in stabilizing operations and enhancing profitability following the integration, as we said. Here, we see a waterfall between the reported headline earnings and normalized headline earnings. Excluding the depreciation and amortization on the purchase price allocation, the headline earnings increased to ZAR 479 million. Nonrecurring expenses mainly cover transaction-related restructuring costs and integration efforts. After accounting for all of these items, the normalized headline earnings showed a strong positive turnaround to almost ZAR 611 million from a loss of ZAR 268 million in the prior year. Thank you. I hand over back to Jordi. Jordi Borrut: Thank you, Lucas. So moving ahead, we still see a changing market dynamics and a challenging market dynamics that set to persist, both by a softening of the alcohol market and by the entry players at low cost, but we have a delivery focus to mitigate some of these impacts. One is the stabilization and the expectation to continue our momentum in beer, a strong innovation pipeline, which has proven to successfully deliver strong gains, pricing dynamics that we can leverage, thanks to the multiplicity of our SKUs and brands, which allows us to play smartly with pricing across the broadest of our portfolio, a continuous obsession on fixed cost savings as we've been doing for a route-to-market transformation as I also explained. It's important to say that we've recovered margin despite a continuous and strengthened investment behind our brands, our ABTL investment has increased over the last 12 months and will continue to increase as we want to focus deliberately in building strong brands. We're now here for the peak performance, which happens between now, September, October, until the end of the year. We're ready for it. And this is the period where we make most of the profit from the company in these last 3, 4 months. Last, but not least, we are very satisfied with our change in our sales focus, from a regional focus to a channel focus, meaning that we've structured our sales force now to be focused on different channels, and we've seen very positive outcomes of that shift, and we will continue with that focus on a channel basis moving forward. Thank you so much. P. Cruickshank: Good morning, everybody. Nice to have the opportunity to add some color to the RCL Foods results, which we published on the 1st of September. Just starting with the strategic overview, and we progressed well against our strategy, which is -- consists of 3 pillars: People First, Right Growth and Future Fit. And I'll just comment on each one in terms of the progress made, but it's also supported by nonstrategic enablers, which are consistent with what we showed in the prior. People First, good progress being made in this pillar. Right growth is challenged due to lower demand, and I'll speak more to the market conditions in the food sector just now, and then, Future Fit, with the context of the tough economic conditions, which we mentioned many times this morning, we've significantly dialed up focus in this area and have made good progress in F '25 results. Just talking to the highlights of F '25. As mentioned previously, the strategy is consistent with prior years and clear, and we've shifted our focus on execution in F '25 and delivered a pleasing set of results despite the market conditions. Just to unpack some of the F '25 strategic priorities that were delivered in a little bit more detail, as context to the numbers, starting with People First, we implemented customized diversity and inclusion plans across our various operating units. We have a diverse business across many provinces, and each plant requires a unique plan, which we've made good progress in implementing. We've shifted culture -- our culture to drive high-performance culture, and this is an individual person level as well as the collective, and we're seeing benefits of that come through in our results. From a Right Growth point of view, net revenue management has delivered savings in the current year, and we've made pleasing progress in this regard. Baking has some key innovation projects, which will be delivered in F '26, but significant progress was made in those projects in F '25 and position us well for the innovation launches which are to come. And then finally, it's not all about growth and innovation, the core is a major part of our business, and we are focused on profitability in the core, particularly in Pet and Bread, and this has yielded positive results in F '25. And in Future Fit, we delivered significant value in our Continuous Improvement program. And as mentioned previously, you need to focus on within when you don't have growth to offset some of your costs, which are coming at you. And these initiatives will continue into F '26. We have a strong pipeline of opportunity there. We have delivered overhead savings in F '25 to address the lost synergies as a result of the Vector sale and the Rainbow separation with the final unbundling step at the end of this financial year with regards to services, which continue to be provided to Rainbow. And then finally, whilst not often spoken about, we implemented successfully Phase 1 of our Group's SAP IT rollout with the conversion of our main operating engine to S/4HANA, which positioned us well for our future years from a system perspective. Then just touching on the numbers and focusing on underlying results, revenue largely muted as a result of the market conditions, improvements in EBITDA and our margin improving 0.5% and pleasing the headline earnings up 14.9%. Important internal measure for us, which we drive all the way down to an operating unit level, is our return on invested capital, and you'll see that whatever metric you look at in F '25, both of them are now above our weighted average cost of capital, which is pleasing. Some market context, Food volume consumption remains under significant pressure. Just starting with inflation on the left-hand side of the chart, you can see Food and then unpacking Staples and then Food excluding Staples. You can see very small inflation revenue numbers coming through in there, which is below the target range of 3% to 6%. This is also impacted by volume. And you can see across various metrics, volume has remained challenged, particularly in Staples, and I have consistently raised the concern when volume in Staples is negative. And you can see which -- over the period, 12-month moving average minus 2.8%, in the more recent period 5.5% in Staples. Some volume growth in the high end of the market with regards to Food of 1.7% for the 12 months to June. On the right-hand side, we unpacked the Food volume trend over a 2-year period. Just a reminder, this date had come from Ask’d, which supports 80% of the food manufacturers, so it's volume out from food manufacturers. And you can see the last 6 months all months in negative territory barring one in June, and this trend has continued down to FY '26. So the market remains very challenged from a food consumption perspective. Just moving into RCL Foods market share performance within that context, pleased to say that our brands continue to hold up well despite the market conditions, but our market shares across a number of them improving in the period. I'd just like to call out 2, which are worth noting. One is the Nola Mayonnaise movement from last year's 47.4%, down to 42.5%. At interim, I did state that we were comfortable with this and remain comfortable with this because the right range for Nola Mayonnaise is between 41% and 43% market share. So that is a clear strategic move to improve margin over the period. And then the others worth calling out is Feline and Canine Cuisine, both of them in the Premium Pet Food sector in retail, and you're seeing nice market share growth, and I'll come back to that later in terms of the Pet performance. Our EBITDA performance and waterfall for the year, the outer bar showing the statutory performance, and I'll just comment on the material bars in between. And the middle section showing our underlying EBITDA performance, which unpacks our operating view, which are up 7.9%, with the statutory number up 11.4%. Some of the material numbers in the statutory reconciliation relate to insurance claims, the Komati being one and floods in Komati area being the other. The other one that's worth calling out is the ZAR 91 million special levy recovery, which relates to the business rescue process for Gledhow and Tongaat. And it's probably worth spending a second just to update everybody where we are there. That ZAR 91 million did come through in H1 of F '25, and that was money that was held at SASA with regards to exports and that was payable to the other millers and growers within the industry. Just an update on the process, Gledhow is on a payment term, and the first payment was made in F '25, and there's 2 more years for them to repay that outstanding levy. The Tongaat portion remains subject to the appeal case, which will be heard in the Supreme Court. We still remain hopeful this side of the calendar year, but certainly early in 2026 calendar. Tongaat to exit business rescue will need to pay ZAR 517 million into an escrow account. And we also believe that, that process is imminent, and then, the recovery of that money was subject to the court case. We remain confident in our perspective, our legal view on this case. In the operating view, I'll talk to the business units on the next slide, but just to mention growth, I spoke earlier about the overhead savings, and you see that coming through in the group line showing a profit or movement of ZAR 62 million versus the prior year as well as unallocated restructuring costs, which we've managed to reduce our cost base to offset Vector and Rainbow. A long-term historical perspective of our performance at RCL Foods, so taking out the businesses which are now being separated, starting with F '21 through to F '25. F '21, just a reminder, was a COVID year, so significant tailwinds from a food consumption perspective. I think what I just want to mention here is the makeup of the results and the quality of the earnings that underpin F '21 versus F '25, and you can see growth coming through. But in F '21, our Groceries and Baking business units made up 50% of our EBITDA, and F '25, they make up 60% of EBITDA. And this is despite a very good profit performance on sugar, which I'll contextualize in the next slide. So we're making progress in terms of our shape of our portfolio with a lot of our focus and innovation coming through in Baking and Groceries. And then just to touch on each business unit's performance briefly, you'll see a nice uptick in the EBITDA numbers for Groceries and Baking, 25.5% Groceries and 55.1% in Baking, with sugar down 22.3%, but it's worth noting that sugar is nearly ZAR 1.1 billion EBITDA for F '25 is the fourth highest profit in its history. So still a significant performance. Just touching on each one briefly, Groceries, I mentioned earlier around Pet Food driving premium brands, and you can see that payable product mix driving some of the improved performance. NRM and continuous improvement initiatives playing a role here as well as production efficiencies and to some extent reduced load shedding costs of not having to run those diesel generators in our Randfontein plant. From a baking point of view, strong turnaround across all operating units. We saw volume growth in Pies and Specialties, only 2 operating units across the group that saw volume growth in the year, and Milling benefited from improved pricing. Bread reported a significant turnaround in EBITDA. I must acknowledge it's off a very low base, and a lot of work continues to happen in Bread to turn this business around and position ourselves differently within the market. And then from a sugar point of view, we've seen pleasing agricultural performance and manufacturing operational performance in FY '25, particularly out of -- our biggest plant being Malelane, opportunities that exist there to continue that improved trajectory. And we're seeing good crop and good yields come through in the first part of season '26. There is some risk in sugar. In the last 6 months of the financial year, we saw reduced consumer demand and a significant increase in imports, which is a concern to us. Just looking forward, I've given the context of consumer demand. We don't see any change to that. And as I mentioned, we're seeing that trend continue into the first couple of months of the new financial year. And we will continue to focus and drive our strategy, which is a focus on business resilience. And in pockets of growth, where there is, we will take advantage of that. Just 3 things I want to mention on the slide. The first one is Sugar. We are expecting the less favorable market conditions from H2 to continue. Significant work is happening between SASA and ITAC to reduce the impact of the import risk. That is a process which needs to be followed and at best will be resolved sometime towards the end of Q1 of 2026 calendar year. So there is risk in sugar. We will, as a consequence of that, give a strong emphasis to our internal items, which we can control. Then the last 2 to call out, I mentioned the key innovation launches in Grocery and Baking. They will not drive significant value in F '26, but remain key enablers for improved performance into the medium term, and we are well progressed and on track with those projects. And then finally, we have refreshed our Pet Food strategy and are busy implementing that, and this is to make sure that we are well positioned to play our profitable brands in the channel shift, which is currently taking place in Pet to the Specialty Pet stores, which are busy being rolled out by our major retailers. And with that, I'll hand back to Jannie. Jan Durand: Our priorities remain as stated, as we've explained, Carel explained at the beginning of the presentation. So they won't change. But in their nature, we must remember, they are not binary, most of them are long term and require continuous attention. Even so, today, we spoke to some of the notable improvements we've made as evidenced by our pleasing results. We're happy to celebrate the gains, as it keeps the teams motivated and up to new challenges. Looking at the year ahead, I'm excited to continue building on the progress of the current year, notably through continued active partnership with our management teams and co-shareholders to drive sustainable performance in our underlying portfolio. The positive momentum we have seen in this financial year, I'm pleased to report that it continued across the majority of our portfolio in the first few months of the current financial year. However, we will continue on our path of sharpening and simplifying the Remgro portfolio as well as in seeking out capital allocation opportunities that will create sustainable value for our shareholders. No doubt, our refined capital allocation plan will be central to the value unlock phase of our journey. This includes our continuing journey of simplifying our portfolio. On our sustainability priorities, we remain focused on strengthening disclosure, including alignment on key ESG indicators to be monitored across the group. A key priority will be able to deepen the risk component of our climate reporting through scenario analysis and stronger risk management processes. This will enable us as a holding company to better understand the risks we face and to support our investee companies in addressing them effectively. These remain the 3 key immediate priorities for us as a management team, which we believe, if done right, will aid our efforts in achieving our goal of crystallizing value for our shareholders. Beyond our portfolio, South Africa's muted GDP growth, strained consumer sentiment, high employment -- unemployment rate and economic reform, progress continues to pose some challenges. The implementation of significant U.S.A. import tariffs will also magnify this impact, the quantum which is very difficult to predict right now. Our portfolio is certainly not immune from this impact. We are not naive about the magnitude of some of the challenges that we continue to face and understand these will test our resilience and require some creative solutions. Our team, however, remains up for the challenge, and I remain confident that our mindset of realistic optimism will be impactful. This will enable us to make a positive contribution for the benefit of our shareholders and the wider community in which we operate in, in line with our purpose. I'm personally very grateful for all the tireless efforts of my team and all our partners, and I'm equally pleased with what we've been able to deliver so far, as evidenced by the results we have presented today. It would be obviously very unfair to single out anyone, but I think it will be remiss of me not to make special mention here of Peter Uys who retired in August. Peter has been a stalwart in our teams and joining us from Vodacom 12 years ago. But I think it's fair to say that there is efforts and determination in getting the CIVH and Vodacom deal to a point where it looks highly likely was a true evidence of his character and a great example for all of us at Remgro. It took nearly 5 years. Thank you now for your time. We will now open the floor for questions, and hopefully, we can answer all of them. Thank you very much. Operator: [Operator Instructions] At this moment, I will hand over for written questions submitted via the webcast. Lwanda Zingitwa: Jannie, we have a few questions on the webcast. Maybe to start, and I think, Carel, you covered this in the slide, but maybe we can add a bit of color because there's a few questions around capital allocation priorities in the group and given the amount of cash that we have and that we're likely to get if the CIVH deal goes ahead. And linked to that, with the announcement of a special dividend makes sense at a 40% discount versus having done a share buyback. Carel Petrus Vosloo: Thanks, Lwanda. Maybe to deal with the second part of that question first, the question of a share buyback versus a special dividend. I think it's fair to say both of those things are ways of returning capital to shareholders. We've got shareholders that would prefer us to do buybacks. We've got others that would prefer cash. I will say that those that prefer us to do buybacks are typically more vocal than the ones who prefer the cash. But you can get roughly to the same outcome if you're a shareholder that prefers to do a buyback is to take your cash and then reinvest that and buy shares. So that gets you, as I say, remotely to a similar place maybe with the exception of withholding tax, if you are a shareholder that pays withholding tax, but you do get a base cost uplift. So in the end it sort of almost washes out. But I don't think we're committed to only the one or the other and maybe this answers the earlier part of the question that the capital allocation priorities and how we move forward is high on the agenda of the management team and indeed the Board, so it's a live discussion. The reference to the CIVH-Vodacom transaction is important because that is an important milestone that changes the outlook for capital at the center. That did only happen after -- well, the competition appeals court approval was after year end, and we're still awaiting the ICASA approval. So that's not fully in the bag yet. But as I say, it's an ongoing conversation, and we are very mindful of the implications for -- as I say, for Remgro in the long term and short term and also for shareholders. So it's getting a lot of attention. Lwanda Zingitwa: Thanks, Carel. And while we talk about value creation, Jannie, there's a question on OUTsurance having grown to be our second largest investment and whether there's consideration to unbundle that, which would unlock about ZAR 14 billion of value for shareholders. Jan Durand: I think I've said that at the Capital Markets Day as well. OUTsurance remains a core asset of Remgro, certainly part of our longer-term strategy. So our capital allocation, not just focus on short term, it also look at the longer-term things and what we see as the longer-term Remgro strategy. So certainly, OUTsurance is still part of our investment thesis. Lwanda Zingitwa: And maybe last question for now on capital allocation, Carel, having unbundled eMedia and the sale of BAT and Grindrod, can there be an expectation when you talk about front-footedness that we are going to see more rationalization of the portfolio? And linked to that, what plans we have for the remainder of the FirstRand stake? Carel Petrus Vosloo: It's certainly, Lwanda, I think a path that we are committed to continuing on. I think it was last year this time that we said, when nothing is happening, we mustn't assume that nothing is in the works. So on this topic, I feel a bit like that analogy of the duck that's swimming above the water looks very calm, but there's a lot happening underwater. So it is something that I can reassure investors that we -- that it's an area of focus. It gets a lot of attention. I'll also acknowledge the things we did this year, selling FirstRand shares or selling BAT shares are relatively easy things to do. EMedia, perhaps a little bit more complicated, but again, there was a route to a capital market exit. So it wasn't that difficult. Some of the other things are more difficult. So they take more time. But what I can definitely say is that it's our objective we committed to you. There's lots of effort going into it. As for FirstRand, we're not -- I think we've shown a hand at the right price. We were a seller of shares. I think it was around ZAR 84 that we realized shares in the last year. But it also does depend on the use of funds. So it's -- FirstRand remains a great investment, a great company. So it's not something that's burning our pocket, but we'll continue to watch that space. Lwanda Zingitwa: Thanks, Carel. Jurgens, on Mediclinic, a few questions around Spire and the strategic review that's currently at play and how Mediclinic thinks about its stake in Spire given what that process entails? Petrus Myburgh: Thank you, Lwanda. Yes, we're, of course, very aware of the dynamic around Spire and the announcement that came out last week. I would say that following that announcement, according to the U.K. takeover rules, Spire is in an offer period, which place a restriction on what we can and cannot say. What I will say, and what we've said often, is that we continue to be a supportive shareholder of Spire in respect of the continued execution of the strategy in the first instance and the cost-saving initiatives that they continue to be on a path with aimed at saving a net number of GBP 60 million in the cost base. But also the rollout across other areas of the business, the acquisition of Vita, the continued rollout of day surgery facilities. This is something that we're very supportive of. Other than that, we continue to support the management team, and we continue to focus on the interest of all stakeholders, but also looking to drive long-term shareholder value for the business as well. Lwanda Zingitwa: Thank you, Jurgens. And to Lucas or Jordi online, there's a question on Heineken Beverages. Where are we from an EBITDA margin perspective today versus what the target is? And are you able to talk a little bit more around the trajectory and timelines for that margin recovery? Lucas Verwey: Thanks, Lwanda. I can start here. Jordi will also chip in. That EBIT or our EBITDA margin is the conundrum we face every day. So pricing and margin versus market share is basically the same side -- or 2 sides of the same coin. So every day, we battle with that. Currently, we're coming off a low base. We just provide context. We went through integration, so there's some disruption there. What I can say is that F '25 full year for the Heineken Beverages financial year-end, we will have doubled our EBIT margin. And obviously, just for reference, in our EBIT margin, we have ZAR 2.5 billion of depreciation. So if you want to work back to EBITDA margin, you can. Then long term -- and also the second factor that impacted us heavily is the massive discounting in the market currently from all players in the beer market, ciders and spirits and wines. So all areas, we had significant discounting preventing us from taking a lot of price, and therefore, passing on some of the cost pressures to the consumer. So we had to sort of balance pricing to maintain and stabilize our market shares over the past 2 years. Going forward, the long-term trajectory, the EBIT type margins that we're looking at from a sort of a Heineken Global perspective is around 15-odd percent. So the evolution is to get to that double-digit number in due course in the next 2 or 3 years. Lwanda Zingitwa: Thank you, Lucas. And back to Carel and Neville, just a confirmation of what price we hold the Capevin stake at and whether you can comment a little bit on how it has gone with having Campari as a co-shareholder in Capevin and plans going forward. Carel Petrus Vosloo: Neville, you must correct me, but it's ZAR 15 and some change, I think, is the price that we hold it at. So -- there we go, ZAR 15.45. So not a million miles away from the price that was originally put on the deal as part of the larger restructuring. And as far as Campari as a co-shareholder, they've been incredibly constructive. We've worked well alongside them. They seem to have the same regard for the value of the brands and the assets that we have there. Obviously, the whiskey market is in a slump, and it's a cycle that we will see through. But yes, certainly, there's good efforts going into making sure that we manage those assets to ensure their long-term value, and Campari is on the same page as us in that respect. Lwanda Zingitwa: Thanks, Carel. There are no questions at this stage on the webcast, except for comments to say congratulations on an excellent set of results and a few thank yous for the special dividend. Can we ask for questions on the Chorus Call line? Operator: A question comes from Rey Wium of Anchor Stockbrokers. Rey Wium: Jannie, Neville, Carel, you have touched on -- I think it's on Slide 10, but I just want to get a feel -- I mean, obviously, I'm fully supportive of what's been happening here. The investment activity over the past 2 years have been fairly muted. I think it's like ZAR 300 million and ZAR 500 million plus/minus over the past year. So it looks like the focus has been on the debt reduction, which is great. So I just want to know whether the capital allocation will continue in the short to medium term to be more -- basically supportive of the existing investments in your various pillars as opposed to looking for new outside opportunities. So I just want to get an idea around that. And then maybe just a quick one on -- I mean, it's obviously still dependent on the approval of the Maziv transaction. But I mean, if Vodacom decides to top up their stake to 34.95%, my understanding is that they will purchase that directly from Remgro. So let's assume that, that does happen, will that flow through to Remgro's own cash balances? Or will it be trapped within CIVH? So that's about a ZAR 2 billion plus amount that we're talking of. Jan Durand: First question. Let me -- we're open for business for new investments. So I think the reason why you haven't seen new activities probably related -- not seeing the right opportunities, also the muted GDP growth in South Africa with very low growth prospect. And remember, we've got a high cost of capital, so it must beat our internal hurdle rate. So yes, but the short answer is absolutely correct. We're open for business. But also, we'll still focus on the other capital allocation thing. So we're not saying new investment, but also following on investment. As Carel has mentioned earlier, that is very critical for us and supporting our underlying investments so to have a reserve at the center to be able to follow on investments if they've got expansion opportunities. Then, on the second part of your question, regarding the option, yes, that is -- will be a cash that will flow directly to Remgro. So if they exercise that option, that will be cash at the center. I don't know if you want to add anything Carel. Carel Petrus Vosloo: No, that's right, Jannie. And Rey, it's the presentation that we did after the announcement of that transaction sets it out relatively clearly. So if you had to follow it there, you'll see that, that purchase from us sort of happens through CIVH. So it's a subscription of shares or purchase of shares from CIVH and then a repurchase of shares from Remgro with a bit of leakage of tax sort of in between. But you're right in that number, roughly ZAR 2 billion that should come directly to Remgro -- or the ZAR 2 billion is sort of the bottom end of the range. It's subject to a valuation, but yes, that's correct. Rey Wium: And if I may, just a quick 2 additional questions from my side. This is for Jurgens on Mediclinic. I think it's now the second year in a row where the dividend declaration, I think, was $40 million. I just want to know what could trigger an uptick in that rate. Is it dependent on the debt levels within Mediclinic or -- so maybe just some color around that? And then maybe just for Lucas on Heineken Beverages. I just want to clarify or just check if my calculations are correct. I mean, the improvement in the operating performance there, does that basically look like about -- round about 4 percentage point improvement in EBIT margin? So just the incremental increase, which I'll sort of try to pick up there. I just want to know if my calculations are correct. Petrus Myburgh: Thank you very much. From our side, the dividends, obviously, it's -- as you can imagine, is part of a much broader capital allocation strategy in terms of, as I set out at Capital Markets Day, first and foremost, the generation, which very much depends on revenue growth and driving our EBITDA margins and then converting that into cash, which is our operating strategy in a nutshell. But then looking at where we allocate that towards, you're 100% right. If we look at our leverage, it has reduced to 3.1x, which is the lowest than it's been in a very long time, at least since I think I've been with this company. But in -- within that portfolio of debt, we need to make a couple of moves. We have 0 debt in the Middle East at the moment, in the process of refinancing in South Africa and we need to do the same in Switzerland as well. And so I think we need to settle that down. And then, we need to look at our growth trajectory, especially within the Middle East and the capital requirement there. But all of that, over a 5-, 10-year period and evaluate that and then say, okay, well, then what is the right dividend level for us at a shareholder level as well. But we -- I can assure you, there's quite a bit of emphasis and discussion around that -- around the boardroom table as well. So it's a very important part of capital allocation, but it forms part of this much broader framework that I just outlined. Jordi Borrut: From Heineken side, yes, the margin, you're correct. Just remember, we have a different financial year. So our full financial year ends in December. But for this period that we're talking about, you're right, we probably had a 3.5-odd OP or EBIT percentage going to 7-odd, so it's about that 4% increase -- incremental increase for the period under reference, so correct. Rey Wium: Excellent. And congratulations again on a great set of results. Operator: Ladies and gentlemen, with no further questions, this brings us to the end of the question-and-answer session. I will now hand over to Mr. Jannie Durand for closing remarks. Jan Durand: Just want to say thanks for everybody for attending. And hopefully, we can present another good set of results in 6 months' time. Thank you very much for your -- for attending the session. Thank you. Operator: Thank you, sir. Ladies and gentlemen, that concludes today's event. Thank you for attending, and you may now disconnect your lines.
Operator: Thank you for standing by, and welcome to the Tuas Limited Full Year Financial Year 2025 Results. [Operator Instructions] I would now like to hand the conference over to Mr. Richard Tan, CEO. Please go ahead. Richard Tan: Thank you. Good morning, and thank you for joining us. I'm Richard Tan, Chief Executive Officer of SIMBA Telecom, the principal operating entity of the Tuas Group. Also on the call today are Mr. David Teoh, Executive Chairman of Tuas Limited; and Mr. Harry Wong, Chief Financial Officer of SIMBA Telecom. It's a pleasure to present the financial results for Tuas Limited for the fiscal year ended 31st July 2025, covering the period which started 1st August 2024. Let me briefly outline today's agenda as shown on Slide 2. We'll begin with Harry, who will walk through the financial performance and key metrics for the year. I'll then provide an update on our operational progress, strategic initiatives and outlook for FY '26. We'll conclude with a Q&A session to address any questions you may have. Please note that all financial figures discussed today are denominated in Singapore dollars. With that, I will now hand over to Harry to take us through the numbers. Harry Wong: Good morning, everyone. My name is Harry Wong, CFO of SIMBA Telecom. I'll be presenting the financials of the Tuas Group. On Slide 3, you will see that we achieved a notable improvement in the financial results during FY '25 when compared to FY '24. Revenue for the year is $151.3 million, up from $117.1 million last year. EBITDA increased by 8%, up from $49.7 million in the prior year to $68.4 million. We achieved a full year positive net profit after tax. Net profit after tax of $6.9 million is a significant improvement on the prior year's loss of $4.4 million and represents a major milestone for the group. Next, we look at the revenue and EBITDA on Slide 4. Revenue for the year ending 31st July 2025, increased 29% compared to FY '24. With the increasing scale of the business, EBITDA margin has improved to 45% of revenue. Gross ARPU for the year was $9.60. The key drivers of this EBITDA uplift continue to be an increased subscriber base and expanded plan mix catering to different customers' needs. Our plans include generous roaming data at every price point. Slide 5 shows our sustained mobile subscriber growth since FY '22. As of 31st July 2025, we have about 1.254 million subscribers, representing a 19% increase over the past 1 year. We estimate SIMBA's mobile subscriber market share to be around 12%. Slide 6 shows the mobile -- Slide 6 shows the broadband subscriber base. As of 31 July 2025, we have approximately 25,600 active services, adding 22,000 subscribers over the year. We proceed to the cash flow on Slide 7. We continue to show positive cash flow. Opening cash and term deposit balance was $55.3 million. Net cash generated from operating activities was $81.2 million. The main cash outflow comes from acquisition of plan and equipment and intangible assets of $55 million, largely mobile network and some fixed broadband infrastructure. This brings the ending cash and term deposits to $80.7 million as of 31st July 2025. Again, positive cash flow after CapEx for the year is a welcome achievement. With this, I will let Richard proceed with the business updates. Richard Tan: Thank you, Harry. The Singapore mobile market remains highly dynamic. Over the past financial year, SIMBA has focused on delivering enhanced value across all price points. This strategy has resonated strongly with consumers as reflected in our continued subscriber growth. Notably, our $12 plan has gained significant traction due to its generous APAC roaming inclusions. Coupled with free IDD, our portfolio of plans appeal to the mass market, frequent travelers and migrant workers alike. We have broadened our retail footprint to increase accessibility of SIMBA products. This includes island-wide availability at 7-Eleven convenience stores and sales counters across the 4 Changi Airport terminals. These strategic placements have driven growth in prepaid activations, particularly among inbound travelers. To support our expanding customer base, SIMBA continues to invest in network capacity and user experience. Our infrastructure enhancements are complemented by the rapid expansion of our 5G coverage, which remains on track to exceed IMDA's regulatory benchmarks. Slide 9 covers our fiber broadband business, which, although still in its early days, is scaling faster, driven by a clear and compelling value proposition which includes true 10 gigabit per second speed, lowest market price, latest Wi-Fi 7 technology, no upfront costs, free ONT and router. This simplified high-value offering is resonating with consumers, and we intend to build on this momentum. Moving to Slide 10. On 11th of August 2025, we announced the proposed 100% acquisition of M1 Limited, excluding its ICT business, for an enterprise value of SGD 1.43 billion on a debt-free and cash-free basis. This transaction will be funded through existing cash reserves, AUD 385 million completed equity raise; SGD 1.1 billion in fully underwritten acquisition debt financing; up to AUD 50 million via a share purchase plan, which is expected to close tomorrow, 21st September 2025. A key step required prior to completion of the acquisition, if approved by the Singapore regulator, the Infocomm Media Development Authority, which has responsibility for regulating competition issues for -- in the telecommunications industry in Singapore. This process requires an application to be made by the parties to the consolidation. Together with M1, we have prepared and submitted to the IMDA the long-form consolidation joint application, and we are hoping to get regulatory approval in the coming months. And finally, the business outlook. The financial year has begun on a firm note with sustained growth in both mobile and fiber broadband segments in line with our expansion. SIMBA's stand-alone CapEx is projected to be between $50 million and $55 million for the full year. We will also remain focused on margin optimization and disciplined cash management. I will now hand it back to the moderator for the Q&A session. Operator: [Operator Instructions] Your first question today comes from William Park with Citi. William Park: Hopefully, this one is for -- firstly, this one's for David. Just a big picture question around the technology and network engineering that you've been able to sort of implement in Singapore. And could you just step through whether that's given you sort of a leg up in starting up and expanding SIMBA in Singapore versus, say, when you used to run TPG Telecom back in Australia? Richard Tan: Maybe I will handle this question. Richard here. Yes, I think... David Teoh: It's better than Richard handle it because he is more familiar than me. So Richard, thanks. Richard Tan: Okay. Thanks, David. So the technology that we use, obviously, was -- or rather, let me take one step back. TPG -- it started as TPG, and obviously, we transitioned to SIMBA as we're all aware. And we built the entire platform, both hardware, software and the network without any legacy. That has given us, obviously, an advantage because there were a lot of issues that we did not have to deal with entirely. We started -- we had started with 4G, and there are a lot of the equipment that we made were easily upgradable to support 5G. So in summary, we are in a very, very good position, and this has obviously been reflected in the growth as well as our CapEx efficiency and OpEx efficiency. Not quite sure if I addressed your question, but please feel free to jump in. William Park: That's very clear. Can I just ask about the EBITDA margin? Clearly, 45.2% for the full year is sort of in line with what you guys have delivered in the first half. But I'd imagine in second half, there would have been costs associated with M1 acquisition. Could you provide some color around the quantum of those acquisition costs that you have incurred? And because I'm trying to get to sort of the EBITDA margin on a like-for-like basis without these acquisition costs. And would it -- that's sort of a floor margin that you guys are thinking about for SIMBA business going forward? Richard Tan: So as you know, it's still early days because a lot of the work that was done was previously on the due diligence part of it, which led to the announcement, which, again, all of you are aware about. We don't give out -- we don't give the breakdown of costs. But obviously, what we will do moving forward is ensure that analysts as well as investors have clarity in terms of what the -- how the business is trending without the other costs associated with the acquisition. So that's something that we'll provide information on moving forward. William Park: Yes. That will be very helpful. And just one last one for me. Just around broadband ARPU in second half appears to have stepped up a fair bit versus first half. Just wondering what's driven this, particularly given with all these promotional activities that's going on in Singapore and your competitor is taking a pretty aggressive pricing strategy. Just wondering what's driven that uplift in ARPU. And I know you guys don't provide sort of a margin profile for mobile and broadband separately, but just if you could sort of direct us around how we should be thinking about broadband margin sort of going forward? Richard Tan: Okay. So it's a good question, but I think it is clear that we have a very simple product with regards to fiber broadband. Originally, we started at $19.99 and then now it's $29.95. So what we are trying to say is that we have been transitioning a lot of our customers from the old plan, which was at 2.5 gigabit per second to the 10 gigabit per second. So that obviously is driving an increase in ARPU. So that's pretty much to it. Operator: Your next question comes from Hussaini Saifee with Maybank. Hussaini Saifee: I have several questions. I'll go through it one by one. First is a question on the acquisition side. I understand that a part of the M1 network is with Antina, which is a joint venture with your start-up. So just wanted to understand, do you have any preliminary discussion with your start-up on that side? Then how you are going to also integrate the SIMBA network onto their network and potentially sharing on the cost side and things like that? So just if you can give your view on the side, that will be helpful. Richard Tan: Okay. Thanks for your question. As mentioned, we are still in the early phases as far as the consolidation application is concerned. With regards to Antina, it's too early to comment right now. But obviously, what we have observed is that Antina has served M1 well in terms of its 5G strategy. So given that we are in the process of engaging IMDA on the long-form consolidation application, I think that's as much color I'm able to provide. Hussaini Saifee: Understood. Maybe then moving on to the potential approach of the enlarged SIMBA post consolidation. I just wanted to understand that given the competition in the market and given how the other MVNOs and the flanker brands have put the pricing down, how should we see the competition evolving post consolidation? Will the enlarged SIMBA -- I mean, is the market share going forward in your view to grow in this market? Or do you think that there is room for prices to go up? And I also wanted to get your view on are you comfortable with your market share? The enlarged market share is around 25% or so. Or would you like to maybe try to inch it up forward -- upwards? Richard Tan: Okay. I note that you refer to the enlarged market share. So I think that what we can say right now is that, firstly, we don't really talk a lot about competition. We focus more on our own growth. SIMBA stand-alone, as indicated earlier in my presentation, the year has become on a firm note, and we are progressing in terms of growing our subscriber base. As far as M1 is concerned, they have their strength in the postpaid handset bundling. And we note that they are obviously very active in that area as well. So again, on a combined basis, early days. I can't really say much; too premature. So I would like to leave it as that. Operator: Your next question comes from Darren Odell with TELUS Capital (sic) [ Peloton Capital ]. Darren Odell: Congratulations on the strong results. Just a couple of questions. Just on numbers. I did notice that the gross margin came off a bit in the second half [ versus ] the first half. Just wondering the [indiscernible] there and what we should be thinking about going forward. On top of that as well is the broadband adds in the second half, [ if going upward ] not as high as the first half adds. I'm just trying to figure out [indiscernible] or how should we think about [indiscernible] into the next financial year as well. Richard Tan: Sorry, you're coming in rather muffled. So I would have to kind of like guess what your questions are about. So I think you're asking about gross margins of second half versus first half? Darren Odell: Yes. Richard Tan: As you know, we have been working hard to maintain our growth margins. And as I've always indicated in our past presentations, we want to continue to grow as much as we can. So obviously, as we move from quarter-to-quarter or half-to-half, we will invest to ensure that we keep up with our growth momentum. That has always been our priority. Now with regards to broadband adds, could you please repeat your question again? Darren Odell: Just in the first half, the [indiscernible] number was high from [indiscernible] in the second half. I just wonder how should be thinking [indiscernible] for [indiscernible] why that [indiscernible] was first half to second half? Richard Tan: Some of it is seasonality. And as I've said, it depends on the promotions that we run. So as of this rate -- as of this moment, we are comfortable with the growth rates with regards to fiber broadband. Operator: Your next question comes from James Bales with Morgan Stanley. James Bales: My question relates to the previous one. Just on the outlook commentary on mobile and broadband subs continuing to grow. Is that referring to the percentage growth rate or absolute subs added? Richard Tan: Well, if you look at our track record for the past 5 years and how we're trending in terms of growth rate, I would just like to leave it that, that's the continued path, the trajectory that we -- at least the early indications are indicating. So I'm not going to talk whether it's absolute number in terms of percentage. But if you look at the trend itself that we are progressing as what we have done for the past 5 years. James Bales: Okay. Got it. And on one of the slides, you highlight the value proposition in your $12 a month mobile plan. But the ARPU actually declined in the second half versus a year ago and versus the first half. Can you maybe help us understand why when that value proposition looks so strong for the higher price plan, why you've seen ARPU go down? Richard Tan: I don't think ARPU went down noticeably, right, especially in this highly dynamic market. What we have noticed is that there are, for example, increased popularity for our $12 plan. So that's obviously very good for SIMBA. And we are also continuing to gain significant traction for our senior plans. So all in all, it all balances out to the ARPU, which we have presented as $9.60. James Bales: Okay. Got it. And then maybe just on CapEx. You've called out stand-alone CapEx of $50 million to $55 million. I guess we have to -- we're trying to sort of figure out what the -- what that could look like in a post M1 completion world. If that deal does complete, how material would the change in CapEx profile be? Richard Tan: It's really hard to comment right now because, as I said, while we have done some analysis, it's still very much in the early stages. So we would have to understand the M1 network architecture, get a deeper understanding of it and see how we can derive the synergies. So one thing is for sure, we will not compromise on network quality or user experience, either on a stand-alone basis or a combined basis, but we are very watchful in terms of how we spend CapEx and OpEx. So we aim to do the best. And as I've said, from what I can see right now is that on a stand-alone basis, it's $50 million to $50 million -- $50 million to $55 million, and that's in line with the capacity needed to support our subscriber growth. Operator: [Operator Instructions] Your next question comes from Nick Harris with Morgans. Nick Harris: Just my first one. I know, Richard, you obviously just commented that it's very early days with respect to M1. But could you give us some high-level thoughts from what you've seen today just to try and help us understand the similarities or differences between M1's telco network and systems versus SIMBA. And I guess, really, what I'm trying to get to is there an opportunity there for you to leverage SIMBA's cost advantage into M1? Anything you can say around that would be great. Richard Tan: I will share with you what I can because, obviously, both companies have built up quite an extensive 4G network. I think you heard earlier in the call about Antina. Antina handles the 5G rollout for both M1 and StarHub. So there are synergies, obviously, on the 4G mobile network that can be derived as far as the radio network is concerned, the transmission as well as the core network because equipment-wise, network-wise, there would be significant overlap. But however, having said that, the overlap is, in fact, very, very complementary because for example, spectrum is extremely complementary as well. On the 900, we can combine our 10 megahertz with M1's 5 megahertz. So that will deliver a very good foundation for mobile coverage and quality. So I'm sorry to repeat myself again, it's really early days. But for M1 and SIMBA coming together, we are really excited about the opportunity. Nick Harris: And maybe just an easier question then was just if I looked at the M1 accounts, they've historically generated some revenue out of Singapore. I was just trying to understand if that revenue is related to the IT business or their telco business and then obviously, the logic being, will TUA or SIMBA have some telco revenue outside of Singapore? That's it for me. Richard Tan: Yes. The overseas revenue is part of the our ICT business that will be spun off. Operator: Your next question comes from Hussaini Saifee with Maybank. Hussaini Saifee: Sure. Some follow-ups. A couple of follow-ups. First is on the spectrum side, Richard, maybe you can help that -- because if we look at consolidations across the globe, at the time of consolidation, companies [indiscernible] do end up giving a little bit of a spectrum back to the regulator. Do you see that as a potential outcome with this merger? Or do you think that it could be one of the outcome? That's question number one. And the second question is, I understand that it is early days, but if you can give us some targets on the synergies, which you can potentially get on the back of network consolidation. Richard Tan: Okay. I can't comment on spectrum because that would be under consideration, obviously, by the regulator. But on a combined basis, you will see that the spectrum distribution is, in fact, very fair across 3 on a combined basis. Other than that, I really can't say much with regards to spectrum or your other question with regards to targets and synergies. I appreciate the questions. But as I've said, when the consolidation happens, then hopefully, we aim to provide more color. Operator: There are no further questions at this time. I'll now hand back to Mr. Tan for closing remarks. Richard Tan: Thank you all for your time and for engaging with our business update. The Board and management of Tuas Limited deeply appreciates your continued support. We look forward to delivering further value and growth in the months ahead. Thank you once again. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Good day, ladies and gentlemen, and welcome to the Remgro Annual Results Presentation. [Operator Instructions] Please note that this event is being recorded. I will now hand you over to Mr. Jannie Durand. Please go ahead. Jan Durand: Good morning, everybody. Thank you for joining us this morning, and welcome to our final results presentation for the year ended 30 June 2025. Today, the team and I will unpack our financial performance for this past financial year and has become our set format, we will delve into some detail on the performance of our key portfolio companies that contribute meaningful to our overall performance. With that in mind, the outline of today's presentation will be as follows: First, myself, and then Carel Vosloo will give an overview of the salient features of our results for the year, including a high-level recap of our key strategic priorities, which remains consistent with those that we've communicated at our recent Capital Markets Day and a sense of our progress against these. Secondly, our CFO, Neville Williams, will then unpack in more detail our results for the period. And then thirdly, as mentioned, we will then begin an update on some of our key investments, including Mediclinic, CIVH, Heineken Beverages and RCL Foods. The CFO of Mediclinic, Jurgens Myburgh, will speak to Mediclinic's results. Thereafter, and for the very first time, the CEO of Maziv, Dietlof Mare, will do the same for CIVH. And then just after that, the Managing Director and Finance Director of Heineken Beverages, Jordi Borrut -- incidentally is no relation to Jordie Barrett, All Blacks, center, no relations there as he's Spanish. And then Lucas Verwey will do the same for Heineken Beverages. And then finally, the CEO of RCL Foods, Paul Cruickshank, will provide highlights of the results I reported on the first of this month. I will then close off the presentation by looking at our areas of focus going forward before opening the floor for questions right at the end. If we move on to the performance overview. Today, I will be presenting our results showing strong earnings momentum across our portfolio, which we are very satisfied with. As I reflected on this progress, I came to the view that these outcomes are really a reflection of the resilience of our portfolio in difficult times as well as the focused execution of the strategy we set in motion 5 years ago. This journey has involved enormous challenges, but through patience and resilience, we continue to make very good progress. By the same token, it would be remiss of us not to reflect the impact of the operating environment within which we have operated in the past few years and that we continue to operate in. The environment around us remains challenging, and this is the reality that I'm sure this audience is all too familiar with. Global trade tensions, persistent geopolitical instability and muted domestic growth continues to test South African corporates. Our own portfolio companies are, of course, not immune to this. We're not operating in an island. We have spent some time, as recently as our Capital Markets Day, unpacking the macroeconomic challenges and the resulting impact on our underlying investments. So I'm not going to delve in all of these details today. While these continue -- we know that these continue to persist globally and locally. We have also seen some improvements, including some reductions in interest rates. The significant strides made in driving the structural reform agenda for Operation Vulindlela, including sustained energy availability, which we're all very pleased with, some rehabilitation of the transport logistics and some regulatory reforms. These improvements, together with the renewed and positive sentiment following the establishment of the government of National Unity, has led to an improvement in global investor sentiment towards South Africa, you can see that on some of the currency exchange rate, which -- recently, which, over time, we will believe will contribute to improved growth prospects. South Africa has shown many times that its people can muddle through these challenges and survive. Through civil society, I get the feeling that our people's patience is wearing thin with the current situation, and we can see it in the narrative in social media and also other some recent election results at the local level. All of these factors are outside of our control, but we remain conscious of and continue to assess any indirect impact that these might have on our businesses, while we also play our role in the areas we can influence and where we can provide support. Our focus remains on what is within our control, strengthening the performance of our core businesses, advancing portfolio simplification and managing our capital with discipline. I believe it is improved execution in these areas and much closer engagement of our respective management teams that underpins the results we present today, which I will touch on it a little bit later. I first want to highlight a few of these positive outcomes that this strategic focus has yielded. We have seen some notable gains in some of our key portfolio companies. OUTsurance has again delivered a standout performance. Mediclinic has made some tangible progress in its operating model review and turnaround initiatives. As you also would have seen in Rainbow's recent results announcement, the turnaround strategy execution that Marthinus and his team have been hard at work on has successfully unlocked some robust earnings and linked to that RCL Foods focused portfolio has also delivered a meaningfully improved performance. Building on this momentum in the current year, I'm excited by the progress made in the CIVH-Vodacom transaction and look very much forward to its conclusion, positioning us to unlock further shareholder value through this critical transaction for South Africa's digital future. We have also made some progress in addressing the smaller portfolio holdings. The announced unbundling of eMedia investments was a notable example and subsequent to year-end, the disposal of our remaining shares in BAT and Grindrod has also been done. Lastly, we have de-geared our balance sheet, which we believe sets us up to be more front-footed in capital allocation opportunities into the future. Very importantly, whilst we are not where we want to be yet and while some challenges persist, such as the regulatory environment in Switzerland that threatens Mediclinic sustained recovery and volume decline through aggressive pricing trends we see in the overall beverages market that impacts Heineken Beverages. The positive gains, however, are proof that our focus on the stated priorities is having a positive impact. Carel will talk a little bit more about how we continue to think about these strategic priorities later. I will now move on to our results for the period, which we are very proud of. You will recall when we presented our final results in September 2024, I said that we were not where we wanted to be, and considerable work was being done to bed down the operational performance of a number of key investments in order to drive a sustainable recovery. This morning, however, I'm pleased to be delivering our final results that show a strong performance across the board. This improvement is a reflection of the work that our executive team at our underlying investee companies in partnership with Remgro have been actively driving. For this year, under review, headline earnings increased by 38.6%. With the improved earnings, we have constantly seen better cash earnings at the center, with dividends received up by approximately 24%. And in turn, our final ordinary dividend declared is up by 34.8%. The total dividend for the year is now sitting at -- if we look at the slide, is ZAR 3.44, which is up by 30.3%. I'm also pleased to announce a special dividend of ZAR 2 per share. We have earmarked the proceeds of the sale of the BAT shares to pay this dividend to our shareholders. A significant driver of the increase in headline earnings relate to improved contributions by Mediclinic, OUTsurance, RCL Foods and Rainbow as well as significantly reduced losses by Heineken Beverages. Neville will later provide more detail around these drivers and the headline earnings numbers in his section later on. I want to reemphasize what I said earlier. While we are pleased with the strong contributions that were made by some of Remgro's investee companies, there's considerable work still to be done to improve the operational performance of some of our key investments. We also recognize that our efforts will not be easy as the market dynamics in some of our key businesses continue to be challenging. As mentioned earlier, Mediclinic continues to operate in a Swiss market that is not showing signs of easing, and volumes and pricing remain challenging across the Heineken Beverages portfolio amidst strong competition. Despite these dynamics, we remain confident in the potential for the portfolio to generate sustainable growth and cash earnings over the long term. I will now hand over to Carel to recap on our strategic priorities. Carel Petrus Vosloo: Thank you, Jannie, and good morning, everyone. As Jannie mentioned, I will recap briefly on our progress on these strategic priorities. As Jannie said, they have not changed since we last spoke, but to briefly just mention them. The first one is active performance optimization across the portfolio. Secondly, to follow a considered capital allocation strategy. And then lastly, to lead sustainable businesses and embedding our ESG strategy across our portfolio. So to deal with each of them in turn on active performance optimization, I hope that those numbers that Jannie flashed will be evidence of good progress on this front. We are very happy that the active partnership with our management teams is yielding good results. Credit here absolutely goes to the underlying teams that deliver these earnings, and we're pleased for the partnership with all of those. And as Jannie also mentioned, certainly, the work is far from done here, but this is a big step in the right direction. Also on the optimization of the portfolio, we've had some good progress during the year, and I'll just recap on that over the next page. On considered capital allocation, Jannie has touched on all the highlights there. But again, to say that we feel there's been good progress during the year, you'll be aware that we sold down a portion of our FirstRand shares and use those proceeds to settle all of our outstanding debt. As Jannie mentioned, we will be distributing our eMedia exposure that happens next week. And then also, as Jannie mentioned, we disposed of our BAT shares after a strong recovery in that share price, and that enabled us to pay a special dividend or to propose a special dividend. Lastly, on leading sustainable businesses and ESG, really good strides have been made during this year. I'm hoping that when you see the integrated annual report that will be available next year -- next month, you'll see the improved disclosure and the progress on this front and the maturing strategy around ESG. Much of that maturing strategy has had to do with engaging with our underlying investee companies and making sure we understand the metrics that are important to each of them. This is not a one-size-fits-all solution. We've certainly identified some additional opportunities, some gaps in our approach. But I am confident that we're getting to a place where we are really embedding ESG as part of how we do business and not just a tick box and sort of disclosure exercise. Also under this banner of ESG and particularly under governance, you would know that enhancing our communication with stakeholders and specifically with investors has been something that we've committed to, and we're proud of decent strides there. As Jannie mentioned, we had our capital -- our second Capital Markets Day earlier this year. That gave us the opportunity to engage with -- I think it was around 200 investors that were there either in-person or virtually. to unpack not only the Remgro investment thesis but also delve a bit deeper into a few of our investee companies. Similarly, we've got a good panel of executives from across our portfolio assembled here this morning, and I hope that gives the opportunity to understand in greater detail the performance across the portfolio. Over the slide, looking just specifically on the transformation of the portfolio. We've been sharing a version of this slide, I think, since 2020 when this transition of the portfolio started. So maybe you've seen 10 different versions of it, and you could be forgiven at times for not being entirely sure of these arrows have been moving. Some of this progress has been frustratingly slow, but I'm very hopeful that this will be the last time that we will share this slide with you. And the one important milestone that we achieved in this last year or just shortly after year-end was the approval by the competition authorities of the CIVH-Vodacom transaction. I don't want to jinx this deal. It's still subject to ICASA approval, which we hope will be imminently in hand, but a great milestone, and Dietlof will later talk about what that transaction means for CIVH. We are very excited about the high road, not only for us as investors, but certainly also for the customers of CIVH. I'm not going to talk about any of these other transactions. I think most of them are now firmly in the rearview mirror, and the executives from these companies are here with us today. So they'll give more color on how these businesses are coming along. The one exception perhaps is Rainbow. But as Jannie mentioned, Rainbow has had a really strong start to its life as an independently listed company. I think if they carry on, on this track, then we'll have to find a start on this agenda for Marthinus next year as well. So then just looking at the portfolio performance. Jannie mentioned this, and Neville is going to delve into it in more detail. So I won't steal Neville's thunder. But just on the schematic, you can see that more than 80% of the portfolio has choked up positive earnings momentum in the last year. That sort of range from modest single-digit growth on the right -- the left-hand side of that schematic to very robust growth here on the right-hand side. I think what's particularly pleasing is that some of those companies that contributed very meaningful increases in earnings were probably the companies that a couple of years ago or even as recently as a year ago, we would have said is sort of in the intensive care award, but they are all now in different stages of recovery and really pleased about those contributions to the growth in our earnings. It's almost easier to talk here about the names that are not on the slide. If you say 80% of the companies enjoyed improving performance, then what's the 20% that's not here? And there are two notable companies absent from the schematic. The one would be CIVH. And again, we are very encouraged by the underlying performance improvement at CIVH, but there was interest rate derivative that caused the downwards adjustment to earnings, which resulted in a negative headline earnings result for the year, but the operating performance has got good forward momentum. And the second one would be Total. Again, underlying performance of Total was healthy. But again, there was a stock revaluation adjustment that resulted in the headline result being down for the year. But again, both of those companies, good underlying momentum. And if you had to add that to the 80%, you'd be comfortably ahead of 90%. We realize this will not be the case every year. There will be ups and downs. As Jannie also mentioned, the work is far from done. We know there's much more earnings potential in the portfolio than what we're showing now. But certainly, as I mentioned, a step in the right direction. Then the last slide I want to talk about is just very briefly on capital allocation. We have showed you a version of this slide before. And what we have here is the different priorities of usage of capital for Remgro and also some commentary on our current posture. As we shared with you before, the highest priority for us when it comes to capital allocation is making sure that we've got capital available to pay the debt on our own balance sheet. On that front, I think we're in a good place. You see we give it a green tick or a green blob there. We've fully repaid our debt in the current year. And then secondly, and equally importantly, making sure that we can provide resilience to our portfolio companies and support them with capital when they need it. On that front, again, with improved performance across the portfolio and also the CIVH-Vodacom transaction, which is looking very promising and hopefully, imminently will be approved, we think there's a stronger foundation there as well. So if the foundation in those first two priorities are secured, it does allow us to adopt a somewhat more front-footed posture on the alternative uses for capital, and we've got those in those next sort of four blocks. And as we say, these priorities are dynamic and informed by the specifics of the situation as it unfolds. But certainly, on the cash dividends front, as Jannie showed you, a decent increase in our dividends. There was also the special dividend following the disposal of BAT. Share repurchases, we haven't undertaken any further repurchases this year, but that remains compelling given the discount to INAV. And then follow-on or new investments, obviously, something we remain keenly on the lookout for. We're not giving you any specific color here on how we rank those priorities between those four. I can reassure you this is a topic of live debate amongst the executives and at the Board, and we're very thoughtful about the implications for Remgro and for our shareholders on the trade-offs that we make here, both implications in the short term and the longer term. So this is a live debate and something we'll continue to talk about. So thank you very much. And with that, I will hand over to Neville. Neville Williams: Thank you, Carel, And good morning, everyone. After a challenging FY 2024, the theme for FY '25 is a sustainable momentum in headline earnings growth year-on-year with over 80%, as Carel mentioned, also now of the Remgro's portfolio achieving headline earnings growth. So for the year under review, Remgro's headline earnings increased by 38.6% from ZAR 5.6 billion to ZAR 7.8 billion, while headline earnings per share increased by 38.4% from ZAR 10.18 to ZAR 14.09. The earnings growth momentum experienced in the first half of the year under review continued during the second half, culminating in the 39% increase in headline earnings. If we exclude the negative impact of significant corporate actions, which were implemented during the previous financial years, this year amounting to ZAR 140 million. And you will see on the right-hand side of the graph, the ZAR 140 million versus the ZAR 766 million in the comparative year. And on the left-hand side, you will see the ZAR 766 million, the adjusted headline earnings increased by 24%. And I think this increase provides a better assessment of the underlying financial and operational performance of the portfolio. The graph also depicts an overview of the main drivers of the increase in headline earnings, and this can be summarized as follows: Firstly, improved operational performances from the majority of the investee companies, of which the most significant are increased contribution from Mediclinic, a positive impact of ZAR 362 million this year. OUTsurance Group positive ZAR 318 million. Rainbow Chicken up by ZAR 324 million. RCL Foods, their contribution increased by ZAR 264 million. Then Heineken Beverages, excluding the Heineken IFRS 3 impact, returning to profitability, and this was driven by volume growth and margin recovery. And it's a positive swing of ZAR 406 million this year. However, these gains were partly offset by lower contributions from TotalEnergies, a negative ZAR 359 million, mainly due to higher negative stock revaluations as well as lower dividends from Momentum, a drop of ZAR 160 million following its disposal. Secondly, the positive impact on headline earnings of lower finance costs amounting to ZAR 403 million due to the redemption of the preference shares. So we will provide more detail on these operational results during the presentation. This graph provides an overview of the significant changes in the valuation outcome of our unlisted investments as well as the movement in the market values of our listed investments. The main drivers impacting positively on the growth in INAV are the growth in market values of listed investments. You will see there in the middle of the graph, OUTsurance market value increased by 69%, and that represents approximately ZAR 27 per Remgro share. Discovery is up by 59% or approximately ZAR 6 per Remgro share. The net cash increased by ZAR 4 billion, mainly due to the proceeds of the sale of the FirstRand shares as well as the redemption of the preference shares amounting to ZAR 2.5 billion. The following graphs show the movement in the valuations and multiples of the five largest unlisted investments in Remgro's portfolio. These investments contribute just over 45% of Remgro's investment portfolio, representing approximately 82% of the unlisted portfolio. So the top five represents 82% of the unlisted portfolio. These graphs show all the multiples decreasing, reflecting both earnings recovery, growth of the assets and we believe an appropriately conservative valuation approach. The improved performance has the multiples reducing over time as the businesses increasingly start to deliver the earnings that underpin our valuations with the multiples also aligning to relevant market comparables. You will see that if you look at the slides per pillar that in addition to the intrinsic value and headline earnings disclosure per pillar, we also disclosed the cash dividends received for the financial year as well as the last 12 months headline earnings and dividend yield for improved transparency. The [ healthcare ] platform consisting of Mediclinic is the single biggest investment in Remgro's portfolio and contributes approximately 25% to INAV and 30% to headline earnings. Mediclinic is valued on a sum of the parts basis with a DCF underpinned of the business plans of the three regions as updated during the year, also moderated by a multiple-based market approach applicable to each region. The valuation benefited slightly from lower weighted average cost of capital in the South Africa and Switzerland against a slightly higher WACC in the Middle East. This is an independent valuation conducted by Deloitte as in the prior three periods. In dollar terms, the valuation increased by 4.7% year-on-year and 1.8% in rand terms. The valuation increase represents good delivery against this plan with pleasing performance across the business. Jurgens will expand on this later, but, in short, Middle East is a promising growth story. South Africa, a stable and consistent performer and Switzerland is making good progress on its recovery plan. The implied trailing EV/EBITDA multiple of 9.9x, and that's calculated with reference to Mediclinic's March 2025 published results and is a buildup of the three regions that are reflective of the relevant regions' particular dynamics and aligned to relevant peers in those regions. Jurgens will unpack Mediclinic's results later in the presentation. This platform consists of RCL Foods, Rainbow, Heine-Bev, Siqalo and Capevin and contributes approximately 15% to INAV and 26% to headline earnings with improved contributions from RCL Foods, Heine-Bev, Siqalo as well as Rainbow. Dividends contribution also improved due to the contributions by RCL Foods, Siqalo and Capevin compared to the comparative period. Paul will elaborate in more detail on RCL Foods results later in the presentation. If you look at Rainbow's results, Rainbow listed on the 1st of July 2024. The contribution by Rainbow increased substantially to ZAR 469 million from ZAR 145 million in the comparative period. Rainbow's revenue increased by 9%, and that was driven by a stronger sales performance, up 9.6% in the Chicken division, translating into an EBIT increase of approximately 300%. This strong financial performance was driven by enhanced capacity at Hammarsdale, better product mix and channel diversification with strategic customers. There was also additional improvement due to the enhanced agricultural and operational performance, lower commodity input costs and reduced expenses from loadshedding and the Avian Influenza. Further detail is included in Rainbow's results, which were published on the 28th of August. If you look at Heine-Bev, just some notes on Heine-Bev valuation. Remgro's valuation for its 18.8% interest in Heine-Bev decreased by 4.7% year-on-year. The slight decline in valuation is attributed to a combination of factors, including the continued constrained consumer environment in a highly competitive market across the categories within which Heine-Bev operates and a decrease in the terminal value growth rate as part of the continued process to standardize the valuation approach to all Remgro's unlisted valuations. The DCF valuation benefited slightly from a reduced WACC and the implied EV/EBITDA multiple of 9.6x compares favorably to the observed global peer set average multiple. Lucas and Jordi will elaborate in more detail on Heine-Bev's results later in the presentation. Siqalo Foods, if you look at the valuation there, the valuation increased by 5.1% year-on-year. This valuation is in the context of a persistently challenging trading environment marked by ongoing commodity cost pressures and constrained consumer spending. The valuation benefited from a slightly lower WACC with this benefit being offset by slightly moderated financial forecast and terminal value growth rate. The implied EV/EBITDA multiple of 8.8x compares favorably to the peer set considering Remgro's 100% control of Siqalo. From a results perspective, Siqalo Foods' headline earnings contribution amounts to ZAR 467 million, representing an increase of 3.3%. The trading environment showed signs of recovery during the period under review. And Siqalo was able to offset inflationary cost pressures through a focused savings agenda, and this allowed the business to drive profitable volume growth, resulting in a 1.1% increase in volumes and a 1.7% increase in operational EBITDA for the period. So overall, a pleasing set of results in a challenging trading environment. The Financial Services platform contributes 23% to INAV, 19% to headline earnings and 30% to dividends received at the center, mainly from OUTsurance. OUTsurance is the most significant investment here. Their contribution to headline earnings increased by 29% to ZAR 1.4 billion, and that was mainly due to OUTsurance Holdings normalized earnings increasing by 34%. The increase in earnings was driven by strong operational performances by Youi and OUTsurance South Africa. They released their year-end results on the 15th of September 2025. Infrastructure platform, just some notes on the CIVH valuation. The valuation methodology used is the sum of the past parts based on DCF. Valuation increased by 9% year-on-year to ZAR 15.8 billion. We continue to base the CIVH valuation on the longer-term business plans of the underlying operations, which are substantially unchanged year-on-year, but with operating assumptions refined where appropriate. Just to mention that this valuation does not include the addition of the assets and cash expected to be acquired by Maziv as part of the Vodacom transaction. Although the combined CIVH enterprise value benefited from a decrease in the WACC applied to a slightly moderated forecast for DFA and Vumatel, this increase was partially offset by a slight increase in the net debt with the overall equity value of CIVH before the application of discounts still up. The discounts applied to the equity value in absolute terms were largely in line with the prior year. The Remgro valuation implies a trailing EV/EBITDA multiple of 10.2x, well below the peer set multiple of 11.4x. This valuation of ZAR 15.8 billion is at a discount of approximately 25% to the value at which the Vodacom transaction was ultimately concluded. Dietlof will elaborate in more detail on CIVH's results in the presentation. Industrial platform or portfolio companies are mostly profitable on a sustainable basis and consistent dividend payers with high cash conversion ratios as seen in the contribution to headline earnings and dividends received with attractive earnings yield and dividend yields. The valuations are also not very demanding. Air Products valuation increased by 5.3% to ZAR 6.3 billion and is largely a result of an increase in free cash flow due to continued cost efficiency, the expected solid operational performance and reduced forecast risk assumptions. Total's valuation increased by 22% to ZAR 4.2 billion. The 2025 forecast shows improved cash flow driven by strong network fuel margins, annual fixed cost reductions, annual CapEx cuts, however, negatively impacted by lower sales volume. The decrease in WACC and higher net cash boosted the valuation, partly offset by a marketability discount applied for the first time now. If you look at the results, Air Products contribution to headline earnings increased by 13.6% to ZAR 643 million. Demand from large tonnage gas customers was generally stable, while the Packaged Gases business performed well. coupled with cost efficiency improvements leading to improvement in profitability. The contribution to Remgro's headline earnings by Total is ZAR 194 million, down from a profit of ZAR 553 million in 2024. Excluding the negative stock revaluations, TotalEnergies' contribution increased actually by 20%, mainly due to the scaling down of loss-making refining operations towards the second half of 2024 calendar year, partially offset by supply chain disruptions. The cash at the center increased by ZAR 1.5 billion to ZAR 8.3 billion. The net cash increased by ZAR 4 billion over the reporting period due to the redemption of the preference shares during the year. Then just on the dividends received evolution, the dividends from investee companies increased to ZAR 3.8 billion, representing a 24% increase year-on-year. And this increase was mainly driven by dividends received of ZAR 393 million from RCL Foods, no dividends was received in the previous financial year, and an increase in ordinary dividend of ZAR 254 million received from OUTsurance. OUTsurance also paid a special dividend, of which Remgro received ZAR 188 million. The cash flow bridge, the main driver of sustainable cash earnings at the center is dividends received this year amounting to ZAR 3.8 billion. We've also sold 31 million FirstRand shares for gross proceeds of ZAR 2.5 billion and utilized ZAR 2.5 billion to redeem the last tranche of the preference shares in December '24. Then final and the ordinary dividend. The Board declared a final ordinary dividend of ZAR 2.48 per share, up by 34.8% from the comparative period. So the total ordinary dividend for 2025, therefore, amounts to ZAR 3.44 per share, an increase of ZAR 0.33. And as Jannie mentioned, the Board also declared a special dividend, which they will utilize the proceeds of the sale of the BAT shares, amounting to ZAR 1.2 billion. So that brings me to the end of my presentation, and I will now hand over to Jurgens to talk to Mediclinic results. Petrus Myburgh: Thank you very much, Neville. Good morning, everyone, and thank you very much for your time and for the opportunity. To frame the discussion on Mediclinic, I'll provide a brief overview in industry-wide dynamics, with it also opportunities for new revenue streams. Our strategy is simply aimed at adapting our organization to this changing healthcare environment and preparing to take advantage of these emerging opportunities. To this end, we've already made significant strides in expanding our services to encompass prevention, treatment recovery and enhancement. This past year, we amplified our efforts to enhance operational excellence and adapt to the changing needs of our clients. We continue to focus our efforts around three key strategic goals. Firstly, to strengthen the core of the business, which includes adding new revenue streams, [Technical Difficulty] of care and responding to external pressures through enhanced efficiency. Our second goal is to focus on care, which involves focus on -- and to transform into a client-centered organization by ensuring our clinical care is at the center of all that we do. And our third strategic goal is differentiation on service, which is aimed at ensuring a long-term sustainable competitive advantage through robust service differentiation. With reference to the key priorities discussed at the previous results presentation, we continue to make good progress. In our results for the year ended 31 March 2025, which I'll discuss in more detail in a minute, we've seen strong volume growth across all three divisions and client settings. This is a testament to the operational capabilities of our teams as well as the strategic response to opportunities and challenges in our environment. Alongside strategy execution, we're prioritizing performance improvement through improved efficiency. As communicated during the Capital Markets Day, we're in the process of an operating model review aimed at inter alia driving efficiency, empowering facilities to pursue growth and being agile to respond to market changes. We are targeting total savings of $100 million by the end of our financial year 2027. To achieve this, each division as well as group has set clear objectives through defined initiatives over a 1- and 2-year horizon. This important project continues to receive group-wide attention and oversight. By way of tangible examples, we've already implemented streamlined and delayed governance and reduced our administrative staff component. Through a combination of growth and efficiency, together with disciplined capital allocation, we've reduced leverage and improved return on invested capital, with the latter admittedly not yet where we wanted to be, but seeing incremental improvement as indicated before. Going forward, the pressures of the healthcare environment will continue to put focus on efficiencies and our ability to adapt our cost base accordingly. We embrace this challenge with our disciplined approach to operating model review and actively seeking new revenue streams and finding ways of linking those activities to form healthcare ecosystems. To go into more detail on each of these priorities with each division in turn and starting with Switzerland, we continue to make progress both strategically and operationally to drive an improvement in the business. Our turnaround plan delivered CHF 25 million in savings in FY '25 with an aggregate target exceeding CHF 60 million. We've also made good progress in negotiations with insurers, although our efforts have been delayed in Western Switzerland through complicated and protracted negotiations on doctors' tariffs, which has impacted the entire industry in that region and with that, our FY '26 year-to-date performance. We expect this matter to be resolved in the next couple of months, following which we're targeting a normalization of our operations in this key part of the business. This is another instance where I think we have benefited greatly from our partnership with MSC. In addition to targeting operational efficiencies, we will continue to assess the appropriateness of our hospital portfolio in Switzerland as evidenced by the intended closure of Clinic Rosenberg this month, transferring as many of our activities as possible to nearby [ Stephanshorn ]. From a strategic perspective, we've set our sights on systemic relevance by building our business on delivery regions, driving at clinical powerhouses supported by medium-sized hospital and outpatient facilities, with the latter seen as an area of possible organic and/or acquisitive growth. Turning to the Southern African business. Our Southern African business continues to drive its process of optimization, digitalization and expansion across the continuum of care. Within the context of a challenging economic environment, we have seen strong volume growth on the back of selective network participation. We will continue to be judicious in our engagement with insurers, seeking a balance between volume and pricing. Our related business has now grown to the point of contributing the economics of a medium-sized hospital. We continue to see this as an opportunity to improve our services to clients through broadening our scope and with that increasing and diversifying our revenue. Our core systems replacement project continues to progress under the stewardship of a group-wide oversight to ensure learnings are shared between work streams. We expect this project to complete by the end of our financial year '28. We continue to see opportunities for expansion in our existing facilities and related businesses. This, together with our focus on cost management and efficiencies, will drive the strategic and operational delivery of our Southern African business in the coming years. Turning then to the Middle East, which continues to be a growth market for us. Within our hospitals, we've made positive changes to the specialty mix, improving services to our clients and incrementally increasing revenue. In addition, we followed a regional approach to building powerhouse hospitals, creating leading units or hospitals within the cluster. This improves quality of care and clinical outcomes and ultimately drives volumes for us. In June, we announced the consolidation of our two hospitals in the city of Abu Dhabi, Mediclinic Al Noor Hospital and Mediclinic Airport Hospital, into a single-integrated flagship-medical powerhouse at an expanded Airport Road campus. This strategic integration involves phasing out operations at Mediclinic Al Noor Hospital, which closed its doors earlier this month, and transferring clinical services and expertise to the enhanced Mediclinic Airport Road Hospital location, further strengthening operational efficiency and service delivery. The new consolidated 265-bed facility supported by an additional AED 122 million investment represents a significant commitment to clinical excellence, advanced infrastructure and superior patient experience. This period of consolidation will have a modest impact on our operating and financial performance in the medium term as we transition doctors and staff between facilities but is expected to deliver significant value in the medium to long term. Turning then to our results for financial year ended 31 March 2025 and starting with the group. The group delivered good results against the backdrop of persistently challenging operating environment, driven by strong volume growth across all divisions. Group revenue was up 5% at $4.8 billion and up 4% in constant currency terms. Inpatient admissions and day cases grew by 1.5% and 3.2%, respectively. Adjusted EBITDA was up 9% at $737 million. The group's adjusted EBITDA margin was 15.3%, reflecting good revenue growth and cost efficiency, partially offset by higher consumable supply costs, mainly because of ongoing mix changes. The increase in adjusted EBITDA, with broadly stable depreciation and amortization charges and finance costs, resulted in an adjusted earnings uplift of 21%. Cash and cash equivalents was $737 million at the end of the year, reflecting a high cash conversion of 104%, which is marginally ahead of our targeted 90% to 100%, mainly due to improved collections in Switzerland and the Middle East. The group's leverage ratio decreased to 3.1x at 31 March 2025 from 3.7x a year ago. With net incurred debt decreasing by $184 million, to just $1.35 billion -- just over $1.3 billion, I should say. Looking then at each division in turn and starting with Switzerland, where we continue to build the resilience that I outlined earlier. Revenue for the period increased by 2% to CHF 1.9 billion, reflecting good growth in inpatient admissions of 2.2%. The general insurance mix was marginally higher at 52.6% as growth in generally insured admissions exceeded that of supplementary insurance. The revenue growth delivered a 4% increase in adjusted EBITDA to CHF 266 million at an adjusted EBITDA margin of 13.7%, reflecting disciplined cost management, offset by higher consumable and supply costs driven by increased volumes and mix changes. As part of our year-end closing, we considered changes in the market and regulatory environment in Switzerland that affected key inputs to the estimate of future cash flows and earnings. This gave rise to impairment charges recorded against properties, equipment and vehicles of $195 million and against intangible assets of $84 million. In year-to-date trading, Switzerland, as I referenced earlier, has been impacted by the ongoing negotiations on doctor tariffs in Western Switzerland, affecting our hospitals, in particularly Geneva and Lausanne. Considering the anticipated resolution of this dispute, together with the good volume growth across the rest of the business and continued progress on our turnaround project, we're targeting low single-digit revenue growth and continued improvement in EBITDA margins in FY '26. Turning our attention to Southern Africa. Revenue for the period increased by 8% to ZAR 22.4 billion in a challenging economic environment. Compared with the prior year, paid patient days increased by 1.2% with day cases increasing by 3.2%. Occupancy improved to average 67.7% as admissions growth was partially offset by a 0.3% reduction in average length of stay. Average revenue per bed day was up 6.5% compared to the prior year, reflecting year-on-year price increases and also specialty mix changes. Adjusted EBITDA increased by 8% to ZAR 4.1 billion, resulting in adjusted EBITDA margin of 18.3%. In year-to-date trading, the division has continued to see steady growth in bed days sold and this, together with disciplined cost management, is targeted at delivering revenue growth ahead of inflation and an improvement in EBITDA margins. Finally, looking at the Middle East, where revenue growth for the period increased by 5% to AED 5.1 billion, driven by continued growth in client activity and increased pharmacy revenue. Inpatient admissions and day cases were up 4.8% and 3.5%, respectively, and outpatient cases, which contributes approximately 65% to revenue, increased by 1%. Adjusted EBITDA increased by 10% to AED 788 million, driven by revenue growth and strong cost discipline. The adjusted EBITDA margin increased to 15.4%. In year-to-date trading, the Middle East has experienced strong revenue and EBITDA growth, albeit on a comparative period that was impacted by flooding in April 2024. This strong growth is tempered by ongoing regulatory changes and a traditional second half seasonality. Excluding the consolidation in Abu Dhabi City that I referenced earlier, we target revenue growth in the mid- to upper-single digits, moderated at a divisional level to mid- to lower-single digits by the impact of the closing of the Al Noor Hospital and an incremental improvement in our EBITDA margin. And then to wrap up on Mediclinic. In summary, we remain focused on building out our revenue streams and improving operating performance. This will provide us with a robust position from which to execute on our strategic objectives to compete in a changing environment, take advantage of the opportunities and creating an ecosystem that enhances the quality of life. And with that, I'd like to hand over to Dietlof Mare to go through CIVH. Dietlof Mare: Thank you, Jurgens. Good morning, everybody. I would like to start the presentation focusing on a few strategic points. Then I would like to go into the operations and the market overview, touch on the financial performance and then the main key initiatives we're planning in the next short to medium term. If you look at the Maziv's strategy, we're looking at unlocking scale to deliver South Africa's fiber future. We're sitting in a country where the digital divide is big, and we believe that we can actually make a huge impact in closing that digital divide. We're doing that by combining enterprise stability on the one segment with 15,000 kilometers of metro fiber in covering basically all the main cities in South Africa as well as consumer growth where we cover basically 1.2 million homes in South Africa in the low-LSM and in the high-LSM areas. We believe that the opportunity is on scale expansion, and that's why strategically, we had to look at different ways of expanding this network across South Africa. Supported by the Vodacom transaction, Vodacom's investment will strengthen the balance sheet of Maziv. There's cash that will flow into Maziv. And with that cash, obviously, we will pay back some of the debt in the organization. The second part of the transaction is integrating the two assets that Vodacom will contribute. The assets will be fiber-to-the-home assets of 165,000 homes and then also 5,000 kilometers of metro fiber. And these are all revenue-generating assets that will immediately contribute to the EBITDA growth. Both debt-to-EBITDA then will obviously increase -- reduce and that will then allow us to have access to more capital, and we can expand and scale the network, building homes across -- and network across South Africa. The transaction also committed to -- we committed to 1 million homes that we will build over the next 5 years, spending committed to ZAR 9 billion of new infrastructure that we will build across South Africa. So very positive, I think, for the group, opens up and unlocks a lot of opportunities, driving the strategic objective of scale and expansion, closing that digital divide. From a DFA and enterprise point of view, the strategy for this year was to redesign and re-architecture and upgrade the network. So we focus on quality. We focused on customer experience, giving services to customers quicker from order to delivery date. And I think that was the big focus to differentiate on quality service, reliable service, redundancy and a future-proof network that can compete with the best in the world. We still, on top of that, connected 5,000 new -- net new enterprise links, a little bit lower than last year, but the focus was still on actually expanding this network and redesigning the architecture. From a Vumatel point of view, the strategy was not built this year. We only built 36,000 homes this year. At peak, 2, 3 years ago, we were building that a month. But this year, we focused more on the connectivity side. We could focus on the revenue-generating side of the asset, getting 133,000 net new subscribers onto the network versus the 106,000 previous year, which absolutely drives the strategy for us this year. The CapEx that we spent was on connectivity, last-mile connectivity, taking the homes passed and actually getting an active customer to the endpoint generating revenue. If I deep dive into Vumatel a little bit and look at the market, I think it was a phenomenal result. We increased our uptake from 36% to 42% across the blended base. Stable core growth. We've seen huge expansion and growth in reach, and then we're seeing the opportunities in the key market. Three segments in Vumatel core market, 2.2 million homes. These are households with incomes more than ZAR 30,000 monthly rent per month. The 2.2 million is -- market has matured. It's penetrated. There's actually 33% -- 34% of this market is overbuilt. And we have a market share of 41% of this market. If you take that and look at that on the FNOs in the market, there's more than 70 FNOs in the market, of which 10 of those FNOs are substantial big FNOs. We're still sitting with a 41% market in this segment. And that's because of first-mover advantage and the knowledge of deployment -- early deployment of network in South Africa. On the uptake side, we saw a 2% uptake, taking the uptake to 45%, which is very positive. And we're also seeing our subscriber numbers growing by 4% year-on-year, reaching over 400,000 active subscribers on the network, roughly 900,000 homes in this market -- on the Vuma network. From a reach point of view, 4.8 million market size. These are homes between ZAR 5,000 and ZAR 30,000 monthly rent income per month. This is a growth engine at this point. Small overbuilt, only 1.7 million of these 4.8 million homes have a fiber line that passes that. We have got a 55% market share up to -- between a 55% and a 60% market share in this market. 1.1 million homes that we've built, not a lot of [ built ] happening during the year. A small portion was built that was just closing off projects. But what we've seen that we believe is phenomenal was, in line with the uptake strategy, we saw a growth of 32% on subscribers for the full year, taking it to 443,000 active customers on the network, bigger than the core network at this point, which is for us a big achievement. Uptake also 9%, up year-on-year from 31% to 40%, which is quite a remarkable result. On the key market, this is the untouched market. This is where the scale will happen, 9.7 million homes, very low income, monthly income, under ZAR 5,000 rent per household. Big, large opportunity remains. And if we want to close the digital divide, this is where we have to make the impact. Only 200,000 of these homes have got a fiber line to it, or option of a fiber line to it. We got a market share of 13% of this. And if you go look at the figures, it's still small amounts, only 30,000 homes passed. But more remarkable is the uptake ratios on this is, 43.6%, which is the highest of all our segments. And the time to get this penetration was also the quickest ever, meaning that the need is there for people to be connected in these segments. And I also think this is the opportunity. So we're building our network in Vumatel on first-mover advantage. I think that is critical. We've got 2.1 million homes covered. Two focus areas, drive uptake in the short to medium term and then also expand into these opportunistic markets where we can drive future growth and change South Africa. From a DFA enterprise and carrier point of view, this is the anchor business. It's critical to the 5G rollout. And as we see 5G is expanding, a lot of excitement is around the 5G densification around the world actually and also in South Africa. And fiber to the site is very critical. We've got 47,000 sites in South Africa linked to all the MNOs and the fixed wireless access providers. And we're playing a big part in that. Remember, that's how DFA start, was following the towers and then we expanded from towers into metro into connecting the businesses. These are long-term contracts with MNOs and fixed wireless access providers, which is a very secure business. It's an anchor business for us, long-term 15-year, 20-year contracts, high ARPU and high revenue-generation assets. It's crucial that we enable the 5G rollout and basically 1/3 of these sites are still linked to microwave and the opportunity is there then to obviously convert these microwave sites to fiber in the future. We just have to get the model right. So 12,500 sites connected, 2% year-on-year growth, and we're seeing very stable ARPU, long-term contract scenario in this segment. Business connectivity, 424,000 business connections across South Africa. And we're approaching this in two ways, tying up the metro fiber, linking up businesses and linking up the infrastructure within the metros itself. And this enables us then to obviously get to the fiber to the sites, fiber to the business and then fiber to the homes. And as you expand the fiber to the sites, it obviously opens up more areas to actually connect businesses and also fiber-to-the-home sites in more rural and remote areas in South Africa. We've seen a strong small, medium and enterprise demand for affordable business services where people are moving away from a best effort service, more to a quality service. And that's why we decided to upgrade the network, redesign the network and re-architecture the network to actually address this segment within South Africa because we believe that in time, every business will have a quality service linked to that business because of connectivity and the importance of connectivity to do business in South Africa and compete with the rest of the world. From a financial point of view, if you look at the year ended 31st of March 2025, strong results from Vumatel. You're looking at revenue growing 8% year-on-year to ZAR 3.8 billion. EBITDA growing 11% to ZAR 2.7 billion, very good EBITDA margins within the business. You're seeing operating earnings growing 15% to ZAR 1.3 billion, and you're seeing very good operating leverage coming through in the organization. Headline earnings, 46%, better than the previous year, still ZAR 202 million negative, but you're seeing this trend going positive, and we believe this trend will continue in the near future, which is quite positive. From a DFA carrier and enterprise point of view, revenue 2% up, strong solid revenue. EBITDA flat, and the reason for this was the maintenance and the upgrades and the teams that we had to push into the market into Gauteng specifically to re-architecture and build these networks. We had to do that with additional security because we could only do the upgrades and rehabilitation at night. So we had to put big security teams next to the technicians to actually execute on this. We believe that this will normalize, and this will return to normal in the foreseeable future, in the near future, and we will turn back to our EBITDA growth year-on-year from next year. Operating earnings, 4%, up to ZAR 1.1 billion. And then we're also seeing headline earnings 7%, up to ZAR 370 million year-on-year. Community Investment, CIVH, I think underpinned by the two operating companies: revenue up 6%, to ZAR 6.7 billion; EBITDA 9%, up to ZAR 4.6 billion; operating earnings 11%, operating leverage good. And then you're seeing headline earnings negative 22%, and that's mainly due to interest and then also project costs on the Vodacom and the EUROTEL deal, and we believe that will normalize in the near future. From a cash flow point of view, very, very strong cash generation. We're seeing ZAR 1.5 billion additional cash generated for the year-on-year. So very strong net cash surplus, ZAR 620 million, and that is driven on basically through three pillars. We're seeing EBITDA growth, year-on-year EBITDA growth positive. We've seen very prudent, smart CapEx spend on revenue-generating assets, getting connections up, getting uptake up, getting the penetration to generate revenue. And then, working capital discipline. I think a huge effort within the organization to get the working capital discipline in and that we believe will continue going forward, but a very good story on generating ZAR 1.5 billion additional cash for the year. Corporate activities linked to the strategy, expanding scale, strengthening the capital base to accelerate bridging the digital device. And I think that's the critical thing for us as a group. Two corporate activities that's in process, Vodacom investment in Maziv. I think everybody has read about this in the newspapers for the last 3 years, but conditional approval granted by the Competition Commission Appeal Court. I think if you look at the conditions, I think there's a very good balance between the public interest, benefits and the competition concerns, and a lot of work went into actually aligning those two elements of the deal. ICASA still has to approve this. It's pending ICASA. We don't believe that will take too long, and we're planning to actually get the implementation -- targeted implementation date in on the 1st of November 2025. That obviously will kick off a few actions. We will have to rapidly integrate the assets to maximize EBITDA. We've got these two assets, 5,000 kilometers of metro fiber that we will have to integrate into the network. We got 165,000, nearly 3,000 kilometers of fiber-to-the-home assets that we will have to integrate as quickly as possible. And we will have to execute this as quick as possible because immediately, we will see a revenue and EBITDA uplift because these are revenue-generating assets. The key terms of the deal, Maziv equity value was valued at ZAR 36 billion that included the EUROTEL stake. Vodacom will contribute ZAR 6.1 billion in cash into Maziv and then ZAR 4.9 billion fiber assets, which has been the transfer assets and the fiber-to-the-home assets. A pre-implementation dividend of about ZAR 4.2 billion will be payable to CIVH, and then Vodacom will hold 30% initially, with shares in Maziv, with the option then to increase to 34.95% in future. Acquisition of the additional stake in EUROTEL, it's also very key for us as a strategic pillar within the organization, linking up to scale and then also accelerating the bridge of the digital divide. Competition Commission recommended this for approval and referred this then to the competition tribunal where we have to then follow the normal process. And we believe that is being kicked off at this point. We're waiting for a date for the tribunal still, but I believe that will be fast tracked. And soon, we will actually be at a position where we can give more detail on what's happening there. I think the significance of this deal is the assets in EUROTEL complements the Vumatel assets, and it builds out our scale. So it covers underserved markets where we are not, as a Vumatel, at this point, but it opens up nearly 500 towns or more than 500 towns across South Africa where we can then start building out these different solutions we have on the fiber and connecting different types of LSM households. I think built on this, if you look at our network, you look at our uptake, and you look at the structures, you look at how we're actually driving the scale, I think this is a very good future. There's a very good future for the organization to grow to scale and to close the digital divide and connect South Africa. Thank you, and I would like to hand over to Paul from RCL. Jordi Borrut: I think we will start from Heineken Beverages, right? So thanks, James. And allow me to, in the next few minutes, present the performance of Heineken Beverages and its finance together with my CFO, Lucas Verwey. So moving to the recap of the strategic rationale. It is important to reflect on the fact that this integration of -- with the 3 companies provides a strong opportunity for value creation and growth. First, because it allows us to tap into growing markets in the Southern and Eastern Africa with a combined population of nearly 300 million inhabitants, including South Africa. And secondly, because it combines -- it complements beautifully the portfolios of the 3 companies, allowing us to position #1 or 2 brands in all categories, ciders, beer, wines and spirits with a stronger scale in South Africa, which none of the 2 companies had priorly, giving us a challenger opportunity that we did not have before. It also leverages the strengths of both companies, the global scale, best practices, portfolio partnerships and sponsorships of Heineken with a deep expertise of Distell in the Beyond beer portfolio, which suits the Heineken recent global ambition to expand in Beyond beer. Fair to say that the disruption phase is now at its end. It's been 2 years since the integration. So we've changed and moved from a focus on systems integration and structures much more into market expansion, customers and consumers. Moving to the next slide. So talking about focus on the market. In the recent momentum in the last 6 months, we've seen an improved momentum of our business despite the fact that Jannie mentioned that the market context is challenging with a slower alcohol growth and also the entry of low-cost players that come at low entry points. Nevertheless, we've been able to turn around our beer performance with share stabilization and some gains in beer, which was a key focus for us. A significant improved margins across the 4 categories with a combination of moderate pricing and strong efforts in our variable expenses, fixed expenses below inflation, which is a testimony of the efficiencies and synergies that we can still tap, thanks to the combination of the 3 companies. From a growth perspective, what you see is that the companies in Namibia is showing -- continues to show a very resilient and solid market share, growth and margin expansion. And we continue a very strong growth also in international markets with a stronger momentum, as I mentioned, in South Africa. If we move to the next one, specifically on South Africa, what you see is our key priorities for South Africa remain unchanged. The first one is to win in beer, and that's because our total alcohol share in South Africa, which is above 30%, is not translated yet in beer, where we are -- market share is below 20%. So we've got a significant opportunity to grow in beer, and we're well positioned now with the integration and the brands that we have and also the route to market to do so. The second one is to build brands with pricing power, which is a reflection of our intent to focus amongst the 60 brands that we currently sell and distribute into 13 of them to invest behind these 13 brands in significantly more ABTL to make sure that we have the strength of the brand and the pricing power behind the brands, whilst we continue to trade with the rest of the brands. And those are brands like Savanna, Heineken, Bernini, Amarula, just to mention a few. The third one is to create a direct connection with our end customers, leveraging digitization, but as well as joint business plan with key customers now that we have the scale and the opportunity for growth for these customers as joint business we can see much better opportunities to joint business plan and to co-create growth with these key customers. The fourth one is the operational efficiency. As I mentioned before, both in variable and fixed expenses, we are seeing a significant effort, and we will continue to do so in the years to come. All that cemented with our winning competitive spirit, which is a key enabler, and it talks about the resilience and the engagement of our employees, we've seen post-integration over the last 2 years and improved in our engagement scores, we've measured that for the last 2 years 4 times. And in the 4 times, we've seen improved engagement, which is a testimony of the better momentum and mood of the company. I'll now pass over to Lucas to talk to us more detail on the financials. Lucas Verwey: Thanks, Jordi. Good morning, everyone. This slide shows the financial view of the Heineken Beverages Group, including Namibia Breweries. The financial overview for the 12 months ending June '25 shows very solid progress. Revenue grew by 8%, reaching over ZAR 55 billion, while the reported headline loss narrowed dramatically by ZAR 2.9 billion, signaling improved operational efficiencies and profitability. Our normalized headline earnings turned positive for the first time to ZAR 611 million. The market share in beer has stabilized and margin improvements, like Jordi said, have been achieved through initiatives like our returnable packaging program for mainly bottles and crates. Despite our limiting pricing power due to competitive pressures, cost savings measures have protected our profit. The business remains cash flow positive with stable net debt, positioning it well to capitalize on growth opportunities in South Africa and other African markets, following a complex 2-year integration period. Next slide. You can see the graphs show the revenue contribution by category and also the revenue growth by category on the left-hand side. The revenue growth was achieved across all categories with single to double-digit increases, reflecting very strong brand investment and market dynamics. Beer revenue stabilized, thanks to brand support and returnable packaging, which also helped improve the margin. The cider category continues to expand rapidly with Savanna now the largest cider brand globally by volume and value, and Bernini emerging as a standout performer. Spirits, spirits remain important for profitability despite significant pricing pressures. And on wine, while the premium wine faced challenges as consumer shifts towards more mainstream options. The next slide shows the revenue contribution now by region. So obviously, we've got Heineken Beverages SA business, the Heineken Beverages International business and Namibia Breweries. As you can see there, South Africa remains the dominant contributor to Heineken Beverages, revenue and profit, also producing export stock for other regions. The Namibia business, led by Windhoek and Savanna is profitable and provides operational benefits. The NBL portfolio is growing in volume validating the strategic rationale for Heineken Beverages. HBI, or the international business, has high single-digit volume growth across key African regions, highlighting significant expansion potential, supported by local production capabilities and export opportunities. The geographic and product diversity strengthens the company's position and supports long-term growth ambition across the African continent. This slide here, we detail the movement in reported headline loss for Heineken Beverages, including the Remgro IFRS adjustment. The significant reduction in headline loss from F '24 to F '25 as a result of significant improved earnings before tax of ZAR 2.1 billion. The depreciation and amortization on the purchase price adjustment, or the PPA, is also ZAR 720 million less than the prior year, and that's mainly due to the inventory realizations for ciders and wines coming to an end. The financial improvement underscores the company's progress in stabilizing operations and enhancing profitability following the integration, as we said. Here, we see a waterfall between the reported headline earnings and normalized headline earnings. Excluding the depreciation and amortization on the purchase price allocation, the headline earnings increased to ZAR 479 million. Nonrecurring expenses mainly cover transaction-related restructuring costs and integration efforts. After accounting for all of these items, the normalized headline earnings showed a strong positive turnaround to almost ZAR 611 million from a loss of ZAR 268 million in the prior year. Thank you. I hand over back to Jordi. Jordi Borrut: Thank you, Lucas. So moving ahead, we still see a changing market dynamics and a challenging market dynamics that set to persist, both by a softening of the alcohol market and by the entry players at low cost, but we have a delivery focus to mitigate some of these impacts. One is the stabilization and the expectation to continue our momentum in beer, a strong innovation pipeline, which has proven to successfully deliver strong gains, pricing dynamics that we can leverage, thanks to the multiplicity of our SKUs and brands, which allows us to play smartly with pricing across the broadest of our portfolio, a continuous obsession on fixed cost savings as we've been doing for a route-to-market transformation as I also explained. It's important to say that we've recovered margin despite a continuous and strengthened investment behind our brands, our ABTL investment has increased over the last 12 months and will continue to increase as we want to focus deliberately in building strong brands. We're now here for the peak performance, which happens between now, September, October, until the end of the year. We're ready for it. And this is the period where we make most of the profit from the company in these last 3, 4 months. Last, but not least, we are very satisfied with our change in our sales focus, from a regional focus to a channel focus, meaning that we've structured our sales force now to be focused on different channels, and we've seen very positive outcomes of that shift, and we will continue with that focus on a channel basis moving forward. Thank you so much. P. Cruickshank: Good morning, everybody. Nice to have the opportunity to add some color to the RCL Foods results, which we published on the 1st of September. Just starting with the strategic overview, and we progressed well against our strategy, which is -- consists of 3 pillars: People First, Right Growth and Future Fit. And I'll just comment on each one in terms of the progress made, but it's also supported by nonstrategic enablers, which are consistent with what we showed in the prior. People First, good progress being made in this pillar. Right growth is challenged due to lower demand, and I'll speak more to the market conditions in the food sector just now, and then, Future Fit, with the context of the tough economic conditions, which we mentioned many times this morning, we've significantly dialed up focus in this area and have made good progress in F '25 results. Just talking to the highlights of F '25. As mentioned previously, the strategy is consistent with prior years and clear, and we've shifted our focus on execution in F '25 and delivered a pleasing set of results despite the market conditions. Just to unpack some of the F '25 strategic priorities that were delivered in a little bit more detail, as context to the numbers, starting with People First, we implemented customized diversity and inclusion plans across our various operating units. We have a diverse business across many provinces, and each plant requires a unique plan, which we've made good progress in implementing. We've shifted culture -- our culture to drive high-performance culture, and this is an individual person level as well as the collective, and we're seeing benefits of that come through in our results. From a Right Growth point of view, net revenue management has delivered savings in the current year, and we've made pleasing progress in this regard. Baking has some key innovation projects, which will be delivered in F '26, but significant progress was made in those projects in F '25 and position us well for the innovation launches which are to come. And then finally, it's not all about growth and innovation, the core is a major part of our business, and we are focused on profitability in the core, particularly in Pet and Bread, and this has yielded positive results in F '25. And in Future Fit, we delivered significant value in our Continuous Improvement program. And as mentioned previously, you need to focus on within when you don't have growth to offset some of your costs, which are coming at you. And these initiatives will continue into F '26. We have a strong pipeline of opportunity there. We have delivered overhead savings in F '25 to address the lost synergies as a result of the Vector sale and the Rainbow separation with the final unbundling step at the end of this financial year with regards to services, which continue to be provided to Rainbow. And then finally, whilst not often spoken about, we implemented successfully Phase 1 of our Group's SAP IT rollout with the conversion of our main operating engine to S/4HANA, which positioned us well for our future years from a system perspective. Then just touching on the numbers and focusing on underlying results, revenue largely muted as a result of the market conditions, improvements in EBITDA and our margin improving 0.5% and pleasing the headline earnings up 14.9%. Important internal measure for us, which we drive all the way down to an operating unit level, is our return on invested capital, and you'll see that whatever metric you look at in F '25, both of them are now above our weighted average cost of capital, which is pleasing. Some market context, Food volume consumption remains under significant pressure. Just starting with inflation on the left-hand side of the chart, you can see Food and then unpacking Staples and then Food excluding Staples. You can see very small inflation revenue numbers coming through in there, which is below the target range of 3% to 6%. This is also impacted by volume. And you can see across various metrics, volume has remained challenged, particularly in Staples, and I have consistently raised the concern when volume in Staples is negative. And you can see which -- over the period, 12-month moving average minus 2.8%, in the more recent period 5.5% in Staples. Some volume growth in the high end of the market with regards to Food of 1.7% for the 12 months to June. On the right-hand side, we unpacked the Food volume trend over a 2-year period. Just a reminder, this date had come from Ask’d, which supports 80% of the food manufacturers, so it's volume out from food manufacturers. And you can see the last 6 months all months in negative territory barring one in June, and this trend has continued down to FY '26. So the market remains very challenged from a food consumption perspective. Just moving into RCL Foods market share performance within that context, pleased to say that our brands continue to hold up well despite the market conditions, but our market shares across a number of them improving in the period. I'd just like to call out 2, which are worth noting. One is the Nola Mayonnaise movement from last year's 47.4%, down to 42.5%. At interim, I did state that we were comfortable with this and remain comfortable with this because the right range for Nola Mayonnaise is between 41% and 43% market share. So that is a clear strategic move to improve margin over the period. And then the others worth calling out is Feline and Canine Cuisine, both of them in the Premium Pet Food sector in retail, and you're seeing nice market share growth, and I'll come back to that later in terms of the Pet performance. Our EBITDA performance and waterfall for the year, the outer bar showing the statutory performance, and I'll just comment on the material bars in between. And the middle section showing our underlying EBITDA performance, which unpacks our operating view, which are up 7.9%, with the statutory number up 11.4%. Some of the material numbers in the statutory reconciliation relate to insurance claims, the Komati being one and floods in Komati area being the other. The other one that's worth calling out is the ZAR 91 million special levy recovery, which relates to the business rescue process for Gledhow and Tongaat. And it's probably worth spending a second just to update everybody where we are there. That ZAR 91 million did come through in H1 of F '25, and that was money that was held at SASA with regards to exports and that was payable to the other millers and growers within the industry. Just an update on the process, Gledhow is on a payment term, and the first payment was made in F '25, and there's 2 more years for them to repay that outstanding levy. The Tongaat portion remains subject to the appeal case, which will be heard in the Supreme Court. We still remain hopeful this side of the calendar year, but certainly early in 2026 calendar. Tongaat to exit business rescue will need to pay ZAR 517 million into an escrow account. And we also believe that, that process is imminent, and then, the recovery of that money was subject to the court case. We remain confident in our perspective, our legal view on this case. In the operating view, I'll talk to the business units on the next slide, but just to mention growth, I spoke earlier about the overhead savings, and you see that coming through in the group line showing a profit or movement of ZAR 62 million versus the prior year as well as unallocated restructuring costs, which we've managed to reduce our cost base to offset Vector and Rainbow. A long-term historical perspective of our performance at RCL Foods, so taking out the businesses which are now being separated, starting with F '21 through to F '25. F '21, just a reminder, was a COVID year, so significant tailwinds from a food consumption perspective. I think what I just want to mention here is the makeup of the results and the quality of the earnings that underpin F '21 versus F '25, and you can see growth coming through. But in F '21, our Groceries and Baking business units made up 50% of our EBITDA, and F '25, they make up 60% of EBITDA. And this is despite a very good profit performance on sugar, which I'll contextualize in the next slide. So we're making progress in terms of our shape of our portfolio with a lot of our focus and innovation coming through in Baking and Groceries. And then just to touch on each business unit's performance briefly, you'll see a nice uptick in the EBITDA numbers for Groceries and Baking, 25.5% Groceries and 55.1% in Baking, with sugar down 22.3%, but it's worth noting that sugar is nearly ZAR 1.1 billion EBITDA for F '25 is the fourth highest profit in its history. So still a significant performance. Just touching on each one briefly, Groceries, I mentioned earlier around Pet Food driving premium brands, and you can see that payable product mix driving some of the improved performance. NRM and continuous improvement initiatives playing a role here as well as production efficiencies and to some extent reduced load shedding costs of not having to run those diesel generators in our Randfontein plant. From a baking point of view, strong turnaround across all operating units. We saw volume growth in Pies and Specialties, only 2 operating units across the group that saw volume growth in the year, and Milling benefited from improved pricing. Bread reported a significant turnaround in EBITDA. I must acknowledge it's off a very low base, and a lot of work continues to happen in Bread to turn this business around and position ourselves differently within the market. And then from a sugar point of view, we've seen pleasing agricultural performance and manufacturing operational performance in FY '25, particularly out of -- our biggest plant being Malelane, opportunities that exist there to continue that improved trajectory. And we're seeing good crop and good yields come through in the first part of season '26. There is some risk in sugar. In the last 6 months of the financial year, we saw reduced consumer demand and a significant increase in imports, which is a concern to us. Just looking forward, I've given the context of consumer demand. We don't see any change to that. And as I mentioned, we're seeing that trend continue into the first couple of months of the new financial year. And we will continue to focus and drive our strategy, which is a focus on business resilience. And in pockets of growth, where there is, we will take advantage of that. Just 3 things I want to mention on the slide. The first one is Sugar. We are expecting the less favorable market conditions from H2 to continue. Significant work is happening between SASA and ITAC to reduce the impact of the import risk. That is a process which needs to be followed and at best will be resolved sometime towards the end of Q1 of 2026 calendar year. So there is risk in sugar. We will, as a consequence of that, give a strong emphasis to our internal items, which we can control. Then the last 2 to call out, I mentioned the key innovation launches in Grocery and Baking. They will not drive significant value in F '26, but remain key enablers for improved performance into the medium term, and we are well progressed and on track with those projects. And then finally, we have refreshed our Pet Food strategy and are busy implementing that, and this is to make sure that we are well positioned to play our profitable brands in the channel shift, which is currently taking place in Pet to the Specialty Pet stores, which are busy being rolled out by our major retailers. And with that, I'll hand back to Jannie. Jan Durand: Our priorities remain as stated, as we've explained, Carel explained at the beginning of the presentation. So they won't change. But in their nature, we must remember, they are not binary, most of them are long term and require continuous attention. Even so, today, we spoke to some of the notable improvements we've made as evidenced by our pleasing results. We're happy to celebrate the gains, as it keeps the teams motivated and up to new challenges. Looking at the year ahead, I'm excited to continue building on the progress of the current year, notably through continued active partnership with our management teams and co-shareholders to drive sustainable performance in our underlying portfolio. The positive momentum we have seen in this financial year, I'm pleased to report that it continued across the majority of our portfolio in the first few months of the current financial year. However, we will continue on our path of sharpening and simplifying the Remgro portfolio as well as in seeking out capital allocation opportunities that will create sustainable value for our shareholders. No doubt, our refined capital allocation plan will be central to the value unlock phase of our journey. This includes our continuing journey of simplifying our portfolio. On our sustainability priorities, we remain focused on strengthening disclosure, including alignment on key ESG indicators to be monitored across the group. A key priority will be able to deepen the risk component of our climate reporting through scenario analysis and stronger risk management processes. This will enable us as a holding company to better understand the risks we face and to support our investee companies in addressing them effectively. These remain the 3 key immediate priorities for us as a management team, which we believe, if done right, will aid our efforts in achieving our goal of crystallizing value for our shareholders. Beyond our portfolio, South Africa's muted GDP growth, strained consumer sentiment, high employment -- unemployment rate and economic reform, progress continues to pose some challenges. The implementation of significant U.S.A. import tariffs will also magnify this impact, the quantum which is very difficult to predict right now. Our portfolio is certainly not immune from this impact. We are not naive about the magnitude of some of the challenges that we continue to face and understand these will test our resilience and require some creative solutions. Our team, however, remains up for the challenge, and I remain confident that our mindset of realistic optimism will be impactful. This will enable us to make a positive contribution for the benefit of our shareholders and the wider community in which we operate in, in line with our purpose. I'm personally very grateful for all the tireless efforts of my team and all our partners, and I'm equally pleased with what we've been able to deliver so far, as evidenced by the results we have presented today. It would be obviously very unfair to single out anyone, but I think it will be remiss of me not to make special mention here of Peter Uys who retired in August. Peter has been a stalwart in our teams and joining us from Vodacom 12 years ago. But I think it's fair to say that there is efforts and determination in getting the CIVH and Vodacom deal to a point where it looks highly likely was a true evidence of his character and a great example for all of us at Remgro. It took nearly 5 years. Thank you now for your time. We will now open the floor for questions, and hopefully, we can answer all of them. Thank you very much. Operator: [Operator Instructions] At this moment, I will hand over for written questions submitted via the webcast. Lwanda Zingitwa: Jannie, we have a few questions on the webcast. Maybe to start, and I think, Carel, you covered this in the slide, but maybe we can add a bit of color because there's a few questions around capital allocation priorities in the group and given the amount of cash that we have and that we're likely to get if the CIVH deal goes ahead. And linked to that, with the announcement of a special dividend makes sense at a 40% discount versus having done a share buyback. Carel Petrus Vosloo: Thanks, Lwanda. Maybe to deal with the second part of that question first, the question of a share buyback versus a special dividend. I think it's fair to say both of those things are ways of returning capital to shareholders. We've got shareholders that would prefer us to do buybacks. We've got others that would prefer cash. I will say that those that prefer us to do buybacks are typically more vocal than the ones who prefer the cash. But you can get roughly to the same outcome if you're a shareholder that prefers to do a buyback is to take your cash and then reinvest that and buy shares. So that gets you, as I say, remotely to a similar place maybe with the exception of withholding tax, if you are a shareholder that pays withholding tax, but you do get a base cost uplift. So in the end it sort of almost washes out. But I don't think we're committed to only the one or the other and maybe this answers the earlier part of the question that the capital allocation priorities and how we move forward is high on the agenda of the management team and indeed the Board, so it's a live discussion. The reference to the CIVH-Vodacom transaction is important because that is an important milestone that changes the outlook for capital at the center. That did only happen after -- well, the competition appeals court approval was after year end, and we're still awaiting the ICASA approval. So that's not fully in the bag yet. But as I say, it's an ongoing conversation, and we are very mindful of the implications for -- as I say, for Remgro in the long term and short term and also for shareholders. So it's getting a lot of attention. Lwanda Zingitwa: Thanks, Carel. And while we talk about value creation, Jannie, there's a question on OUTsurance having grown to be our second largest investment and whether there's consideration to unbundle that, which would unlock about ZAR 14 billion of value for shareholders. Jan Durand: I think I've said that at the Capital Markets Day as well. OUTsurance remains a core asset of Remgro, certainly part of our longer-term strategy. So our capital allocation, not just focus on short term, it also look at the longer-term things and what we see as the longer-term Remgro strategy. So certainly, OUTsurance is still part of our investment thesis. Lwanda Zingitwa: And maybe last question for now on capital allocation, Carel, having unbundled eMedia and the sale of BAT and Grindrod, can there be an expectation when you talk about front-footedness that we are going to see more rationalization of the portfolio? And linked to that, what plans we have for the remainder of the FirstRand stake? Carel Petrus Vosloo: It's certainly, Lwanda, I think a path that we are committed to continuing on. I think it was last year this time that we said, when nothing is happening, we mustn't assume that nothing is in the works. So on this topic, I feel a bit like that analogy of the duck that's swimming above the water looks very calm, but there's a lot happening underwater. So it is something that I can reassure investors that we -- that it's an area of focus. It gets a lot of attention. I'll also acknowledge the things we did this year, selling FirstRand shares or selling BAT shares are relatively easy things to do. EMedia, perhaps a little bit more complicated, but again, there was a route to a capital market exit. So it wasn't that difficult. Some of the other things are more difficult. So they take more time. But what I can definitely say is that it's our objective we committed to you. There's lots of effort going into it. As for FirstRand, we're not -- I think we've shown a hand at the right price. We were a seller of shares. I think it was around ZAR 84 that we realized shares in the last year. But it also does depend on the use of funds. So it's -- FirstRand remains a great investment, a great company. So it's not something that's burning our pocket, but we'll continue to watch that space. Lwanda Zingitwa: Thanks, Carel. Jurgens, on Mediclinic, a few questions around Spire and the strategic review that's currently at play and how Mediclinic thinks about its stake in Spire given what that process entails? Petrus Myburgh: Thank you, Lwanda. Yes, we're, of course, very aware of the dynamic around Spire and the announcement that came out last week. I would say that following that announcement, according to the U.K. takeover rules, Spire is in an offer period, which place a restriction on what we can and cannot say. What I will say, and what we've said often, is that we continue to be a supportive shareholder of Spire in respect of the continued execution of the strategy in the first instance and the cost-saving initiatives that they continue to be on a path with aimed at saving a net number of GBP 60 million in the cost base. But also the rollout across other areas of the business, the acquisition of Vita, the continued rollout of day surgery facilities. This is something that we're very supportive of. Other than that, we continue to support the management team, and we continue to focus on the interest of all stakeholders, but also looking to drive long-term shareholder value for the business as well. Lwanda Zingitwa: Thank you, Jurgens. And to Lucas or Jordi online, there's a question on Heineken Beverages. Where are we from an EBITDA margin perspective today versus what the target is? And are you able to talk a little bit more around the trajectory and timelines for that margin recovery? Lucas Verwey: Thanks, Lwanda. I can start here. Jordi will also chip in. That EBIT or our EBITDA margin is the conundrum we face every day. So pricing and margin versus market share is basically the same side -- or 2 sides of the same coin. So every day, we battle with that. Currently, we're coming off a low base. We just provide context. We went through integration, so there's some disruption there. What I can say is that F '25 full year for the Heineken Beverages financial year-end, we will have doubled our EBIT margin. And obviously, just for reference, in our EBIT margin, we have ZAR 2.5 billion of depreciation. So if you want to work back to EBITDA margin, you can. Then long term -- and also the second factor that impacted us heavily is the massive discounting in the market currently from all players in the beer market, ciders and spirits and wines. So all areas, we had significant discounting preventing us from taking a lot of price, and therefore, passing on some of the cost pressures to the consumer. So we had to sort of balance pricing to maintain and stabilize our market shares over the past 2 years. Going forward, the long-term trajectory, the EBIT type margins that we're looking at from a sort of a Heineken Global perspective is around 15-odd percent. So the evolution is to get to that double-digit number in due course in the next 2 or 3 years. Lwanda Zingitwa: Thank you, Lucas. And back to Carel and Neville, just a confirmation of what price we hold the Capevin stake at and whether you can comment a little bit on how it has gone with having Campari as a co-shareholder in Capevin and plans going forward. Carel Petrus Vosloo: Neville, you must correct me, but it's ZAR 15 and some change, I think, is the price that we hold it at. So -- there we go, ZAR 15.45. So not a million miles away from the price that was originally put on the deal as part of the larger restructuring. And as far as Campari as a co-shareholder, they've been incredibly constructive. We've worked well alongside them. They seem to have the same regard for the value of the brands and the assets that we have there. Obviously, the whiskey market is in a slump, and it's a cycle that we will see through. But yes, certainly, there's good efforts going into making sure that we manage those assets to ensure their long-term value, and Campari is on the same page as us in that respect. Lwanda Zingitwa: Thanks, Carel. There are no questions at this stage on the webcast, except for comments to say congratulations on an excellent set of results and a few thank yous for the special dividend. Can we ask for questions on the Chorus Call line? Operator: A question comes from Rey Wium of Anchor Stockbrokers. Rey Wium: Jannie, Neville, Carel, you have touched on -- I think it's on Slide 10, but I just want to get a feel -- I mean, obviously, I'm fully supportive of what's been happening here. The investment activity over the past 2 years have been fairly muted. I think it's like ZAR 300 million and ZAR 500 million plus/minus over the past year. So it looks like the focus has been on the debt reduction, which is great. So I just want to know whether the capital allocation will continue in the short to medium term to be more -- basically supportive of the existing investments in your various pillars as opposed to looking for new outside opportunities. So I just want to get an idea around that. And then maybe just a quick one on -- I mean, it's obviously still dependent on the approval of the Maziv transaction. But I mean, if Vodacom decides to top up their stake to 34.95%, my understanding is that they will purchase that directly from Remgro. So let's assume that, that does happen, will that flow through to Remgro's own cash balances? Or will it be trapped within CIVH? So that's about a ZAR 2 billion plus amount that we're talking of. Jan Durand: First question. Let me -- we're open for business for new investments. So I think the reason why you haven't seen new activities probably related -- not seeing the right opportunities, also the muted GDP growth in South Africa with very low growth prospect. And remember, we've got a high cost of capital, so it must beat our internal hurdle rate. So yes, but the short answer is absolutely correct. We're open for business. But also, we'll still focus on the other capital allocation thing. So we're not saying new investment, but also following on investment. As Carel has mentioned earlier, that is very critical for us and supporting our underlying investments so to have a reserve at the center to be able to follow on investments if they've got expansion opportunities. Then, on the second part of your question, regarding the option, yes, that is -- will be a cash that will flow directly to Remgro. So if they exercise that option, that will be cash at the center. I don't know if you want to add anything Carel. Carel Petrus Vosloo: No, that's right, Jannie. And Rey, it's the presentation that we did after the announcement of that transaction sets it out relatively clearly. So if you had to follow it there, you'll see that, that purchase from us sort of happens through CIVH. So it's a subscription of shares or purchase of shares from CIVH and then a repurchase of shares from Remgro with a bit of leakage of tax sort of in between. But you're right in that number, roughly ZAR 2 billion that should come directly to Remgro -- or the ZAR 2 billion is sort of the bottom end of the range. It's subject to a valuation, but yes, that's correct. Rey Wium: And if I may, just a quick 2 additional questions from my side. This is for Jurgens on Mediclinic. I think it's now the second year in a row where the dividend declaration, I think, was $40 million. I just want to know what could trigger an uptick in that rate. Is it dependent on the debt levels within Mediclinic or -- so maybe just some color around that? And then maybe just for Lucas on Heineken Beverages. I just want to clarify or just check if my calculations are correct. I mean, the improvement in the operating performance there, does that basically look like about -- round about 4 percentage point improvement in EBIT margin? So just the incremental increase, which I'll sort of try to pick up there. I just want to know if my calculations are correct. Petrus Myburgh: Thank you very much. From our side, the dividends, obviously, it's -- as you can imagine, is part of a much broader capital allocation strategy in terms of, as I set out at Capital Markets Day, first and foremost, the generation, which very much depends on revenue growth and driving our EBITDA margins and then converting that into cash, which is our operating strategy in a nutshell. But then looking at where we allocate that towards, you're 100% right. If we look at our leverage, it has reduced to 3.1x, which is the lowest than it's been in a very long time, at least since I think I've been with this company. But in -- within that portfolio of debt, we need to make a couple of moves. We have 0 debt in the Middle East at the moment, in the process of refinancing in South Africa and we need to do the same in Switzerland as well. And so I think we need to settle that down. And then, we need to look at our growth trajectory, especially within the Middle East and the capital requirement there. But all of that, over a 5-, 10-year period and evaluate that and then say, okay, well, then what is the right dividend level for us at a shareholder level as well. But we -- I can assure you, there's quite a bit of emphasis and discussion around that -- around the boardroom table as well. So it's a very important part of capital allocation, but it forms part of this much broader framework that I just outlined. Jordi Borrut: From Heineken side, yes, the margin, you're correct. Just remember, we have a different financial year. So our full financial year ends in December. But for this period that we're talking about, you're right, we probably had a 3.5-odd OP or EBIT percentage going to 7-odd, so it's about that 4% increase -- incremental increase for the period under reference, so correct. Rey Wium: Excellent. And congratulations again on a great set of results. Operator: Ladies and gentlemen, with no further questions, this brings us to the end of the question-and-answer session. I will now hand over to Mr. Jannie Durand for closing remarks. Jan Durand: Just want to say thanks for everybody for attending. And hopefully, we can present another good set of results in 6 months' time. Thank you very much for your -- for attending the session. Thank you. Operator: Thank you, sir. Ladies and gentlemen, that concludes today's event. Thank you for attending, and you may now disconnect your lines.
Operator: Good evening, and welcome to MillerKnoll, Inc.'s Quarterly Earnings Conference Call. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Wendy Watson, Vice President of Investor Relations. Good evening. Wendy Watson: And welcome to our first quarter fiscal 2026 conference call. On with me are Andi Owen, Chief Executive Officer, and Kevin Veltman, Interim Chief Financial Officer. Joining them for the Q&A session are Jeff Stutz, Chief Operating Officer, John Michael, President of North America Contract, and Debbie Propst, President of Global Retail. We issued our earnings press release for the quarter ended August 30, 2025, after market closed today. It is available on our Investor Relations website at millernoll.com. A replay of this call will be available on our website within 24 hours. Before I turn the call over to Andi, please remember our safe harbor disclosure regarding forward-looking information. During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties, and other factors which may cause the results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors which are detailed in today's press release. The forward-looking statements are made as of today's date, and except as may be required by law, we assume no obligation to update or supplement these statements. Operator: We also refer to certain non-GAAP financial metrics, and our press release includes the relevant non-GAAP reconciliations. With that, I'll turn the call over to Andi. Andi Owen: Thanks, Wendy. Good evening, everyone, and thank you for joining us tonight. We are very pleased with our strong start to fiscal 2026. Our Q1 results significantly exceeded our expectations. Before we get into the financial details, I'd like to recap a few highlights from the quarter including leadership names, progress on our strategic initiatives, and an update on what we're seeing in our markets. First, I want to touch on our recently announced board chair succession plans and leadership changes. I'd like to thank Mike Volkema, our outgoing board chair, for his dedication and leadership for the past 25 years, and to congratulate John Hoke as he prepares to succeed Mike as board chair. John has served on our board since February 2005, and I'm looking forward to working closely with him in his new role. We have a strong bench of talent at MillerKnoll, and I'm thrilled to congratulate Jeff Stutz on his well-deserved promotion to Chief Operating Officer. Jeff has impacted nearly every corner of our business during his 25 years with the company, including as Chief Financial Officer for the past ten years. As Chief Operating Officer, Jeff is responsible now for our international contract business, our Europe-based brands, and our global manufacturing and distribution. This evening, Kevin Veltman is joining us as interim CFO. Many of you know Kevin from his prior roles with MillerKnoll over the past ten years, serving in a variety of leadership positions, including investor relations, and as the integration lead for the Knoll acquisition. When we spent last quarter, I set out our priorities for this fiscal year. We are focusing on accelerated product creation and innovation, consistent execution, and prudent cost management while investing for profitable growth across our businesses. In the four years since we combined the strengths of Herman Miller and Knoll, we've had the time to perfect how we go to market, with the full strength of our collective. To integrate our world-class dealers who are now well-versed in our unmatched product portfolio. And we are now capitalizing on our opportunities. Every day we're presenting our customers with state-of-the-art solutions for what's possible in their spaces. Implementing our geographic and channel expansion plans, and developing innovative new products. We have a balanced long-term approach to our businesses, with the cash flow and balance sheet strength to capitalize on our multiple opportunities. Now on to the quarter. As I just mentioned, we outperformed our expectations and delivered strong revenue and profitability, with consolidated net sales growing almost 11% and adjusted EPS increasing 25%. Our results underscore the strength of our business model, strong execution by our team, improving conditions in several key and continued progress on our strategic growth initiatives. In our contract businesses, we believe growth momentum is building. More and more companies are recognizing the benefit of bringing their employees together and looking to refresh their spaces. Office leasing activity for class A space continues to be robust in many markets, with Manhattan leasing activity in August well above the ten-year monthly leasing average. Orders in the industry and dealer optimism are up, and we are continuing to see strength in our own preorder metrics with our twelve-month funnel up year over year in both North America and international contract. On the product side, in addition to healthcare solutions from Herman Miller, private office solutions from Geiger, AIDS, Weiser, and the new workspace solutions from Knoll that were all introduced at Design Days, we launched an electrostatic discharge version of one of our icons, the Aeron chair, allowing it to be used in data center clean room environments. We are excited to see such strong interest in and opportunity for this product globally. Turning to our global retail business. First, a reminder that our growth strategy for this business is currently focused on the North America region, and comprised of four levers: opening new stores, expanding our product assortment, growing e-commerce sales, and increasing our brand awareness. Kevin will discuss the segment financials, but I want to share some North America retail-specific performance for the quarter which includes all of our North American operations with the exception of Holly Hunt. Net sales in the North America region were up 7% compared to last year, and North America orders were up over 5%. Web traffic in North America was up a strong 17% over last year. We opened four stores during the quarter, two new DWR locations in Sarasota, Florida and Las Vegas, and new Herman Miller stores in Chicago and Philadelphia. In the second quarter, we expect to open four additional stores, a DWR in Salt Lake City, and Herman Miller stores in Nashville, and in El Segundo and Walnut Creek, California. For the full fiscal year, we anticipate opening a total of 12 to 15 new stores in the US, as we execute on our strategy to more than double our DWR and Herman Miller store footprint over the next several years. Onto our retail assortment expansion initiatives. This year, we're launching 50% more product newness than we did in fiscal 2025. And new product is already positively impacting our performance with new product order growth of over 20% in the quarter. This bodes well for the future. First, as you might expect, we see a direct correlation between categories with the most newness and overall growth. Second, new products are driving out demand from customers who are brand new to MillerKnoll, so assortment expansion fosters new customer acquisition and provides a platform for building long-term customer lifetime value. Before I turn it over to Kevin, I want to thank and recognize our associates around the world for their hard work and dedication to MillerKnoll. Our performance this quarter reflects their commitment to outstanding execution. Our people are the key to our success. And I'm proud that MillerKnoll was recognized by SAS company as the best workplace for innovators, and also named overall as a great place to work. Kevin, welcome. I'll hand it over to you. Kevin Veltman: Thanks, Andi, and good evening, everyone. I'll start with an overview of our first quarter performance followed by our outlook for the second quarter. In the first quarter, we generated adjusted earnings of $0.45 per share, significantly outperforming the midpoint of our guidance and 25% ahead of prior year, driven by better than expected sales and strong gross margin performance that benefited from leverage on our sales growth. Consolidated net sales in the first quarter were $956 million, above the midpoint of our guide. Versus prior year, net sales were up 10.9% on a reported basis and up 10% organically, driven by strength in all segments of the business. New orders at the consolidated level in the first quarter were $885 million, down 5.4% as reported and 6.2% lower on an organic basis. As a reminder, we expected lower orders in the first quarter due to the $55 million to $60 million in pull forward activity we saw in the fourth quarter in our North America contract business, related to our pre-announced tariff surcharge and list price increase. I will touch more on this later in the call. In keeping with this same dynamic, our consolidated backlog by $67 million to $691 million. First quarter consolidated gross margin was 38.5%. Gross margin included approximately $8 million in net tariff-related impacts. As mentioned last quarter, we expect margins to be negatively impacted through the first half of our fiscal year by tariffs currently in place but remain confident our pricing actions will ease these in the second half of the fiscal year. Turning to cash flows in the balance sheet. We generated $9 million in cash flow from operations in the first quarter, and ended the quarter with $481 million in liquidity. In August, we refinanced our term loan B to extend its maturity to February 2032. In connection with this refinance, we incurred a noncash debt extinguishment charge of $7.8 million that is recognized in other expenses on the P&L. We finished the quarter with a net debt to EBITDA ratio, as defined by our lending agreement, of 2.92 turns, comfortably under the maximum limit defined in those agreements. With that, I will move to our first quarter performance by segment. In the North America Contract segment, net sales for the quarter were $534 million, up 12% from the same quarter a year ago. New orders in the period were $492 million, down 8% from last year. Given the order pull forward dynamic in 2025, in order to better normalize the order trend, order growth in the segment over the prior year for the combination of 2025 and 2026 was 3.3%. Shifting to earnings in the North America contract segment, first quarter operating margin was 10.7% compared to 3.4% in the prior year. Adjusted operating margin improved 200 basis points in the quarter to 11.4%, illustrating the benefit of fixed expense leverage we have in this business from higher sales volumes. This operating margin strength was partially offset by the net tariff impact. In the international contract segment, net sales in the first quarter improved to $168 million, up 14.4% on a reported basis and up 11.3% on an organic basis year over year. New orders during the quarter were $155 million, 6.5% lower than prior year on a reported basis, and 9.2% lower organically, primarily from lower year over year orders in the APMEA and Latin America regions, partially offset by higher orders in Europe and the UK. First quarter reported operating margin for the International segment was 8.1%, compared to 6.5% in the prior year. On an adjusted basis, segment operating margin was 8.5%, down 60 basis points primarily from the regional and product mix of sales in the quarter. Turning to our Global Retail segment, net sales in the first quarter were $254 million, up 6.4% on a reported basis and up 4.9% organically. New orders in the quarter improved to $239 million, up 1.7% to last year on a reported basis and up 0.3% on an organic basis compared to last year. Operating margin in the Retail segment was 0.6% in the quarter compared to 2.2% last year. On an adjusted basis, operating margin was 1.2%, 190 basis points lower than the prior year, primarily from new store opening costs, increased freight expense, and higher net tariff-related impact. As Andi mentioned, we opened four new stores in the first quarter. We expect to open four additional stores in the second quarter, and anticipate opening a total of 12 to 15 new stores in the full fiscal year. Now let's turn to our Q2 guidance and outlook, which is informed by our most up-to-date information on tariffs and related mitigation efforts. For 2026, we expect net sales to range between $926 million to $966 million, down 2.5% versus prior year at the midpoint of $946 million. This implies our expectation that sales for 2026 will be up approximately 3.8% at the midpoint, and this first half view normalizes the impact of the $55 million to $60 million of order pull ahead into our fiscal 2025 fourth quarter. Gross margin is expected to range between 37.6% and 38.6%. Adjusted operating expense is expected to range $300 million to $310 million, and adjusted diluted earnings are expected to range between $0.38 and $0.44 per share. The gross margin and EPS outlook includes our estimate of the net impact of tariffs currently in place. In total, we expect net tariff-related impact to reduce gross margin in the second quarter between $2 million and $4 million before tax or between $0.02 and $0.04 per share after tax. We believe our collective mitigation actions will fully offset these costs as we move into the second half of this fiscal year. Another factor included in our expectations for operating expense and earnings per share are the costs associated with planned new store openings in our global segment. As a reminder, due to the time it takes to prepare a new store for daily operation, we normally begin to incur occupancy and other pre-opening expenses one to two quarters before the first products are sold. In the first quarter, this expense was approximately $3 million. We estimate approximately $4 million to $5 million in incremental operating expense tied to these new locations in the second quarter. We expect to incur a similar range of incremental expense over the prior year in each quarter this year related to the planned new store openings. For all other details related to our outlook, please refer to our press release. I will now turn the call over to the operator and we will take your questions. Operator: We will now open the floor for questions. If you would like to ask a question at this time, simply press star followed by the number one on your telephone keypad. Our first question comes from the line of Reuben Garner with Benchmark Company. Reuben, please go ahead. Reuben Garner: Thank you. Good evening, guys, and congrats to Jeff and Kevin. Andi Owen: Hey, Reuben. How are you? Good. Thanks. Reuben Garner: Doing well. So I guess to start off in The Americas, I guess if I try to normalize for the pull forward, you've kinda been consistently growing in the low to mid single digits the last I think, three or four orders for both revenue and orders. Okay. I guess, one, do I have that right? Okay. And two, can you break down what that looks like from a volume and a pricing standpoint? Is that evolving, I guess, in the more recent quarters, is it more volume driven than price? And then how do you feel about that trend in the last four quarters? And based on what you're seeing here, of late, I don't know if things have, you know, strengthened or weakened throughout the quarter. But how do you feel on a go forward about those numbers? Kevin Veltman: So, Reuben, I could unpack your question. Maybe to start, you're thinking about it as the right way looking for NAC at the combination over the two quarters between Q4 and Q1. And if you normalize for NAC, it's itself on a trailing two-quarter basis, it's averaged out to 3.3% growth over that period of time. Your other question was related to price versus volume, and volume was a key driver for us. We expected with the pull forward, we might see some lighter demand in the quarter, and underlying demand was more positive during the quarter. We also had a surcharge adjustment during the quarter in July that customers also responded to by placing some orders. And so we had fairly strong orders in July. And given our lead times, we were able to ship some of that activity as well. The last point I would make as we look at external demand indicators right now is we mentioned in the prepared remarks, the funnel that's looking positive year over year, additions to the funnel, mock-ups were all looking positive. And then early in the quarter, we often comment our orders are up about 6% on a consolidated basis in the first three weeks of the quarter as well. Andi Owen: Yeah, Reuben, you'll recall from the last call, thank you, Kevin, we talked a little bit about the makeup of the funnel and international contract as well as North America contract. And what we've seen is a consistent change from orders that are four and five quarters out to orders that are one to three quarters out. Those orders have more certainty, they drive more revenue close in, so that is also a good sign that continues to bode well for consistent growth in North America contract. And would also add that you look at kind of the pull ahead that we talked to you about in Q4 and what's happening in Q1 and what we expect for Q2 is unfolding exactly as we thought it would. We feel good about the results. We feel good about what we're seeing in the trend, especially in North America. Would you add anything, John? John Michael: No. I think that's spot on, Andi. Reuben Garner: Well, how about any discounting? I understand that the surcharges and tariff pricing, but has there been any increase in discounting necessary to win projects or has that been pretty stable? Andi Owen: You know, that's been pretty stable for us, Reuben. We haven't seen increased discounting at this stage. We feel good about that trend holding steady. Reuben Garner: Okay. And then my last question is on retail profitability. In the press release, you listed a few sources of what appear to be near-term pressures. Can you break down the freight, new store expenses, and there was one other bucket, the tariff-related, those three items, how much in either dollars or basis points did those drag the retail margins on a year-over-year basis? And then how the new store expense in particular, like, how is that gonna play out through the year? Is that something we should expect in each of the next three quarters, and then next year, we'll get relief? Or how do we map that out? Thank you. Andi Owen: Those are all great questions. I'm gonna let Kevin break down the details about a high level, Reuben. The bulk of what you'll see as margin degradation is really new store expenses. So we're being aggressive in opening more new stores than we have before. So you will see in Q1, Q2, and Q3 those expenses will hit our bottom line, but you will also see as we get further into the year the revenue from those new store locations starting to minimize that impact. We imagine that by the end of Q4 and going into Q1 of next year, those stores will start to be accretive to the top line and the bottom line. But this year, these first three quarters, will see a margin impact. And also from a tariff perspective, and Debbie can speak to this in a little bit more detail, we had a little bit of unplanned tariff expense this quarter based on mix and what customers bought and really trying to guess where our tariff expense would be based on how customers actually fill the revenue cart. So that's one of the other factors. What would you add, Kevin? Kevin Veltman: Yeah. Just to break down and maybe a reminder, Reuben, that Q1 is always our lowest seasonal point in the retail segment. So from an absolute margin, that would be a lower volume quarter for us. And then we build in the other quarters. But of that 190 basis points for the retail margins are lower than last year from an operating margin perspective, as Andi mentioned, the new stores would be more than half of that. And then the impact of tariffs and the freight would kind of split the difference between the remainder. Reuben Garner: Can I squeeze one more small follow-up in? Is the new store impact at both the gross margin and operating margin line? Or were there other factors impacting gross margin, whether it's product mix or door or some other driver? Kevin Veltman: The new store costs are in the operating expense, so they're impacting the operating margins. You'd have those other items up in gross margins. Andi Owen: The only other thing in gross margin was some unfavorable FX impact this quarter versus last year. Reuben Garner: Perfect. Thank you, guys, and good luck. Andi Owen: Thanks. You too. Operator: Thanks. And our next question comes from the line of Greg Burns with Sidoti and Company. Greg, please go ahead. Greg Burns: Good afternoon. Just wanted to talk a little bit about the recent consolidation. Does that in any way change the competitive outlook for you in terms of how you go to market? And do you feel like there needs to be maybe further consolidation, or is M&A or acquisitions on the table for you in terms of maybe gaining greater scale in any areas of the business? Thanks. Andi Owen: Listen, I think consolidation for the industry where we are right now is a good thing for all of us. I do think that the industry has shifted to growth mode. So I can't say whether I anticipate further consolidation, but I think it presents opportunity for all of us. So from our perspective, we're excited. We think we're competitively differentiated. We know what integrations will be like, so we are looking forward to the opportunities that it presents for MillerKnoll. And as far as M&A acquisitions, we are always opportunistic in that arena. Greg Burns: Okay. And I know you're focused on the retail business in North America. But can you just maybe talk about the rest of the world? It seems to be lagging kind of the performance that you're delivering in North America. Longer term, maybe what your view is for those markets, how you might be able to bolster them or have them catch up to what you're doing in North America? Andi Owen: Yeah. I think it's a smaller part of our business, but I think just as a reminder, Greg, that the international markets are primarily wholesale, and they have been slower to recover from over-inventory in COVID, but we are seeing them start to rebound. I think it's a little bit of a slower trend. I'll let Debbie elaborate, but I think it is an area that will grow for us and continue to grow slowly, but in the future. Probably not this year. What would you add, Debbie? Debbie Propst: I'll just start by saying where we do have DTC internationally, we're pleased with the growth performance we're seeing in those channels, and as Andi suggested, the more challenging areas are wholesale business. Where we're still sort of beholden to the lack of to buy with the dealer or retail network that we sell through. However, we're seeing some green shoots, particularly with our Hay and Mitchell brands, which hit a lower price point within our portfolio and seeing progress this quarter already with our Knoll and Herman Miller brands. Greg Burns: Okay. Thank you. Operator: And our next question comes from the line of Doug Lane with Water Tower Research. Doug? Please go ahead. Doug Lane: Yes. Hi. Good evening, everybody. Thank you. I'm trying to understand how these tariffs have impacted your business because there's a lot of moving parts as a result of all this. Can we start with just in the first quarter, had $8 million of net tariff-related impact? And does that mean there was some mitigation to the tariffs? You did get some pricing or some cost reductions, or is that mostly just the cost of the tariffs at this point? Kevin Veltman: Yeah. Doug, this is Kevin. Exactly right. The point of the net is to say we've been working on pricing. We put a surcharge in place. We had a price increase in June as well. And the way it works for us is those take a little while to flow through back and through our contracts with customers. So the net impact in the short term is the $8 million that we called out from a pressure perspective. We expect that to be less in Q2, $2 million to $4 million of net impact. And then when we get into the back half of the year, we believe our pricing mitigation actions will be offsetting those costs based on the current tariff environment. Doug Lane: Oh, okay. So well underway to the mitigation efforts. And the disruption to order patterns because of the buy ahead for the tariffs. Sounds like it's pretty much behind us and the way to address that is to sort of look at the fourth quarter and first quarter in aggregate to capture the broader trends. And then beginning in the second quarter, we kind of, I don't want to say back to normal, but back to more normal ordering and sales patterns. Kevin Veltman: Correct. And that's what we felt like in looking at the order rates in the first three weeks of the quarter. We feel like we're in a more normalized place related to that. The other way we tried to cut through that noise in our prepared remarks was to say sales year to date through Q2, including the midpoint of our guide, are up 3.8% on a consolidated basis. That takes out some of that noise for you. Doug Lane: Right. Right. No. That's very helpful. And then, you know, at the adjusted operating profit line where margins are up in the quarter, I know you don't have a full year number out here. But should we be modeling improvements in the adjusted operating profit margin for this year despite all these cross currents? Kevin Veltman: Yeah. On that front, we'll hold off on commenting with the uncertainty that's out there in the macro. We're guiding right now on a quarter-to-quarter basis as opposed to still watching visibility, feeling fairly limited out beyond that. Doug Lane: Okay. Fair enough. Thank you. Operator: There are no further questions. We turn the floor back to President and CEO, Andi Owen, for any closing remarks. Andi Owen: Thanks again, everyone, for joining us on the call. We really appreciate your continued support of MillerKnoll, and we look forward to updating you on our next quarterly call. Good night. Operator: That concludes today's conference call. You may now disconnect.
Roland Carter: Good morning, everyone, and thank you for joining us. Today, I'll open with a reminder of our strategic actions that we announced in January and a few highlights of our fiscal year 2025 performance before handing over to Julian to walk through the numbers in more detail. I'll then come back to you to provide an update on our strategy. And as always, we'll have plenty of time for questions at the end. I would like to start by saying how pleased I am with the excellent progress we have made this year, operationally, financially and strategically. We are extending our track record of consistent financial performance and advancing the strategic plans we announced earlier this year to reposition Smiths and deliver significant value for all stakeholders. Turning to our strong financial performance, which came in ahead of our twice raised guidance. Fiscal year 2025 marks our fourth consecutive year of organic revenue growth, with group organic revenue up 8.9%, ahead of our 6% to 8% guidance. We expanded operating profit margins by 60 basis points at the top end of the guided range. We deployed capital in a disciplined and dynamic way with 3 accretive acquisitions and enhanced share buyback alongside a 5.1% dividend increase, marking 74 consecutive years of dividend payments. In January, we announced a number of strategic actions to unlock portfolio value and enhance returns. We are progressing the separation of Smiths Interconnect and Smiths Detection. And reflecting this, Smiths Interconnect is reported as discontinued operations in our full year results. The acceleration plan is progressing well. Initial benefits are being delivered, and we remain on track for the full benefits in fiscal year 2027. We are well positioned for fiscal year 2026 with a strong order book and expect 4% to 6% organic revenue growth with continuing margin expansion. We enter the next phase of our growth journey from both a position of financial strength and strategic clarity. The strategic actions we announced this year mark a pivotal moment for Smiths. We set out plans to be a focused industrial engineering company centered on high-performance technologies in flow management and thermal solutions. Our businesses are customer-centric, hold market-leading positions and operate in structurally growing markets. They have a high-quality financial profile with a strong through-cycle track record and with ample potential for above-market growth. This sharper focus, combined with disciplined capital allocation, positions us to deliver superior shareholder value through consistent execution, operational and financial performance and strategic delivery. Turning to fiscal year 2025 performance. Keeping our people safe is our #1 priority, and I'm pleased to see our safety record improved this year with our recordable incident rate being the lowest for several years. We delivered strong financial results with growth across all our key metrics. A great performance when one considers the impact of the cyber incident, particularly felt in John Crane, and the ongoing challenging macro and tariff backdrop. We invested organically as well, spending GBP 121 million on acquisitions to support and enhance future growth. We also increased returns to shareholders, and are now 80% through our GBP 0.5 billion share buyback program. Together with dividends, we have returned GBP 460 million to shareholders in the year, taking the total to GBP 1.7 billion over the past 4 years. With that, I'll now hand over to Julian to talk through the numbers in more detail. Julian Fagge: Thank you, Roland, and good morning. I'm pleased to present our fiscal year 2025 financial results, which extend our track record of consistent performance delivery. Organic revenue growth for the group comprising all 4 businesses was up 8.9%, ahead of the already twice raised guidance of 6% to 8% growth. Reported revenue increased 6.5%, including a 1.4% contribution from acquisitions in Flex-Tek, partly offset by adverse foreign exchange. Operating profit grew 13.1% on an organic basis and 10.3% on a reported basis. Operating profit margin expanded 60 basis points to 17.4% on both an organic and reported basis at the top end of our guidance of 40 to 60 basis points. Earnings per share increased 14.8%, driven by the strong operating profit performance, supplemented by acquisitions and the benefit of our enhanced share buyback program. Return on capital employed was up 170 basis points to 18.1%, driven by profit growth and our continuing focus on efficient capital allocation, and we achieved strong operating cash conversion of 99%. As a result of the planned separation, Smiths Interconnect is now reported as discontinued operations, with its assets and liabilities classified as held for sale. This means that on a continuing operations basis, organic revenue grew 7.2% and operating profit grew 8.5%, with an operating profit margin of 17.3%. In line with our progressive dividend policy, we are recommending a final dividend of 31.77p, resulting in a total full year dividend of 46p, a 5.1% increase. Now turning to the results in more detail and starting with organic revenue growth. Delivering consistent growth above our markets is a key focus for us, and we've now delivered 4 consecutive years of organic revenue growth, averaging over 7% per year across this time period. This growth has been underpinned by the strong performance of our portfolio of leading brands, our focus on commercial excellence and innovation and new product development. Strong revenue growth translated into even stronger operating profit growth with a 60 basis point margin expansion to 17.4%. Growth was driven by operating leverage, particularly in Smiths Interconnect and Smiths Detection, continued price discipline more than offsetting inflation, and efficiency and productivity savings, which delivered 20 basis points of margin improvement. This included benefits from the Smiths Excellence continuous improvement program and initial benefits from the acceleration plan. Offsetting this was a 50 basis point negative effect from mix with higher growth coming from Smiths Detection and some negative product mix mostly within Flex-Tek. Earnings per share grew very strongly at 14.8%, driven by the organic profit growth, accretive acquisitions, the share buyback and lower tax and interest charges. Constant currency earnings per share grew 19.6%. Cash generation was very strong at GBP 576 million, representing a 99% conversion, reflecting disciplined cash and working capital management. CapEx was GBP 80 million, GBP 12 million higher than depreciation and amortization, but lower than originally guided, with a good amount, reflecting higher investment in automation capacity and testing in John Crane. Finally, we generated GBP 336 million of free cash flow, a conversion rate of 58%. Generating free cash flow remains a key focus for us as we execute our strategic plan. Turning now to the businesses. John Crane delivered organic revenue growth of 3% against a strong prior year comparator of 9.8% growth. Growth was led by original equipment, whilst aftermarket having been more affected by the cyber incident, recovered in the fourth quarter. Second half growth was impacted by operational challenges associated with the upgrades to our machining and testing capabilities and exacerbated by a longer-than-anticipated recovery from the January cyber incident. However, we saw sequential quarterly improvement with fourth quarter growth of 3.9%. Notable contract wins in the second half included a large-scale retrofit energy project in the Middle East and a large managed reliability program in Asia. In June, John Crane launched its coaxial separation dry gas seal, helping customers cut emissions, boost reliability and lower costs. John Crane operating profit grew 6.3% on an organic basis, with margin expanding 80 basis points to 23.8%. This margin expansion reflected productivity and cost efficiency improvements, price and initial savings from the acceleration plan. Looking ahead, healthy market demand, strong order intake alongside improved execution, supports our positive outlook for fiscal year 2026. Now turning to Flex-Tek. Organic revenue grew 4.4%, with a marked strengthening in performance in the second half. The acquisitions of Modular Metal, Wattco and Duc-Pac added a further 5.4% to growth. Flex-Tek's Industrial segment grew 4% despite challenging conditions in U.S. construction, reflecting increased demand for heat kits and flexible ducting products and new customer acquisitions. Revenue in the industrial heat segment was flat year-on-year, reflecting the phasing of a large industrial contract, which is due to conclude in the first half of fiscal 2026. The business is well positioned for future wins, strengthened by the acquisition of Wattco. A recent highlight includes a contract to supply electric heaters for a low-carbon electro fuel project in North America. And aerospace grew 6.3%, supported by a strong order book, reflecting ongoing aircraft build programs and renewed long-term agreements that position the business well for the future. Operating margin was 19.5%, down versus the prior year's strong comparator, which benefited from higher-margin industrial heat contracts. This underlying performance reflected positive pricing and efficiency savings, a positive contribution from acquisitions of 20 basis points, offset by mix impact. In the fourth quarter, we identified a nonmaterial balance sheet overstatement at a stand-alone U.S. industrial site, which had an GBP 8 million in-year impact on headline operating profit and a GBP 15 million impact on statutory profit relating to prior years. This issue was isolated to a single site, has been independently investigated and is now fully resolved. Looking forward, the U.S. construction market remains subdued, although we are well positioned to take advantage from its recovery, should mortgage rates moderate and given the meaningful U.S. housing inventory deficit. For aerospace, the strong order book underpins a healthy demand for the coming year. Moving to Smiths Detection. Revenue increased 15.2% organically, and we successfully converted a strong order book into revenue in both original equipment and aftermarket. We delivered significant growth in aviation with strong demand for checkpoint CT scanners, where we continue to a good win rate. Smiths Detection has now sold around 1,800 CTiX products globally, and is the first to receive the up to 2 liters recertification in the U.K. and the EU. It is anticipated that the global upgrade program will continue with the current level of cabin baggage activity into fiscal year 2026, along with the associated longer-term aftermarket revenue stream. The business is well positioned for the next upgrade cycle in hold baggage screening supported by the first X-ray diffraction-based system in the aviation sector. With 4 units already in operation and regulatory certification underway, this innovation marks a significant step forward in detection technology and reinforces our leadership in the sector. Other Detection Systems delivered improved performance in the second half with growth of 5.2%, following a first half decline on a strong comparator. The business had significant contract wins, particularly in ports and borders, including for large mobile scanners for customs and road cargo in the Americas. Looking ahead, a growing focus on border security is expected to drive growth. Operating profit grew 23.3% and operating margin expanded 80 basis points, reflecting the good operating leverage, improved pricing, a positive mix effect and efficiency savings. Underscoring the business' commitment to innovation, our iCMORE Automated Prohibitive Items Detection System became the first AI-driven platform to receive regulatory approval for live deployment now implemented in Schiphol Airport. Looking ahead, our multiyear order book remains strong, supporting a positive outlook for fiscal year 2026. Growth will continue to be supported by the aviation upgrade program, albeit at a more moderated pace. Finally, Smiths Interconnect increased sales by 22.5% organically. All business units grew with particular strength in the semiconductor test business, where we achieved large wins, particularly in high-speed GPU and AI programs. This performance reflected the strength of our product innovation, most recently, the DaVinci Generation V high-speed test socket designed to test advanced chips used in AI, data centers and computer processing. Aerospace and defense revenue grew 15.1% with strong demand for our differentiated technology in fiber optic, radio frequency and connected products. Here, Smiths Interconnect launched the EZiCoax interposer connector for high-value aerospace and defense applications, enabling secure, precise and reliable communications in systems like satellites and advanced radar. Operating profit was up 57.2%, with margin expanding 390 basis points to 17.8% as a result of the notably higher volumes as well as pricing, positive mix and significant benefits from efficiency programs. As part of the drive to maximize value through the separation process of Smiths Interconnect, we have agreed the sale of its U.S. subsystem business, a noncash impairment on disposal of GBP 30 million was recorded. Strong market conditions combined with key program wins underpin our growth expectations for fiscal year 2026. We take a disciplined approach to our use of capital. In fiscal year 2025, we continue to demonstrate consistency in line with our framework. Organically, we invested GBP 219 million in CapEx and RD&E, which includes customer-related engineering. We invested GBP 121 million in value-accretive acquisitions in Flex-Tek at attractive multiples and higher margins. We increased our total dividend by 5.1% to 46p per share and we paid GBP 152 million in dividends in the year. And we've now executed GBP 398 million of our GBP 500 million enhanced buyback program, which is on track to complete by the end of the calendar year. Overall, we have returned GBP 1.7 billion to shareholders in the form of dividends and buybacks over the last 4 years. We did all of this whilst maintaining a strong balance sheet, with net debt to EBITDA ending the year at 0.6x. Our disciplined approach to capital allocation combined with a clear focus on sustainable value creation is designed to maximize long-term returns and drive shareholder value. We will continue to prioritize disciplined investment for organic and inorganic growth and deliver enhanced returns to shareholders whilst maintaining a strong and efficient balance sheet. First, we are committed to supporting innovation, and expect to invest 3% to 4% of revenue in RD&E, enabling new product development and commercialization. Second, value-accretive acquisitions. We will continue to pursue disciplined acquisitions in core and adjacent markets, augmenting our organic growth and strengthening our competitive position. Third, a progressive dividend policy. We balance the cash flow needs of the business with our commitment to deliver consistent and meaningful returns to shareholders. And fourth, returning excess cash to shareholders. Where we generate surplus cash, we will return it to shareholders through share buybacks or other appropriate mechanisms, ensuring capital is deployed efficiently. We intend to maintain an investment-grade credit rating, and we will balance this alongside our desire to have an efficient balance sheet. Our credit rating is underpinned by our strong and consistent financial track record, leading market positions and significant share of recurring revenue. As we progress the separation of Smiths Interconnect and Smiths Detection, we remain committed to returning a large portion of disposal proceeds to shareholders. The scale of this return will be determined once we have clarity on the timing and magnitude of the proceeds. Importantly, this decision will be made in the context of our broader capital allocation priorities, organic investment, acquisition pipeline, dividend policy and leverage. Finally, let me take you through our outlook for fiscal year 2026 before handing you back to Roland. We expect organic revenue growth on a continuing operations basis of 4% to 6%, noting the strong first quarter comparator. This outlook reflects the strength of our order book as well as the ongoing macro environment with tariffs and increased geopolitical risks causing market uncertainty. In John Crane, growth is supported by a strong order book, solid momentum and improving operational delivery. For Flex-Tek, our outlook reflects a continued subdued view on U.S. construction, balanced against a strong aerospace order book. Smiths Detection will continue to grow, albeit at a moderated pace, supported by the aviation upgrade program. We expect continuing margin expansion driven by operating leverage, benefits from the acceleration plan and ongoing efficiencies through Smiths Excellence. And finally, we expect cash conversion to be around the mid-90s percent, reflecting continued investment for growth and strong underlying cash generation. In summary, while the external environment is challenging, our strategic positioning, operational discipline and our strong order book give us confidence in delivering growth, margin expansion and robust cash flow in fiscal year '26. And with that, let me hand back to Roland. Roland Carter: Thank you, Julian. Firstly, I'll give a brief update on the separation processes. Then I'll turn to Smiths businesses and the opportunity for continued growth and margin expansion. And I'll end with our purpose, people and culture of high performance. We are fully focused on executing the strategic actions that will enhance returns to our shareholders and position Smiths for long-term success. We announced the separation of Smiths Interconnect and Smiths Detection earlier this year and are progressing these with pace and purpose, balancing value maximization with execution certainty. We continue to expect to announce a transaction in relation to Smiths Interconnect by the end of the calendar year, with completion anticipated in 2026. For Smiths Detection, we are progressing both the sale and demerger options ahead of a decision on the preferred route. Work streams are underway internally for both businesses to set them up for the separations. Following the separations, Smiths will be a focused industrial engineering company, specializing in high-performance technologies in flow management and thermal solutions with leading positions in these growing market segments, aligned with long-term structural megatrends. Our competitive advantage stems from our leading brands and engineering capabilities, our targeted investment in innovation and our product development and commercialization to meet customer needs. We have valued customer relationships based on our customized technologies, products and solutions with more than 70% aftermarket recurring or repeatable revenue. Our businesses have high-performance cultures centered on safety, our values, innovation and excellence. They have a strong financial profile of sustainable growth with high returns and good cash generation as well as organic and inorganic expansion opportunities. Empowered decision-making across our businesses ensure we remain focused on supporting customers to capture growth opportunities and deliver attractive and resilient growth with high returns. We operate a lean corporate center, delivering core competencies, including strategy, capital allocation, M&A and compliance. Here, we also present Smiths' pro forma financial metrics. Smiths generated GBP 1.95 billion in revenue in fiscal year 2025 with a pro forma operating profit margin of 19.6% and a 22.8% return on capital employed. We operate in the broad end markets of energy, industrial and construction, with 36% of revenue in energy, 38% in industrial and 26% in construction. With our strategic positions in these markets, we are aligned to some of the most powerful structural megatrends shaping the global economy, energy security and transition, resource efficiency and industrial productivity and sustainability that underpin long-term growth. These markets are expected to grow at a 4% to 5% CAGR over the next decade. Drilling down further into the subsegments of these markets, we are typically positioned in faster growth areas, including flow control, HVAC and industrial process heat. In energy, our mechanical seals enhance reliability across the oil and gas value chain, where we are seeing robust demand for traditional energy as well as increasing opportunities in new energy segments such as CCUS, hydrogen and biofuels. For industrial markets, the rising demand for process efficiency and emission reduction also supports growth in our flow control business. Aerospace continues to perform strongly with new aircraft build programs supporting demand for our fluid conveyance products. And investment in industrial heat electrification is providing significant potential upside for our process heat portfolio. The construction market growth fundamentals remain strong given the U.S. housing inventory deficit and our deep customer relationships and growing U.S. footprint, positioning us well to capture future demand in this highly fragmented market despite some short-term market challenges. Across all market segments, our solutions help customers reduce emissions, improve efficiency and use fewer raw materials, delivering both sustainability and performance. In summary, we are excited about the opportunities in our markets to deliver long-term consistent and sustainable growth. Our aim is to continue to deliver above-market growth over the medium term, underpinned by a resilient and recurring revenue base. This provides a strong foundation for sustainable performance. Our enhanced medium-term financial targets announced in March reflect our plans and strategic initiatives for above-market growth and include leveraging our installed base, brand reputation, customer intimacy and leading product expertise to deepen relationships with customers and expand our share of wallet. Commercial excellence, we will continue to enhance our operational processes to deliver exceptional customer service, enhancing customer value, incumbency and retention versus peers. Innovation. New product development and commercialization are key to sustaining growth. As examples, John Crane this year launched a new coaxial separation seal and is scaling digital solutions, including Sense Monitor and Turbo. Market adjacencies. We continue to target higher growth and higher-margin subsegments, geographies, products and customers, both organically and through targeted acquisitions. This multifaceted approach ensures that we remain well positioned to outperform in our markets over the medium term. Let's look at what we're doing in Flex-Tek, where we delivered robust growth in our construction business in fiscal year 2025 despite challenging U.S. market conditions. Building on the strength of our portfolio, we are leveraging our flexible duct product platform to drive deeper and wider penetration through our distribution channels and are adding new customers. We saw increased demand for heat kits with notable growth in key accounts, illustrating the importance of customer intimacy and higher-performing products. And our innovation remains a core growth driver. During the year, we launched the Blue Series, a redesigned sealed metal duct system that sets a new standard in performance and is already contributing to revenue. In our heat business, another launch this year supports ultra-low carbon emissions fuel with electric heaters that are being tailored for a cutting-edge electro fuel project. Both are great examples of how our innovative approach leads to new product design, which solves a key customer challenge. Our organic growth strategy is augmented by a disciplined and value-accretive approach to M&A. Acquisitions since 2018 supported a more than 13% CAGR in both revenue and operating profit at Flex-Tek alongside a 60 basis point margin uplift. This year's acquisitions, Wattco, Modular Metal and Duc-Pac strengthen our capabilities in heat transfer technologies and broaden our reach in U.S. construction. These acquisitions also allow us to scale into adjacent markets within our existing product portfolio. Adding new metal ducting businesses this year has increased our addressable market for our flexible ducting products by opening up new geographies and customers. So they are already contributing to growth and margin uplift, and we expect further benefits as we scale and integrate these businesses. For fiscal year 2026, we expect the construction market to remain subdued, although we will continue to drive the business forward to deliver against this backdrop. Turning to margin. Our journey to our medium-term target of 21% to 23% is supported by a series of structural and tactical initiatives, a combination of operational discipline, cost optimization and portfolio focus. First, operating leverage, actively driving a higher contribution margin as we grow revenue, for example, through price and product mix. Second, delivering efficiency savings and productivity improvements through Smiths Excellence. This year, through our Smiths Excellence Academy, we expanded our Lean and Six Sigma programs to reinforce our high-performance culture and scale operational best practice globally. Third, implementing our acceleration program, which is on track for GBP 40 million to GBP 45 million annualized benefits in fiscal year 2027 and beyond for a total of GBP 60 million to GBP 65 million of costs, whilst ensuring central costs remain at 1.5% to 1.7% of revenue. 2/3 of the costs and benefits relate to the retained businesses. And finally, evolving our product portfolio towards higher-margin products and market subsegments, including targeting a greater share of aftermarket, repeat or recurring revenue. Here, we show how operational excellence is supporting both revenue growth and margin expansion. Through our acceleration plan, we are simplifying, standardizing and automating core processes across engineering, manufacturing and supply chain functions in John Crane, including investment in advanced manufacturing technologies. We have upgraded automation and machining across multiple sites with a focus on high-precision applications. We have installed 72 new CNC machines and are adding 9 dry gas seal test rigs. These investments are enhancing throughput and quality, improving lead times, reducing waste and enhancing customer satisfaction. Our supply chain is being optimized to improve agility, resilience and cost competitiveness. We are consolidating manufacturing locations and centralizing transactional procurement and finance. These initiatives are delivering measurable benefits, including reduced lead times, improved pricing power and enhanced scalability and all contribute to growth and improving profitability for the business. Realizing these performance improvements underpin our confidence in the outlook for John Crane for fiscal year 2026 and beyond. As already mentioned, we set out new enhanced medium-term targets for fiscal year 2027 onwards. These targets are ambitious, yet achievable and reflect our confidence in our ability to deliver premium returns through the cycle and supports the superior rating for Smiths. At Smiths, our long-term success is built on enduring foundations, our purpose, people, values and commitment to excellence and sustainability. Our purpose is clear, engineering a better future and is embedded in our strategy, culture and decision-making. Our people are always at the heart of our business, and I would like to thank them for delivering the strong financial performance this year. Your dedication is very much appreciated. Our culture is built on our values and reflected in our high-performance mindset and commitment to delivering for our customers, communities and all stakeholders. We are making meaningful progress on sustainability. Our approach is informed by a double materiality assessment, ensuring our strategy reflects both financial and societal impact. These foundations are central to our pledge to create long-term value for all our stakeholders. So in summary, in fiscal year 2025, we delivered strong results, extending our track record of consistent financial performance. We have made great progress advancing our strategic plans to focus Smiths as a high-performance industrial engineering company. As a result, Smiths is very well positioned to deliver superior value over the medium and long term. We are growth and returns focused, highly cash generative and have a disciplined approach to capital allocation. We are confident that these strategic actions will unlock significant value and enhance returns to shareholders. Thank you for listening. Julian and I are now happy to take your questions. Operator: [Operator Instructions] And now we're going to take our first question. And the question comes from the line of Lush Mahendrarajah from JPMorgan. Lushanthan Mahendrarajah: I've got 3, if that works. The first is on John Crane. I think of the H2 organic growth is perhaps a bit lower than sort of the expectations at the Q3 point. I mean is that being driven by some of those operational issues being worse than expected? And then if so, I guess, where -- I know the Q4 has picked up, but I guess, how far are we from that returning to normal, I guess? And sort of how does that feed into sort of your confidence for growth in FY '26? It sounds like the orders are still positive there. So just how that all fits in, I guess, in terms of 2026. The second question is just on the margin guidance, obviously, continuing margin expansion is the sort of phrase you use. I guess can you help us just sort of quantify that a little bit and sort of what some of the puts and takes are? I think the acceleration plan should be quite a notable tailwind within that. But yes, just to help us sort of build that bridge, I guess. And then the third is on Detection. I think you're probably about 3 halves now sort of very strong growth on the OE side with the CT scanner upgrade. I think you said before it's over 2, 3 years of this. I guess where does the OE side peak in that sort of 2- to 3-year time frame? And then how should we think about sort of the aftermarket associated with those OE deliveries coming through over the next 2, 3 years? And I guess how that sort of plays into sort of the margin pickup in Detection over those years as well? Roland Carter: Okay. Thank you very much. I'll try and answer those questions. So from the point of view of John Crane, yes, we saw the John Crane half -- the second half in John Crane. What was comforting in that is Q3 was better than Q2 and Q4 was better than Q3. So that was very, very positive for us. The operational issues have been a challenge. We highlighted that with the cyber that exacerbated, as I said, 72 CNC machines were being put in place, and we're heading towards 9 new dry gas seals. So that was that was exacerbated by the cybersecurity issue. We have been monitoring the key performance indicators, though, within the business, that's machining hours, both external and internal machine hours. Those are improving. We've been monitoring the number of engineering hours that we need because these are highly engineered products, and that's also improving. We did surge those hours, and now they're back to a very manageable level. And we continue to monitor on-time delivery, lead times, supplier performance, and these are all moving in the right direction. So that's associated with that strong order book that we're bringing into the year and the fact that we've seen a positive book-to-bill, and we have quite a view out into the marketplace of the activity in the marketplace, we feel positive that we'll see improvement on John Crane in fiscal year 2026. So pleased with how that's moving forward. Yes, did it move forward slightly slower in the second half than we thought it would? Absolutely, but the long-term health is still there within the business. On the margin, yes, as we said, continuing, and we mean continuing margin expansion on that. So we're seeing that inflation has somewhat moderated, but we still see that we have price in our portfolio. We've learned a lot of lessons about price through the inflationary period. So we see that as very positive. We also saw the initial stages of the acceleration plan. And you'll recall, 2/3 of that acceleration plan is around the future of Smiths. So we saw the early stages of that acceleration plan coming through, which was gratifying. We'll see about half of that coming through in fiscal year 2026 as well. So that will continue to build. And not forgetting underlying all this, although we don't call out the number, the Smiths Excellence number was strong this year. That was good. It grew again. Smiths Excellence really is starting to bed into the organization. And so that will be another benefit going forward. There are headwinds, and we recognize that there are headwinds of the macroeconomic -- the broader macroeconomic environment and tariffs. Our guidance takes account of tariffs and our current understanding. So we have those mitigations around that as well. So you can see why we are confident in saying that continuing margin expansion. Coming on to your third question, which was about Detection. So Detection is in a very positive area. You saw that the growth that we recorded this year, we'll see that somewhat moderate going forward in fiscal year 2026 because it has been exceptional, as you point out. The program on CTiX, it's an important but not the only piece of business that Smiths Interconnect (sic) [ Smiths Detection ] does. So it's an important part of the business, but one shouldn't forget the rest of the business, which is also doing relatively well. So from that point of view is we're still in the midst of that program. It still continues. We -- I think last time we spoke, we shipped about 1,600 of those. Now we've shipped about 1,800 of those. The win rate is as good as we highlighted, at least as good as we highlighted. So that still has a way to run, as we pointed out, through '26 and into '27 is what we are seeing there. So we're pleased with that going forward. Obviously, aftermarket, we've never been shy about talking about the stability of aftermarket. We've never been shy about talking about the margin of aftermarket, which are both very positive for us. So we see the aftermarket will come through not only on the CTiX, but as we roll forward with all the products that we install. So hopefully, those answer your questions, Lush. Thank you. Operator: Now we're going to take our next question. And the question comes from the line of Christian Hinderaker from Goldman Sachs. Christian Hinderaker: I want to start with Interconnect, if I can, 18.9% organic growth for the half. I think that was an acceleration from a low double-digit cadence in Q3. I just wonder if there's any change to note in the comp Q-on-Q or if that's all underlying? And then secondly, if I look all the way back to Page 85 of the report, APAC revenues for Interconnect have effectively doubled for the full year. That is -- is that all driven by the strength in semi test? And I guess, interested how we think about that regional dynamic for Interconnect, given the same table implies more than 90% of its assets sit in the Americas. Roland Carter: Yes. So thank you. So from the point of view of Interconnect, we were very pleased with the growth in Interconnect. And it continues to be a very strong and well-balanced business, in fact. I think we shouldn't forget, yes, the headline is semiconductor test and the leading position and the excellent sort of products that we have within that are helping us move with the market. Not forgetting that this is also an operational challenge and the fact that we've set ourselves up incredibly well for delivering this amount of growth, which one should understand. So that mixture between operational excellence and product excellence has really delivered for us on that. We continue to see strong orders in that area. But as I said, not forgetting that this business is exposed -- over half of it is exposed to aerospace and defense, and we're seeing broadly across the business that, that market is definitely being positive going forward on that. I will let Julian comment on Interconnect as he's close to the business having previously run it very recently. But the growth in APAC also does reflect growth in semiconductor, but we don't see that, that changes the shape of the business particularly. But Julian, perhaps you want to add some more color? Julian Fagge: Thanks, Roland. Not much to add. The -- we're particularly pleased with the semiconductor performance and particularly the strength of the business in AI, where we performed particularly strongly. It's true that a large portion of the business is in the Americas. We've had that strength in aerospace and defense, particularly coming through in the U.S. But no, very pleased with where Interconnect is as we go into the new year. Christian Hinderaker: Second one, maybe for Julian. I just want -- just clarifying the charges on the balance sheet restatement in Flex-Tek. If I'm reading that correctly, GBP 8 million of the charge is within the adjusted earnings line and a further GBP 15 million one-off that further reduces your reporting earnings for the business. I just want to understand a little bit the rationale for that split and whether I've got that well understood. Julian Fagge: Yes. So Christian, in quarter 4, we discovered what ended up being a nonmaterial balance sheet misstatement in one of our Flex-Tek businesses. When we dug into it, it was effectively covering multiple years, which guided our treatment with GBP 8 million, as you say, as a headline charge or indeed reflected in our reported numbers for 2025. And then we had the GBP 15 million charge to non-headline reflecting the balances for previous years. We thought that was the best presentation of the effect of this through our numbers so that we could show an appropriate organic performance in the year. I will just add that whilst unfortunate and something that we didn't want to have, this particular event has now been fully investigated. It is now fully resolved and the learnings from this have been taken forward into the rest of the business. Operator: Now we're going to take our next question. And it comes from the line of Mark Davies Jones from Stifel. Mark Jones: Can I just ask a bit more about the moving parts of Flex-Tek and the different end markets addressed? The risk of being picky, is 6% growth in aerospace relatively modest given the current trends in that industry? Is that related to the sort of supply chain issues we're hearing about in engines? Julian, I think you mentioned a big industrial electrical heat project coming to a conclusion in the first half of next year. Is that causing any kind of gap in the outlook for that aspect of the business? And then thirdly, I note that recent acquisitions have been weighted more to the construction end of the business despite the fact that, that market looks relatively soft short term anyway. Is that just availability in terms of where the opportunity to consolidate the market sits at the moment? Or do you think we should see acquisitions in other parts of the business, too? Roland Carter: Thank you for those. From the point of view of the aerospace business, we're actually very pleased with the growth rate we're seeing there. We are working through any sort of supply chain challenges that we have. They're not major for us at all. So we are pleased with the continuing growth rate there. We're pleased with those relationships with the customers. So we will -- as we said, we are coming into the year on aerospace with a very robust order book and a positive book-to-bill ratio. So we see that coming through very strongly, and that's reflected in that 6%, which we think is a good number to think about on that one. On the industrial engineering projects, yes, we have the large project, which we continue to execute against. And we have a funnel of other projects in that area. So this is the programmatic part of Flex-Tek. So we will continue to build those programs going through. And you can see that we've indicated for Flex-Tek, we anticipate growth going forward in the fiscal year 2026. So yes, is it programmatic? Yes, absolutely. Do we have other projects coming in through the process? Absolutely. And that leads on to sort of construction. I think much of the numbers might not call it out to such an extent. The standout performance is construction because we know the U.S. market is very muted. We know it continues to be muted. We're not predicting an upturn in how we've looked at our numbers for fiscal year 2026. We are recognizing the market for what it is. There might be some good news, but we're not baking that in from the point of view of the rates and the putative rate changes that might happen. However, we think that we're in a -- an advantaged position within that market. And why? Well, we've got some empirical evidence. We continue to grow in spite of the market. We've got the new products coming through, which we mentioned the Blue Series that, that will be a changer. We've got Python coming through as well. So we've got the new products. But just as important as the innovation, we've got the customer relationships and the alignment with the correct customers, end customers to really make sure that we continue to outperform that. As part of the acquisitions, there were acquisitions in construction. And I think we see the megatrend. There is a deficit. We know there's a substantial -- several million homes are missing in America. We know it's going to take them perhaps a decade to sort of fill that deficit from that point of view. So the megatrend is correct for us. So our strategy is aligned with the megatrend. We're advantaged because of the way we play in that market as we are the people who are consolidating, which gives us me comfort about the R&D spend that we've got there because of the new products as well. So you start to put those things together and now is a good time to continue our strategy because when it does turn, you'll see the exceptional performance coming through from that. So the strategy being essentially long term. One of the acquisitions that we recently announced wasn't in construction. It was in heat. Heat is also another market, which obviously we touched on with the larger programs there, but we're very keen to both develop our presence and our routes to market within heat, but also to fill in technology gaps that we see within that and either through organic investment, but in this case, through inorganic investment. Julian Fagge: I would just add to that, Mark, we do have a very active pipeline in Flex-Tek, and we continue to work that pipeline, and we do expect to see more acquisitions in this space as we go into the new year. Operator: Now we're going to take our next question. And the question comes from the line of Margaret Schooley from Redburn Atlantic. Margaret Schooley: I actually have 2, if you would. The first one, I'll just put up there. In terms of John Crane, again, organic growth, can you give us some indication of the split between what was volume and price? Roland Carter: Yes. So from the point of view of where we've been in the past to sort of contextualize it, essentially, we did experience a lot of price growth in the past. And that also helped us develop the skills and the disciplines we need for managing price growth. What was pleasing this year was actually this year was more about volume growth. And that, I think, is important to me to say, yes, we're managing pricing. Yes, it's not quite such an inflationary environment. However, people are willing to pay for the John Crane brand. But really, we're now driving through volume. So -- would you like to give us some guidance on the split? Julian Fagge: Yes, just to say that we've taken some additional price to reflect tariffs. But the -- as I say, as Roland said, the dynamic of volume and price has been positive this year. Margaret Schooley: Excellent. And then my just second one, you mentioned some -- several new products in Flex-Tek, which is driving through growth. And in the presentation, you also mentioned in John Crane, the coaxial separation dry steel. Can you just give us a little understanding on the John Crane new product introductions? What markets you're actually targeting to further exploit? Or what other new products and adjacencies we should look forward to in FY '25 to continue to support your growth expectations? Roland Carter: Yes. I think it was pleasing to see, and it does get a lot of focus from both Julian and myself because I think John Crane is an area where we can definitely improve the way we introduce products. We can improve what we're doing with our new product development pipeline. And I think I'm very keen on new product development, new technology development, new process development and new materials development. And I think John Crane, it will take time for these things to crystallize. But we can already see with the separation seal, the focus on getting products out there, getting products aligned with key customers and getting products aligned with key accounts to make sure they're adopted relatively quickly. I think there is that commercialization, which you'll see us focus on more and more about how do we improve the products that are already out there. So the products introducing new technologies, bringing them -- increasing their specifications and then these new products, which you saw in the separation seal. So you'll see that mixture coming through. Some of those -- the new products will be longer term. The upgraded products will be shorter term, more easily adopted, meeting customers' requirements. Underlying all that, what are the sort of broad fundamentals? Because the great thing about the John Crane seals is they're not necessarily an end market specific. Obviously, the end markets do drive it. But we're looking -- all these seals need similar characteristics and similar improvements in characteristics. What do I mean by that? I mean they need higher pressures. So we're developing the technologies that allow us to have higher pressures and the products that allow us to have higher pressures. They're looking towards higher temperatures. So we're developing the products and the platforms, I should really say that allow us to higher temperatures. And then the third one, which is very, very much a focus is high speeds. So -- and then if you mix those sort of 3 ingredients together, that can go for very traditional energy, that can go for hydrogen, that can go for LNG. So you can see all those markets, enjoy the benefits of those improvements. So I think we're becoming much more coherent on how we develop those products, which I think will benefit our customers ultimately. Margaret Schooley: One last one, if I may, which might be slightly difficult to answer given where you are. But since the announcement of your strategic actions, in particular, on Detection, has your thinking evolved at all as you go through this exercise in separating some of the assets? Can you give us any indication of the level of interest or how the market backdrop has changed or in any way changed your thinking since the point you announced the strategic actions on Detection specifically? Roland Carter: Detection, specifically. Yes. So on the broad approach, we're very pleased with the performance of those assets that we've highlighted for separation. So we knew it was a good time, and we knew they were performing well. We're pleased to see that continuing performance. So absolutely, the timing is working well for us on that. As we said, Interconnect, we will announce something at the end of the calendar year that we've seen -- we're continuing on that track, and we're working through that to announce something at the end of the calendar year. On Detection, again, we did a lot of the desktop and role playing on this to see how it would work. You saw the outcome of what that said, the clear sale of Interconnect, that was obvious. We wanted to make sure that we were value creating -- value creation is what this is about and surety of delivery. And that's where you see the demerger. We're running the twin track of demerger and sale process for that. The work that we're doing behind the scenes on separation is progressing as we anticipated. So I'm not going to give you a sort of blow-by-blow account, but that's essentially where we are. So yes, obviously, we're always thinking about the value creation and the surety. I wouldn't -- but the strategic direction was well set, and we're very sure that, that is the right strategic direction. Operator: Now we're going to take our next question, and it comes from the line of Alex O'Hanlon from Panmure Liberum. Alexandro da Silva O'Hanlon: Well done on a great set of results. Just 1 question from me. Could you give us an idea of the level of employee churn at Smiths and how that compares to recent history? I guess what I'm trying to get at is how are you managing the culture of the business during a time of transition? Is it a case that employees don't feel unsettled given that the businesses are already run very separately and maybe feel empowered, but just kind of any color you can give us on that would be greatly appreciated. Roland Carter: Thank you for the kind comment at the beginning. So this is something we look at very carefully because it is one of those questions which one has to ask in these situations. And what we've made sure is that we've been clear and transparent with people and explain to them what's happening. And that's not only within the businesses that have been separated, but also the businesses which are being retained as well as head office, which we've spoken quite extensively about this 1.5% to 1.7% that our target is for central costs. So we do recognize that this is a moment in time and a difficult moment. I think of it -- people talk about transformation. I think this is a continuing journey for us. We fully intend to be moving at pace and always with purpose. So we have made sure that we're talking to everybody who we work with on this and preparing people for the necessary sort of questions that would be answered, make sure that we have a unified position to things to make sure that we're dealing with people, with equity as well. At the moment, what we're seeing in the figures is probably where you'd like me to get to is we're actually seeing our attrition at a slightly lower level than we've been seeing previously. I won't give you the exact numbers. But at the moment, what we're doing seems to be the right thing. Obviously, it does affect individuals, and we are acutely aware that it is a person-by-person thing. But at the moment, in the broad, we're not seeing the uptick one might have anticipated. Operator: Now we're going to take our next question. And the question comes from the line of [ Stephan Klepp ] from BNP Paribas. Unknown Analyst: I hope you can hear me well. So I have 3 questions. So the first one is on John Crane. Can we just talk again on the execution? I mean I know that you have been very vocal about the fact that it has never been an order problem and execution, obviously, due to the cyber incident was impacted. Well, your peers, your peers have outgrown you. The question is, did you lose some market share? Are your clients patient? And should that not even mean that some pent-up demand in the area? And having said that, shouldn't the visibility in John Crane be larger than normal because you couldn't basically get the orders out [indiscernible] Roland Carter: Right. Struggled to hear that question, but I will repeat it to make sure I've got it and Julian, if you heard it better than me -- so you were asking about how the execution is affecting John Crane and particularly if we've lost market share and has that created pent-up demand, I think that was the question. And has that, therefore, created more visibility in John Crane. Yes, sorry, the line is bad. Unknown Analyst: Sorry, the line is probably bad. Sorry for that. Roland Carter: That's all right. So from the point of view of the delivery in John Crane, as I said, Q3 was better than Q2, Q4 was better than Q3. But we are ramping up. The cyber incident was definitely an issue for us around engineering, as I mentioned before, but more broadly for John Crane being the most integrated of our businesses. During that period, we obviously were talking to customers. We were obviously making sure that the customers were comforted with that. This is a very sticky business, as we know, although there are opportunities to gain market share as we've laid out. So we were very aware of that and made sure that we worked through that. Now we are on the path to recovery. As I said, our machining hours, both internal and external are up. Our engineering hours are now stabilized, having gone through a surge to do the deal with the heart of what was the issue, which was we locked down our drawings to protect them and then took time to release our drawings back. So leading indicators on lead time, on supplier delivery, those are all moving in the right direction. So we will see over time that developing. The answer to what about the order book and what about your visibility, what I pointed out through this period, we have a strong order book. So that was a positive. We also are starting to reduce our own lead times in this period, and we have a positive book-to-bill ratio. And as we've talked to previously, yes, there's a book-to-bill ratio that the orders actually coming in, but also we have visibility into our customers' programs, which are long-term multiyear programs. So we do have that visibility. So we believe if you think about where our guidance is on the 4% to 6%, I think it would be fair to say that John Crane will be at the top end of that guidance. Julian Fagge: Roland, I'll just add there that the aftermarket saw some slippage in Q3 around the cyber event. Of course, it's very difficult for anyone else to pick up our aftermarket. So what we're expecting to see is aftermarket returning as our operational improvement starts to come through. And we did see an improvement in aftermarket orders through Q4. Unknown Analyst: And the second question is Interconnect. I mean... Operator: Excuse me, Stephan. Please accept my apologies. Your line is very breaking up. I believe our speakers will be not able to hear your question. Please, can you adjust the volume. Unknown Analyst: One second. Can you hear me better now? Roland Carter: Let's try. Let's try. Unknown Analyst: Yes. I'm very sorry for that. I don't know what's going on. On Interconnect, I mean it is very good news that you are very far in the process and say that at the end of the year, we're going to see the divestment. Is it right from the capital allocation perspective that in this big transition that you're going through, larger deals on the M&A side are off the table? And should we mentally earmark the proceeds of Interconnect all to be deployed for share buybacks? Roland Carter: Do you want to take that one, Julian? Julian Fagge: Yes. Thanks, Stephan. So yes, just to repeat the point Roland made, the sale process for Interconnect is progressing well, and our plan to announce that by the end of the calendar remains in place. In terms of the use of proceeds, again, we've been clear that our intention is to return a significant portion of proceeds to shareholders, although we haven't yet determined or agreed the mechanic. In terms of our capital allocation, again, we've been pretty clear on this in that we allocate our capital to develop and generate the very best returns. And of course, that's illustrated in our very strong ROCE performance in '25. We'll continue with that. We'll allocate capital organically, and Roland has given us some insight into some of the organic R&D investments and programs that we're pushing forward with. We have the investment into the acceleration plan, which is delivering the returns that we expect to see next year. And then inorganically, we will continue to work an active pipeline of inorganic acquisitions. We will continue to see acquisitions as an important part of our story as we go into the future, particularly in higher value, high-return adjacencies in both John Crane and Flex-Tek. Operator: And now we're going to take our last question for today. And it comes from the line of Dylan Jones from Kepler Cheuvreux. Dylan Jones: Just a few quick follow-ups. The first one, just on the Flex-Tek restatement, the GBP 8 million that go through the headline number. So if this is a balance sheet restatement, can we expect to get all of this back in FY '26 and going forward? Or is it more of a realization of an accounting policy that was being applied appropriately and it's going to sort of remain in that sort of cost base in future years? And then just the second question, you obviously touched on some of the R&D and innovation qualitatively, what's sort of going on there. But I guess just given it's sort of more looking at future Smiths, it's sort of identified as one of those areas where you can get that sort of above-market growth. Just wondering how we should think about that, whether it's a step-up in sort of R&D in that Flex-Tek and John Crane business that would need to sort of capture that higher level of growth with the product innovation? Or is it more just a concentrated focus on those 2 businesses should enable a higher level of growth from the innovation piece? Roland Carter: Do you want to take the first? Julian Fagge: Yes. Thanks for the question. So of the GBP 8 million that was charged to this year's Flex-Tek profit, we expect some of that to come back next year, but not all of it. That's not necessarily because there's any repeat of the problem. Of course, what it really is, is getting to a point as to understand what is the fundamental underlying profitability of that business as we look out into the future, and the business is working through that as we speak. But some of it will come back, but we're not guiding on the absolute amount. Roland Carter: And then on the R&D, this will be very much a focus. So as some of you will know, my background is innovation and R&D. And I think with that focus and some of those points I was talking about, about enhancing the products within John Crane in that sort of product technology, process and materials approach. So really getting the products we have fit for the future and then developing the products, the long term, new products is important as well. So you'll see that focus, and it's very pleasing to see the separation seal come through, but you'll see that focus really start delivering. And it's not just about the new product development, it's about the new product commercialization, making sure that we've got the customers, those key opinion leaders, those key accounts ready for those products as well, almost co-collaborating in some cases, hopefully, with that. So we'll see that driving through on John Crane. And for me, Flex-Tek, the focus on Flex-Tek, the Blue Series is really the most recent. But really, there is a lot of innovation about Flex-Tek because Flex-Tek is so close to its customer. And I think there might be a little bit more -- I'd like to see a little bit more discipline driven through that capture of requirements. But yes, I think you'll see Flex-Tek. I mean you look at the numbers, you say they don't spend a lot on RD&E. But relative to the competition in absolute terms, they do spend and they -- I think they can turn into a real market leader on the innovation as well as the market leader where they already are. Just the same way we saw the effect of R&D on the growth rate that we see within Detection recently or the growth rate that we saw in -- we now see in Smiths Interconnect with that focus on semiconductor that they had, for example. So yes, I think expect more on the innovation side from us, but not necessarily spending more money on that. Operator: Dear speakers, there are no further questions for today. Thank you for joining the conference today. You may all disconnect. Have a nice day. Roland Carter: Thank you very much. Julian Fagge: Thank you.
Conversation: Karol Prazmo: Ladies and gentlemen, good morning, and welcome to the mBank Capital Markets Day. My name is Karol Prazmo, and I'm the Managing Director for Treasury and Investor Relations. Thank you for joining us here in the mBank Auditorium via remote, through your tablets, computers and TVs. This is a very important day for us. We will outline the strategy of mBank Group for the next 5 years. The CEO and members of the Management Board will outline their vision, aspirations and strategic goals for our future. The title of the strategy is Full Speed Ahead. [indiscernible] but with us for the next 2 hours as we outline the strategy that symbolizes the momentum and the strong [indiscernible]. Now let's begin. I would like to invite the President and CEO, Cezary Kocik to join the stage. Cezary Kocik: Thank you, Karol. Good morning, ladies and gentleman. Today's a very important day for us. Just in a few moments, we are going to present to you our strategy for the next 5 years. The strategy was developed by [indiscernible]. So let me introduce, Krzysztof Bratos, Head of Retail Division; Adam Pers, Head of Corporate Division; Krzysztof Dabrowski, IT and Operations; Pascal Ruhland, our CFO; Katarzyna Piwek, Deputy Head of our HR. Today Katarzyna is [indiscernible]; and Marek Lusztyn, our CRO. So let's get started. We stand in a povital moment in mBank's history. Over the [indiscernible]. Today, I'm proud to present our strategy for 2026, 2030. This was developed in line with our mBank's [indiscernible]. We have proven that we are able to grow organically. [Audio Gap] What powers our organization? It's our people, our brand and our technology. The digital world is our natural environment where we stay the course and set the pace. What is incredibly important is that we do this responsibly, ensuring our client safety. We are proud to have the strongest brand in Polish banking sector, not just in recognition, but in emotional connection. Our employee engagement score places us in a top quartile in Europe. And our digital-first mindset and Gen AI deployment are not just aspiration. They are a fact. This is the mBank DNA, agile, innovative and deeply human. We have overcome challenges that once constrain us. The legal risk related to FX mortgage loans has been largely mitigated. At the end of June, we had only 10,000 active Swiss franc loans, but now it declined to only 8,000. We are now ready to navigate at a full speed with the [indiscernible] wind lifting our ambitions. Our capital base is robust with a safe buffers, giving us room to grow dynamically. We have achieved it, thanks to our effort, securitization transaction, issuance of AT1 capital and retention of profits. And our profitability is among the highest in the sector with return on tangible equity at 21% in the first half of 2025 and as much as 38.5% in the core business, excluding the impact of FX mortgage loans. Thus, we are embarking on the next chapter of mBank's growth with strength, clarity and determination. Full speed ahead is our strategic motto. It means scaling with purpose, innovating with discipline and growing with our clients in a profitable way. It's about being smarter, more convenient and more connected in every market where we serve our clients. In the past, we have already shown our ability to dynamically extend our market shares and growing organically at the pace comparable to the one setting the strategy. In the 5-year period, before the peak of the Swiss franc saga in 2022, we increased our market shares in retail loans and deposits by 2 percentage points and in the corporate loans by nearly 1.5 percentage points. Maintaining a similar growth trajectory will be essential to delivering on our strategic ambitions by 2030. Our key strategic target is to exceed 10% market share in 2030 in loans and deposits across both Retail and Corporate segments. This is not just about number. It is about our ambitions to be a top-tier universal bank. We have already made a significant progress. And already, we are the Poland's most successful growth story in the banking sector. Now we are accelerating and positioning mBank for growth. We want to grow dynamically, but not only in volumes. Thus, efficiency will be our backbone. We will maintain a cost/income ratio below 35% and deliver competitive return on tangible equity above 22% during the strategic horizon. Starting from a net profit for 2026, we will resume dividend payments with a target payout ratio of 75% by 2030. Consequently, our net profit is set to triple until 2030 compared to 2024, which shows the magnitude of the future value for our shareholders. We are building a compelling investment case based on a profitable growth, resilience and shareholders' returns. Now let's explore the pillars and that defines our strategic direction. Our purpose is simple, yet powerful, simplifying finances, helping bring goals to life. We have always believed that simplicity is the ultimate sophistication. We have shown it by solving hard problems in a way that feels easy for our customers. This is not just about banking. It is about enabling dreams, whether it is a first home, high-performing company or a secure retirement. We are here to make those journeys easier, smarter and more human. mBank's strategy for 2026, 2030 will be based on 3 pillars. The first one is life cycle-based growth. We grow with our clients, adopting our value proposition to their life moments and evolving needs over time. The second one is customer excellence. We're simplifying financial journeys and deliver delightful experiences. The third pillar is our organizational excellence. We empower our people and leverage technology to scale impact. These 3 pillars are not isolated. They are interconnected to better drive our transformation. We integrated sustainability into everything we do, not as a checkbox, but as a core belief. Our employees are the engine of our growth. The commitment, creativity and culture make mBank exceptional. Karol Prazmo: Thank you, Cezary Kocik, for setting out the strategic version. Ladies and gentlemen, now it will be time to learn about the upcoming journey in detail. Before we go there, I wanted to tell you more about today's event. The presentation of the strategy will take about one hour. Then my co-host and mBank's Head of Investor Relations, Investor Relations, Joanna Filipkowska, will lead the demo session, during which we'll show you 5 examples of products and solutions that will be rolled out during the strategy and on which we have significant advancement. You will have the opportunity to ask questions, both here in the room and in front of your screens. And note to our online participants, please use the chat box within the live stream to submit your questions at any time during the event. And without further ado, it's time to learn about the upcoming journey in detail. I would like to invite Vice President of the Management Board for Retail Banking, Krzysztof Bratos, to the stage. Karol Prazmo: Krzysztof, mBank's client base has always been unique. What is so special about our client base and what's in store for them in product terms in this strategy? Krzysztof Dabrowski: Thank you, Karol. Thank you, Carl. Our CEO talked about favorable demographics. And indeed, it's the age of our clients that makes us very special on a Polish banking map. You see we've always been loved by younger generations. And luckily, this is still the case today. 74% of our clients are still below the age of 46, and that's a very important threshold. We estimate that in between the age of 46 and 55, that falls to the so-called the peak earning period. So this is when the retail clients accumulate the most of their assets, hold most of their products and together with their banks, generate the most of the revenue. One could say that revenue-wise, the future is still bright and is ahead of us for both of our clients and ourselves as a bank serving them. You could say that we already have clients that others need to chase. And for this very reason in this strategy, we're going to primarily focus on our existing clients. But focusing on your existing clients means that you need to serve them at different ages and serve their different needs and those needs evolve. And this is why in this strategy, we want to evolve from being an exceptional transactional bank that we are for sure today already into a long-life partner that helps our clients with the long-term goals. This new strategy will see an introduction of more of a long-term products like savings, digital mortgages and investments from day-to-day trading up to the planning for your pension. Karol Prazmo: Krzysztof, you spoke about the client base. You spoke about the products, but how will we support the financial well-being of our clients? Krzysztof Dabrowski: And this is a very important part for us, and we treat it with a huge responsibility. We believe that the products, even if digital, simple, intuitive are not enough by themselves. We want to help our clients navigate them all, but also use them wisely. We want to help our clients take care of their financial well-being, and it's going to be an important part of our strategy. And we're going to introduce it twofold. Firstly, we're going to help our clients take care of their day-to-day life, to make sure that they stay safe online, that they spend less than they earn, build financial cushion, keep loved ones safe and borrow responsibly. We're going to help them with that by introducing a financial health score, but also a set of contextual tips and communication and education to make sure their day-to-day life is in order. This will be a foundation of our financial health being. And once this foundation is set, we'll help our clients with the second part. That second part will be a set of digital financial planning tools, but also support of our experts that will help our clients plan holistically all of those complex products in one cohesive plan from planning for your pension to planning for your children education to saving for your first home. We aspire for the 50% of our clients to be financially healthy in 2030. Karol Prazmo: We now understand the focus on financial health and the product offering for every stage of life. What will this mean for the growth in the number of active clients? Krzysztof Bratos: So here is where I need to mention our demographic premium once again. 78% of our 35 years old clients have a junior age child, but also 1.5 million of our clients, those aged 35 and 50, will soon be guiding financial decision of their parents. This creates a tremendous and valuable ecosystem, the one that we want to build on. We wanted to pay off for our clients to be here at mBank together with their children, their partners, their parents and even their friends. We want to grow through our clients and not chasing sometimes very expensive external acquisition. We believe that this will strengthen the loyalty of our clients, but also allow us to grow in a very, very efficient way. Karol Prazmo: Krzysztof, you've given us a lot of insight about the priorities for Poland. What are the strategic objectives for operations in Czechia and Slovakia? Krzysztof Bratos: We've created One mBank strategy, and this means we'll be doing a lot more together with Czechia and Slovakia. We believe that only an aligned platform approach is the way to build things in a scalable and efficient way, but also set a foundation for potential expansion into other foreign countries in the future. In this strategy, we'll bring to Czechia and Slovakia solutions that already exist in Poland, especially for the affluent and SMEs. What will make this Czechia and Slovakia strategy is slightly distinctive will be a bit more focused on external acquisition. As in here, we want to catch up and be the market share wise at the same stage that we are already in Poland. This should convert into having 1 million of active customers in 2030 and through them doubling our loan volumes and almost doubling our deposit volume. We believe that this approach will not only accelerate the growth of those foreign markets, but also we bring tremendous benefits as an innovation for the whole group. Karol Prazmo: You talked about the product offering for affluent and SME clients in Czechia and Slovakia. Can you tell us more about these 2 segments in Poland? Krzysztof Bratos: I started my presentation today talking about the younger people joining mBank. But truth to be told, they joined us 10, 15 or 20 years ago, and we meet them here in Poland every day. And since then, they grew, their little student account is now an affluent account. Their little start-up is the well-prospering enterprise. But then the most beautiful thing is they actually grew with us and they stayed. And we have proof for that. 73% of our affluent clients have been with us for more than 10 years. Also on the SME side, 71% of our high potential business clients have started with us as a little startup. But best of them all, 70% of our business clients are also our individual clients. It's a tremendous and valuable 2 segments that we call the super segments. There is more number standing behind it. Our affluent clients are responsible -- or not responsible. Our affluent clients constitute only 27% of our client base, but yet generate 70% of individual revenue. The high potential business clients, we call the clients who generate EUR 1 million annual turnover, they constitute only 30% of our clients, but generate half of the SME revenue. They're valuable, loyal and high potential clients that with a little extra care, with a little appreciation that they absolutely deserve and with a little bit of additional products can flourish even further together with us. And this is why this new strategy will see the significant focus on the affluent and on the SMEs in their upper levels. Karol Prazmo: Now that we know more about these 2 segments, can you tell us about how you want to deepen the relationships with affluent and SME clients? Krzysztof Bratos: We strive to create the best-in-class value proposition for the modern affluent, starting with daily banking excellence through global traveler benefits, but also your lifestyle benefits that you can use here in Poland. But maybe most of all, we want to elevate their service. We want to show them that they're appreciated and they can have a fast access and fast track to some of our services. In some cases, we will even go as far as introducing a dedicated adviser to our clients. This will be new for mBank. We believe that once you get to the more complex stages of your life, you do need to speak to a person regardless of how sophisticated your digital solutions are. We want our clients, our affluent clients to feel like in a private banking, but of course, in a very digital, a very modern and a very mBank way. We strive to serve 1.4 million of those affluent clients at the end of our strategic horizon. And we're going to do exactly the same for our SMEs, so SME plus, how we call them. We want to expand our financing solutions as their needs grew over those last 10 years. We will also introduce additional products known mostly from our corporations world like mLeasing, but then with a fully integrated version with our banking app. And similarly to affluence, we'll go as far, in some cases, introducing also dedicated advisers who will help them flourish and develop. This should convert into serving 120,000 of those high potential firms at mBank. And obviously, that is naturally before we will help them transition to the full corporations world. Karol Prazmo: Thank you, Krzysztof Bratos. Karol Prazmo: Ladies and gentlemen, now that we know the plan for the Retail segment, let's talk about our exceptional Corporate and Investment Banking business. I would like to invite Vice President of the Management Board, Adam Pers, to the stage. Adam Pers: Good morning. Karol Prazmo: Adam, can you tell us about the growth aspirations for your business? Adam Pers: Of course, thank you. Good morning once again. Today, I will be talking about the Corporate Banking strategy, but let me start shortly with the reference to our CEO, Cezary Kocik. He said that most of our bank is full speed ahead. And we decided with our team that we will translate it into Corporate Banking language, which is what you see on the slide, this is long-term business growth. And it's going to be the most important sentence in our strategy. And the question is how we're going to deliver that. And we decided jointly with our risk colleagues that we will grow in the sustainable transition and sustainable finance. But what is important, we defined 6 perspective industries. We'll talk about that later. But we cannot forget about strengths. Strength, which means structured finance, investment banking and international banking. But what we need to deliver this growth, which at the end of the strategy should let us reach that market share in the amount of 10%, which translates into PLN 20 billion net growth. We need something that we call exceptional unique hybrid model. We need organization excellence, which is built on digitalization. But going forward with the strategy, we will add the AI component. And sorry, I used the word last but not least, is our people. Our people created the strategy and our people joining with us with the Board will deliver the strategy. So we need them motivated and highly qualified. Karol Prazmo: Adam, you referred to the best unique hybrid model, what exactly is behind this concept? Adam Pers: Yes. It requires explanation indeed because here, we talk about 3 pillars. The first pillar is we call them -- we call it remote but digital. The second pillar is remote, but human, and the third one is offline. This remote digital, I will talk also later on during the strategy, the presentation. We're talking about the new mBank CompanyNet, so our main gateway to the customers. And we're talking about the fine-tuning of mobile banking. And this will create something which we call virtual branch. But customers also sometimes need the contact with the person. So if, for some reasons, the customer will not be able to self-service the digital channel, then we have dedicated contact center, which is only for corporate business. And why we are doing so? We are doing some because we want our offline channel, which means relationship manager to have enough time to talk to people, to talk about the business, talk about the transactions, et cetera. And they will be supported by top best-in-class product specialists. These all 3 pillars constitute the what we call best unique hybrid model. Karol Prazmo: Adam, and going beyond the service model and into the client base, can you tell us about the specific growth strategies for each of the 3 corporate client segments? Adam Pers: This slide requires a little bit of explanation because as you heard, we're a universal bank. You already listened to Krzysztof's strategy where we have different type of customers. And within the Corporate Banking, we also have relatively small and not sophisticated customers, which is the K3, and we have also large corporate, which is K1. And let me start with the latter one. So K1 customers, this is the segment that, for some reasons, in a couple of last years, we were not so active. Now we want to come back to something, which we called bigger tickets. So we will be more present in this segment. But definitely, we offer them more sophisticated products like M&A, structured finance and all these complex products. But if you talk about the biggest engine from the volume perspective, it's definitely going to be K2, which is our midsized corporate segment. And here, we have a combination of complex product like investment banking, sustainable finance. But at the same time, we know that a significant part of the financing in this segment is relatively small ticket. That's why we will offer so-called fast-track credit process. But as I said, this is going to be the biggest engine from the volume perspective. But from the, I would say, biggest change, it will happen in K3 segment, which is our corporate SME segment. And here are the challenges or targets. First of all, we would like to double number of active customers. Here we're talking about the active customers, not just open accounts, and it is going to be credit customers. Second thing, we want to offer them -- we call it semi-automated credit path. And if you allow me, I will, in a few sentences, elaborate how it's going to work in real terms. Our aim is that customers start the journey in the CompanyNet system. So the application for the loan will be done in the system, then the loan will be done on a semi-automated way. And finally, signed agreement and disbursing the money will be done also in the CompanyNet system. And at the end, we are taking our end-to-end process, which means that the managing the loan going forward will be done also in this process. And what is our ambition? We are starting from 0. I think we are transparent here. And we want to reach 40% of the double number of credit customers at the end of the strategy horizon. Karol Prazmo: Thank you, Adam Pers. We'll be back with you in a moment. So please don't go anywhere. And ladies and gentlemen, I would now like to go into corporate credit risk and the industries that we want to focus on. And this, I would like to discuss with our Chief Risk Officer, Marek Lusztyn. Marek Lusztyn: Good morning, everyone. Karol Prazmo: Marek, where should we expect growth in the corporate portfolio as we roll out this strategy? Marek Lusztyn: So as Adam said, we have asked ourselves what will make Polish economy tick over the next 5 years. We have asked ourselves what our clients will face, how we can help them in benefiting from those trends. And we have identified 6 big trends, 6, how we call it, big shifts that Polish economy will face until 2030. And we want to support our clients in that specific shift to make sure that they are benefiting from those. First of all, and that is not surprise to anybody, it's energy transition. Second of all, it's green economy and sustainable finance. Then we have identified localization of production, automation and robotization of production as the next big shift that Polish economy is going to face. [indiscernible] were alluding to the demographic shifts in our retail base, but these demographic shifts are not only related to our retail base, it is also something that our corporate clients are going to face, and we want to help them in that shift as well. So the help in financing, free time economy and health care is the next one that we will zoom into. And finally, I guess this is also not a surprise to anybody, defense. I would like to highlight that it is not a new area for mBank. We are going to capitalize on existing expertise and sometimes even on us being already a clear market leader in some of those segments. When we think about quantitative KPIs that we have put in front of ourselves for our corporate portfolio, the first one is an increase of sustainable financing in an overall corporate portfolio from 11% in 2024 to 15% by 2030. And as it comes to our ambitions in supporting those big shifts, in supporting our clients in benefiting from those big shifts in the Polish economy, we would like to increase the share of financing of those from 20% at the end of last year to 40% by the end of strategy horizon. Karol Prazmo: Thank you, Marek Lusztyn. Now let's return to the strategic plans for Corporate and Investment Banking. Adam Pers, back to you. Poland is the fifth largest economy in the EU, and we're part of Commerzbank Group. What does this mean for us in terms of cross-border opportunities? Adam Pers: Thank you for this question, but let me top up 3 facts. First of all, Poland is the fifth biggest economy in European Union, and we probably exceed EUR 1 trillion nominal GDP. This is a very important fact. And if you look at mBank and Commerzbank, mBank is a very strong player in the Polish market. Luckily, we have a foreign investor who is very active in the most developed economy in Europe, which is Germany, but is also present internationally. I hope that you see that on the map. And when we want to develop the growth in more sophisticated products, let me start with the presence in Poland. mBank in Corporate Banking is famous for its competence in the structured finance, both on the corporate sales side and risk area. And our aim is the following: to be market leader in structured finance, to be the bank of the first choice for the private equity, which was the case over the past few years, and finally, we want to constantly deliver new products to more sophistic customers, like we did in the past years. But going abroad and going to the cooperation with the Commerzbank, our plan is to help our customers to go internationally. And we're going to support customers in 2 dimensions. The first dimension is the opening account and, let's say, working operationally in the foreign market using Commerzbank network. But we see that and we read in the press that going forward, our customers are more and more active buying the competitors even in the western part of Europe. And in this journey, we would like to be active, and we would like to be bank of the first choice for the customers. The opposite direction, we would like to continue and even further strengthen the cooperation in which we invite foreign customers to Poland and we have to be, let's say, the biggest gateway for the customers that have accounts with Commerzbank, but also for the customers that are entering Polish market and want to set up the relationship with the bank. And finally, Recently, we started quite actively the journey with Commerzbank on the treasury bond market. And in this respect, we want to grow going forward over the strategic horizon. Karol Prazmo: Thank you, Adam Pers. Adam Pers: Thank you. Karol Prazmo: Ladies and gentlemen, this concludes the first strategic pillar life cycle-based growth and now we move to the second strategic pillar, customer excellence. And we will again start with Retail Banking, Krzysztof Bratos, welcome back to the stage. Krzysztof, what innovations are we planning to make mobile banking feel even more effortless and intuitive? Krzysztof Bratos: We believe that mBank has been setting standards in the mobile banking and digital banking for quite some time already. But truth to be told, the world doesn't stop. It changes. It evolves, not only in the banking ecosystem, but also in the fintechs that are already in Poland. Also, around 10 years ago, average banking app was providing just a few, maybe 15 products in the banking ecosystem. Today, it's actually tens of products and tens of services. It takes a fresh look on how you navigate them all and how you use them all. And we've decided to take that fresh look. And we've decided to do another just tiny uplift, but a significant upgrade on how we use our application. We're going to introduce the 3 major innovations. Firstly, we're going to put a new application architecture, the way you find your services, the way you find your products and how you navigate it all. We'll also add high personalization. Me, my wife, my kids and my parents, we use mBank app in a completely different way as we need different products and different solutions and will allow our clients to customize it. Secondly, we will provide more of an instant feedback by automating more of our sales processes, but also those post sales and give that client a sense of control that whatever their click is happening instantly. And then thirdly, we're going to introduce a redesigned communication system with a new graphics, emotions, even videos or even haptics, the solutions that you have seen already in the different industries and you happily use. So why not in banking? We believe those 3 innovations will contribute to creating and still having a very simple and very intuitive app, but yet the one that can handle the complex world's needs while staying modern and fresh. But what if all of that was not enough, and you actually needed to go a step further in today's world. What if you all could actually talk to it? Ask it, how much I spent for my last trip in Barcelona? Or what is the status of my complaint? Or perhaps what can I do with my PLN 10,000? What if you could do it all in a natural language, maybe sometimes even with spelling mistakes, of course, while staying in your safe banking environment. Would that be another chatbot, assistant 2.0 or something a little bit more than that. And here, I would love Krzysztof Dabrowski to share a few words about it. Krzysztof Dabrowski: I will be happy to do so, but I would like to also enlist a little bit of help from our guests, if I may. I will not ask you if you ever use a banking app because I can safely assume you did. But may I ask you, who of you ever used any banking chatbot or assistant? Raise your hand, please. Okay, and -- quite a bit. And who of you think this assistant was not particularly smart? Raise your hand, please. Thank you even more. That's a bit surprising. But thank you for your support. And it will not be a surprise to you probably that we do share your view. So with the help of generative AI, we would like to take this experience in mBank to another level. So first, we -- there are 100 ways of asking for the same thing, and we don't want our customers to guess the correct question. It's our task to guess the correct answer. Second, most of those assistants that you do not find very smart are just a giant knowledge basis and not particularly even good at answering the questions. We would like to teach our assistant a lot of verbs, More than 200 of them actually, to make it very, very helpful and providing services to our customers, not only answers to the questions. And last but not least, we will combine it with all of the data we have about our customers to provide a personalized experience. So this will not feel generic. This will feel like the assistant is there just for you to serve your needs and knowing a lot about you. Krzysztof Bratos: Thank you very much, Krzysztof. So not just simple questions, but definitely actions. Over 200 of them also executed through the voice. We believe that this is not another assistant, not another chatbot, but the very beginning of a new channel of how you can use your app and how you can use our bank. We believe that this is the very beginning of a conversational banking. Thank you. Karol Prazmo: Thank you, Krzysztof Bratos. Thank you, Krzysztof Dabrowski. And now I would like to invite Adam Pers back to the stage, please. Adam, what can you tell us about what will change in the way that you interact with customers in the Corporate and Investment Banking area? Adam Pers: Thank you. I have the impression that while I was describing the hybrid model, I already promised a lot. So now I will be talking about how we deliver that. And let me start with the CompanyMobile, which is definitely the application for relatively small customers. And here, we will focus on base modules, which is FX, payment, BLIK and all this, I would say, that we need on a daily basis. But what is extremely important is, we gave -- we received the feedback from our customers that in case of CompanyMobile, apart from feature, also security is as important as those features. So definitely, the second part of our, I would say, development of CompanyMobile will be the security of this application. But the main change will happen to the CompanyNet system, so our core gateway in the digital world. And here, we will implement new modules or we modify the modules. Let me start with the so-called personal dashboard, personalized workspace. Why we are talking about this solution at first? Because as I said that we have different kind of customers, relatively small and relatively complex. And my personal experience that when I have application, not necessarily banking, but any other, and I can adjust the application going through 100 or 50 questions, it's relatively difficult to go through this. And here, we would like to build a system that almost automatically adjust to the company and adjust to the so-called personas or to the person working with the application. So it's going to be convenient, and this is the most important word. Second thing is we'll be working on the payments module. But what is important, we will build new, we call it, liquidity module. This is something that will truly use the AI because it will be analyzing the history. It will be analyzing the current situation of liquidity of our customer, and it will give some advice. And let's imagine that the customer may need some loan in the future. I hope that having the next module, which is the expanded loan module, the customers will be able to apply for a loan and potentially sign and disburse also in the component system. I already mentioned that what we are cooperating with Commerzbank and we want to go abroad with customer and invite foreign customers to Poland. That's why we will pay special attention to FX model. And last but not least, here, you can see our ambitious target, which is 80% of every interaction with customers done in the digital world. And what is important, this is end to end. So it is for the customer digital, but also finally, in Krzysztof Dabrowski area, operation also end up in a digital way. And we would like to deliver that by enhancing the so-called self-service via virtual branch. And the last thing, which is very important that our current CompanyNet system, which as I said, we have to rebuild, because the customer needs more perception of top 3 on the market. And our ambition target is to be at least #3 from the perspective of our customers, how they see this application. Karol Prazmo: Thank you, Adam Pers. Krzysztof Dabrowski, Adam Pers spoke about all the enhancements to mBank CompanyNet and mBank CompanyMobile. Can you tell us about what is happening on the back end to make all of this possible? Krzysztof Dabrowski: Yes. I'll be happy to say. But before I will tell you what we just did because I think a bit of a history is important here, and it is a good history. I'm actually very blessed with the business colleagues that you've just seen in action who are very ambitious. They have -- they set themselves very high targets and they have this tendency of actually delivering them. So IT has not to be the road block, IT has to be an enabler and a helper. And one of the very important aspects of IT in banks are the core systems. And I've been on the AKF, this is the Polish gathering of all of the banking industry last year. And there was a large roundtable, around 12 participants from all of the major banks in Poland. And the question was, what do you do about the modernization of your core system? And I was lucky because I was sitting, like, I was like the 9th. And they were -- the answers were like, we are not touching it. We are thinking. We're analyzing. That's too complex. And my answer in June was, we are going to finish it this year. And you are first to hear it that as of today, both of our core systems, the Corporate and the Retail are modernized, are taken to the modern technologies. And all of our customers are right now on the new platforms without even noticing that because we did it in parallel with the normal business growth, and we did it without stopping the bank. Why we did it? We did it in order to do the next steps. We wanted to get rid of the legacy that we have. We are a relatively young bank in the grand scheme of things, but we also had our legacy because I would say, majority or vast majority of our employees were not even around when we implemented those core systems. But now when we migrated to the better solutions, we can do the things that we plan to ourselves in the strategy. So the most important program in IT has a very short name. And in the spirit of saying not a lot but doing quite a bit, we are going to make our bank 24/7. In Retail, it may sound easy because Retail in our case, is already running 24/7, but the remaining problem are the technical breaks. And it will take a bit of heavy engineering to reduce it down to almost 0. But for the Corporate Banking, it's a bit of a different challenge in mBank because our Corporate Banking is not working 24/7. It's not working over the weekends, and it's not working during the night. So we are using the opportunity that we get from the fact that we have to support European instant payments, but we want to take it to the next level in an mBank fashion. So we want to give access to our corporate customers to the majority of the important products 24/7 and to extend the availability of the rest through the weekend. We think that this will be the great basis for our business to grow further. The other important aspect that I'm responsible in the bank is the security. And to tell you about the security is a bit harder than to tell you about the IT because we just don't have this one grand project. In fact, we have really a couple of dozens of projects that we want to do in the time frame of the strategy, and we group them into 3 pillars. And actually, they don't change. So these are the same pillars that we were having so far. So the first one is the cybersecurity. Obviously, substantial part of the trust that customers put on us is coming from the fact that we are offering them a security. So cybersecurity in the sense of defending the bank, but also helping customers defending themselves, this is a crucial aspect, and we are going to continue investing in this area. The other part, which is no less important, is antifraud. The fraud is, let's say, ongoing daily burden for our customers. The trends are not actually good. It's actually getting worse from the customer's perspective. So mBank is here to protect them. We will extend our anti-fraud systems, but also we will deliver more self-service to the customers. So if actually something bad happens, the customers will be able to help themselves. And last but not least, we strongly believe that humans are the best firewall for all kind of bad things. And we are probably the first bank that's really invested in the broad communication to the Polish society about security. We've been running public campaigns aimed not only at our customers, but at all citizens of Poland because we believe that the customers who are aware of the security risks are the customers that can better protect themselves. On the other hand, we are also investing in our own employees because they can protect the bank, but they could also protect both the customers but also their friends and their neighbors. And those 3 pillars form together our security strategy. Karol Prazmo: Krzysztof, and with that, you've brought us to the end of the second strategic pillar, which is customer excellence. And now we go into the third strategic pillar, organizational excellence. And I want to stay with you, and you spoke about AI and conversational banking earlier during the presentation. And can you tell us about the other places where you and your team will be deploying AI? Krzysztof Dabrowski: Okay. So you've heard a bit about AI from my colleague's presentation. These are the, let's say, the large business applications of the AI that we are doing together. But we are treating this concept very seriously. And on top of everything, we are also running our own incubator for those solutions because we believe that we need a deep focus and a lot of acceleration to really make it happen on a daily basis here in mBank. I'm not going to be able to take you through all of the things that we are working on. And on the other hand, I'm not going to tell you what are we going to do 3 years down the road because on one hand, I probably don't know actually. But on the other hand, we wouldn't like to reveal too much to our competition. So I will just explain you and show you 3 solutions, and they are at the stage that either they are already in production in mBank or they will be very soon. So I'm not going to spoil the market success. So the first one is what we call the deep customer understanding. The banks have a lot of data about customers. And historically, we've been all very, very good in analyzing this. All of the structured data we have about customers, the transactions, the financial data, the products they are using, even how they are using the products. All of the banks know it, all of the banks analyze it, hopefully, and all of the banks know how to deal with this kind of data. But there is a whole ocean of the data that is not structured. These are the interactions that we are having with our customers. It's voice interactions, video interactions, but even simple chat interactions. We have a lot of those. And historically, they were very hard to actually analyze. We've been analyzing them in a very, let's say, focused way, for instance, to do quality control of our conversations. But it was not really possible to do it at scale. As of today in mBank, we are analyzing all of the interactions we have with our customers. Thanks to the generative AI, we can process all of them. We can process voice, we can process text. And on a mass scale, we can draw the conclusions. On one hand, what the customers want from us, which is very important. But on the other hand, how do we serve the customers? What is the quality of our interactions? What is the quality of our conversations? And we no longer have to sample, we can analyze all of them. The other example is maybe very niche and technical, but it also shows the power of the technology. We call this -- internally, we call this product, Talk to Your Data. We have a lot of data in mBank. But on top of the actual size of the data, our data models are very, very large. And there is no living human being in mBank who knows it all. So our analysts, they spend quite a lot of time before they actually start to work with the data. They spend a lot of time finding the data in our systems. So we created a tool for them that we can use and ask the questions in the natural language. So you could ask, for instance, where can I find the information about all of the retail customers, who gave the marketing consent, but didn't have the mortgage with us for the last 20 years, but are making more than 3 transactions per month. And this tool will create a database query, and we show to the analysts where this data is in our system and how to get it. And last but not least, this is probably the toughest nut that we are trying to crack. These are the customer complaints. And why customer complaints are very tough? It's the definition of unstructured. The customers are writing us a letter, and I'm always saying this is not always a love letter to the bank. And this letter is just the pros. It describes the problem in the way the customers see fit. So we have to analyze these pros. We have to extract what is the problem. Then based on this, we need to find out what should be the solution for this problem and create steps for the person in the bank to solve the problem. And then at the end of the day, we need to actually write the response to the customers. And this response has to maybe make sense, be written according to our standards and solve the customer problem. So all of it together creates probably the toughest automation problem, I, in my career, had to deal with. And we are solving it already with the help of generative AI, and part of the customer claims already in mBank are being processed with the help of this solution. Karol Prazmo: Krzysztof Dabrowski, thank you very much. Ladies and gentlemen, now let's shift focus from technology to people. Katarzyna Piwek is our Deputy Director, responsible for Human Resources. Katarzyna, what makes mBank's teams exceptional? Katarzyna Piwek: Well, 2 factors. Our employees are highly engaged and driven, and there are numbers that demonstrate these qualities. First, it's our engagement score. We achieved 68% of engagement during the past 2 years, while top quartile in Poland stands -- starts at 64%. Second number speaks more to our employees' motivation to grow. Our staff completed over 20,000 future skills initiatives, not to mention all the others during the past 4 years. On the HR side, we actively support this engagement. We invest heavily in skills-based development. We care about our employees' well-being, just as Krzysztof Bratos mentioned, we care about our customers' well-being. So we provide a variety of well-being programs as well as top-tier hybrid environment. We offer competitive and transparent pay. And on the equity side, we are in a strong position. Last year, in gender pay gap, we stood at 2.9%, and we are committed to reduce it to 2.5%. With gender balance on managerial positions, we are currently at 40%, and we aim to reach the balanced distribution between 40% and 60%. What I want to emphasize is that today, we are proud to have one of the strongest employer brands in Poland. Karol Prazmo: You spoke about our highly engaged teams. What else will we do to retain and attract the best and the brightest? Katarzyna Piwek: Well, we aim to be the employer of choice by building on 3 strategic pillars. First, ahead of others, through our unique culture, mBank culture really is something special. It's so special that we decided to give it a special brand, mKULTURA and culture. This culture is highly attractive to people as we are top place for those who want to develop and grow, top place for people that are willing to take responsibility and take decisions. And finally, top place for those who are -- who practice dialogue and are empathetic towards the clients and each other. Second pillar, ahead of others through best talent. Given the demographic structure you mentioned, Krzysztof, in Poland, it's not only to attract the best, but also to retain them. In order to retain the best, we are investing in skills, but also make sure that our knowledge is at the forefront of innovation and at the highest standards of industry. We know that best talent naturally require an appropriate employee experience reflected in good working conditions and inclusive environment. Third pillar, the digital HR, which is taking decisions based on data. We embrace logic. We base our decisions on data when it comes to remuneration, recruitment, skills and competencies. We believe that being data-driven and therefore, logic and predictable creates a secure space for our employees. We also improved our internal processes using AI in all possible use cases. For example, performance, development, recruitment. Three pillars, but all 3 serve one purpose: to have the best team to deliver on mBank's growth. Karol Prazmo: Thank you, Katarzyna Piwek. Ladies and gentlemen, now that we have discussed the 2 business lines, technology and human resources, let's move to finance. And I would like to invite our Chief Financial Officer, Pascal Ruhland, to the stage. Pascal, welcome. And Pascal. How will the strategic goals translate into financial performance? What do they mean in terms of balance sheet volumes, revenues and costs? Pascal Ruhland: Thank you very much, Karol. And it's my pleasure to present you now our financial frame of the strategy. And let me start with our growth aspirations. Cezary Kocik was saying it at the beginning. We are back in a growing mode. We want to exceed 10% market share in every single of our core products. That means we need to grow faster than our competitors. What you see here is our loan volume development. And in 2024 and in 2025, we have already proven that we are capable of growing faster than the competition. And now the big question is, why do we believe this will continue? And my colleagues in the presentations beforehand gave you the answer because we, as mBank, are set up as an organic growth institution by clients, by our culture and by our infrastructure. In Retail, we can call our clients the most attractive client group of any bank in Poland by age, by purchasing power and by loan demand. To give you one fact, our clients demand for around 25% of the overall mortgage loan market in Poland. This, together with a seamless process, is the foundation for a 12% CAGR. Coming to the Corporate side. You know us as sector experts. We are focusing on sectors which are growing faster than the average. And Marek and Adam explained to you now we're following trends, trends like the energy transition, again, faster growing. This plus an additional investment in our lending infrastructure build our basis for a 7% CAGR. Let's move now from our loan sides to the deposit side. And here's one thing very visible. The main engine is Retail, with a 10% CAGR. And Krzysztof Bratos was in the strategy explaining how we do it. We focus on our clients. We want to remain with them. We want to increase loyalty and grow with them. In Corporate, we have a 4% CAGR on an already elevated market share as we already have in enterprises a market share of around 10%. Now let's have a look how this turns into our P&L. What you see here is that we expect revenues to grow between 7% and 8% on a CAGR level. What you don't see is that we expect that every single year in our strategy, we will increase our revenues. NII is fueled by the volumes which we have shown. We will have a strict focus to maintain discipline in deposit management and will overcome a dropping interest rate environment. Net fees, you see it currently in our P&L, are on a rise, and this is expected to continue. We have a broader product spectrum and we maintain growing with our clients. But obviously, there's one factor where we're decisive nowadays in banking, it's the external reference rate. We expect the NBP reference rate to drop as early as 2026 to 4%. And while I explained that we have an increased balance sheet and the rates are dropping, of course, margins are under pressure. We account for that. We expect the net interest margin to go slightly down step-by-step to 3.5% by the end of the strategy cycle. But let me tell you one thing. We are well prepared for a dropping interest rate environment. If you look into our data NII, we have barely moved since the beginning of the year. A 100 basis point rate cut currently costs us between 6.5% to 7% of total NII. And if you compare it to 2 years ago, 2023, it's 2 percentage points less sensitive. So we did our homework from a treasury perspective to stabilize our NII and increase volumes, went into fixed rate bonds and also swaps. Now going from the revenue side to our cost side. What you see is we expect a CAGR of 4% to 5% in the strategy cycle. The main driver is IT-related. And here, we increase the spending across all you have heard, digitization, automation, but also AI-related use cases. And as we know that you are interested in how we do that actually, we came up with the idea of the second part of today to show you the client look into our kitchen, the real use cases. And I just can encourage you to stay, it's worth it. In 2026, you see a steeper cost growth of 11%. There are 2 main drivers. The first one is we invest further in our people. We will grow by FTEs and also, we increased wages. And we do that with a smile, as you have heard, because this is everything we can deliver is out of our people. The second topic is regulatory cost increase. We expect that the BFG contribution and also our support fund will increase or normalize, if you want to call it like that. Now summing it up. You know us as mBank as the most efficient bank in this market, and we will maintain that with a cost-to-income ratio of at or below 35%. And this brings us in every single year in the top 3 of the country. Karol Prazmo: Pascal, allow me to briefly shift to the risk perspective, and to our Chief Risk Officer, Marek Lusztyn. What does this strategy mean in terms of expected cost of risk and risk appetite? Marek Lusztyn: That's clearly a question that many of you in the audience ask yourself, how much risk does it take to deliver our strategic objectives? And let me assure you that we are going to deliver them without changing our risk appetite. And now let me explain you how we are going to do it. Our risk excellence is based on 3 pillars. First of all, we want to grow intelligently, and colleagues from business lines already elaborated on the potential that mBank client franchise has for us doing so. First of all, on Retail side, Krzysztof explained the demographics of our customer base, and that demographic is not only beneficial in terms of our revenue growth, but it's also beneficial in terms of supporting us in lending growth and supporting us in our retail credit risk. Second of all, Adam explained at length the trends that we see in the economy. And those big shifts are going to be wins that will support us sailing to much higher growth in the Corporate space without taking unnecessary risk in the books. Second of all, it's resilience. Over the last 5 years, mBank has proven that we are an extraordinarily resilient bank, not only by local standards, but with all that we have gone through, we are super resilient by any international standards. We are going to capitalize on that, not only leveraging on excellent liquidity position, but also on our improving capital position that will serve not only as a cushion for safety, but also that -- as we have explained at length that will support us going back into dividend payouts. We have been exposed to the growing regulatory constraints since we are in the regulated industry. We would like to turn it into our advantage and proactively manage all the regulatory pressures that are coming in the strategic horizon. And finally, on the resilience, we are going to improve our ability to respond to nonfinancial risks since all those novel risks are the big risks that all the industry is facing. And finally, third pillar, which is efficiency. Our CEO, in his introductory speech, said that simplification is ultimate sophistication. Krzysztof explained at length what we are going to do using AI tools. And in terms of efficiency, we would like our clients to benefit from the simplified fast credit processes. And we will make sure that credit process greatly contributes to the efficiency of the mBank overall. So finally, this brings me to our strategic goal in terms of the risk management. We aspire our cost of risk to be around 80 basis points in the strategy horizon. And we are going to achieve this without changes to our risk appetite. Karol Prazmo: Marek Lusztyn, thank you. And returning to Pascal Ruhland. Marek spoke about the trajectory for cost of risk. You spoke about the trajectory for revenues and costs. What does all of this mean for our capital return strategy? Pascal Ruhland: Yes. Before I'm going into the capital return strategy, I want to remind us all that in Poland, we have the reintroduction of the countercyclical buffer. That means 2 percentage points, 1 this year, 1 next year, which will increase the minimum requirements. And while you keep that in mind, I would like to have all your attention now to the bar chart. What you see there is our net profit expected growth rate, so the dividend potential. What we balance there is the reinvestment and the dividend distribution. The basis of it is our high profitability. We aim for exceeding in every single year of the strategy, 22% of return on tangible equity. And we're really proud to say that we want to be back as a regular dividend payer. We start with 30%, and we go up as high as 75%. But of course, we are not working isolated. Therefore, I want now to speak about what the Minister of Finance has issued on the 21st of August, that the banking taxation would change. And yes, indeed, if you think about that, our net profit will be under pressure because if we simulate it for the next year for 2026, we would talk about an effective tax rate at mBank of around 40%, and that is massive. But while you let that sink in, please follow me once more. Look at the bar chart because what we show you here, we expect to exceed PLN 6 billion net profit. And that should give you a good sense how resilient the strategy is set up of any external change. Now going from one strategy, the capital return strategy to our balance sheet strategy. You know us, especially from an investor perspective as the bank, which is most active in the capital markets. We are pioneers. We have issued the first AT1. We have issued first Tier 2. And also, we have made the securitization market in Poland vibrant. But why have we done that? To most efficiently manage also regulatory environments. So we are used to leverage the full potential of our balance sheet to stay effective. And also in this strategy, we will do that. Therefore, we will more than double our issuance volumes. We will be active across the full stack from AT1 to securitizations. And also, while we see a growing mortgage loan book, we will return to covered bonds and make use of it. But that's not the only thing which will grow. Our capital today is around PLN 20 billion. And in the due course of the strategy, we will double that. And while we carefully also listen to our investors' feedback to run the bank prudently, to have a strong capital position, we give ourselves the target of at least 2.5 percentage points on CET1 ratio as a capital buffer to show you the strength of our capital position. Karol Prazmo: Pascal, given the breadth and depth of what you have covered, can I ask you to summarize the strategic priorities for the '26 through 2030 period? Pascal Ruhland: Of course, that's my pleasure. Our 6 key financial KPIs for the strategy. First, we are back in a growing mode. We will exceed 10% market share in every single of our core products. Second, we remain highly profitable and exceeded a 22% return on tangible equity in every single year. Third, you know us as one of the most efficient banks in the market, and this will stay like that for a cost-to-income ratio of at or below 35%. And this brings us in the top 3 in every single year. Fourth, a cost of risk of around 80 basis points shows a prudent credit control. Fifth, with our strong capital position, we maintain a buffer of 2.5 percentage points above the CET1 ratio minimum requirements. And sixth, we will be a regular dividend payer. We will start with 30%, and it will go up as high as 75%. Karol Prazmo: Thank you, Pascal Ruhland. And now I would like to invite our President and CEO back to the stage for the closing remarks. Cezary Kocik, the floor is yours. Cezary Kocik: I would like to highlight 3 of the most important things. First, we have overcome equity constraints mainly related to Swiss francs. And now we are ready to go ahead with a full speed gaining market share. Second one is that we are going to deliver to our shareholders exceptional profitability and efficiency, together with increasing dividend payment. And finally, demographic structure of our client and the engagement of our employees make mBank exceptional. Thank you very much. Karol Prazmo: Ladies and gentlemen, this fulfills the first of our 4 agenda points for today. And now we will move to the Q&A session, and I'll take questions both from the room and from online. Unknown Attendee: [ Joanna Kosik from CSC ]. Excellent presentation. I have one question kind of slightly obvious, you've mentioned the 10% market share increase in loan and deposits. Question to probably the CEO or whoever would like to answer. There's a lot of other banks in the market that have talked about growth prospects in Poland. Just kind of curious, who do you expect to take that market share from? Cezary Kocik: We are not competing with any specific bank. We're just competing with the whole market. And we track very carefully strategies of our competitors. And -- but just to make you a little bit more sure that it will happen, I can say that we are probably the one bank in the whole Polish market, which has grown fully in an organic way. So the Corporate started with a white paper in 1986 and the Retail in 2000. And from that time, we're permanently gaining market share, not by acquisition, just pure organic growth. And on top of that, what I highlighted in my introduction speech is that before these problems with Swiss franc, because without equity, you can't grow, you are counting risk-weighted assets every day just to be on the safe side. But before to that time, before these constraints start to be so severe for our bank, we managed to grow in retail, as I mentioned, 2% in a 5-years horizon in Retail, in deposit and loans, and in Corporate in loans, 1.5%. This is exactly missing gap, which we need to fulfill our strategy and gain 10% market share. So it is not just a promise, which is not covered by fact, but we proved in the past that we are able to grow with such dynamic. I don't know if it's... Karol Prazmo: Thank you, Cezary Kocik. Unknown Attendee: [indiscernible] My question is about the Corporate income tax rate. Can you quantify the impact of the higher rate for banks on your strategic goals, specifically on ROTE, net profit and dividend payout. Karol Prazmo: Pascal, I will direct this one to you. Pascal Ruhland: Yes. I gave in the presentation an indication where we will lay -- if the tax currently as it was announced on the 21st of August. And in '26, we would assume an effective tax rate of 40%. And just let me explain why it's 40% and not 30%, which was in the Corporate income tax name because we, as a banking sector, have quite significant costs, which are not tax deductible. This is the balance sheet costs we are having, but also other regulatory contribution. Therefore, you see an elevation. We are not precisely naming how much impact it would be, but I want to direct you to a few of the colleagues. The analyst did a very good job. And if I'm reading the reports, they currently come up that this could cost around PLN 800 million to PLN 900 million, and we are now taking this 2026 as the most severe. And this is a good ballpark figure. Karol Prazmo: Fantastic. Thank you, Pascal Ruhland. I'll take one question from online. There is numerous questions online. They pertain to our international presence and potential M&A. So I'll actually start with Czechia and Slovakia, and Krzysztof Bratos, with you. Can you summarize again the strategic objectives in terms of growing the Czech and the Slovak business? And the next question, Cezary Kocik, to yourself. In terms of the second part of that question, what can investors expect in terms of potential M&A? And are we looking at M&A opportunities? But Krzysztof Bratos, the floor is yours. Krzysztof Bratos: Okay. Thank you. So I think what we've shown is the ambition for Czech and Slovakia. This is absolutely the organic growth path. And in here, we are estimating to have 1 million of active clients and doubling our loans and nearly doubling our deposits. And the main engine of that growth and the source will be this aligned platform approach that we've mentioned. So the numbers you've seen, this is the assumption on the organic growth in Czech and Slovakia through the corporation in Poland. And I'll hand over for the second part to Cezary. Cezary Kocik: Of course, as a Management Board, we have very carefully observed the market. But for all of you who knows very well Polish market, the situation is quite complicated because almost 50% is -- there are banks with a significant stake of government. So that are rather -- and they are also big banks, so they are not potential target. And the rest have a very big financial investors. So honestly, I believe that if they are mergers in Poland, they rather trigger by the agreement between the major shareholders, not by the Management Board. But still, we are observing it very carefully. And if we believe that something fits to our model because we also need to remember that some merger destroy value. We need somebody or a bank with a similar customer profile, a similar distribution channel that the synergy will come to life, not -- we will be stuck in a permanent integration. So we will take a decision. But as I said, there is many obstacles. It's not very probable. And this is the reason why our strategy is based on organic growth, not on mergers and acquisitions. Karol Prazmo: Thank you, Cezary Kocik. Yes, go ahead. Kamil Stolarski: Kamil Stolarski, Santander Bank Polska. Congratulations on the strategy, especially of the market gains aims. My question is on the other side of the P&L about the cost in 2026. And I wonder if you could share some comments because it seems that the cost will outgrow revenues? And how do you justify this in 2026? And then the other question is about CapEx. Does this strategy involves also higher CapEx? Pascal Ruhland: Thank you for the question. I alluded in the presentation that the 11% increase on the cost side are driven especially twofold. First of all, by investing in our people. And why we grow in FTE, we are doing that twofold. First of all, business orientated, IT orientated, therefore, because we are serving our customers. And secondly, it's also compliance related. For instance, DORA as a regulation demands more from us. That is one part of the pillar. The second part of the pillar is regulatory costs, which we also expect to increase. And that is the second driver. And if you -- because you alluded to that costs are growing faster than revenues, our expectation is that the interest rate will go down to 4% on the NBP as fast as 2026. So you will have to overcome that. We also sent the signal, I said it, that we will grow revenues despite this interest rate drop. And the cost will be adjusted. Long term, you see that our revenues from the 7% to 8% CAGR very much outperformed the 4% to 5% CAGR on the cost side. On the CapEx, Yes, of course, we will increase our CapEx level because in the future, as the colleagues were explaining it, it's about IT capabilities. How smart can you really apply and how fast to especially increase effectiveness for your clients. So it's not about -- and we, therefore, invite you for the second session today. It's not about just applying AI, it really needs to be useful. Our CapEx is expected to grow by more than 16% in the due course of the strategy. Karol Prazmo: Thank you, Pascal Ruhland. Now I'll take another question from our online participants, and I'll direct it to Krzysztof Dabrowski. Krzysztof, the question relates to artificial intelligence. And can you give us examples of how AI will translate into operational efficiency? And can it potentially lead to lower costs? Krzysztof Dabrowski: Okay. So one of the examples of using AI to have some operational efficiency would be what we are doing in the AML area. This is a particular cost area that is growing rapidly because of the requirements that we have to fulfill. And in particular concern that we have is the analysis of the customer transactions from the perspective of money laundering. And in that area, the costs have been growing so far because we had to build the team and we had to do our obligations. But what we've been able to do with the help of AI was to significantly mitigate this growth. So what we initially assumed would be the FTEs necessary to just cover the retail transaction monitoring, thanks to our AI solution, we've been able to also cover Corporate Banking. We have been able to cover international money transfers in SWIFT and also our Czech and Slovak branch. So that was a significant investment and significant reduction in the effort. So this is what we are doing. We are removing the effort from the system. Because the bank is growing very fast, we need also to handle the organic growth. I think the word organic was used many times in our presentation. So our ambitious target is to keep up with this growth without increasing the cost on the operational side, and this is how we apply the AI. In many other places, the AI can be used for the things that were so far not easy target to automate. It's not the best tool to do things in a repeatable manner. If something can be done in a repeatable manner, you can do it with traditional method and you get predictability. AI is much more suited in our opinion to the things that are not easy subject to those things like, just to give you an example, comparing 2 documents, 2 scans of documents, which for the moment, require human beings and can be right now done with the AI. So you can expect us investing in this area. This is factoring in our cost base at the moment, certain assumption about the productivity gains. Karol Prazmo: Thank you, Krzysztof Dabrowski. Pascal Ruhland, I'll take one more question from online. And I want to direct it to you. The question relates to what is embedded in our forecast with respect to GDP and interest rate forecast. And also with respect to the growth expected for total revenues, can you break it more down into NII and NFC? Pascal Ruhland: Okay. So the GDP forecast, which I didn't mention specifically, but you will find it in our paper deck, which is uploaded right now, is between 3.6 and 3.8, and we expect to have GDP growth year-on-year throughout the strategy. And as I said on the interest rate, we expect that the interest rate is dropping down to 4% as early as 2026 and has then a stable state. When we then think about the revenues, and here I explained that we are growing from a CAGR level between 7% and 8%, and from today's split between NII and NFC, which is an 80-20 split, we expect that net fee and commission income is slightly faster growing than NII, but just slightly. And in the end, it will be a bit shifting the 80-20 split, but not massively. Karol Prazmo: Thank you, Pascal Ruhland. And I'll take one final question from the room here. Is there any? Okay. Then in that case, we will -- we conclude with the Q&A session, and I pass the voice over to mBank's Head of Investor Relations, Joanna Filipkowska, who will now lead the demo session. Joanna, over to you. Joanna Filipkowska: Good morning, ladies and gentlemen. The purpose of this demo session is to provide you with concrete examples of some of our exciting solutions that we are implementing as part of this strategy. Today, we will show you 5 use cases in which we already have significant advancement. First, you will see a short video, and then one of our Board members will provide further details. The session will last 20 to 25 minutes. After the end of the session, we will again have 10 minutes for Q&A. So please get your questions ready, both here in the room and online. The session will be led by our 3 Board Members: Mr. Krzysztof Dabrowski, Mr. Adam Pers and Mr. Krzysztof Bratos. We will start with our Gen AI program. Krzysztof Dabrowski, Vice President of the Management Board for IT and Operations, the floor is yours. Krzysztof Dabrowski: So I've been talking about 3 of the solutions that came out of our incubator, and we prepared for you a demonstration of those 3 plus 1 more as a bonus. So let's start. [Presentation] Krzysztof Dabrowski: Okay. I hope you like what you just saw. And also, as I mentioned, this is just the things that we either already have in production or will soon have. We have so much more in the store. So keep watching us. Joanna Filipkowska: Thank you very much, Krzysztof. Now we will turn to our Corporate Banking. Adam Pers, Vice President of the Management Board for Corporate and Investment Banking. Let's start. Adam Pers: Thank you so much. I was talking about the tools that we will see in a second in a movie, that will be a true movie. But our ambition is not just to show technology, show the tools that can bank. I think the word banking, bank as a word is something like old fashion. We like to implement the tools that will help our customers and our employees as well to use in their daily, routine daily operations, to help also to build a competitive advantage to our customers. So please enjoy. [Presentation] Adam Pers: Yes. And I will not repeat what was on the movie. Just 2 closing comments. The first one is that, what Krzysztof said that some of them are already in production. The second thing is that for the time being, we are, I would say, producing only what we receive from customers, the feedback and the expectations. Thank you. Joanna Filipkowska: Thank you, Adam. We've shown you 2 exciting use cases from our technology and corporate banking areas. Now let's turn to Retail Banking area, where we have 3 use cases to share with you. Krzysztof Bratos, Vice President of the Management Board for Retail Banking, the floor is yours. Krzysztof Bratos: Thank you. In our strategy, we plan to evolve from being an exceptional transaction bank. And in that, we promised to take care of those more complex products for our clients. But while doing so, we want to stay true to our purpose, simplifying finances, bringing goals to life. Emerging complex products in simplicity is not that easy, but we took on that challenge. And this is how we reimagine the mortgage experience. [Presentation] Krzysztof Bratos: And I can say that this is definitely not just a vision. It's a solution of which first stage went live already 2 weeks ago for one of our scenarios. And that 15 minutes that we promise, we've actually managed to issue a full credit decision last week in 6 minutes and 31 seconds. That is including credit worthiness check, legal checks and the valuation of the property for the real client in the real life and most stages will follow. Now moving to the second video. We believe that transitioning and taking care of the more complex scenarios doesn't mean that we'll forget about what is core. And in there, not everything is simplified and not everything yet is made truly, truly easy. And here is what we took on in one of our super segments, in SME, something that probably doesn't exist on the market yet. [Presentation] Krzysztof Bratos: And finally, the very heart of mobile banking. Let the video speak for itself. [Presentation] Joanna Filipkowska: Thank you very much, Krzysztof. Ladies and gentlemen, this completes this demo session. And at this point, I would like to open the Q&A session, which will be hosted again by Karol Prazmo. Karol Prazmo: Thank you, Joanna. So we're opening up to the questions. Please get those questions ready, and please put your hands up. And while you do that, I'll actually start with the first question from one of our online users. Krzysztof Bratos, the question is directed to you. In terms of the digital mortgage, is this for one borrower? Is this for several borrowers? And if it's not available for several borrowers, when do you think that functionality will be available? Krzysztof Bratos: Okay. So I think there are digital mortgages and there are digital mortgages. There are companies that will create a mobile interface that will allow you to file a mortgage application, and that can be called digitally. We went a different path. We decided that in order to keep our efficiency operations and our costs, we invested firstly heavily in our backbone. In AI-supported valuation models for the real estate, the automated legal checks, the automated credit worthiness. And this is something that took us quite a while to build. And thanks to that, as I said, we can do that now in 6 minutes and 31 seconds. And now we are now expanding and building on that foundation to the more and more scenarios. The scenario that we went live with is just the refinancing for the ones -- for the single borrower. But as soon as still this year, we are planning to add the new mortgages for the single borrower and the more complex scenarios like the more than one borrower are planned for 2026. So I would say most of the agenda, we should explore and most of the key scenarios in the next year to come. But the first, the foundation is there, and the first scenario is there and is fully operational. Karol Prazmo: Thank you, Krzysztof Bratos. And do I see any hands up in the room with respect to questions? Then I'll take another question from online. And Krzysztof Bratos, in terms of the phone acting as a payment terminal, is this already available to everybody today? Krzysztof Bratos: No. But it will be and it still be as early as this year. And we are sure that it's going to change the experience of a lot of our customers. Now when building and when thinking about the solution, the first idea actually was to try to embed our app and connect our app today external point-of-sale devices or software point-of-sale devices because those 2 exist on the market. But then we thought, while integrating, why wouldn't we can turn our app into something that is a true point of sale in one go with a fully integration of our accounting system. And therefore, this is something that we believe is very, very new. It's in a very advanced stage of development and is expected still this year. Karol Prazmo: Thank you, Krzysztof. Is there any questions here in the room? Okay. In that case, ladies and gentlemen, this concludes today's event. We thank you very much for joining us here in the room. We also thank you very much for joining us online. And now for the participants here in the room, we invite you to lunch. Our Board members will be available for another hour. So please take the opportunity to have all those informal conversations. Thank you, and have a great day.
Operator: Welcome to AutoZone's 2025 Q4 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press zero on your telephone keypad. Please note this conference is being recorded. Before we begin, please note that today's call includes forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance. Please refer to this morning's press release and the company's most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission for a discussion of important risks and uncertainties that could cause actual results to differ materially from expectations. Forward-looking statements speak only as of the date made, and the company undertakes no obligation to update such statements. Today's call will also include certain non-GAAP measures. The reconciliation of GAAP to non-GAAP financial measures can be found in our press release. I will now like to turn the call over to your host, Philip Daniele, President and CEO of AutoZone. You may begin. Philip Daniele: Thank you. Good morning, and thank you for joining us today for AutoZone's 2025 Fourth Quarter Conference Call. With me today are Jamere Jackson, Chief Financial Officer, and Brian Campbell, Vice President, Treasurer, Investor Relations, and Tax. Regarding the fourth quarter, I hope you had an opportunity to read our press release and learn about the quarter's results. If not, the press release, along with slides complementing our comments today, are available on our website under the Investor Relations link. Please click on the quarterly earnings conference call to see them. To start out this morning, I want to thank our more than 130,000 AutoZoners across the entire company for their commitment to delivering on the first line of our pledge: AutoZoners always put customers first. Our operating theme for FY 25 was "Great people, great service," and we have lived up to that theme. Their contributions continue to allow us to deliver solid results. We will continue to succeed as long as we are all working towards the common goal of delivering what AutoZoners call "wow" customer service. To get started this morning, let me address our sales results. Coming into the quarter, we were optimistic that our focus on improved store execution would drive sales growth for both our retail and commercial channels. More specifically, we felt the momentum we gained over the last two quarters with our domestic commercial same-store sales would continue this quarter. We are very pleased that our domestic commercial sales accelerated again this quarter, up 11.5% on a 16-week basis. Additionally, our domestic retail comp performed well at 2.2%. Finally, our international constant currency comp remained solid, up 7.2% for the quarter, and relatively consistent on a two-year basis with last quarter's results. We are encouraged by our continued sales results, and we are excited about the outlook for the 2026 fiscal year. Next, let me touch on a few highlights for the quarter, and then I'll give you a little more color on our execution, the current environment, and our outlook for the quarter as we continue to focus on what we call "wow" customer service. Our total sales grew 0.6%, while earnings per share decreased 5.6%. I will remind you that last year we had an extra week in the quarter. If we adjust last year to include only 16 weeks, our total sales grew 6.9%, while our earnings per share grew 1.3%. Additionally, I want to point out that this year's gross margin, operating profit, and EPS were negatively impacted by a non-cash $80 million LIFO charge. This charge had an impact on margins and EPS. Excluding this LIFO charge, our EPS would have been up 8.7% versus last year on a 16-week basis. We also delivered a positive 5.1% total company same-store sales on a constant currency basis, with domestic same-store sales growth of 4.8%. Our domestic DIY same-store sales grew 2.2%, while our domestic commercial sales grew 12.5% versus last year on a 16-week basis. International same-store sales were up 7.2% on a constant currency basis. While our international business continues to comp impressively, we faced over five points of currency headwind, which resulted in a lower unadjusted international comp of 2.1%. As you know, the stronger US dollar had a negative impact on our reported sales, operating profit, and earnings per share. Jamere will provide more color for you on the foreign currency impact on our financial results for both this past quarter and the upcoming first quarter later on this call. Specifically related to our domestic commercial business, our focus is on improving execution, expanding parts availability, and improving speed of delivery to our commercial professional customers. These initiatives helped us significantly improve our sales results versus last year. Commercial sales were up 12.5% year over year on a six-week basis versus a very strong 10.7% in the third quarter and 7.3% in the second quarter. We believe the initiatives we have in place have a long runway and will drive strong results into future quarters. We are pleased with our efforts and our execution thus far. Next, I'll discuss the quarter's sales cadence. Regarding our positive 4.8% quarterly domestic same-store sales, the cadence was 4.4% in the first four weeks, 2.4% in the second four weeks, 6% in the third four-week segment, and 6.4% over the last four weeks of the quarter. Because this quarter's second four-week segment had the July 4 holiday, while last year the holiday fell in the third four-week segment, we feel it's appropriate to combine the middle eight weeks of results. Our comp was 4.2% over this segment. Therefore, the ramp being 4.4%, 4.2%, and 6.4%. We're encouraged by those numbers. We attribute this ramp to both growing market share and the warmer, more summer-like weather arriving in mid-July, while last year's warmer weather came earlier in the quarter. This positively impacted both our DIY and commercial sales. Overall, we are encouraged with our sales acceleration this quarter, and we are excited to start the new year. Now let me focus for a few more minutes on our domestic DIY business. Our merchandise category segments, failure, maintenance, and discretionary, were all positive for the quarter. It is very encouraging for us to see the discretionary categories grow at a pace not seen since FY 2023. Regarding our 2.2% DIY comp for the quarter, we experienced a positive 2.1% in the first four-week segment, a 0.9% in the second segment, 1.7% across the third segment, and up 4.1% during the last segment. With regard to inflation's impact on DIY sales, we saw higher average DIY ticket growth at 3.9% versus like-for-like same SKU inflation up approximately 2.8% for the quarter. We attribute the higher average ticket versus SKU inflation growth to an improved product mix this quarter. We continue to expect ticket inflation to be up at least 3% for the remainder of the calendar year. We also saw DIY traffic count down 1.9%, which was relatively consistent across the quarter, although the best period for DIY transactions performance was our last segment at negative 0.6%, which is exciting as it was also our best average ticket growth in the quarter. This correlated with warmer weather temperatures versus the previous periods. We continue to see data that confirms we are gaining share, and we are encouraged by our most recent trends. We believe we have best-in-class product offerings and customer service. This gives us confidence that we will continue to win in the marketplace. Finally, all of our census regions were positive, led by the Northeast and the Rust Belt markets, which were driven by share gains and favorable weather after having a more normal winter and spring weather season. Next, I will touch on our domestic commercial business. As I mentioned, our commercial sales were up 12.5% for the quarter on a 16-week basis. The first four-week segment grew 11.4%, the second four-week segment grew 7.3%, the third four-week segment grew 17.9%, and the last four-week segment grew 13.4%, excluding this year's additional week. As previously mentioned, the second four-week segment this year had the July 4 holiday in it, while last year, the July 4 holiday fell in the third four-week segment. When combining the sales of both second and third segments, sales grew 12.5% over those eight weeks. Overall, we saw a steady increase in the performance throughout the quarter. We are very encouraged with our improved satellite store inventory availability, significant improvements in our hub and mega hub store coverage, the continued strength of our Duralast brand, and improved execution in our initiatives to improve speed of delivery and customer service for the professional customers. These initiatives are delivering share gains and give us confidence as we move into FY 2026. Year-over-year inflation on a like-for-like SKU for commercial business was roughly 2.7% and contributed to our average ticket growth of approximately 3.7%. Lastly, we were very pleased with the gross growth in our commercial transactions year over year, with traffic up 6.2% on a same-store basis. Our sales growth will be driven by our continued ability to gain market share and an expectation that like-for-like retail SKU inflation will accelerate as we move forward. For the quarter, we opened a total of 90 net domestic stores and 51 stores in our international markets. For the year, we opened 304 net new stores, the most since 1996. We remain committed to more aggressively opening satellite stores, hub stores, and mega hub stores. Hub and mega hubs comps results continue to grow faster than the balance of the chain, and we're going to continue to aggressively deploy these assets for FY '26. FY '26, we expect to continue to open stores at an accelerated pace, and Jamere will share more on our new store development progress. As we move into FY '26, we expect both DIY and commercial sales trends to remain solid as we gain momentum and grow market share behind our growth initiatives. We will, as always, be transparent about what we are seeing and provide color on our markets and outlook as trends emerge. Let me take a moment to discuss our international business. In Mexico and Brazil, we opened a total of 51 new stores in the quarter and now have 1,030 international stores. As I mentioned, our same-store sales grew 7.2% on a constant currency basis. We remain very positive on our growth opportunities in these markets. Today, we have over 13% of our total store base outside the U.S., and we expect this number to grow as we accelerate our international store openings. We opened 109 international stores for the year, and we expect to open slightly more in FY '26. In summary, we have continued to invest in driving traffic and sales growth. While there will always be tailwinds and headwinds in any quarter's results, what has been consistent is our focus on driving sustainable, long-term results. We continue to invest in improving customer service, product assortment initiatives, and our supply chain, which all position us well for future growth. We are investing both CapEx and operating expense to capitalize on these opportunities. This year, we invested approximately $1.4 billion in CapEx in order to drive our strategic growth priorities, and we expect to invest a similar amount this next year. The majority of our investments will be accelerated store growth, specifically hubs and mega hubs that place more inventory closer to our customers. This past year, we also opened two new distribution centers while utilizing our existing distribution centers to drive efficiency and reduce supply chain costs. And we will continue investing in technology to improve customer service and our AutoZoners' ability to deliver on our promise of Wow! Customer service. This is the right time to invest in these initiatives as we believe the industry demand will continue to remain strong and we have the ability to grow market share. Now I will turn the call over to Jamere Jackson. Jamere Jackson: Thanks, Phil, and good morning, everyone. Our underlying operating results for the quarter were strong, highlighted by strong top-line results. Total sales were $6.2 billion, up 0.6% versus the 17-week quarter last year. On a 16-week comparison to last year, our sales grew 6.9%. Our domestic same-store sales grew 4.8%, and our international comp was up 7.2% on a constant currency basis. Total company EBIT was down 1.1%, and our EPS was up 1.3% on a 16-week basis. I do want to point out that excluding our non-cash $80 million LIFO charge, and reporting on a comparable 16-week basis, EBIT would have grown 5.5% and EPS would have been up 8.7%. As Phil discussed earlier, we also had a headwind from foreign exchange rates this quarter. For Mexico, FX rates weakened just over 5% versus the US dollar for the quarter, adding a $36 million headwind to sales, a $14 million headwind to EBIT, and a 57¢ a share drag on EPS versus the prior year. For the full year, our sales were $18.9 billion, up 4.5% versus last fiscal year on a 52-week basis. We continue to be proud of our results as the efforts of our AutoZoners in our stores and distribution centers have enabled us to continue to grow our business. Let me take a few moments to elaborate on the specifics in our P&L for Q4. And first, I'll give a little more color on our sales and our growth initiatives. Starting with our domestic commercial business for the fourth quarter, our domestic DIFM sales were $1.8 billion, up 12.5% on a 16-week basis. For the quarter, our domestic commercial sales represented 33% of our domestic auto parts sales and 28% of our total company sales. Our average weekly sales per program were approximately $18,200, up 9% versus last year. Our commercial acceleration initiatives are continuing to deliver good results as we grow share by winning new business and increasing our share of wallet with existing customers. We have our commercial program in 92% of our domestic stores, which leverages our DIY infrastructure. We're building our business with national, regional, and local accounts. This quarter, we opened 87 net new programs, finishing with 6,098 total programs. Importantly, we continue to have a tremendous opportunity to both expand sales per program and open new programs. We plan to aggressively pursue growing share of wallet with existing customers and adding new customers. Mega Hub stores remain a key component of our current and future commercial growth. We opened 14 mega hubs and finished the fourth quarter with 133 mega hub stores. We expect to open 25 to 30 mega hub locations over the next fiscal year. As a reminder, our mega hubs typically carry over 100,000 SKUs and drive a tremendous sales lift inside the store box as well as serve as an expanded assortment source for other stores. The expansion of coverage and parts availability continues to deliver a meaningful sales lift to both our commercial and DIY business. These assets are performing well individually, and the fulfillment capability for the surrounding AutoZone stores is giving our customers access to thousands of additional parts and lifting the entire network. While I mentioned a moment ago that our average commercial weekly sales per program grew 9%, the 133 mega hubs are growing much faster than the balance of the commercial business in Q4. We continue to target having almost 300 mega hubs at full build-out. Our customers are excited by our commercial offering as we deploy more parts in local markets closer to the customer while improving our service levels. On the domestic retail side of our business, our DIY comp was up 2.2% for the quarter. As Phil mentioned, we saw traffic down 1.9% along with a positive 3.9% ticket growth. Over time, we expect to see slightly declining transaction counts offset by low to mid-single-digit ticket growth in line with the long-term historical trends for the business driven by changes in technology and the durability of new parts. Our DIY shares remain strong behind our growth initiatives, and we're well-positioned for future growth. Importantly, the market is experiencing a growing and aging car park and a challenging new and used car sales market for our customers, which continues to provide a tailwind for our business. These dynamics, ticket growth, growth initiatives, and macro car park tailwinds, we believe, will continue to drive a resilient DIY business environment for FY '26. Now I'll say a few words regarding our international business. We continue to be pleased with the progress we're making in our international markets. During the quarter, we opened 45 new stores in Mexico to finish with 883 stores and six new stores in Brazil, ending with 147. Our same-store sales grew 7.2% on a constant currency basis and positive 2.1% on an unadjusted basis. We remain committed to international, and we're pleased with our results in these markets. We will accelerate the store opening pace going forward as we're bullish on international being an attractive and meaningful contributor to AutoZone's future sales and operating profit growth. Now let me spend a few minutes on the rest of the P&L and gross margins. For the quarter, our gross margin was 51.5%, down 103 basis points versus last year on a 16-week basis. This quarter, we had an $80 million LIFO charge or a 128 basis point unfavorable LIFO comparison to last year. Excluding the LIFO comparison and last year's additional week, we had a 25 basis point improvement to gross margin driven by solid merchandise margin improvement. Next quarter, we anticipate continued benefits from merchandise margins that should offset the rate headwind from the mix shift to a faster-growing commercial business. We're planning a LIFO charge of approximately $120 million for next quarter. As I mentioned, we had an $80 million LIFO charge in Q4 as we're continuing to experience higher costs due to tariffs that impact our LIFO layers. Moving on to operating expenses. Our expenses were up 8.7% versus last year on a 16-week basis. As SG&A as a percentage of sales deleveraged 53 basis points driven by investments to support our growth initiatives. On a per-store basis, our SG&A was up 4.4% on a 16-week basis compared to last quarter's 5.1% increase. We have been investing in SG&A in order to capitalize on opportunities to grow our business now and in the near future. These investments will help us grow market share, improve the customer experience, speed up delivery times, and drive productivity. We remain committed to being disciplined on SG&A growth, and we will manage expenses in line with sales growth over time. Moving to the rest of the P&L, EBIT for the quarter was $1.2 billion, down 1.1% versus the prior year on a 16-week basis. As I previously mentioned, a combination of LIFO charges and FX rates reduced our EBIT by $94 million. Adjusting for the unfavorable LIFO comparison and reporting on a constant currency and 16-week basis, our EBIT would have been up 6.6% versus the prior year. Interest expense for the quarter was $148 million, up 2.7% from a year ago on a 16-week basis, as our debt outstanding at the end of the quarter was $8.8 billion versus $9 billion a year ago. We're planning interest in the $112 million range for '26 versus $108 million last year. Higher borrowing rates have driven interest expense increases. For the quarter, our tax rate was 20.1%, down from last year's 21%, driven primarily by higher stock option expense benefit. This quarter's tax rate benefited 152 basis points from stock options exercised, while last year, it benefited 80 basis points. For '25, we suggest investors model us at approximately 23.2% before any assumption on credits due to stock option exercises. For the full year, EBIT was $3.6 billion, down 4.7% driven by the extra week and $104 million in net LIFO impacts. Excluding the LIFO and currency headwinds, EBIT would have grown 2.7% on a 52-week basis. Moving to net income and EPS. Net income for the quarter was $837 million, down 0.5% versus last year on a 16-week basis. Our diluted share count of 17.2 million was 1.8% lower than last year's fourth quarter. The combination of lower net income and lower share count drove earnings per share for the quarter to $48.71, up 1.3% on a 16-week basis. As a reminder, the combination of LIFO and unfavorable FX comparison drove our EPS down $4.14 a share. For FY '25, net income was $2.5 billion, down 6.2%, and earnings per share was $144.87, down 3.1%. LIFO and FX drove our EPS down $6.42 a share in FY '25. Now let me talk about our free cash flow. For the quarter, we generated $511 million in free cash flow, $1.8 billion for FY '25. We expect to continue being an incredibly strong cash flow generator going forward, and we remain committed to returning meaningful amounts of cash to our shareholders. Regarding our balance sheet, our liquidity position remains very strong, and our leverage ratio finished at 2.5 times EBITDAR. Our inventory per store was up 9.6% versus Q4 last year, while total inventory increased 14.1% over the same period last year, driven by new stores, additional inventory investment to support our growth initiatives, and inflation. Net inventory, defined as merchandise inventories less accounts payable on a per-store basis, was negative $131,000 versus negative $163,000 last year and negative $142,000 last quarter. As a result, accounts payable as a percent of gross inventory finished the quarter at 114.2% versus last year's Q4 of 119.5%. Lastly, I'll spend a moment on capital allocation and our share repurchase program. We repurchased $447 million of AutoZone stock in the quarter, and at quarter-end, we had $632 million remaining under our share buyback authorization. Our ongoing strong earnings, balance sheet, and powerful free cash allow us to return a significant amount of cash to our shareholders through our buyback program. We have bought back over 100% of the net outstanding shares of stock since our buyback inception in 1998 while investing in our existing assets and growing our business. We remain committed to this disciplined capital allocation approach that will enable us to invest in the business and return meaningful amounts of cash to shareholders. So to wrap up, we remain committed to driving long-term shareholder value by investing in our growth initiatives, driving robust earnings and cash, and returning excess cash to our shareholders. Our strategy continues to work as we remain focused on gaining market share and improving our competitive positioning in a disciplined way. As we look forward to FY '26, we're bullish on our growth prospects behind a resilient DIY business, a fast-growing international business, and a domestic commercial business that is growing share in a meaningful way. We continue to have tremendous confidence in our ability to drive significant and ongoing value for our shareholders behind a strong industry, a winning strategy, and an exceptional team of AutoZoners. Before handing the call back to Phil, I want to remind you that we report revenue comps on a constant currency basis to reflect our operating performance. We generally don't take on transactional risk, so our results primarily reflect the translation impact for reporting purposes. As mentioned earlier in the quarter, foreign currency resulted in a headwind on revenue and EPS. If yesterday's spot rates held for Q1, then we expect an approximate $32 million benefit to revenue, a $9 million benefit to EBIT, and a 38¢ a share benefit to EPS. Additionally, as you build your FY '26 models, note that we are aggressively building stores both domestically and in Mexico, and expect to build 325 to 350 stores in The Americas in FY '26. The build-out will be skewed to the back half of the year and will make up the majority of our planned CapEx of approximately $1.5 billion. And now I'll turn it back to Phil. Philip Daniele: Thank you, Jamere. We are excited to start FY '26. We have a lot to accomplish in this new fiscal year. We are committed to improving our execution and driving Wow customer service. We feel we are well-positioned to grow sales across our domestic and our international store businesses with both our retail and our commercial customers. We expect to manage our gross margins effectively and operating expenses appropriately for future growth. We continue to put our capital to work where it will have the biggest impact on sales: our stores, our distribution centers, and investing in technology to build a superior customer service experience. The top focus areas for FY '26 will be growing share in our domestic commercial business and continuing our momentum internationally. We are excited to get started on our first quarter. We understand we cannot take things for granted. We must remain laser-focused on customer service, flawless execution, and gaining market share in every market in which we operate. This time of year, we also enjoy reflecting on the past twelve months' highlights. Our teams achieved several impressive milestones this past year. First, $18.9 billion in sales, and we hope to celebrate the $20 billion milestone soon. Domestic commercial sales at an amazing $5.2 billion. Average weekly sales domestically of just over $48,000 a store, equating to just over $2.5 million per store annually. We opened an amazing 195 new stores domestically. This is the most stores we opened annually in the US since fiscal year 2004, over twenty years ago, and we opened a record 109 stores internationally. Globally, we opened a record 304 net new stores, over 43% more stores than the year before. In a week or so, we will be hosting our national sales meeting here in Memphis and we'll discuss with our field leadership our operating theme for the New Year: Driving the Future Together. While improving on our customer service levels will forever be a key theme, this year, we want to celebrate collaboration as a theme to take us even further for the new year. Our store assortments and in-stock position are better than they have ever been. So we want to challenge our teams to educate our customers on our product offerings and services. This will only happen if AutoZoners amplify their product availability across our retail and commercial customer bases. Fiscal 2026's top operating priority will continue to be based on improving execution and Wow customer service. We will continue to invest in the following strategic projects: remain focused on driving our do-it-yourself and commercial sales growth, which we are doing in a meaningful way; continuing to ramp our domestic and international new store growth; drive new hub and mega hub openings, where we are incredibly excited about their continued performance; focusing on improving our new distribution centers and the new supply chain capabilities we have; and leveraging our IT capabilities to drive improved customer service and sales. We are excited about what we can accomplish in the New Year, and our AutoZoners everywhere are prepared to deliver on our commitments. We believe AutoZone's best days are ahead of us. Now we'd like to open up the call for questions. Operator: Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We do ask to please limit yourself to two questions. If you have any additional questions, you may reenter the queue by pressing 1. One moment, while we poll for questions. Your first question for today is from Bret Jordan with Jefferies. Bret Jordan: Good morning, Phil. You were calling out inflation, I think, at least 3% in the fiscal first quarter. It's sounding from some of the WDs like they're seeing a fair amount more price than that. Is that your supply chain allowing you to sort of get to market at a lower cost and use price as a share gain? Or are you really expecting more than three, you know, sort of tied to same SKU tariff tailwinds? Philip Daniele: I think, Bret, we suspect it will probably, you know, we said kind of at least 3%, probably goes up from here. I mean, at the end of the day, you know, we've talked for years about this industry being pretty disciplined and rational in pricing. And, you know, we're going to use the pricing lever as we need to. To cover the cost of goods and make sure we stay competitive in the marketplace. Bret Jordan: And then interesting you commented that discretionary is up for the first time in a bit. Is there anything either internally that you're doing to drive that? Are you seeing sort of green shoots as far as that consumer base? Philip Daniele: Yeah. Well, I think it's kind of two points. At some point, you know, it really spiked up, and I'm going back several years, you know, coming out of the pandemic, the discretionary categories really spiked up. And then they've really declined over the last two years. As we said, it's the best growth we've had over the last couple of months since '23. So I'd say it's probably bottomed out and slowly started to gain some traction. There's a little bit of green shoots, but I would say it's a little early to say. I still think that, you know, the lower-end consumer is still under quite a bit of pressure. And, you know, this is mostly on the DIY sales floor side of the business. Bret Jordan: Great. Thank you. Appreciate it. Philip Daniele: Thank you, Bret. Thanks, Bret. Operator: Your next question for today is from Michael Lasser with UBS. Michael Lasser: Good morning. Thank you so much for taking my question. Can you provide a sense of how the arc of the LIFO charges will look from here? You indicated to expect $120 million in the first quarter. Is it reasonable for us to simply annualize that number, getting to around $520 million or so for the full year, or would you expect that to peak and then fade off? And how will your margins look as that cycle fades? Meaning, you get all of the margin headwind back on the other side of this cycle? Jamere Jackson: Yeah. Thanks, Michael, for the question. So, you know, for the first quarter, we're expecting the number to be in the $120 million ZIP code, if you will. And we expect pressure, quite frankly, for the subsequent quarters, Q2, Q3, Q4. I would say over those three quarters, right now, our modeling is probably in the $80 to $85 million-ish a quarter range. It's a pretty dynamic environment, obviously, because it's associated with tariffs. But based on the visibility that we see right now, it could be in the $80 to $85 a quarter going out Q2, Q3, and Q4. As always, we'll be pretty transparent about what we see there and share the next quarter's outlook. What I'll say in total about that is, you know, as you've seen in the past, you know, as we have booked these LIFO charges and as we sort of anniversary those, and, you know, they become part of the base as we see product cost deflation over time, which we have. Then we would expect to see these gains potentially rolling back through the P&L. And over time, we'll get back to, you know, these reversion out and being gained through the P&L. The timing of which right now is a little bit uncertain, but that's what you can expect in the future. And then the last thing I'll say about LIFO is it is a little bit of a bellwether, if you will, for what we expect to see coming on inflation. And as Phil talked about a little bit earlier, I mean, we see at least 3% inflation. But what I'll tell you is that based on what we're seeing from tariffs and the costs associated with tariffs, and the playbook that we have, which is negotiating with our vendors to absorb a portion of the cost, to raise retails where necessary, and make sure and doing all of this that we're taking care of the customer. I mean, that playbook is still active. And we're going to be pretty disciplined about what we do. But our goal over time is to maintain our gross margins and our gross margin rate. Michael Lasser: Got you. Very helpful. My follow-up question is on SG&A. Your SG&A growth was elevated this quarter. It sounds like it might remain elevated for at least the near term. Others are having a similar dynamic. Is this a reflection of an arms race within the industry where there's just an opportunity to put more operating expense in the ground, and that will translate to better share, and eventually, that will subside, or is it just more expensive to run an auto parts business these days? Jamere Jackson: Yeah. I wouldn't characterize it as an arms race. What I'll say very specifically is that we're investing heavily primarily in new stores this year. And that new store growth will be, as I mentioned, 325 to 350 stores in The Americas, which is going to, you know, include an acceleration for both the US and Mexico. And I'll remind you that, you know, new stores typically mature in four to five years, and so their SG&A drags, you know, as in the early years. And then as those stores mature, we actually start to leverage SG&A. What I'll say is that, you know, we expect this SG&A growth to be in the mid-single-digit ZIP code as we move forward and execute on this plan. And coming out on the other side of that, we're creating a faster-growing business, and you can see the growth shoots in our current quarter's comp. And we expect to continue that momentum as we move forward. So, you know, the cost to operate, you know, in this industry, you know, we've always managed that with discipline. I think what you're seeing here is us very purposefully investing in growth initiatives that are going to pay real dividends for us in terms of a faster-growing business going forward. Michael Lasser: Thank you very much, and good luck. Philip Daniele: Thank you. Thank you. Operator: Your next question is from Greg Melich with Evercore. Gregory Melich: Maybe I'd love to follow-up on the last question, and then my follow-up would be on price elasticity. On SG&A growth particularly, what sort of comp now do you expect given the growth plans to be necessary to leverage SG&A? If we think about the next couple of years? Jamere Jackson: Yeah. I mean, you know, one of the things that we've said is that, you know, we will manage the SG&A line in line with sales growth. So, you know, if we're expecting to invest this kind of SG&A going forward, particularly with new stores, then, you know, we obviously would expect an acceleration in the comp. I won't be date certain or very specific about what that comp looks like. But what you can anticipate for us is if we're expecting to grow SG&A in this ZIP code, then you can see us to have a little bit faster growth on the comp line. And, again, we'll be transparent about what we see in the market going forward. But we like the growth prospects that we have. We're growing share both in DIY and in commercial. Our Mexico business is doing very, very well against a tougher macro backdrop. But, you know, we have a lot of confidence in this growth plan. Hence, you know, we're going to continue to accelerate store growth in the future. Gregory Melich: Got it. And I guess the fun part of the question is really on price elasticity. It seems like as the first wave of inflation has come through, I know there's usually some or maybe some items out of the basket, maybe a little bit of deferral, but it sounds like you guys have seen no price elasticity to unit demand as this is occurring? Philip Daniele: Yeah, you know, we've talked about this for a long time. You know, if you think about the way we kind of characterize our big segments of categories, failure, maintenance, and discretionary, the first two, they're, you know, they're break-fix. Or, you know, customers learn over time that if I don't do the maintenance on the car, I ultimately end up with a bigger failure project that costs me a lot more money. So customers can defer that maintenance for some period of time, but ultimately, they realize that they've got to fix it or it creates more damage. You know, again, the discretionary segment of our business specifically on the DIY side is, you know, pretty small relative to the other two. There's just not a lot of elasticity variability in the categories that we play in. Some deferral back and forth, weather is dependent on a couple of them. I think you saw we talked a little bit about our performance in the Midwest. The Northeast was a little better because we got a more normal winter, which drives more, you know, brake sales and undercar sales because it just drives failure on those types of parts. So we feel good about that. The industry has been able to pass on these costs to the consumer. And we saw it in the pandemic. We've seen it over, you know, fifteen, twenty, thirty-year time horizons. It's all been pretty disciplined and rational. We suspect that that's going to continue. Gregory Melich: That's great. Congrats and good luck. Philip Daniele: Thank you. Thanks. Operator: Your next question for today is from Christopher Horvers with JPMorgan. Christopher Horvers: Thanks, guys. Good morning. So I want to make a longer-term question here. Can you talk about the growth opportunity in Mexico, about 900-ish stores? How big is your market share? How big is the market? You know, there's about 37,000 auto parts stores in the United States. Is that a comparable number? And do you think over time that you could perhaps double your store base from here? Philip Daniele: Yeah. I think we see some pretty long shoots for store growth and share growth in all of our international markets, and obviously, also in Mexico. I will say that the competitive set in Mexico is a lot different than it is in the US. Although, you know, there are some pretty good competitors down there that have higher store counts. But there's also a large part of the marketplace that is maybe category-specific. You know, maybe they're focused specifically on undercar or starters and alternators or brakes or something of that nature. As opposed to somebody like us where we have kind of all categories and great service. So we've got a pretty big store count advantage over the rest of the marketplace, but we still see lots of opportunities to continue to expand our store count footprint. Specifically in the southern half of the country and some of the more dense markets. Take Mexico City, for example. We just don't have a lot of stores there. And it's one of the biggest cities in the world. Lots of opportunity for us to continue to grow. Jamere Jackson: Yeah. I think to put it in a little perspective, I mean, you've got a car park there that is older than the car park in the US by roughly three years or so. And you've got a number of outlets there that are very fragmented, if you will. So if you look at the size of our chain today, we're probably larger than the next seven or eight chains combined. So our market share position there is very strong. And as Phil said, we've got a tremendous opportunity to go forward. Hence, we've talked about accelerating store growth in Mexico. So we're pretty bullish on it going forward. You know, you've got a growing and aging car park, and you've got a competitive set there that we bring to the market is differentiated. And we're pretty excited about the opportunity to grow market share. Christopher Horvers: Got it. And then two quick margin follow-up questions. First on LIFO, is the LIFO numbers that you put out, Jamere, predicated on that 3% inflation in the balance of the year? And then on SG&A, SG&A per store growth in '26, given the timing of openings, do you expect that to be weighted to the back half of the year? Jamere Jackson: Yeah. I mean, we expect, you know, from an inflation standpoint, for that inflation number to continue to creep up as we talked about. And, you know, what we anticipate going forward is that, you know, you could see, you know, another couple of mid-single-digit increments of inflation as we work our way through tariffs and, you know, build our inventory accordingly. So with that, if that is the case, then you could see, you know, the LIFO in this ZIP code. Again, it's a pretty dynamic environment. You know, what I'll tell you is that our merchandising teams have done a really good job along with our suppliers in finding ways to go mitigate costs. We haven't experienced as much cost as we would have anticipated given all the announcements that are out there. So as the environment unfolds, then we've reacted accordingly. And, again, the playbook is the same as we move forward. And then on SG&A per store? Back half? Yeah. From an SG&A per store standpoint in the back half, I mean, you know, we think we're going to be somewhere in this mid-single-digit growth for the entire fiscal year. Probably accelerates a little bit in the back half because our store count will accelerate in the back half of the year. It'll be a little bit more level-loaded than it was in this past year, but still a little bit more skewed to the back half of the year. So as you're sort of building your models, you know, call it mid-single digits for the year and maybe have a little bit of acceleration in the back half, and you should be in the right ZIP code. Christopher Horvers: Thanks, guys. We're on both. Philip Daniele: Yeah. Just that we ultimately, you know, the store count growth year over year, you know, we've kind of said we plan to be somewhere around that 500 stores a year in 2028. So we are, as Jamere said, we're going to continue to ramp up our store counts both domestically and internationally to get somewhere close to that. You know, roughly 300 in the US and 200 internationally over time. Christopher Horvers: Got it. Thanks so much. Operator: Your next question is from Steven Zaccone with Citi. Steven Zaccone: Good morning. Thanks very much for taking my question. I wanted to follow-up on the pricing elasticity question. It sounds like things have gone well thus far. But as you think about same chain inflation stepping up over the next couple of quarters, do you have concerns that there could be some more price elasticity in the category? How does that factor into your same-store sales outlook? Philip Daniele: Yeah. Great. Well, yeah, I mean, yes. I think there probably will be more, you know, same SKU inflation as we move throughout the year as the full impact of tariffs come in. And prices continue to migrate up to cover those incremental costs. But I don't, you know, again, if the categories that we play in, if the starter breaks, your car is not going to start. And you have to ultimately do one of two things. Either bum a ride or get your car fixed or take an Uber. And none of those are, you know, probably that customer's probably not that excited about that. I'd like, you know, remind everybody too, most of the categories in the ticket averages that we're talking about here are, you know, somewhere in the mid-35 to forty dollars on DIY, and they're 60 to $90 on the commercial side depending on the category and the job that's being done. So that, you know, an incremental one, two, three, or 5% is not a significant dollar amount. It's not like we're buying, you know, cars that are where the price went up 5 to $8,000 or, you know, a couch where it went up 20 or 30%. It's just not that big a dollar amount. So it's a little easier for the consumer to swallow that price. But we do expect it's going to continue. We expect the industry will remain rational and disciplined in its approach to pricing. The one thing we don't want to do, and we'll always watch, is make sure we're not destroying demand. Because we think that's very important to keep the customer coming into our stores. The shop buying from us. Those are important. Steven Zaccone: Okay. Thanks. And then the follow-up I had was just on gross margin. Merchandise margin has been strong the last couple of quarters. It looks like that's going to continue in the first quarter. Can you just elaborate a little bit more on what's driving that? And can it continue through the balance of fiscal 2026? Jamere Jackson: Yeah. I think our, again, our teams in merchandising have done a fantastic job of finding opportunities for us to drive gross margin improvement. It's a playbook that we've run for a really long time. It's a combination of finding, you know, cost opportunities with our vendor community. It's innovation in those categories that enable us to go do that, and it's an opportunity for us to sweeten the mix a little bit. And we've sweetened that mix in some instances by moving more volume into, you know, our Duralast brand. So teams have done a very good job of doing that over time. It's a playbook that we've run. We run it with intensity inside the company. And we count on that to help us grow our business. And that's really important for us as we think about sort of margin expansion in the future. Obviously, our commercial business is a little bit lower gross margin, although we like the operating margins associated with that. We think the work that we've done on the merchandising side, particularly with merch margins, has the ability to basically mute that pressure that we see on gross margins. So you get an opportunity to have a faster-growing business with commercial that doesn't create a dramatic drag on your gross margins as you move forward. Steven Zaccone: Great. Thanks very much. Jamere Jackson: Thank you. Operator: Your next question is from Brian Nagel with Oppenheimer. Brian Nagel: Hi, good morning. Thanks for taking my question. So first question, I know it's a bit of a follow-up, but just on the topic of tariffs and trade policy, so as we look at these fiscal Q4 results, how should we think about what the impacts tariffs have? I mean, is there a way you can say it was, were the incremental tariffs a driver of sales? Did you see some sort of, say, impacts on the margin here in the quarter? Jamere Jackson: Yeah. I would say, you know, the best way to think about it is you've seen our ticket growth basically accelerate in both DIY and commercial. And a portion of that ticket growth is very clearly driven by the cost increases that we're seeing associated with tariffs. Now, while we've been running the playbook, as I mentioned before, of having, you know, very healthy negotiations with our vendors, by, you know, moving sources in some cases. You know, the reality is that some of that is finding its way into the product cost and finding its way into same SKU inflation. And the entire industry has moved retail prices up accordingly. So there's a very direct impact associated with tariffs and the fact that you're starting to see more pronounced same SKU inflation and as a result, retails across the industry are going up. As we move forward and we continue to see that, and to have probably fewer opportunities to mitigate that, you'll continue to see same SKU inflation tick up and likely see retails moving up accordingly. And, again, you know, back to the previous question on it, this is largely a break-fix business where, you know, the lion's share of our business is in failure and maintenance-related categories. So, you know, we believe that the industry will continue to be rational in terms of how we price, and we don't expect a notable drop-off in terms of units. Philip Daniele: I think those long-term trends too have been in kind of that three, little more than 3% same SKU inflation or ticket average inflation, driven by some number of, you know, negative transaction counts. And those have been in place for, you know, I said this on several calls, twenty and thirty years. You had a big bump through COVID, specifically because of the supply chain crisis. It was muted coming out of that for the last couple of years, and tariffs are now putting it back in somewhere in that 3% range. I think over time, because of technology, parts consolidations, and improvements in longevity of parts, you're going to see that natural incline in average unit retails and slightly decline in transaction counts. Brian Nagel: No. That's very helpful. And then, so as a follow-up to that, if you look at the cadence of sales through the fiscal fourth quarter, I mean, recognizing, as you pointed out, there's some noise with the timing of, I guess, the Fourth of July holiday. But the business in both your DIY and your commercial side, sales growth strengthened. So how much is there a way to think about how much of that is this when we're talking about your, you know, tariffs rolling through? I know there was weather improved for you. But then, you know, I guess the final piece would be actual better underlying demand. So how, I mean, the question I'm asking is, how should we think about that? Improving trend and sales growth through the quarter with all this going on? Philip Daniele: Yeah. Great. You brought up a couple of great points. One is, if you think year over year, the early part of summer was very, very wet and slightly mild relative to the previous year and relative to history. About mid-July, it started to crank up the heat, and you saw we saw the heat categories really take off in that time frame. And, you know, brakes, undercar, those sorts of categories have been really strong up in the Northeast and the Midwest on the back of some better winter and spring weather, which we thought was going to be an advantage for us. I would say all those things you mentioned are reasons that we're pretty optimistic. You know, the marketplace is still pretty good. The weather's been pretty good for us. Specifically in the back half of the year, we are getting some same SKU inflation. And I'll also say that I believe what we're doing, our initiatives are also paying out. We have opened more new stores, but we've continued to improve our assortments at the store level. We've opened up hubs and mega hubs and gotten that inventory closer to the stores. Our in-stocks are at an all-time high. We feel really good about our execution in our stores, both on the DIY side and the commercial side. So I think it's all of those kind of coming together. Tell a pretty good story for us, and it's why we're confident going into the next couple of quarters. Brian Nagel: I appreciate all the color. Thank you. Philip Daniele: Thank you. Operator: Your next question for today is from David Bellinger with Mizuho. David Bellinger: Hey, good morning, everyone. Thanks for the questions. Maybe for Phil, just with all the pricing going into the category. And this is inflation on top of inflation, even pre-tariff inflation. How concerned are you that we could see another deferral cycle show up, maybe sometime in 2026? Is that something you're watching for or just being a bit more mindful of and only increasing prices by that 3% as opposed to something more? Philip Daniele: Yeah, like I said before, a minute ago, we're going to watch our, you know, demand signals that we get, we watch that like a hawk. But at the end of the day, I'm not that concerned about a massive deferral because I think, you know, the consumer at the bottom end has been under pressure for well over two years. Those maintenance deferral cycles, you've probably run through them. If that's been your car where you didn't replace brakes, at some point, you don't have a whole lot of choice. You've got to do it. The discretionary stuff could continue to be under some form of pressure, but it's also gotten to a point where I think it's got really low over the last two years and coming back into a more normal cycle, I would think. So. I'm not that worried about a massive deferral cycle unless inflation ticks up more than what we think it's going to be in that mid-single-digit range. You know, if it went up significantly more and there was an additional shock to the system, I think we would worry about that. But at this point, I think the consumer has been dealing with this inflation for, you know, since probably April or May, depending on the category. And it's showing up in our category today, but we think it's manageable. And we think customer demand stays intact. David Bellinger: I appreciate that. And then just my follow-up question on Mexico and the comments on the long-term growth opportunity there, should we see the Mega hub model at some point roll out to Mexico and sort of replenish the stores more frequently? How should we think about the build of that geography and what other features or capabilities these stores could get over time? Philip Daniele: Yeah, we're light on the hub and Mega hub strategy down in Mexico and have been. It's been mostly a, you know, kind of a satellite strategy down there. We spent the last couple of years really working on our assortment in Mexico to really capitalize on the commercial opportunity. We say commercial is our biggest opportunity in the US. Well, oh, by the way, it's the biggest opportunity in our international markets as well because the mix of volume, roughly 40% DIY in the US, 60% in Mexico in commercial in the US. It's more like, you know, 65. You know, 35, 40 in the it's the inverse of the US. So we like our opportunities down there. So we're strengthening those assortments, and that says we probably need hubs and mega hubs down there to make sure we're satisfying the commercial customer as well. David Bellinger: Very good. Thank you. Philip Daniele: Thank you. Operator: Your final question for today is from Steven Forbes with Guggenheim Securities. Steven Forbes: Good morning, Phil, Bryan. For Phil, just revisiting the path to 500 stores by 2028, I guess sort of a two-part question. One, as we think about the 200 international stores, can you break that down by country? And then how does the year one expense weight differ between a new U.S. store versus an international store? Like, is there anything we should note as we dramatically increase the number of international stores to the mix? Philip Daniele: Yeah. So, you know, in terms of the split, obviously, we will, you know, have significantly more of those international stores in Mexico versus Brazil. One, because we see the market opportunity in Mexico. We have scale there today. And to Phil's point, there are opportunities for us to improve strategically there to really grow our business. And so, you know, to the extent that we're going to put those strategies in place in Mexico, we would expect most of that international mix to skew towards Mexico versus Brazil over time. I think in terms of the cost profile on a relative basis, it's very similar to, you know, what we see in the US. Obviously, the absolute cost per is different in the international markets versus the US, but the cost drag in the early years is very similar to what we see in the US. You know, the stores typically take somewhere between 4 and 5 years to mature. We see a drag in the early years. But as those stores mature and the same-store sales continue to grow, then those stores become very profitable for us as we move forward. Steven Forbes: And then just a quick follow-up right as we think about marrying expense growth to sales growth, the comment that you made earlier on the call to another question. Does that apply for 2026? You know, given the ramp in new stores and the comments around mid-single-digit expense per store growth, because it's really setting up, you know, sort of a high single-digit-ish growth profile for expenses and almost like an indirect sort of framework for sales as well. Jamere Jackson: Yeah, I think, you know, the way to think about it is that, you know, if SG&A is going to be in that ZIP code and it's going to be driven by new stores, as we've suggested, remember, we jammed a lot of new stores into the back half of last year that are going to be SG&A drags for us as we enter this year. And then we're layering on top of that an accelerated sales growth plan this year. So to make, you know, the math work for us, I mean, we essentially have to go drive the sales growth from those new stores and from our existing footprint to make, you know, to make the model work for us. And we're doing that. And you're seeing that on the top line. If, as we said in the past, and we continue to manage the business this way, if we don't see, you know, the kind of performance that we need to see from a sales standpoint, then we know how to reach into the middle of the P&L and pull the expenses out so that we deliver the kind of profitability that we need to. So it's accelerated. But that acceleration is predicated on us continuing to move in the right direction on the top line. Steven Forbes: Thank you. Philip Daniele: Thank you. All right. Thank you for joining us on today's call. Before we conclude the call, I want to take a moment to reiterate that we believe that our industry remains in a very strong position, and our business model is solid. We are excited about our growth prospects for the new year, but we will take nothing for granted as we understand that our customers have alternatives. We have exciting plans that will help us succeed in the future. But I want to stress that this is a marathon and not a sprint. As we continue to focus on flawless execution and strive to optimize shareholder value for the future, we are confident that AutoZone will be successful. Thank you for participating in today's call. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Good day, everyone, and welcome to the Fiscal Year 2026 First Quarter Earnings Call for Netcapital Inc. At this time, all participants are on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, Coreen Kraysler, Chief Financial Officer at Netcapital. Ma'am, the floor is yours. Coreen Kraysler: Thank you, Matthew. Good morning, everyone, and thank you for joining Netcapital's First Quarter Fiscal 2026 Financial Results Conference Call. I'm Coreen Kraysler, CFO of Netcapital Inc. I will begin by reviewing our financial results, and then our Chief Executive Officer, Martin Kay, will share his prepared remarks before we open the Q&A portion of our call. Before we begin, I'd like to remind everyone of the safe harbor disclosure regarding forward-looking information. Management's discussion may include forward-looking statements. These statements relate to future events or future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results, levels of activity, performance, or achievement expressed or implied by these forward-looking statements. Any forward-looking statements reflect management's current views with respect to operations, results of operations, growth strategies, liquidity, and future events. Netcapital assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. With that said, I'd like to now turn to our financial results for the first quarter fiscal 2026. We reported revenues of $190,058 for the three months ended July 31, 2025, which was an increase of approximately 34% as compared to $142,227 during the three months ended July 31, 2024. The increase in revenues was primarily attributed to an increase in portal fees and an increase in revenues for the services that we provide in exchange for equity securities during the quarter. One issuer that accounted for 73% of our revenues in the three months ended July 31, 2025, was responsible for the increase. That issuer successfully raised approximately $5 million from March 24, 2025 to May 30, 2025. We reported an operating loss of approximately $3.3 million compared to an operating loss of approximately $2.5 million for the first quarter of fiscal year 2025. We reported a loss per share of $1.27 compared to a loss per share of $5.10 for the first quarter of fiscal year 2025. As of July 31, 2025, the company had cash and cash equivalents of approximately $4.6 million. I'll now turn the call over to our CEO, Martin Kay. Martin Kay: Thank you, Coreen, and thank you again to all our shareholders for being on this call today and for your continued support and interest in the company. As Coreen mentioned earlier, we began the new fiscal year with encouraging results. Revenue and portal fee growth of more than 30% highlights the solid performance of our core business. On our recent fiscal 2025 year-end call, we emphasized the strategic shift in our business model, moving away from equity-based consulting revenue to focus on building a stronger, more scalable business. While fiscal 2025 presented challenges, we're pleased to see this vision taking shape in the first quarter of fiscal 2026. We remain committed to driving long-term growth through innovation, execution, and focus to build the best fintech ecosystem. In addition to improved financial performance, we achieved several significant milestones this quarter. We established a crypto advisory board composed of accomplished industry leaders to guide our efforts in integrating blockchain, digital assets, and crypto with traditional finance. This initiative positions us to play a larger role in fintech and to explore opportunities in decentralized finance, or DeFi. We also launched a game advisory board to advance our strategic growth initiatives and deepen engagement with the online game community. This board brings together innovative leaders whose expertise will help us expand our ecosystem and drive long-term growth. With our Netcapital Funding Portal and our broker-dealer Netcapital Securities Inc., we already serve a broad base of issuers and investors. By enhancing our services through blockchain, crypto, and digital asset innovation, we hope to position the company to help lead the future of private market opportunities for companies raising capital and direct investment opportunities for investors. Thank you again for your support, and we look forward to continuing to share our progress in the months ahead. Operator, we're ready for questions. Operator: Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone at this time. Please hold while we poll for questions. Thank you. Once again, everyone, if you have any questions or comments, please press star then one on your phone. Please hold while we poll for questions. Thank you. That concludes our Q&A session. I'll now hand the conference back to Martin Kay, CEO, for closing remarks. Please go ahead. Martin Kay: Thank you. Once again, thanks to all who joined today. We appreciate your continued interest and support of Netcapital. Have a good day. Operator: Thank you. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Conversation: Karol Prazmo: Ladies and gentlemen, good morning, and welcome to the mBank Capital Markets Day. My name is Karol Prazmo, and I'm the Managing Director for Treasury and Investor Relations. Thank you for joining us here in the mBank Auditorium via remote, through your tablets, computers and TVs. This is a very important day for us. We will outline the strategy of mBank Group for the next 5 years. The CEO and members of the Management Board will outline their vision, aspirations and strategic goals for our future. The title of the strategy is Full Speed Ahead. [indiscernible] but with us for the next 2 hours as we outline the strategy that symbolizes the momentum and the strong [indiscernible]. Now let's begin. I would like to invite the President and CEO, Cezary Kocik to join the stage. Cezary Kocik: Thank you, Karol. Good morning, ladies and gentleman. Today's a very important day for us. Just in a few moments, we are going to present to you our strategy for the next 5 years. The strategy was developed by [indiscernible]. So let me introduce, Krzysztof Bratos, Head of Retail Division; Adam Pers, Head of Corporate Division; Krzysztof Dabrowski, IT and Operations; Pascal Ruhland, our CFO; Katarzyna Piwek, Deputy Head of our HR. Today Katarzyna is [indiscernible]; and Marek Lusztyn, our CRO. So let's get started. We stand in a povital moment in mBank's history. Over the [indiscernible]. Today, I'm proud to present our strategy for 2026, 2030. This was developed in line with our mBank's [indiscernible]. We have proven that we are able to grow organically. [Audio Gap] What powers our organization? It's our people, our brand and our technology. The digital world is our natural environment where we stay the course and set the pace. What is incredibly important is that we do this responsibly, ensuring our client safety. We are proud to have the strongest brand in Polish banking sector, not just in recognition, but in emotional connection. Our employee engagement score places us in a top quartile in Europe. And our digital-first mindset and Gen AI deployment are not just aspiration. They are a fact. This is the mBank DNA, agile, innovative and deeply human. We have overcome challenges that once constrain us. The legal risk related to FX mortgage loans has been largely mitigated. At the end of June, we had only 10,000 active Swiss franc loans, but now it declined to only 8,000. We are now ready to navigate at a full speed with the [indiscernible] wind lifting our ambitions. Our capital base is robust with a safe buffers, giving us room to grow dynamically. We have achieved it, thanks to our effort, securitization transaction, issuance of AT1 capital and retention of profits. And our profitability is among the highest in the sector with return on tangible equity at 21% in the first half of 2025 and as much as 38.5% in the core business, excluding the impact of FX mortgage loans. Thus, we are embarking on the next chapter of mBank's growth with strength, clarity and determination. Full speed ahead is our strategic motto. It means scaling with purpose, innovating with discipline and growing with our clients in a profitable way. It's about being smarter, more convenient and more connected in every market where we serve our clients. In the past, we have already shown our ability to dynamically extend our market shares and growing organically at the pace comparable to the one setting the strategy. In the 5-year period, before the peak of the Swiss franc saga in 2022, we increased our market shares in retail loans and deposits by 2 percentage points and in the corporate loans by nearly 1.5 percentage points. Maintaining a similar growth trajectory will be essential to delivering on our strategic ambitions by 2030. Our key strategic target is to exceed 10% market share in 2030 in loans and deposits across both Retail and Corporate segments. This is not just about number. It is about our ambitions to be a top-tier universal bank. We have already made a significant progress. And already, we are the Poland's most successful growth story in the banking sector. Now we are accelerating and positioning mBank for growth. We want to grow dynamically, but not only in volumes. Thus, efficiency will be our backbone. We will maintain a cost/income ratio below 35% and deliver competitive return on tangible equity above 22% during the strategic horizon. Starting from a net profit for 2026, we will resume dividend payments with a target payout ratio of 75% by 2030. Consequently, our net profit is set to triple until 2030 compared to 2024, which shows the magnitude of the future value for our shareholders. We are building a compelling investment case based on a profitable growth, resilience and shareholders' returns. Now let's explore the pillars and that defines our strategic direction. Our purpose is simple, yet powerful, simplifying finances, helping bring goals to life. We have always believed that simplicity is the ultimate sophistication. We have shown it by solving hard problems in a way that feels easy for our customers. This is not just about banking. It is about enabling dreams, whether it is a first home, high-performing company or a secure retirement. We are here to make those journeys easier, smarter and more human. mBank's strategy for 2026, 2030 will be based on 3 pillars. The first one is life cycle-based growth. We grow with our clients, adopting our value proposition to their life moments and evolving needs over time. The second one is customer excellence. We're simplifying financial journeys and deliver delightful experiences. The third pillar is our organizational excellence. We empower our people and leverage technology to scale impact. These 3 pillars are not isolated. They are interconnected to better drive our transformation. We integrated sustainability into everything we do, not as a checkbox, but as a core belief. Our employees are the engine of our growth. The commitment, creativity and culture make mBank exceptional. Karol Prazmo: Thank you, Cezary Kocik, for setting out the strategic version. Ladies and gentlemen, now it will be time to learn about the upcoming journey in detail. Before we go there, I wanted to tell you more about today's event. The presentation of the strategy will take about one hour. Then my co-host and mBank's Head of Investor Relations, Investor Relations, Joanna Filipkowska, will lead the demo session, during which we'll show you 5 examples of products and solutions that will be rolled out during the strategy and on which we have significant advancement. You will have the opportunity to ask questions, both here in the room and in front of your screens. And note to our online participants, please use the chat box within the live stream to submit your questions at any time during the event. And without further ado, it's time to learn about the upcoming journey in detail. I would like to invite Vice President of the Management Board for Retail Banking, Krzysztof Bratos, to the stage. Karol Prazmo: Krzysztof, mBank's client base has always been unique. What is so special about our client base and what's in store for them in product terms in this strategy? Krzysztof Dabrowski: Thank you, Karol. Thank you, Carl. Our CEO talked about favorable demographics. And indeed, it's the age of our clients that makes us very special on a Polish banking map. You see we've always been loved by younger generations. And luckily, this is still the case today. 74% of our clients are still below the age of 46, and that's a very important threshold. We estimate that in between the age of 46 and 55, that falls to the so-called the peak earning period. So this is when the retail clients accumulate the most of their assets, hold most of their products and together with their banks, generate the most of the revenue. One could say that revenue-wise, the future is still bright and is ahead of us for both of our clients and ourselves as a bank serving them. You could say that we already have clients that others need to chase. And for this very reason in this strategy, we're going to primarily focus on our existing clients. But focusing on your existing clients means that you need to serve them at different ages and serve their different needs and those needs evolve. And this is why in this strategy, we want to evolve from being an exceptional transactional bank that we are for sure today already into a long-life partner that helps our clients with the long-term goals. This new strategy will see an introduction of more of a long-term products like savings, digital mortgages and investments from day-to-day trading up to the planning for your pension. Karol Prazmo: Krzysztof, you spoke about the client base. You spoke about the products, but how will we support the financial well-being of our clients? Krzysztof Dabrowski: And this is a very important part for us, and we treat it with a huge responsibility. We believe that the products, even if digital, simple, intuitive are not enough by themselves. We want to help our clients navigate them all, but also use them wisely. We want to help our clients take care of their financial well-being, and it's going to be an important part of our strategy. And we're going to introduce it twofold. Firstly, we're going to help our clients take care of their day-to-day life, to make sure that they stay safe online, that they spend less than they earn, build financial cushion, keep loved ones safe and borrow responsibly. We're going to help them with that by introducing a financial health score, but also a set of contextual tips and communication and education to make sure their day-to-day life is in order. This will be a foundation of our financial health being. And once this foundation is set, we'll help our clients with the second part. That second part will be a set of digital financial planning tools, but also support of our experts that will help our clients plan holistically all of those complex products in one cohesive plan from planning for your pension to planning for your children education to saving for your first home. We aspire for the 50% of our clients to be financially healthy in 2030. Karol Prazmo: We now understand the focus on financial health and the product offering for every stage of life. What will this mean for the growth in the number of active clients? Krzysztof Bratos: So here is where I need to mention our demographic premium once again. 78% of our 35 years old clients have a junior age child, but also 1.5 million of our clients, those aged 35 and 50, will soon be guiding financial decision of their parents. This creates a tremendous and valuable ecosystem, the one that we want to build on. We wanted to pay off for our clients to be here at mBank together with their children, their partners, their parents and even their friends. We want to grow through our clients and not chasing sometimes very expensive external acquisition. We believe that this will strengthen the loyalty of our clients, but also allow us to grow in a very, very efficient way. Karol Prazmo: Krzysztof, you've given us a lot of insight about the priorities for Poland. What are the strategic objectives for operations in Czechia and Slovakia? Krzysztof Bratos: We've created One mBank strategy, and this means we'll be doing a lot more together with Czechia and Slovakia. We believe that only an aligned platform approach is the way to build things in a scalable and efficient way, but also set a foundation for potential expansion into other foreign countries in the future. In this strategy, we'll bring to Czechia and Slovakia solutions that already exist in Poland, especially for the affluent and SMEs. What will make this Czechia and Slovakia strategy is slightly distinctive will be a bit more focused on external acquisition. As in here, we want to catch up and be the market share wise at the same stage that we are already in Poland. This should convert into having 1 million of active customers in 2030 and through them doubling our loan volumes and almost doubling our deposit volume. We believe that this approach will not only accelerate the growth of those foreign markets, but also we bring tremendous benefits as an innovation for the whole group. Karol Prazmo: You talked about the product offering for affluent and SME clients in Czechia and Slovakia. Can you tell us more about these 2 segments in Poland? Krzysztof Bratos: I started my presentation today talking about the younger people joining mBank. But truth to be told, they joined us 10, 15 or 20 years ago, and we meet them here in Poland every day. And since then, they grew, their little student account is now an affluent account. Their little start-up is the well-prospering enterprise. But then the most beautiful thing is they actually grew with us and they stayed. And we have proof for that. 73% of our affluent clients have been with us for more than 10 years. Also on the SME side, 71% of our high potential business clients have started with us as a little startup. But best of them all, 70% of our business clients are also our individual clients. It's a tremendous and valuable 2 segments that we call the super segments. There is more number standing behind it. Our affluent clients are responsible -- or not responsible. Our affluent clients constitute only 27% of our client base, but yet generate 70% of individual revenue. The high potential business clients, we call the clients who generate EUR 1 million annual turnover, they constitute only 30% of our clients, but generate half of the SME revenue. They're valuable, loyal and high potential clients that with a little extra care, with a little appreciation that they absolutely deserve and with a little bit of additional products can flourish even further together with us. And this is why this new strategy will see the significant focus on the affluent and on the SMEs in their upper levels. Karol Prazmo: Now that we know more about these 2 segments, can you tell us about how you want to deepen the relationships with affluent and SME clients? Krzysztof Bratos: We strive to create the best-in-class value proposition for the modern affluent, starting with daily banking excellence through global traveler benefits, but also your lifestyle benefits that you can use here in Poland. But maybe most of all, we want to elevate their service. We want to show them that they're appreciated and they can have a fast access and fast track to some of our services. In some cases, we will even go as far as introducing a dedicated adviser to our clients. This will be new for mBank. We believe that once you get to the more complex stages of your life, you do need to speak to a person regardless of how sophisticated your digital solutions are. We want our clients, our affluent clients to feel like in a private banking, but of course, in a very digital, a very modern and a very mBank way. We strive to serve 1.4 million of those affluent clients at the end of our strategic horizon. And we're going to do exactly the same for our SMEs, so SME plus, how we call them. We want to expand our financing solutions as their needs grew over those last 10 years. We will also introduce additional products known mostly from our corporations world like mLeasing, but then with a fully integrated version with our banking app. And similarly to affluence, we'll go as far, in some cases, introducing also dedicated advisers who will help them flourish and develop. This should convert into serving 120,000 of those high potential firms at mBank. And obviously, that is naturally before we will help them transition to the full corporations world. Karol Prazmo: Thank you, Krzysztof Bratos. Karol Prazmo: Ladies and gentlemen, now that we know the plan for the Retail segment, let's talk about our exceptional Corporate and Investment Banking business. I would like to invite Vice President of the Management Board, Adam Pers, to the stage. Adam Pers: Good morning. Karol Prazmo: Adam, can you tell us about the growth aspirations for your business? Adam Pers: Of course, thank you. Good morning once again. Today, I will be talking about the Corporate Banking strategy, but let me start shortly with the reference to our CEO, Cezary Kocik. He said that most of our bank is full speed ahead. And we decided with our team that we will translate it into Corporate Banking language, which is what you see on the slide, this is long-term business growth. And it's going to be the most important sentence in our strategy. And the question is how we're going to deliver that. And we decided jointly with our risk colleagues that we will grow in the sustainable transition and sustainable finance. But what is important, we defined 6 perspective industries. We'll talk about that later. But we cannot forget about strengths. Strength, which means structured finance, investment banking and international banking. But what we need to deliver this growth, which at the end of the strategy should let us reach that market share in the amount of 10%, which translates into PLN 20 billion net growth. We need something that we call exceptional unique hybrid model. We need organization excellence, which is built on digitalization. But going forward with the strategy, we will add the AI component. And sorry, I used the word last but not least, is our people. Our people created the strategy and our people joining with us with the Board will deliver the strategy. So we need them motivated and highly qualified. Karol Prazmo: Adam, you referred to the best unique hybrid model, what exactly is behind this concept? Adam Pers: Yes. It requires explanation indeed because here, we talk about 3 pillars. The first pillar is we call them -- we call it remote but digital. The second pillar is remote, but human, and the third one is offline. This remote digital, I will talk also later on during the strategy, the presentation. We're talking about the new mBank CompanyNet, so our main gateway to the customers. And we're talking about the fine-tuning of mobile banking. And this will create something which we call virtual branch. But customers also sometimes need the contact with the person. So if, for some reasons, the customer will not be able to self-service the digital channel, then we have dedicated contact center, which is only for corporate business. And why we are doing so? We are doing some because we want our offline channel, which means relationship manager to have enough time to talk to people, to talk about the business, talk about the transactions, et cetera. And they will be supported by top best-in-class product specialists. These all 3 pillars constitute the what we call best unique hybrid model. Karol Prazmo: Adam, and going beyond the service model and into the client base, can you tell us about the specific growth strategies for each of the 3 corporate client segments? Adam Pers: This slide requires a little bit of explanation because as you heard, we're a universal bank. You already listened to Krzysztof's strategy where we have different type of customers. And within the Corporate Banking, we also have relatively small and not sophisticated customers, which is the K3, and we have also large corporate, which is K1. And let me start with the latter one. So K1 customers, this is the segment that, for some reasons, in a couple of last years, we were not so active. Now we want to come back to something, which we called bigger tickets. So we will be more present in this segment. But definitely, we offer them more sophisticated products like M&A, structured finance and all these complex products. But if you talk about the biggest engine from the volume perspective, it's definitely going to be K2, which is our midsized corporate segment. And here, we have a combination of complex product like investment banking, sustainable finance. But at the same time, we know that a significant part of the financing in this segment is relatively small ticket. That's why we will offer so-called fast-track credit process. But as I said, this is going to be the biggest engine from the volume perspective. But from the, I would say, biggest change, it will happen in K3 segment, which is our corporate SME segment. And here are the challenges or targets. First of all, we would like to double number of active customers. Here we're talking about the active customers, not just open accounts, and it is going to be credit customers. Second thing, we want to offer them -- we call it semi-automated credit path. And if you allow me, I will, in a few sentences, elaborate how it's going to work in real terms. Our aim is that customers start the journey in the CompanyNet system. So the application for the loan will be done in the system, then the loan will be done on a semi-automated way. And finally, signed agreement and disbursing the money will be done also in the CompanyNet system. And at the end, we are taking our end-to-end process, which means that the managing the loan going forward will be done also in this process. And what is our ambition? We are starting from 0. I think we are transparent here. And we want to reach 40% of the double number of credit customers at the end of the strategy horizon. Karol Prazmo: Thank you, Adam Pers. We'll be back with you in a moment. So please don't go anywhere. And ladies and gentlemen, I would now like to go into corporate credit risk and the industries that we want to focus on. And this, I would like to discuss with our Chief Risk Officer, Marek Lusztyn. Marek Lusztyn: Good morning, everyone. Karol Prazmo: Marek, where should we expect growth in the corporate portfolio as we roll out this strategy? Marek Lusztyn: So as Adam said, we have asked ourselves what will make Polish economy tick over the next 5 years. We have asked ourselves what our clients will face, how we can help them in benefiting from those trends. And we have identified 6 big trends, 6, how we call it, big shifts that Polish economy will face until 2030. And we want to support our clients in that specific shift to make sure that they are benefiting from those. First of all, and that is not surprise to anybody, it's energy transition. Second of all, it's green economy and sustainable finance. Then we have identified localization of production, automation and robotization of production as the next big shift that Polish economy is going to face. [indiscernible] were alluding to the demographic shifts in our retail base, but these demographic shifts are not only related to our retail base, it is also something that our corporate clients are going to face, and we want to help them in that shift as well. So the help in financing, free time economy and health care is the next one that we will zoom into. And finally, I guess this is also not a surprise to anybody, defense. I would like to highlight that it is not a new area for mBank. We are going to capitalize on existing expertise and sometimes even on us being already a clear market leader in some of those segments. When we think about quantitative KPIs that we have put in front of ourselves for our corporate portfolio, the first one is an increase of sustainable financing in an overall corporate portfolio from 11% in 2024 to 15% by 2030. And as it comes to our ambitions in supporting those big shifts, in supporting our clients in benefiting from those big shifts in the Polish economy, we would like to increase the share of financing of those from 20% at the end of last year to 40% by the end of strategy horizon. Karol Prazmo: Thank you, Marek Lusztyn. Now let's return to the strategic plans for Corporate and Investment Banking. Adam Pers, back to you. Poland is the fifth largest economy in the EU, and we're part of Commerzbank Group. What does this mean for us in terms of cross-border opportunities? Adam Pers: Thank you for this question, but let me top up 3 facts. First of all, Poland is the fifth biggest economy in European Union, and we probably exceed EUR 1 trillion nominal GDP. This is a very important fact. And if you look at mBank and Commerzbank, mBank is a very strong player in the Polish market. Luckily, we have a foreign investor who is very active in the most developed economy in Europe, which is Germany, but is also present internationally. I hope that you see that on the map. And when we want to develop the growth in more sophisticated products, let me start with the presence in Poland. mBank in Corporate Banking is famous for its competence in the structured finance, both on the corporate sales side and risk area. And our aim is the following: to be market leader in structured finance, to be the bank of the first choice for the private equity, which was the case over the past few years, and finally, we want to constantly deliver new products to more sophistic customers, like we did in the past years. But going abroad and going to the cooperation with the Commerzbank, our plan is to help our customers to go internationally. And we're going to support customers in 2 dimensions. The first dimension is the opening account and, let's say, working operationally in the foreign market using Commerzbank network. But we see that and we read in the press that going forward, our customers are more and more active buying the competitors even in the western part of Europe. And in this journey, we would like to be active, and we would like to be bank of the first choice for the customers. The opposite direction, we would like to continue and even further strengthen the cooperation in which we invite foreign customers to Poland and we have to be, let's say, the biggest gateway for the customers that have accounts with Commerzbank, but also for the customers that are entering Polish market and want to set up the relationship with the bank. And finally, Recently, we started quite actively the journey with Commerzbank on the treasury bond market. And in this respect, we want to grow going forward over the strategic horizon. Karol Prazmo: Thank you, Adam Pers. Adam Pers: Thank you. Karol Prazmo: Ladies and gentlemen, this concludes the first strategic pillar life cycle-based growth and now we move to the second strategic pillar, customer excellence. And we will again start with Retail Banking, Krzysztof Bratos, welcome back to the stage. Krzysztof, what innovations are we planning to make mobile banking feel even more effortless and intuitive? Krzysztof Bratos: We believe that mBank has been setting standards in the mobile banking and digital banking for quite some time already. But truth to be told, the world doesn't stop. It changes. It evolves, not only in the banking ecosystem, but also in the fintechs that are already in Poland. Also, around 10 years ago, average banking app was providing just a few, maybe 15 products in the banking ecosystem. Today, it's actually tens of products and tens of services. It takes a fresh look on how you navigate them all and how you use them all. And we've decided to take that fresh look. And we've decided to do another just tiny uplift, but a significant upgrade on how we use our application. We're going to introduce the 3 major innovations. Firstly, we're going to put a new application architecture, the way you find your services, the way you find your products and how you navigate it all. We'll also add high personalization. Me, my wife, my kids and my parents, we use mBank app in a completely different way as we need different products and different solutions and will allow our clients to customize it. Secondly, we will provide more of an instant feedback by automating more of our sales processes, but also those post sales and give that client a sense of control that whatever their click is happening instantly. And then thirdly, we're going to introduce a redesigned communication system with a new graphics, emotions, even videos or even haptics, the solutions that you have seen already in the different industries and you happily use. So why not in banking? We believe those 3 innovations will contribute to creating and still having a very simple and very intuitive app, but yet the one that can handle the complex world's needs while staying modern and fresh. But what if all of that was not enough, and you actually needed to go a step further in today's world. What if you all could actually talk to it? Ask it, how much I spent for my last trip in Barcelona? Or what is the status of my complaint? Or perhaps what can I do with my PLN 10,000? What if you could do it all in a natural language, maybe sometimes even with spelling mistakes, of course, while staying in your safe banking environment. Would that be another chatbot, assistant 2.0 or something a little bit more than that. And here, I would love Krzysztof Dabrowski to share a few words about it. Krzysztof Dabrowski: I will be happy to do so, but I would like to also enlist a little bit of help from our guests, if I may. I will not ask you if you ever use a banking app because I can safely assume you did. But may I ask you, who of you ever used any banking chatbot or assistant? Raise your hand, please. Okay, and -- quite a bit. And who of you think this assistant was not particularly smart? Raise your hand, please. Thank you even more. That's a bit surprising. But thank you for your support. And it will not be a surprise to you probably that we do share your view. So with the help of generative AI, we would like to take this experience in mBank to another level. So first, we -- there are 100 ways of asking for the same thing, and we don't want our customers to guess the correct question. It's our task to guess the correct answer. Second, most of those assistants that you do not find very smart are just a giant knowledge basis and not particularly even good at answering the questions. We would like to teach our assistant a lot of verbs, More than 200 of them actually, to make it very, very helpful and providing services to our customers, not only answers to the questions. And last but not least, we will combine it with all of the data we have about our customers to provide a personalized experience. So this will not feel generic. This will feel like the assistant is there just for you to serve your needs and knowing a lot about you. Krzysztof Bratos: Thank you very much, Krzysztof. So not just simple questions, but definitely actions. Over 200 of them also executed through the voice. We believe that this is not another assistant, not another chatbot, but the very beginning of a new channel of how you can use your app and how you can use our bank. We believe that this is the very beginning of a conversational banking. Thank you. Karol Prazmo: Thank you, Krzysztof Bratos. Thank you, Krzysztof Dabrowski. And now I would like to invite Adam Pers back to the stage, please. Adam, what can you tell us about what will change in the way that you interact with customers in the Corporate and Investment Banking area? Adam Pers: Thank you. I have the impression that while I was describing the hybrid model, I already promised a lot. So now I will be talking about how we deliver that. And let me start with the CompanyMobile, which is definitely the application for relatively small customers. And here, we will focus on base modules, which is FX, payment, BLIK and all this, I would say, that we need on a daily basis. But what is extremely important is, we gave -- we received the feedback from our customers that in case of CompanyMobile, apart from feature, also security is as important as those features. So definitely, the second part of our, I would say, development of CompanyMobile will be the security of this application. But the main change will happen to the CompanyNet system, so our core gateway in the digital world. And here, we will implement new modules or we modify the modules. Let me start with the so-called personal dashboard, personalized workspace. Why we are talking about this solution at first? Because as I said that we have different kind of customers, relatively small and relatively complex. And my personal experience that when I have application, not necessarily banking, but any other, and I can adjust the application going through 100 or 50 questions, it's relatively difficult to go through this. And here, we would like to build a system that almost automatically adjust to the company and adjust to the so-called personas or to the person working with the application. So it's going to be convenient, and this is the most important word. Second thing is we'll be working on the payments module. But what is important, we will build new, we call it, liquidity module. This is something that will truly use the AI because it will be analyzing the history. It will be analyzing the current situation of liquidity of our customer, and it will give some advice. And let's imagine that the customer may need some loan in the future. I hope that having the next module, which is the expanded loan module, the customers will be able to apply for a loan and potentially sign and disburse also in the component system. I already mentioned that what we are cooperating with Commerzbank and we want to go abroad with customer and invite foreign customers to Poland. That's why we will pay special attention to FX model. And last but not least, here, you can see our ambitious target, which is 80% of every interaction with customers done in the digital world. And what is important, this is end to end. So it is for the customer digital, but also finally, in Krzysztof Dabrowski area, operation also end up in a digital way. And we would like to deliver that by enhancing the so-called self-service via virtual branch. And the last thing, which is very important that our current CompanyNet system, which as I said, we have to rebuild, because the customer needs more perception of top 3 on the market. And our ambition target is to be at least #3 from the perspective of our customers, how they see this application. Karol Prazmo: Thank you, Adam Pers. Krzysztof Dabrowski, Adam Pers spoke about all the enhancements to mBank CompanyNet and mBank CompanyMobile. Can you tell us about what is happening on the back end to make all of this possible? Krzysztof Dabrowski: Yes. I'll be happy to say. But before I will tell you what we just did because I think a bit of a history is important here, and it is a good history. I'm actually very blessed with the business colleagues that you've just seen in action who are very ambitious. They have -- they set themselves very high targets and they have this tendency of actually delivering them. So IT has not to be the road block, IT has to be an enabler and a helper. And one of the very important aspects of IT in banks are the core systems. And I've been on the AKF, this is the Polish gathering of all of the banking industry last year. And there was a large roundtable, around 12 participants from all of the major banks in Poland. And the question was, what do you do about the modernization of your core system? And I was lucky because I was sitting, like, I was like the 9th. And they were -- the answers were like, we are not touching it. We are thinking. We're analyzing. That's too complex. And my answer in June was, we are going to finish it this year. And you are first to hear it that as of today, both of our core systems, the Corporate and the Retail are modernized, are taken to the modern technologies. And all of our customers are right now on the new platforms without even noticing that because we did it in parallel with the normal business growth, and we did it without stopping the bank. Why we did it? We did it in order to do the next steps. We wanted to get rid of the legacy that we have. We are a relatively young bank in the grand scheme of things, but we also had our legacy because I would say, majority or vast majority of our employees were not even around when we implemented those core systems. But now when we migrated to the better solutions, we can do the things that we plan to ourselves in the strategy. So the most important program in IT has a very short name. And in the spirit of saying not a lot but doing quite a bit, we are going to make our bank 24/7. In Retail, it may sound easy because Retail in our case, is already running 24/7, but the remaining problem are the technical breaks. And it will take a bit of heavy engineering to reduce it down to almost 0. But for the Corporate Banking, it's a bit of a different challenge in mBank because our Corporate Banking is not working 24/7. It's not working over the weekends, and it's not working during the night. So we are using the opportunity that we get from the fact that we have to support European instant payments, but we want to take it to the next level in an mBank fashion. So we want to give access to our corporate customers to the majority of the important products 24/7 and to extend the availability of the rest through the weekend. We think that this will be the great basis for our business to grow further. The other important aspect that I'm responsible in the bank is the security. And to tell you about the security is a bit harder than to tell you about the IT because we just don't have this one grand project. In fact, we have really a couple of dozens of projects that we want to do in the time frame of the strategy, and we group them into 3 pillars. And actually, they don't change. So these are the same pillars that we were having so far. So the first one is the cybersecurity. Obviously, substantial part of the trust that customers put on us is coming from the fact that we are offering them a security. So cybersecurity in the sense of defending the bank, but also helping customers defending themselves, this is a crucial aspect, and we are going to continue investing in this area. The other part, which is no less important, is antifraud. The fraud is, let's say, ongoing daily burden for our customers. The trends are not actually good. It's actually getting worse from the customer's perspective. So mBank is here to protect them. We will extend our anti-fraud systems, but also we will deliver more self-service to the customers. So if actually something bad happens, the customers will be able to help themselves. And last but not least, we strongly believe that humans are the best firewall for all kind of bad things. And we are probably the first bank that's really invested in the broad communication to the Polish society about security. We've been running public campaigns aimed not only at our customers, but at all citizens of Poland because we believe that the customers who are aware of the security risks are the customers that can better protect themselves. On the other hand, we are also investing in our own employees because they can protect the bank, but they could also protect both the customers but also their friends and their neighbors. And those 3 pillars form together our security strategy. Karol Prazmo: Krzysztof, and with that, you've brought us to the end of the second strategic pillar, which is customer excellence. And now we go into the third strategic pillar, organizational excellence. And I want to stay with you, and you spoke about AI and conversational banking earlier during the presentation. And can you tell us about the other places where you and your team will be deploying AI? Krzysztof Dabrowski: Okay. So you've heard a bit about AI from my colleague's presentation. These are the, let's say, the large business applications of the AI that we are doing together. But we are treating this concept very seriously. And on top of everything, we are also running our own incubator for those solutions because we believe that we need a deep focus and a lot of acceleration to really make it happen on a daily basis here in mBank. I'm not going to be able to take you through all of the things that we are working on. And on the other hand, I'm not going to tell you what are we going to do 3 years down the road because on one hand, I probably don't know actually. But on the other hand, we wouldn't like to reveal too much to our competition. So I will just explain you and show you 3 solutions, and they are at the stage that either they are already in production in mBank or they will be very soon. So I'm not going to spoil the market success. So the first one is what we call the deep customer understanding. The banks have a lot of data about customers. And historically, we've been all very, very good in analyzing this. All of the structured data we have about customers, the transactions, the financial data, the products they are using, even how they are using the products. All of the banks know it, all of the banks analyze it, hopefully, and all of the banks know how to deal with this kind of data. But there is a whole ocean of the data that is not structured. These are the interactions that we are having with our customers. It's voice interactions, video interactions, but even simple chat interactions. We have a lot of those. And historically, they were very hard to actually analyze. We've been analyzing them in a very, let's say, focused way, for instance, to do quality control of our conversations. But it was not really possible to do it at scale. As of today in mBank, we are analyzing all of the interactions we have with our customers. Thanks to the generative AI, we can process all of them. We can process voice, we can process text. And on a mass scale, we can draw the conclusions. On one hand, what the customers want from us, which is very important. But on the other hand, how do we serve the customers? What is the quality of our interactions? What is the quality of our conversations? And we no longer have to sample, we can analyze all of them. The other example is maybe very niche and technical, but it also shows the power of the technology. We call this -- internally, we call this product, Talk to Your Data. We have a lot of data in mBank. But on top of the actual size of the data, our data models are very, very large. And there is no living human being in mBank who knows it all. So our analysts, they spend quite a lot of time before they actually start to work with the data. They spend a lot of time finding the data in our systems. So we created a tool for them that we can use and ask the questions in the natural language. So you could ask, for instance, where can I find the information about all of the retail customers, who gave the marketing consent, but didn't have the mortgage with us for the last 20 years, but are making more than 3 transactions per month. And this tool will create a database query, and we show to the analysts where this data is in our system and how to get it. And last but not least, this is probably the toughest nut that we are trying to crack. These are the customer complaints. And why customer complaints are very tough? It's the definition of unstructured. The customers are writing us a letter, and I'm always saying this is not always a love letter to the bank. And this letter is just the pros. It describes the problem in the way the customers see fit. So we have to analyze these pros. We have to extract what is the problem. Then based on this, we need to find out what should be the solution for this problem and create steps for the person in the bank to solve the problem. And then at the end of the day, we need to actually write the response to the customers. And this response has to maybe make sense, be written according to our standards and solve the customer problem. So all of it together creates probably the toughest automation problem, I, in my career, had to deal with. And we are solving it already with the help of generative AI, and part of the customer claims already in mBank are being processed with the help of this solution. Karol Prazmo: Krzysztof Dabrowski, thank you very much. Ladies and gentlemen, now let's shift focus from technology to people. Katarzyna Piwek is our Deputy Director, responsible for Human Resources. Katarzyna, what makes mBank's teams exceptional? Katarzyna Piwek: Well, 2 factors. Our employees are highly engaged and driven, and there are numbers that demonstrate these qualities. First, it's our engagement score. We achieved 68% of engagement during the past 2 years, while top quartile in Poland stands -- starts at 64%. Second number speaks more to our employees' motivation to grow. Our staff completed over 20,000 future skills initiatives, not to mention all the others during the past 4 years. On the HR side, we actively support this engagement. We invest heavily in skills-based development. We care about our employees' well-being, just as Krzysztof Bratos mentioned, we care about our customers' well-being. So we provide a variety of well-being programs as well as top-tier hybrid environment. We offer competitive and transparent pay. And on the equity side, we are in a strong position. Last year, in gender pay gap, we stood at 2.9%, and we are committed to reduce it to 2.5%. With gender balance on managerial positions, we are currently at 40%, and we aim to reach the balanced distribution between 40% and 60%. What I want to emphasize is that today, we are proud to have one of the strongest employer brands in Poland. Karol Prazmo: You spoke about our highly engaged teams. What else will we do to retain and attract the best and the brightest? Katarzyna Piwek: Well, we aim to be the employer of choice by building on 3 strategic pillars. First, ahead of others, through our unique culture, mBank culture really is something special. It's so special that we decided to give it a special brand, mKULTURA and culture. This culture is highly attractive to people as we are top place for those who want to develop and grow, top place for people that are willing to take responsibility and take decisions. And finally, top place for those who are -- who practice dialogue and are empathetic towards the clients and each other. Second pillar, ahead of others through best talent. Given the demographic structure you mentioned, Krzysztof, in Poland, it's not only to attract the best, but also to retain them. In order to retain the best, we are investing in skills, but also make sure that our knowledge is at the forefront of innovation and at the highest standards of industry. We know that best talent naturally require an appropriate employee experience reflected in good working conditions and inclusive environment. Third pillar, the digital HR, which is taking decisions based on data. We embrace logic. We base our decisions on data when it comes to remuneration, recruitment, skills and competencies. We believe that being data-driven and therefore, logic and predictable creates a secure space for our employees. We also improved our internal processes using AI in all possible use cases. For example, performance, development, recruitment. Three pillars, but all 3 serve one purpose: to have the best team to deliver on mBank's growth. Karol Prazmo: Thank you, Katarzyna Piwek. Ladies and gentlemen, now that we have discussed the 2 business lines, technology and human resources, let's move to finance. And I would like to invite our Chief Financial Officer, Pascal Ruhland, to the stage. Pascal, welcome. And Pascal. How will the strategic goals translate into financial performance? What do they mean in terms of balance sheet volumes, revenues and costs? Pascal Ruhland: Thank you very much, Karol. And it's my pleasure to present you now our financial frame of the strategy. And let me start with our growth aspirations. Cezary Kocik was saying it at the beginning. We are back in a growing mode. We want to exceed 10% market share in every single of our core products. That means we need to grow faster than our competitors. What you see here is our loan volume development. And in 2024 and in 2025, we have already proven that we are capable of growing faster than the competition. And now the big question is, why do we believe this will continue? And my colleagues in the presentations beforehand gave you the answer because we, as mBank, are set up as an organic growth institution by clients, by our culture and by our infrastructure. In Retail, we can call our clients the most attractive client group of any bank in Poland by age, by purchasing power and by loan demand. To give you one fact, our clients demand for around 25% of the overall mortgage loan market in Poland. This, together with a seamless process, is the foundation for a 12% CAGR. Coming to the Corporate side. You know us as sector experts. We are focusing on sectors which are growing faster than the average. And Marek and Adam explained to you now we're following trends, trends like the energy transition, again, faster growing. This plus an additional investment in our lending infrastructure build our basis for a 7% CAGR. Let's move now from our loan sides to the deposit side. And here's one thing very visible. The main engine is Retail, with a 10% CAGR. And Krzysztof Bratos was in the strategy explaining how we do it. We focus on our clients. We want to remain with them. We want to increase loyalty and grow with them. In Corporate, we have a 4% CAGR on an already elevated market share as we already have in enterprises a market share of around 10%. Now let's have a look how this turns into our P&L. What you see here is that we expect revenues to grow between 7% and 8% on a CAGR level. What you don't see is that we expect that every single year in our strategy, we will increase our revenues. NII is fueled by the volumes which we have shown. We will have a strict focus to maintain discipline in deposit management and will overcome a dropping interest rate environment. Net fees, you see it currently in our P&L, are on a rise, and this is expected to continue. We have a broader product spectrum and we maintain growing with our clients. But obviously, there's one factor where we're decisive nowadays in banking, it's the external reference rate. We expect the NBP reference rate to drop as early as 2026 to 4%. And while I explained that we have an increased balance sheet and the rates are dropping, of course, margins are under pressure. We account for that. We expect the net interest margin to go slightly down step-by-step to 3.5% by the end of the strategy cycle. But let me tell you one thing. We are well prepared for a dropping interest rate environment. If you look into our data NII, we have barely moved since the beginning of the year. A 100 basis point rate cut currently costs us between 6.5% to 7% of total NII. And if you compare it to 2 years ago, 2023, it's 2 percentage points less sensitive. So we did our homework from a treasury perspective to stabilize our NII and increase volumes, went into fixed rate bonds and also swaps. Now going from the revenue side to our cost side. What you see is we expect a CAGR of 4% to 5% in the strategy cycle. The main driver is IT-related. And here, we increase the spending across all you have heard, digitization, automation, but also AI-related use cases. And as we know that you are interested in how we do that actually, we came up with the idea of the second part of today to show you the client look into our kitchen, the real use cases. And I just can encourage you to stay, it's worth it. In 2026, you see a steeper cost growth of 11%. There are 2 main drivers. The first one is we invest further in our people. We will grow by FTEs and also, we increased wages. And we do that with a smile, as you have heard, because this is everything we can deliver is out of our people. The second topic is regulatory cost increase. We expect that the BFG contribution and also our support fund will increase or normalize, if you want to call it like that. Now summing it up. You know us as mBank as the most efficient bank in this market, and we will maintain that with a cost-to-income ratio of at or below 35%. And this brings us in every single year in the top 3 of the country. Karol Prazmo: Pascal, allow me to briefly shift to the risk perspective, and to our Chief Risk Officer, Marek Lusztyn. What does this strategy mean in terms of expected cost of risk and risk appetite? Marek Lusztyn: That's clearly a question that many of you in the audience ask yourself, how much risk does it take to deliver our strategic objectives? And let me assure you that we are going to deliver them without changing our risk appetite. And now let me explain you how we are going to do it. Our risk excellence is based on 3 pillars. First of all, we want to grow intelligently, and colleagues from business lines already elaborated on the potential that mBank client franchise has for us doing so. First of all, on Retail side, Krzysztof explained the demographics of our customer base, and that demographic is not only beneficial in terms of our revenue growth, but it's also beneficial in terms of supporting us in lending growth and supporting us in our retail credit risk. Second of all, Adam explained at length the trends that we see in the economy. And those big shifts are going to be wins that will support us sailing to much higher growth in the Corporate space without taking unnecessary risk in the books. Second of all, it's resilience. Over the last 5 years, mBank has proven that we are an extraordinarily resilient bank, not only by local standards, but with all that we have gone through, we are super resilient by any international standards. We are going to capitalize on that, not only leveraging on excellent liquidity position, but also on our improving capital position that will serve not only as a cushion for safety, but also that -- as we have explained at length that will support us going back into dividend payouts. We have been exposed to the growing regulatory constraints since we are in the regulated industry. We would like to turn it into our advantage and proactively manage all the regulatory pressures that are coming in the strategic horizon. And finally, on the resilience, we are going to improve our ability to respond to nonfinancial risks since all those novel risks are the big risks that all the industry is facing. And finally, third pillar, which is efficiency. Our CEO, in his introductory speech, said that simplification is ultimate sophistication. Krzysztof explained at length what we are going to do using AI tools. And in terms of efficiency, we would like our clients to benefit from the simplified fast credit processes. And we will make sure that credit process greatly contributes to the efficiency of the mBank overall. So finally, this brings me to our strategic goal in terms of the risk management. We aspire our cost of risk to be around 80 basis points in the strategy horizon. And we are going to achieve this without changes to our risk appetite. Karol Prazmo: Marek Lusztyn, thank you. And returning to Pascal Ruhland. Marek spoke about the trajectory for cost of risk. You spoke about the trajectory for revenues and costs. What does all of this mean for our capital return strategy? Pascal Ruhland: Yes. Before I'm going into the capital return strategy, I want to remind us all that in Poland, we have the reintroduction of the countercyclical buffer. That means 2 percentage points, 1 this year, 1 next year, which will increase the minimum requirements. And while you keep that in mind, I would like to have all your attention now to the bar chart. What you see there is our net profit expected growth rate, so the dividend potential. What we balance there is the reinvestment and the dividend distribution. The basis of it is our high profitability. We aim for exceeding in every single year of the strategy, 22% of return on tangible equity. And we're really proud to say that we want to be back as a regular dividend payer. We start with 30%, and we go up as high as 75%. But of course, we are not working isolated. Therefore, I want now to speak about what the Minister of Finance has issued on the 21st of August, that the banking taxation would change. And yes, indeed, if you think about that, our net profit will be under pressure because if we simulate it for the next year for 2026, we would talk about an effective tax rate at mBank of around 40%, and that is massive. But while you let that sink in, please follow me once more. Look at the bar chart because what we show you here, we expect to exceed PLN 6 billion net profit. And that should give you a good sense how resilient the strategy is set up of any external change. Now going from one strategy, the capital return strategy to our balance sheet strategy. You know us, especially from an investor perspective as the bank, which is most active in the capital markets. We are pioneers. We have issued the first AT1. We have issued first Tier 2. And also, we have made the securitization market in Poland vibrant. But why have we done that? To most efficiently manage also regulatory environments. So we are used to leverage the full potential of our balance sheet to stay effective. And also in this strategy, we will do that. Therefore, we will more than double our issuance volumes. We will be active across the full stack from AT1 to securitizations. And also, while we see a growing mortgage loan book, we will return to covered bonds and make use of it. But that's not the only thing which will grow. Our capital today is around PLN 20 billion. And in the due course of the strategy, we will double that. And while we carefully also listen to our investors' feedback to run the bank prudently, to have a strong capital position, we give ourselves the target of at least 2.5 percentage points on CET1 ratio as a capital buffer to show you the strength of our capital position. Karol Prazmo: Pascal, given the breadth and depth of what you have covered, can I ask you to summarize the strategic priorities for the '26 through 2030 period? Pascal Ruhland: Of course, that's my pleasure. Our 6 key financial KPIs for the strategy. First, we are back in a growing mode. We will exceed 10% market share in every single of our core products. Second, we remain highly profitable and exceeded a 22% return on tangible equity in every single year. Third, you know us as one of the most efficient banks in the market, and this will stay like that for a cost-to-income ratio of at or below 35%. And this brings us in the top 3 in every single year. Fourth, a cost of risk of around 80 basis points shows a prudent credit control. Fifth, with our strong capital position, we maintain a buffer of 2.5 percentage points above the CET1 ratio minimum requirements. And sixth, we will be a regular dividend payer. We will start with 30%, and it will go up as high as 75%. Karol Prazmo: Thank you, Pascal Ruhland. And now I would like to invite our President and CEO back to the stage for the closing remarks. Cezary Kocik, the floor is yours. Cezary Kocik: I would like to highlight 3 of the most important things. First, we have overcome equity constraints mainly related to Swiss francs. And now we are ready to go ahead with a full speed gaining market share. Second one is that we are going to deliver to our shareholders exceptional profitability and efficiency, together with increasing dividend payment. And finally, demographic structure of our client and the engagement of our employees make mBank exceptional. Thank you very much. Karol Prazmo: Ladies and gentlemen, this fulfills the first of our 4 agenda points for today. And now we will move to the Q&A session, and I'll take questions both from the room and from online. Unknown Attendee: [ Joanna Kosik from CSC ]. Excellent presentation. I have one question kind of slightly obvious, you've mentioned the 10% market share increase in loan and deposits. Question to probably the CEO or whoever would like to answer. There's a lot of other banks in the market that have talked about growth prospects in Poland. Just kind of curious, who do you expect to take that market share from? Cezary Kocik: We are not competing with any specific bank. We're just competing with the whole market. And we track very carefully strategies of our competitors. And -- but just to make you a little bit more sure that it will happen, I can say that we are probably the one bank in the whole Polish market, which has grown fully in an organic way. So the Corporate started with a white paper in 1986 and the Retail in 2000. And from that time, we're permanently gaining market share, not by acquisition, just pure organic growth. And on top of that, what I highlighted in my introduction speech is that before these problems with Swiss franc, because without equity, you can't grow, you are counting risk-weighted assets every day just to be on the safe side. But before to that time, before these constraints start to be so severe for our bank, we managed to grow in retail, as I mentioned, 2% in a 5-years horizon in Retail, in deposit and loans, and in Corporate in loans, 1.5%. This is exactly missing gap, which we need to fulfill our strategy and gain 10% market share. So it is not just a promise, which is not covered by fact, but we proved in the past that we are able to grow with such dynamic. I don't know if it's... Karol Prazmo: Thank you, Cezary Kocik. Unknown Attendee: [indiscernible] My question is about the Corporate income tax rate. Can you quantify the impact of the higher rate for banks on your strategic goals, specifically on ROTE, net profit and dividend payout. Karol Prazmo: Pascal, I will direct this one to you. Pascal Ruhland: Yes. I gave in the presentation an indication where we will lay -- if the tax currently as it was announced on the 21st of August. And in '26, we would assume an effective tax rate of 40%. And just let me explain why it's 40% and not 30%, which was in the Corporate income tax name because we, as a banking sector, have quite significant costs, which are not tax deductible. This is the balance sheet costs we are having, but also other regulatory contribution. Therefore, you see an elevation. We are not precisely naming how much impact it would be, but I want to direct you to a few of the colleagues. The analyst did a very good job. And if I'm reading the reports, they currently come up that this could cost around PLN 800 million to PLN 900 million, and we are now taking this 2026 as the most severe. And this is a good ballpark figure. Karol Prazmo: Fantastic. Thank you, Pascal Ruhland. I'll take one question from online. There is numerous questions online. They pertain to our international presence and potential M&A. So I'll actually start with Czechia and Slovakia, and Krzysztof Bratos, with you. Can you summarize again the strategic objectives in terms of growing the Czech and the Slovak business? And the next question, Cezary Kocik, to yourself. In terms of the second part of that question, what can investors expect in terms of potential M&A? And are we looking at M&A opportunities? But Krzysztof Bratos, the floor is yours. Krzysztof Bratos: Okay. Thank you. So I think what we've shown is the ambition for Czech and Slovakia. This is absolutely the organic growth path. And in here, we are estimating to have 1 million of active clients and doubling our loans and nearly doubling our deposits. And the main engine of that growth and the source will be this aligned platform approach that we've mentioned. So the numbers you've seen, this is the assumption on the organic growth in Czech and Slovakia through the corporation in Poland. And I'll hand over for the second part to Cezary. Cezary Kocik: Of course, as a Management Board, we have very carefully observed the market. But for all of you who knows very well Polish market, the situation is quite complicated because almost 50% is -- there are banks with a significant stake of government. So that are rather -- and they are also big banks, so they are not potential target. And the rest have a very big financial investors. So honestly, I believe that if they are mergers in Poland, they rather trigger by the agreement between the major shareholders, not by the Management Board. But still, we are observing it very carefully. And if we believe that something fits to our model because we also need to remember that some merger destroy value. We need somebody or a bank with a similar customer profile, a similar distribution channel that the synergy will come to life, not -- we will be stuck in a permanent integration. So we will take a decision. But as I said, there is many obstacles. It's not very probable. And this is the reason why our strategy is based on organic growth, not on mergers and acquisitions. Karol Prazmo: Thank you, Cezary Kocik. Yes, go ahead. Kamil Stolarski: Kamil Stolarski, Santander Bank Polska. Congratulations on the strategy, especially of the market gains aims. My question is on the other side of the P&L about the cost in 2026. And I wonder if you could share some comments because it seems that the cost will outgrow revenues? And how do you justify this in 2026? And then the other question is about CapEx. Does this strategy involves also higher CapEx? Pascal Ruhland: Thank you for the question. I alluded in the presentation that the 11% increase on the cost side are driven especially twofold. First of all, by investing in our people. And why we grow in FTE, we are doing that twofold. First of all, business orientated, IT orientated, therefore, because we are serving our customers. And secondly, it's also compliance related. For instance, DORA as a regulation demands more from us. That is one part of the pillar. The second part of the pillar is regulatory costs, which we also expect to increase. And that is the second driver. And if you -- because you alluded to that costs are growing faster than revenues, our expectation is that the interest rate will go down to 4% on the NBP as fast as 2026. So you will have to overcome that. We also sent the signal, I said it, that we will grow revenues despite this interest rate drop. And the cost will be adjusted. Long term, you see that our revenues from the 7% to 8% CAGR very much outperformed the 4% to 5% CAGR on the cost side. On the CapEx, Yes, of course, we will increase our CapEx level because in the future, as the colleagues were explaining it, it's about IT capabilities. How smart can you really apply and how fast to especially increase effectiveness for your clients. So it's not about -- and we, therefore, invite you for the second session today. It's not about just applying AI, it really needs to be useful. Our CapEx is expected to grow by more than 16% in the due course of the strategy. Karol Prazmo: Thank you, Pascal Ruhland. Now I'll take another question from our online participants, and I'll direct it to Krzysztof Dabrowski. Krzysztof, the question relates to artificial intelligence. And can you give us examples of how AI will translate into operational efficiency? And can it potentially lead to lower costs? Krzysztof Dabrowski: Okay. So one of the examples of using AI to have some operational efficiency would be what we are doing in the AML area. This is a particular cost area that is growing rapidly because of the requirements that we have to fulfill. And in particular concern that we have is the analysis of the customer transactions from the perspective of money laundering. And in that area, the costs have been growing so far because we had to build the team and we had to do our obligations. But what we've been able to do with the help of AI was to significantly mitigate this growth. So what we initially assumed would be the FTEs necessary to just cover the retail transaction monitoring, thanks to our AI solution, we've been able to also cover Corporate Banking. We have been able to cover international money transfers in SWIFT and also our Czech and Slovak branch. So that was a significant investment and significant reduction in the effort. So this is what we are doing. We are removing the effort from the system. Because the bank is growing very fast, we need also to handle the organic growth. I think the word organic was used many times in our presentation. So our ambitious target is to keep up with this growth without increasing the cost on the operational side, and this is how we apply the AI. In many other places, the AI can be used for the things that were so far not easy target to automate. It's not the best tool to do things in a repeatable manner. If something can be done in a repeatable manner, you can do it with traditional method and you get predictability. AI is much more suited in our opinion to the things that are not easy subject to those things like, just to give you an example, comparing 2 documents, 2 scans of documents, which for the moment, require human beings and can be right now done with the AI. So you can expect us investing in this area. This is factoring in our cost base at the moment, certain assumption about the productivity gains. Karol Prazmo: Thank you, Krzysztof Dabrowski. Pascal Ruhland, I'll take one more question from online. And I want to direct it to you. The question relates to what is embedded in our forecast with respect to GDP and interest rate forecast. And also with respect to the growth expected for total revenues, can you break it more down into NII and NFC? Pascal Ruhland: Okay. So the GDP forecast, which I didn't mention specifically, but you will find it in our paper deck, which is uploaded right now, is between 3.6 and 3.8, and we expect to have GDP growth year-on-year throughout the strategy. And as I said on the interest rate, we expect that the interest rate is dropping down to 4% as early as 2026 and has then a stable state. When we then think about the revenues, and here I explained that we are growing from a CAGR level between 7% and 8%, and from today's split between NII and NFC, which is an 80-20 split, we expect that net fee and commission income is slightly faster growing than NII, but just slightly. And in the end, it will be a bit shifting the 80-20 split, but not massively. Karol Prazmo: Thank you, Pascal Ruhland. And I'll take one final question from the room here. Is there any? Okay. Then in that case, we will -- we conclude with the Q&A session, and I pass the voice over to mBank's Head of Investor Relations, Joanna Filipkowska, who will now lead the demo session. Joanna, over to you. Joanna Filipkowska: Good morning, ladies and gentlemen. The purpose of this demo session is to provide you with concrete examples of some of our exciting solutions that we are implementing as part of this strategy. Today, we will show you 5 use cases in which we already have significant advancement. First, you will see a short video, and then one of our Board members will provide further details. The session will last 20 to 25 minutes. After the end of the session, we will again have 10 minutes for Q&A. So please get your questions ready, both here in the room and online. The session will be led by our 3 Board Members: Mr. Krzysztof Dabrowski, Mr. Adam Pers and Mr. Krzysztof Bratos. We will start with our Gen AI program. Krzysztof Dabrowski, Vice President of the Management Board for IT and Operations, the floor is yours. Krzysztof Dabrowski: So I've been talking about 3 of the solutions that came out of our incubator, and we prepared for you a demonstration of those 3 plus 1 more as a bonus. So let's start. [Presentation] Krzysztof Dabrowski: Okay. I hope you like what you just saw. And also, as I mentioned, this is just the things that we either already have in production or will soon have. We have so much more in the store. So keep watching us. Joanna Filipkowska: Thank you very much, Krzysztof. Now we will turn to our Corporate Banking. Adam Pers, Vice President of the Management Board for Corporate and Investment Banking. Let's start. Adam Pers: Thank you so much. I was talking about the tools that we will see in a second in a movie, that will be a true movie. But our ambition is not just to show technology, show the tools that can bank. I think the word banking, bank as a word is something like old fashion. We like to implement the tools that will help our customers and our employees as well to use in their daily, routine daily operations, to help also to build a competitive advantage to our customers. So please enjoy. [Presentation] Adam Pers: Yes. And I will not repeat what was on the movie. Just 2 closing comments. The first one is that, what Krzysztof said that some of them are already in production. The second thing is that for the time being, we are, I would say, producing only what we receive from customers, the feedback and the expectations. Thank you. Joanna Filipkowska: Thank you, Adam. We've shown you 2 exciting use cases from our technology and corporate banking areas. Now let's turn to Retail Banking area, where we have 3 use cases to share with you. Krzysztof Bratos, Vice President of the Management Board for Retail Banking, the floor is yours. Krzysztof Bratos: Thank you. In our strategy, we plan to evolve from being an exceptional transaction bank. And in that, we promised to take care of those more complex products for our clients. But while doing so, we want to stay true to our purpose, simplifying finances, bringing goals to life. Emerging complex products in simplicity is not that easy, but we took on that challenge. And this is how we reimagine the mortgage experience. [Presentation] Krzysztof Bratos: And I can say that this is definitely not just a vision. It's a solution of which first stage went live already 2 weeks ago for one of our scenarios. And that 15 minutes that we promise, we've actually managed to issue a full credit decision last week in 6 minutes and 31 seconds. That is including credit worthiness check, legal checks and the valuation of the property for the real client in the real life and most stages will follow. Now moving to the second video. We believe that transitioning and taking care of the more complex scenarios doesn't mean that we'll forget about what is core. And in there, not everything is simplified and not everything yet is made truly, truly easy. And here is what we took on in one of our super segments, in SME, something that probably doesn't exist on the market yet. [Presentation] Krzysztof Bratos: And finally, the very heart of mobile banking. Let the video speak for itself. [Presentation] Joanna Filipkowska: Thank you very much, Krzysztof. Ladies and gentlemen, this completes this demo session. And at this point, I would like to open the Q&A session, which will be hosted again by Karol Prazmo. Karol Prazmo: Thank you, Joanna. So we're opening up to the questions. Please get those questions ready, and please put your hands up. And while you do that, I'll actually start with the first question from one of our online users. Krzysztof Bratos, the question is directed to you. In terms of the digital mortgage, is this for one borrower? Is this for several borrowers? And if it's not available for several borrowers, when do you think that functionality will be available? Krzysztof Bratos: Okay. So I think there are digital mortgages and there are digital mortgages. There are companies that will create a mobile interface that will allow you to file a mortgage application, and that can be called digitally. We went a different path. We decided that in order to keep our efficiency operations and our costs, we invested firstly heavily in our backbone. In AI-supported valuation models for the real estate, the automated legal checks, the automated credit worthiness. And this is something that took us quite a while to build. And thanks to that, as I said, we can do that now in 6 minutes and 31 seconds. And now we are now expanding and building on that foundation to the more and more scenarios. The scenario that we went live with is just the refinancing for the ones -- for the single borrower. But as soon as still this year, we are planning to add the new mortgages for the single borrower and the more complex scenarios like the more than one borrower are planned for 2026. So I would say most of the agenda, we should explore and most of the key scenarios in the next year to come. But the first, the foundation is there, and the first scenario is there and is fully operational. Karol Prazmo: Thank you, Krzysztof Bratos. And do I see any hands up in the room with respect to questions? Then I'll take another question from online. And Krzysztof Bratos, in terms of the phone acting as a payment terminal, is this already available to everybody today? Krzysztof Bratos: No. But it will be and it still be as early as this year. And we are sure that it's going to change the experience of a lot of our customers. Now when building and when thinking about the solution, the first idea actually was to try to embed our app and connect our app today external point-of-sale devices or software point-of-sale devices because those 2 exist on the market. But then we thought, while integrating, why wouldn't we can turn our app into something that is a true point of sale in one go with a fully integration of our accounting system. And therefore, this is something that we believe is very, very new. It's in a very advanced stage of development and is expected still this year. Karol Prazmo: Thank you, Krzysztof. Is there any questions here in the room? Okay. In that case, ladies and gentlemen, this concludes today's event. We thank you very much for joining us here in the room. We also thank you very much for joining us online. And now for the participants here in the room, we invite you to lunch. Our Board members will be available for another hour. So please take the opportunity to have all those informal conversations. Thank you, and have a great day.
Roland Carter: Good morning, everyone, and thank you for joining us. Today, I'll open with a reminder of our strategic actions that we announced in January and a few highlights of our fiscal year 2025 performance before handing over to Julian to walk through the numbers in more detail. I'll then come back to you to provide an update on our strategy. And as always, we'll have plenty of time for questions at the end. I would like to start by saying how pleased I am with the excellent progress we have made this year, operationally, financially and strategically. We are extending our track record of consistent financial performance and advancing the strategic plans we announced earlier this year to reposition Smiths and deliver significant value for all stakeholders. Turning to our strong financial performance, which came in ahead of our twice raised guidance. Fiscal year 2025 marks our fourth consecutive year of organic revenue growth, with group organic revenue up 8.9%, ahead of our 6% to 8% guidance. We expanded operating profit margins by 60 basis points at the top end of the guided range. We deployed capital in a disciplined and dynamic way with 3 accretive acquisitions and enhanced share buyback alongside a 5.1% dividend increase, marking 74 consecutive years of dividend payments. In January, we announced a number of strategic actions to unlock portfolio value and enhance returns. We are progressing the separation of Smiths Interconnect and Smiths Detection. And reflecting this, Smiths Interconnect is reported as discontinued operations in our full year results. The acceleration plan is progressing well. Initial benefits are being delivered, and we remain on track for the full benefits in fiscal year 2027. We are well positioned for fiscal year 2026 with a strong order book and expect 4% to 6% organic revenue growth with continuing margin expansion. We enter the next phase of our growth journey from both a position of financial strength and strategic clarity. The strategic actions we announced this year mark a pivotal moment for Smiths. We set out plans to be a focused industrial engineering company centered on high-performance technologies in flow management and thermal solutions. Our businesses are customer-centric, hold market-leading positions and operate in structurally growing markets. They have a high-quality financial profile with a strong through-cycle track record and with ample potential for above-market growth. This sharper focus, combined with disciplined capital allocation, positions us to deliver superior shareholder value through consistent execution, operational and financial performance and strategic delivery. Turning to fiscal year 2025 performance. Keeping our people safe is our #1 priority, and I'm pleased to see our safety record improved this year with our recordable incident rate being the lowest for several years. We delivered strong financial results with growth across all our key metrics. A great performance when one considers the impact of the cyber incident, particularly felt in John Crane, and the ongoing challenging macro and tariff backdrop. We invested organically as well, spending GBP 121 million on acquisitions to support and enhance future growth. We also increased returns to shareholders, and are now 80% through our GBP 0.5 billion share buyback program. Together with dividends, we have returned GBP 460 million to shareholders in the year, taking the total to GBP 1.7 billion over the past 4 years. With that, I'll now hand over to Julian to talk through the numbers in more detail. Julian Fagge: Thank you, Roland, and good morning. I'm pleased to present our fiscal year 2025 financial results, which extend our track record of consistent performance delivery. Organic revenue growth for the group comprising all 4 businesses was up 8.9%, ahead of the already twice raised guidance of 6% to 8% growth. Reported revenue increased 6.5%, including a 1.4% contribution from acquisitions in Flex-Tek, partly offset by adverse foreign exchange. Operating profit grew 13.1% on an organic basis and 10.3% on a reported basis. Operating profit margin expanded 60 basis points to 17.4% on both an organic and reported basis at the top end of our guidance of 40 to 60 basis points. Earnings per share increased 14.8%, driven by the strong operating profit performance, supplemented by acquisitions and the benefit of our enhanced share buyback program. Return on capital employed was up 170 basis points to 18.1%, driven by profit growth and our continuing focus on efficient capital allocation, and we achieved strong operating cash conversion of 99%. As a result of the planned separation, Smiths Interconnect is now reported as discontinued operations, with its assets and liabilities classified as held for sale. This means that on a continuing operations basis, organic revenue grew 7.2% and operating profit grew 8.5%, with an operating profit margin of 17.3%. In line with our progressive dividend policy, we are recommending a final dividend of 31.77p, resulting in a total full year dividend of 46p, a 5.1% increase. Now turning to the results in more detail and starting with organic revenue growth. Delivering consistent growth above our markets is a key focus for us, and we've now delivered 4 consecutive years of organic revenue growth, averaging over 7% per year across this time period. This growth has been underpinned by the strong performance of our portfolio of leading brands, our focus on commercial excellence and innovation and new product development. Strong revenue growth translated into even stronger operating profit growth with a 60 basis point margin expansion to 17.4%. Growth was driven by operating leverage, particularly in Smiths Interconnect and Smiths Detection, continued price discipline more than offsetting inflation, and efficiency and productivity savings, which delivered 20 basis points of margin improvement. This included benefits from the Smiths Excellence continuous improvement program and initial benefits from the acceleration plan. Offsetting this was a 50 basis point negative effect from mix with higher growth coming from Smiths Detection and some negative product mix mostly within Flex-Tek. Earnings per share grew very strongly at 14.8%, driven by the organic profit growth, accretive acquisitions, the share buyback and lower tax and interest charges. Constant currency earnings per share grew 19.6%. Cash generation was very strong at GBP 576 million, representing a 99% conversion, reflecting disciplined cash and working capital management. CapEx was GBP 80 million, GBP 12 million higher than depreciation and amortization, but lower than originally guided, with a good amount, reflecting higher investment in automation capacity and testing in John Crane. Finally, we generated GBP 336 million of free cash flow, a conversion rate of 58%. Generating free cash flow remains a key focus for us as we execute our strategic plan. Turning now to the businesses. John Crane delivered organic revenue growth of 3% against a strong prior year comparator of 9.8% growth. Growth was led by original equipment, whilst aftermarket having been more affected by the cyber incident, recovered in the fourth quarter. Second half growth was impacted by operational challenges associated with the upgrades to our machining and testing capabilities and exacerbated by a longer-than-anticipated recovery from the January cyber incident. However, we saw sequential quarterly improvement with fourth quarter growth of 3.9%. Notable contract wins in the second half included a large-scale retrofit energy project in the Middle East and a large managed reliability program in Asia. In June, John Crane launched its coaxial separation dry gas seal, helping customers cut emissions, boost reliability and lower costs. John Crane operating profit grew 6.3% on an organic basis, with margin expanding 80 basis points to 23.8%. This margin expansion reflected productivity and cost efficiency improvements, price and initial savings from the acceleration plan. Looking ahead, healthy market demand, strong order intake alongside improved execution, supports our positive outlook for fiscal year 2026. Now turning to Flex-Tek. Organic revenue grew 4.4%, with a marked strengthening in performance in the second half. The acquisitions of Modular Metal, Wattco and Duc-Pac added a further 5.4% to growth. Flex-Tek's Industrial segment grew 4% despite challenging conditions in U.S. construction, reflecting increased demand for heat kits and flexible ducting products and new customer acquisitions. Revenue in the industrial heat segment was flat year-on-year, reflecting the phasing of a large industrial contract, which is due to conclude in the first half of fiscal 2026. The business is well positioned for future wins, strengthened by the acquisition of Wattco. A recent highlight includes a contract to supply electric heaters for a low-carbon electro fuel project in North America. And aerospace grew 6.3%, supported by a strong order book, reflecting ongoing aircraft build programs and renewed long-term agreements that position the business well for the future. Operating margin was 19.5%, down versus the prior year's strong comparator, which benefited from higher-margin industrial heat contracts. This underlying performance reflected positive pricing and efficiency savings, a positive contribution from acquisitions of 20 basis points, offset by mix impact. In the fourth quarter, we identified a nonmaterial balance sheet overstatement at a stand-alone U.S. industrial site, which had an GBP 8 million in-year impact on headline operating profit and a GBP 15 million impact on statutory profit relating to prior years. This issue was isolated to a single site, has been independently investigated and is now fully resolved. Looking forward, the U.S. construction market remains subdued, although we are well positioned to take advantage from its recovery, should mortgage rates moderate and given the meaningful U.S. housing inventory deficit. For aerospace, the strong order book underpins a healthy demand for the coming year. Moving to Smiths Detection. Revenue increased 15.2% organically, and we successfully converted a strong order book into revenue in both original equipment and aftermarket. We delivered significant growth in aviation with strong demand for checkpoint CT scanners, where we continue to a good win rate. Smiths Detection has now sold around 1,800 CTiX products globally, and is the first to receive the up to 2 liters recertification in the U.K. and the EU. It is anticipated that the global upgrade program will continue with the current level of cabin baggage activity into fiscal year 2026, along with the associated longer-term aftermarket revenue stream. The business is well positioned for the next upgrade cycle in hold baggage screening supported by the first X-ray diffraction-based system in the aviation sector. With 4 units already in operation and regulatory certification underway, this innovation marks a significant step forward in detection technology and reinforces our leadership in the sector. Other Detection Systems delivered improved performance in the second half with growth of 5.2%, following a first half decline on a strong comparator. The business had significant contract wins, particularly in ports and borders, including for large mobile scanners for customs and road cargo in the Americas. Looking ahead, a growing focus on border security is expected to drive growth. Operating profit grew 23.3% and operating margin expanded 80 basis points, reflecting the good operating leverage, improved pricing, a positive mix effect and efficiency savings. Underscoring the business' commitment to innovation, our iCMORE Automated Prohibitive Items Detection System became the first AI-driven platform to receive regulatory approval for live deployment now implemented in Schiphol Airport. Looking ahead, our multiyear order book remains strong, supporting a positive outlook for fiscal year 2026. Growth will continue to be supported by the aviation upgrade program, albeit at a more moderated pace. Finally, Smiths Interconnect increased sales by 22.5% organically. All business units grew with particular strength in the semiconductor test business, where we achieved large wins, particularly in high-speed GPU and AI programs. This performance reflected the strength of our product innovation, most recently, the DaVinci Generation V high-speed test socket designed to test advanced chips used in AI, data centers and computer processing. Aerospace and defense revenue grew 15.1% with strong demand for our differentiated technology in fiber optic, radio frequency and connected products. Here, Smiths Interconnect launched the EZiCoax interposer connector for high-value aerospace and defense applications, enabling secure, precise and reliable communications in systems like satellites and advanced radar. Operating profit was up 57.2%, with margin expanding 390 basis points to 17.8% as a result of the notably higher volumes as well as pricing, positive mix and significant benefits from efficiency programs. As part of the drive to maximize value through the separation process of Smiths Interconnect, we have agreed the sale of its U.S. subsystem business, a noncash impairment on disposal of GBP 30 million was recorded. Strong market conditions combined with key program wins underpin our growth expectations for fiscal year 2026. We take a disciplined approach to our use of capital. In fiscal year 2025, we continue to demonstrate consistency in line with our framework. Organically, we invested GBP 219 million in CapEx and RD&E, which includes customer-related engineering. We invested GBP 121 million in value-accretive acquisitions in Flex-Tek at attractive multiples and higher margins. We increased our total dividend by 5.1% to 46p per share and we paid GBP 152 million in dividends in the year. And we've now executed GBP 398 million of our GBP 500 million enhanced buyback program, which is on track to complete by the end of the calendar year. Overall, we have returned GBP 1.7 billion to shareholders in the form of dividends and buybacks over the last 4 years. We did all of this whilst maintaining a strong balance sheet, with net debt to EBITDA ending the year at 0.6x. Our disciplined approach to capital allocation combined with a clear focus on sustainable value creation is designed to maximize long-term returns and drive shareholder value. We will continue to prioritize disciplined investment for organic and inorganic growth and deliver enhanced returns to shareholders whilst maintaining a strong and efficient balance sheet. First, we are committed to supporting innovation, and expect to invest 3% to 4% of revenue in RD&E, enabling new product development and commercialization. Second, value-accretive acquisitions. We will continue to pursue disciplined acquisitions in core and adjacent markets, augmenting our organic growth and strengthening our competitive position. Third, a progressive dividend policy. We balance the cash flow needs of the business with our commitment to deliver consistent and meaningful returns to shareholders. And fourth, returning excess cash to shareholders. Where we generate surplus cash, we will return it to shareholders through share buybacks or other appropriate mechanisms, ensuring capital is deployed efficiently. We intend to maintain an investment-grade credit rating, and we will balance this alongside our desire to have an efficient balance sheet. Our credit rating is underpinned by our strong and consistent financial track record, leading market positions and significant share of recurring revenue. As we progress the separation of Smiths Interconnect and Smiths Detection, we remain committed to returning a large portion of disposal proceeds to shareholders. The scale of this return will be determined once we have clarity on the timing and magnitude of the proceeds. Importantly, this decision will be made in the context of our broader capital allocation priorities, organic investment, acquisition pipeline, dividend policy and leverage. Finally, let me take you through our outlook for fiscal year 2026 before handing you back to Roland. We expect organic revenue growth on a continuing operations basis of 4% to 6%, noting the strong first quarter comparator. This outlook reflects the strength of our order book as well as the ongoing macro environment with tariffs and increased geopolitical risks causing market uncertainty. In John Crane, growth is supported by a strong order book, solid momentum and improving operational delivery. For Flex-Tek, our outlook reflects a continued subdued view on U.S. construction, balanced against a strong aerospace order book. Smiths Detection will continue to grow, albeit at a moderated pace, supported by the aviation upgrade program. We expect continuing margin expansion driven by operating leverage, benefits from the acceleration plan and ongoing efficiencies through Smiths Excellence. And finally, we expect cash conversion to be around the mid-90s percent, reflecting continued investment for growth and strong underlying cash generation. In summary, while the external environment is challenging, our strategic positioning, operational discipline and our strong order book give us confidence in delivering growth, margin expansion and robust cash flow in fiscal year '26. And with that, let me hand back to Roland. Roland Carter: Thank you, Julian. Firstly, I'll give a brief update on the separation processes. Then I'll turn to Smiths businesses and the opportunity for continued growth and margin expansion. And I'll end with our purpose, people and culture of high performance. We are fully focused on executing the strategic actions that will enhance returns to our shareholders and position Smiths for long-term success. We announced the separation of Smiths Interconnect and Smiths Detection earlier this year and are progressing these with pace and purpose, balancing value maximization with execution certainty. We continue to expect to announce a transaction in relation to Smiths Interconnect by the end of the calendar year, with completion anticipated in 2026. For Smiths Detection, we are progressing both the sale and demerger options ahead of a decision on the preferred route. Work streams are underway internally for both businesses to set them up for the separations. Following the separations, Smiths will be a focused industrial engineering company, specializing in high-performance technologies in flow management and thermal solutions with leading positions in these growing market segments, aligned with long-term structural megatrends. Our competitive advantage stems from our leading brands and engineering capabilities, our targeted investment in innovation and our product development and commercialization to meet customer needs. We have valued customer relationships based on our customized technologies, products and solutions with more than 70% aftermarket recurring or repeatable revenue. Our businesses have high-performance cultures centered on safety, our values, innovation and excellence. They have a strong financial profile of sustainable growth with high returns and good cash generation as well as organic and inorganic expansion opportunities. Empowered decision-making across our businesses ensure we remain focused on supporting customers to capture growth opportunities and deliver attractive and resilient growth with high returns. We operate a lean corporate center, delivering core competencies, including strategy, capital allocation, M&A and compliance. Here, we also present Smiths' pro forma financial metrics. Smiths generated GBP 1.95 billion in revenue in fiscal year 2025 with a pro forma operating profit margin of 19.6% and a 22.8% return on capital employed. We operate in the broad end markets of energy, industrial and construction, with 36% of revenue in energy, 38% in industrial and 26% in construction. With our strategic positions in these markets, we are aligned to some of the most powerful structural megatrends shaping the global economy, energy security and transition, resource efficiency and industrial productivity and sustainability that underpin long-term growth. These markets are expected to grow at a 4% to 5% CAGR over the next decade. Drilling down further into the subsegments of these markets, we are typically positioned in faster growth areas, including flow control, HVAC and industrial process heat. In energy, our mechanical seals enhance reliability across the oil and gas value chain, where we are seeing robust demand for traditional energy as well as increasing opportunities in new energy segments such as CCUS, hydrogen and biofuels. For industrial markets, the rising demand for process efficiency and emission reduction also supports growth in our flow control business. Aerospace continues to perform strongly with new aircraft build programs supporting demand for our fluid conveyance products. And investment in industrial heat electrification is providing significant potential upside for our process heat portfolio. The construction market growth fundamentals remain strong given the U.S. housing inventory deficit and our deep customer relationships and growing U.S. footprint, positioning us well to capture future demand in this highly fragmented market despite some short-term market challenges. Across all market segments, our solutions help customers reduce emissions, improve efficiency and use fewer raw materials, delivering both sustainability and performance. In summary, we are excited about the opportunities in our markets to deliver long-term consistent and sustainable growth. Our aim is to continue to deliver above-market growth over the medium term, underpinned by a resilient and recurring revenue base. This provides a strong foundation for sustainable performance. Our enhanced medium-term financial targets announced in March reflect our plans and strategic initiatives for above-market growth and include leveraging our installed base, brand reputation, customer intimacy and leading product expertise to deepen relationships with customers and expand our share of wallet. Commercial excellence, we will continue to enhance our operational processes to deliver exceptional customer service, enhancing customer value, incumbency and retention versus peers. Innovation. New product development and commercialization are key to sustaining growth. As examples, John Crane this year launched a new coaxial separation seal and is scaling digital solutions, including Sense Monitor and Turbo. Market adjacencies. We continue to target higher growth and higher-margin subsegments, geographies, products and customers, both organically and through targeted acquisitions. This multifaceted approach ensures that we remain well positioned to outperform in our markets over the medium term. Let's look at what we're doing in Flex-Tek, where we delivered robust growth in our construction business in fiscal year 2025 despite challenging U.S. market conditions. Building on the strength of our portfolio, we are leveraging our flexible duct product platform to drive deeper and wider penetration through our distribution channels and are adding new customers. We saw increased demand for heat kits with notable growth in key accounts, illustrating the importance of customer intimacy and higher-performing products. And our innovation remains a core growth driver. During the year, we launched the Blue Series, a redesigned sealed metal duct system that sets a new standard in performance and is already contributing to revenue. In our heat business, another launch this year supports ultra-low carbon emissions fuel with electric heaters that are being tailored for a cutting-edge electro fuel project. Both are great examples of how our innovative approach leads to new product design, which solves a key customer challenge. Our organic growth strategy is augmented by a disciplined and value-accretive approach to M&A. Acquisitions since 2018 supported a more than 13% CAGR in both revenue and operating profit at Flex-Tek alongside a 60 basis point margin uplift. This year's acquisitions, Wattco, Modular Metal and Duc-Pac strengthen our capabilities in heat transfer technologies and broaden our reach in U.S. construction. These acquisitions also allow us to scale into adjacent markets within our existing product portfolio. Adding new metal ducting businesses this year has increased our addressable market for our flexible ducting products by opening up new geographies and customers. So they are already contributing to growth and margin uplift, and we expect further benefits as we scale and integrate these businesses. For fiscal year 2026, we expect the construction market to remain subdued, although we will continue to drive the business forward to deliver against this backdrop. Turning to margin. Our journey to our medium-term target of 21% to 23% is supported by a series of structural and tactical initiatives, a combination of operational discipline, cost optimization and portfolio focus. First, operating leverage, actively driving a higher contribution margin as we grow revenue, for example, through price and product mix. Second, delivering efficiency savings and productivity improvements through Smiths Excellence. This year, through our Smiths Excellence Academy, we expanded our Lean and Six Sigma programs to reinforce our high-performance culture and scale operational best practice globally. Third, implementing our acceleration program, which is on track for GBP 40 million to GBP 45 million annualized benefits in fiscal year 2027 and beyond for a total of GBP 60 million to GBP 65 million of costs, whilst ensuring central costs remain at 1.5% to 1.7% of revenue. 2/3 of the costs and benefits relate to the retained businesses. And finally, evolving our product portfolio towards higher-margin products and market subsegments, including targeting a greater share of aftermarket, repeat or recurring revenue. Here, we show how operational excellence is supporting both revenue growth and margin expansion. Through our acceleration plan, we are simplifying, standardizing and automating core processes across engineering, manufacturing and supply chain functions in John Crane, including investment in advanced manufacturing technologies. We have upgraded automation and machining across multiple sites with a focus on high-precision applications. We have installed 72 new CNC machines and are adding 9 dry gas seal test rigs. These investments are enhancing throughput and quality, improving lead times, reducing waste and enhancing customer satisfaction. Our supply chain is being optimized to improve agility, resilience and cost competitiveness. We are consolidating manufacturing locations and centralizing transactional procurement and finance. These initiatives are delivering measurable benefits, including reduced lead times, improved pricing power and enhanced scalability and all contribute to growth and improving profitability for the business. Realizing these performance improvements underpin our confidence in the outlook for John Crane for fiscal year 2026 and beyond. As already mentioned, we set out new enhanced medium-term targets for fiscal year 2027 onwards. These targets are ambitious, yet achievable and reflect our confidence in our ability to deliver premium returns through the cycle and supports the superior rating for Smiths. At Smiths, our long-term success is built on enduring foundations, our purpose, people, values and commitment to excellence and sustainability. Our purpose is clear, engineering a better future and is embedded in our strategy, culture and decision-making. Our people are always at the heart of our business, and I would like to thank them for delivering the strong financial performance this year. Your dedication is very much appreciated. Our culture is built on our values and reflected in our high-performance mindset and commitment to delivering for our customers, communities and all stakeholders. We are making meaningful progress on sustainability. Our approach is informed by a double materiality assessment, ensuring our strategy reflects both financial and societal impact. These foundations are central to our pledge to create long-term value for all our stakeholders. So in summary, in fiscal year 2025, we delivered strong results, extending our track record of consistent financial performance. We have made great progress advancing our strategic plans to focus Smiths as a high-performance industrial engineering company. As a result, Smiths is very well positioned to deliver superior value over the medium and long term. We are growth and returns focused, highly cash generative and have a disciplined approach to capital allocation. We are confident that these strategic actions will unlock significant value and enhance returns to shareholders. Thank you for listening. Julian and I are now happy to take your questions. Operator: [Operator Instructions] And now we're going to take our first question. And the question comes from the line of Lush Mahendrarajah from JPMorgan. Lushanthan Mahendrarajah: I've got 3, if that works. The first is on John Crane. I think of the H2 organic growth is perhaps a bit lower than sort of the expectations at the Q3 point. I mean is that being driven by some of those operational issues being worse than expected? And then if so, I guess, where -- I know the Q4 has picked up, but I guess, how far are we from that returning to normal, I guess? And sort of how does that feed into sort of your confidence for growth in FY '26? It sounds like the orders are still positive there. So just how that all fits in, I guess, in terms of 2026. The second question is just on the margin guidance, obviously, continuing margin expansion is the sort of phrase you use. I guess can you help us just sort of quantify that a little bit and sort of what some of the puts and takes are? I think the acceleration plan should be quite a notable tailwind within that. But yes, just to help us sort of build that bridge, I guess. And then the third is on Detection. I think you're probably about 3 halves now sort of very strong growth on the OE side with the CT scanner upgrade. I think you said before it's over 2, 3 years of this. I guess where does the OE side peak in that sort of 2- to 3-year time frame? And then how should we think about sort of the aftermarket associated with those OE deliveries coming through over the next 2, 3 years? And I guess how that sort of plays into sort of the margin pickup in Detection over those years as well? Roland Carter: Okay. Thank you very much. I'll try and answer those questions. So from the point of view of John Crane, yes, we saw the John Crane half -- the second half in John Crane. What was comforting in that is Q3 was better than Q2 and Q4 was better than Q3. So that was very, very positive for us. The operational issues have been a challenge. We highlighted that with the cyber that exacerbated, as I said, 72 CNC machines were being put in place, and we're heading towards 9 new dry gas seals. So that was that was exacerbated by the cybersecurity issue. We have been monitoring the key performance indicators, though, within the business, that's machining hours, both external and internal machine hours. Those are improving. We've been monitoring the number of engineering hours that we need because these are highly engineered products, and that's also improving. We did surge those hours, and now they're back to a very manageable level. And we continue to monitor on-time delivery, lead times, supplier performance, and these are all moving in the right direction. So that's associated with that strong order book that we're bringing into the year and the fact that we've seen a positive book-to-bill, and we have quite a view out into the marketplace of the activity in the marketplace, we feel positive that we'll see improvement on John Crane in fiscal year 2026. So pleased with how that's moving forward. Yes, did it move forward slightly slower in the second half than we thought it would? Absolutely, but the long-term health is still there within the business. On the margin, yes, as we said, continuing, and we mean continuing margin expansion on that. So we're seeing that inflation has somewhat moderated, but we still see that we have price in our portfolio. We've learned a lot of lessons about price through the inflationary period. So we see that as very positive. We also saw the initial stages of the acceleration plan. And you'll recall, 2/3 of that acceleration plan is around the future of Smiths. So we saw the early stages of that acceleration plan coming through, which was gratifying. We'll see about half of that coming through in fiscal year 2026 as well. So that will continue to build. And not forgetting underlying all this, although we don't call out the number, the Smiths Excellence number was strong this year. That was good. It grew again. Smiths Excellence really is starting to bed into the organization. And so that will be another benefit going forward. There are headwinds, and we recognize that there are headwinds of the macroeconomic -- the broader macroeconomic environment and tariffs. Our guidance takes account of tariffs and our current understanding. So we have those mitigations around that as well. So you can see why we are confident in saying that continuing margin expansion. Coming on to your third question, which was about Detection. So Detection is in a very positive area. You saw that the growth that we recorded this year, we'll see that somewhat moderate going forward in fiscal year 2026 because it has been exceptional, as you point out. The program on CTiX, it's an important but not the only piece of business that Smiths Interconnect (sic) [ Smiths Detection ] does. So it's an important part of the business, but one shouldn't forget the rest of the business, which is also doing relatively well. So from that point of view is we're still in the midst of that program. It still continues. We -- I think last time we spoke, we shipped about 1,600 of those. Now we've shipped about 1,800 of those. The win rate is as good as we highlighted, at least as good as we highlighted. So that still has a way to run, as we pointed out, through '26 and into '27 is what we are seeing there. So we're pleased with that going forward. Obviously, aftermarket, we've never been shy about talking about the stability of aftermarket. We've never been shy about talking about the margin of aftermarket, which are both very positive for us. So we see the aftermarket will come through not only on the CTiX, but as we roll forward with all the products that we install. So hopefully, those answer your questions, Lush. Thank you. Operator: Now we're going to take our next question. And the question comes from the line of Christian Hinderaker from Goldman Sachs. Christian Hinderaker: I want to start with Interconnect, if I can, 18.9% organic growth for the half. I think that was an acceleration from a low double-digit cadence in Q3. I just wonder if there's any change to note in the comp Q-on-Q or if that's all underlying? And then secondly, if I look all the way back to Page 85 of the report, APAC revenues for Interconnect have effectively doubled for the full year. That is -- is that all driven by the strength in semi test? And I guess, interested how we think about that regional dynamic for Interconnect, given the same table implies more than 90% of its assets sit in the Americas. Roland Carter: Yes. So thank you. So from the point of view of Interconnect, we were very pleased with the growth in Interconnect. And it continues to be a very strong and well-balanced business, in fact. I think we shouldn't forget, yes, the headline is semiconductor test and the leading position and the excellent sort of products that we have within that are helping us move with the market. Not forgetting that this is also an operational challenge and the fact that we've set ourselves up incredibly well for delivering this amount of growth, which one should understand. So that mixture between operational excellence and product excellence has really delivered for us on that. We continue to see strong orders in that area. But as I said, not forgetting that this business is exposed -- over half of it is exposed to aerospace and defense, and we're seeing broadly across the business that, that market is definitely being positive going forward on that. I will let Julian comment on Interconnect as he's close to the business having previously run it very recently. But the growth in APAC also does reflect growth in semiconductor, but we don't see that, that changes the shape of the business particularly. But Julian, perhaps you want to add some more color? Julian Fagge: Thanks, Roland. Not much to add. The -- we're particularly pleased with the semiconductor performance and particularly the strength of the business in AI, where we performed particularly strongly. It's true that a large portion of the business is in the Americas. We've had that strength in aerospace and defense, particularly coming through in the U.S. But no, very pleased with where Interconnect is as we go into the new year. Christian Hinderaker: Second one, maybe for Julian. I just want -- just clarifying the charges on the balance sheet restatement in Flex-Tek. If I'm reading that correctly, GBP 8 million of the charge is within the adjusted earnings line and a further GBP 15 million one-off that further reduces your reporting earnings for the business. I just want to understand a little bit the rationale for that split and whether I've got that well understood. Julian Fagge: Yes. So Christian, in quarter 4, we discovered what ended up being a nonmaterial balance sheet misstatement in one of our Flex-Tek businesses. When we dug into it, it was effectively covering multiple years, which guided our treatment with GBP 8 million, as you say, as a headline charge or indeed reflected in our reported numbers for 2025. And then we had the GBP 15 million charge to non-headline reflecting the balances for previous years. We thought that was the best presentation of the effect of this through our numbers so that we could show an appropriate organic performance in the year. I will just add that whilst unfortunate and something that we didn't want to have, this particular event has now been fully investigated. It is now fully resolved and the learnings from this have been taken forward into the rest of the business. Operator: Now we're going to take our next question. And it comes from the line of Mark Davies Jones from Stifel. Mark Jones: Can I just ask a bit more about the moving parts of Flex-Tek and the different end markets addressed? The risk of being picky, is 6% growth in aerospace relatively modest given the current trends in that industry? Is that related to the sort of supply chain issues we're hearing about in engines? Julian, I think you mentioned a big industrial electrical heat project coming to a conclusion in the first half of next year. Is that causing any kind of gap in the outlook for that aspect of the business? And then thirdly, I note that recent acquisitions have been weighted more to the construction end of the business despite the fact that, that market looks relatively soft short term anyway. Is that just availability in terms of where the opportunity to consolidate the market sits at the moment? Or do you think we should see acquisitions in other parts of the business, too? Roland Carter: Thank you for those. From the point of view of the aerospace business, we're actually very pleased with the growth rate we're seeing there. We are working through any sort of supply chain challenges that we have. They're not major for us at all. So we are pleased with the continuing growth rate there. We're pleased with those relationships with the customers. So we will -- as we said, we are coming into the year on aerospace with a very robust order book and a positive book-to-bill ratio. So we see that coming through very strongly, and that's reflected in that 6%, which we think is a good number to think about on that one. On the industrial engineering projects, yes, we have the large project, which we continue to execute against. And we have a funnel of other projects in that area. So this is the programmatic part of Flex-Tek. So we will continue to build those programs going through. And you can see that we've indicated for Flex-Tek, we anticipate growth going forward in the fiscal year 2026. So yes, is it programmatic? Yes, absolutely. Do we have other projects coming in through the process? Absolutely. And that leads on to sort of construction. I think much of the numbers might not call it out to such an extent. The standout performance is construction because we know the U.S. market is very muted. We know it continues to be muted. We're not predicting an upturn in how we've looked at our numbers for fiscal year 2026. We are recognizing the market for what it is. There might be some good news, but we're not baking that in from the point of view of the rates and the putative rate changes that might happen. However, we think that we're in a -- an advantaged position within that market. And why? Well, we've got some empirical evidence. We continue to grow in spite of the market. We've got the new products coming through, which we mentioned the Blue Series that, that will be a changer. We've got Python coming through as well. So we've got the new products. But just as important as the innovation, we've got the customer relationships and the alignment with the correct customers, end customers to really make sure that we continue to outperform that. As part of the acquisitions, there were acquisitions in construction. And I think we see the megatrend. There is a deficit. We know there's a substantial -- several million homes are missing in America. We know it's going to take them perhaps a decade to sort of fill that deficit from that point of view. So the megatrend is correct for us. So our strategy is aligned with the megatrend. We're advantaged because of the way we play in that market as we are the people who are consolidating, which gives us me comfort about the R&D spend that we've got there because of the new products as well. So you start to put those things together and now is a good time to continue our strategy because when it does turn, you'll see the exceptional performance coming through from that. So the strategy being essentially long term. One of the acquisitions that we recently announced wasn't in construction. It was in heat. Heat is also another market, which obviously we touched on with the larger programs there, but we're very keen to both develop our presence and our routes to market within heat, but also to fill in technology gaps that we see within that and either through organic investment, but in this case, through inorganic investment. Julian Fagge: I would just add to that, Mark, we do have a very active pipeline in Flex-Tek, and we continue to work that pipeline, and we do expect to see more acquisitions in this space as we go into the new year. Operator: Now we're going to take our next question. And the question comes from the line of Margaret Schooley from Redburn Atlantic. Margaret Schooley: I actually have 2, if you would. The first one, I'll just put up there. In terms of John Crane, again, organic growth, can you give us some indication of the split between what was volume and price? Roland Carter: Yes. So from the point of view of where we've been in the past to sort of contextualize it, essentially, we did experience a lot of price growth in the past. And that also helped us develop the skills and the disciplines we need for managing price growth. What was pleasing this year was actually this year was more about volume growth. And that, I think, is important to me to say, yes, we're managing pricing. Yes, it's not quite such an inflationary environment. However, people are willing to pay for the John Crane brand. But really, we're now driving through volume. So -- would you like to give us some guidance on the split? Julian Fagge: Yes, just to say that we've taken some additional price to reflect tariffs. But the -- as I say, as Roland said, the dynamic of volume and price has been positive this year. Margaret Schooley: Excellent. And then my just second one, you mentioned some -- several new products in Flex-Tek, which is driving through growth. And in the presentation, you also mentioned in John Crane, the coaxial separation dry steel. Can you just give us a little understanding on the John Crane new product introductions? What markets you're actually targeting to further exploit? Or what other new products and adjacencies we should look forward to in FY '25 to continue to support your growth expectations? Roland Carter: Yes. I think it was pleasing to see, and it does get a lot of focus from both Julian and myself because I think John Crane is an area where we can definitely improve the way we introduce products. We can improve what we're doing with our new product development pipeline. And I think I'm very keen on new product development, new technology development, new process development and new materials development. And I think John Crane, it will take time for these things to crystallize. But we can already see with the separation seal, the focus on getting products out there, getting products aligned with key customers and getting products aligned with key accounts to make sure they're adopted relatively quickly. I think there is that commercialization, which you'll see us focus on more and more about how do we improve the products that are already out there. So the products introducing new technologies, bringing them -- increasing their specifications and then these new products, which you saw in the separation seal. So you'll see that mixture coming through. Some of those -- the new products will be longer term. The upgraded products will be shorter term, more easily adopted, meeting customers' requirements. Underlying all that, what are the sort of broad fundamentals? Because the great thing about the John Crane seals is they're not necessarily an end market specific. Obviously, the end markets do drive it. But we're looking -- all these seals need similar characteristics and similar improvements in characteristics. What do I mean by that? I mean they need higher pressures. So we're developing the technologies that allow us to have higher pressures and the products that allow us to have higher pressures. They're looking towards higher temperatures. So we're developing the products and the platforms, I should really say that allow us to higher temperatures. And then the third one, which is very, very much a focus is high speeds. So -- and then if you mix those sort of 3 ingredients together, that can go for very traditional energy, that can go for hydrogen, that can go for LNG. So you can see all those markets, enjoy the benefits of those improvements. So I think we're becoming much more coherent on how we develop those products, which I think will benefit our customers ultimately. Margaret Schooley: One last one, if I may, which might be slightly difficult to answer given where you are. But since the announcement of your strategic actions, in particular, on Detection, has your thinking evolved at all as you go through this exercise in separating some of the assets? Can you give us any indication of the level of interest or how the market backdrop has changed or in any way changed your thinking since the point you announced the strategic actions on Detection specifically? Roland Carter: Detection, specifically. Yes. So on the broad approach, we're very pleased with the performance of those assets that we've highlighted for separation. So we knew it was a good time, and we knew they were performing well. We're pleased to see that continuing performance. So absolutely, the timing is working well for us on that. As we said, Interconnect, we will announce something at the end of the calendar year that we've seen -- we're continuing on that track, and we're working through that to announce something at the end of the calendar year. On Detection, again, we did a lot of the desktop and role playing on this to see how it would work. You saw the outcome of what that said, the clear sale of Interconnect, that was obvious. We wanted to make sure that we were value creating -- value creation is what this is about and surety of delivery. And that's where you see the demerger. We're running the twin track of demerger and sale process for that. The work that we're doing behind the scenes on separation is progressing as we anticipated. So I'm not going to give you a sort of blow-by-blow account, but that's essentially where we are. So yes, obviously, we're always thinking about the value creation and the surety. I wouldn't -- but the strategic direction was well set, and we're very sure that, that is the right strategic direction. Operator: Now we're going to take our next question, and it comes from the line of Alex O'Hanlon from Panmure Liberum. Alexandro da Silva O'Hanlon: Well done on a great set of results. Just 1 question from me. Could you give us an idea of the level of employee churn at Smiths and how that compares to recent history? I guess what I'm trying to get at is how are you managing the culture of the business during a time of transition? Is it a case that employees don't feel unsettled given that the businesses are already run very separately and maybe feel empowered, but just kind of any color you can give us on that would be greatly appreciated. Roland Carter: Thank you for the kind comment at the beginning. So this is something we look at very carefully because it is one of those questions which one has to ask in these situations. And what we've made sure is that we've been clear and transparent with people and explain to them what's happening. And that's not only within the businesses that have been separated, but also the businesses which are being retained as well as head office, which we've spoken quite extensively about this 1.5% to 1.7% that our target is for central costs. So we do recognize that this is a moment in time and a difficult moment. I think of it -- people talk about transformation. I think this is a continuing journey for us. We fully intend to be moving at pace and always with purpose. So we have made sure that we're talking to everybody who we work with on this and preparing people for the necessary sort of questions that would be answered, make sure that we have a unified position to things to make sure that we're dealing with people, with equity as well. At the moment, what we're seeing in the figures is probably where you'd like me to get to is we're actually seeing our attrition at a slightly lower level than we've been seeing previously. I won't give you the exact numbers. But at the moment, what we're doing seems to be the right thing. Obviously, it does affect individuals, and we are acutely aware that it is a person-by-person thing. But at the moment, in the broad, we're not seeing the uptick one might have anticipated. Operator: Now we're going to take our next question. And the question comes from the line of [ Stephan Klepp ] from BNP Paribas. Unknown Analyst: I hope you can hear me well. So I have 3 questions. So the first one is on John Crane. Can we just talk again on the execution? I mean I know that you have been very vocal about the fact that it has never been an order problem and execution, obviously, due to the cyber incident was impacted. Well, your peers, your peers have outgrown you. The question is, did you lose some market share? Are your clients patient? And should that not even mean that some pent-up demand in the area? And having said that, shouldn't the visibility in John Crane be larger than normal because you couldn't basically get the orders out [indiscernible] Roland Carter: Right. Struggled to hear that question, but I will repeat it to make sure I've got it and Julian, if you heard it better than me -- so you were asking about how the execution is affecting John Crane and particularly if we've lost market share and has that created pent-up demand, I think that was the question. And has that, therefore, created more visibility in John Crane. Yes, sorry, the line is bad. Unknown Analyst: Sorry, the line is probably bad. Sorry for that. Roland Carter: That's all right. So from the point of view of the delivery in John Crane, as I said, Q3 was better than Q2, Q4 was better than Q3. But we are ramping up. The cyber incident was definitely an issue for us around engineering, as I mentioned before, but more broadly for John Crane being the most integrated of our businesses. During that period, we obviously were talking to customers. We were obviously making sure that the customers were comforted with that. This is a very sticky business, as we know, although there are opportunities to gain market share as we've laid out. So we were very aware of that and made sure that we worked through that. Now we are on the path to recovery. As I said, our machining hours, both internal and external are up. Our engineering hours are now stabilized, having gone through a surge to do the deal with the heart of what was the issue, which was we locked down our drawings to protect them and then took time to release our drawings back. So leading indicators on lead time, on supplier delivery, those are all moving in the right direction. So we will see over time that developing. The answer to what about the order book and what about your visibility, what I pointed out through this period, we have a strong order book. So that was a positive. We also are starting to reduce our own lead times in this period, and we have a positive book-to-bill ratio. And as we've talked to previously, yes, there's a book-to-bill ratio that the orders actually coming in, but also we have visibility into our customers' programs, which are long-term multiyear programs. So we do have that visibility. So we believe if you think about where our guidance is on the 4% to 6%, I think it would be fair to say that John Crane will be at the top end of that guidance. Julian Fagge: Roland, I'll just add there that the aftermarket saw some slippage in Q3 around the cyber event. Of course, it's very difficult for anyone else to pick up our aftermarket. So what we're expecting to see is aftermarket returning as our operational improvement starts to come through. And we did see an improvement in aftermarket orders through Q4. Unknown Analyst: And the second question is Interconnect. I mean... Operator: Excuse me, Stephan. Please accept my apologies. Your line is very breaking up. I believe our speakers will be not able to hear your question. Please, can you adjust the volume. Unknown Analyst: One second. Can you hear me better now? Roland Carter: Let's try. Let's try. Unknown Analyst: Yes. I'm very sorry for that. I don't know what's going on. On Interconnect, I mean it is very good news that you are very far in the process and say that at the end of the year, we're going to see the divestment. Is it right from the capital allocation perspective that in this big transition that you're going through, larger deals on the M&A side are off the table? And should we mentally earmark the proceeds of Interconnect all to be deployed for share buybacks? Roland Carter: Do you want to take that one, Julian? Julian Fagge: Yes. Thanks, Stephan. So yes, just to repeat the point Roland made, the sale process for Interconnect is progressing well, and our plan to announce that by the end of the calendar remains in place. In terms of the use of proceeds, again, we've been clear that our intention is to return a significant portion of proceeds to shareholders, although we haven't yet determined or agreed the mechanic. In terms of our capital allocation, again, we've been pretty clear on this in that we allocate our capital to develop and generate the very best returns. And of course, that's illustrated in our very strong ROCE performance in '25. We'll continue with that. We'll allocate capital organically, and Roland has given us some insight into some of the organic R&D investments and programs that we're pushing forward with. We have the investment into the acceleration plan, which is delivering the returns that we expect to see next year. And then inorganically, we will continue to work an active pipeline of inorganic acquisitions. We will continue to see acquisitions as an important part of our story as we go into the future, particularly in higher value, high-return adjacencies in both John Crane and Flex-Tek. Operator: And now we're going to take our last question for today. And it comes from the line of Dylan Jones from Kepler Cheuvreux. Dylan Jones: Just a few quick follow-ups. The first one, just on the Flex-Tek restatement, the GBP 8 million that go through the headline number. So if this is a balance sheet restatement, can we expect to get all of this back in FY '26 and going forward? Or is it more of a realization of an accounting policy that was being applied appropriately and it's going to sort of remain in that sort of cost base in future years? And then just the second question, you obviously touched on some of the R&D and innovation qualitatively, what's sort of going on there. But I guess just given it's sort of more looking at future Smiths, it's sort of identified as one of those areas where you can get that sort of above-market growth. Just wondering how we should think about that, whether it's a step-up in sort of R&D in that Flex-Tek and John Crane business that would need to sort of capture that higher level of growth with the product innovation? Or is it more just a concentrated focus on those 2 businesses should enable a higher level of growth from the innovation piece? Roland Carter: Do you want to take the first? Julian Fagge: Yes. Thanks for the question. So of the GBP 8 million that was charged to this year's Flex-Tek profit, we expect some of that to come back next year, but not all of it. That's not necessarily because there's any repeat of the problem. Of course, what it really is, is getting to a point as to understand what is the fundamental underlying profitability of that business as we look out into the future, and the business is working through that as we speak. But some of it will come back, but we're not guiding on the absolute amount. Roland Carter: And then on the R&D, this will be very much a focus. So as some of you will know, my background is innovation and R&D. And I think with that focus and some of those points I was talking about, about enhancing the products within John Crane in that sort of product technology, process and materials approach. So really getting the products we have fit for the future and then developing the products, the long term, new products is important as well. So you'll see that focus, and it's very pleasing to see the separation seal come through, but you'll see that focus really start delivering. And it's not just about the new product development, it's about the new product commercialization, making sure that we've got the customers, those key opinion leaders, those key accounts ready for those products as well, almost co-collaborating in some cases, hopefully, with that. So we'll see that driving through on John Crane. And for me, Flex-Tek, the focus on Flex-Tek, the Blue Series is really the most recent. But really, there is a lot of innovation about Flex-Tek because Flex-Tek is so close to its customer. And I think there might be a little bit more -- I'd like to see a little bit more discipline driven through that capture of requirements. But yes, I think you'll see Flex-Tek. I mean you look at the numbers, you say they don't spend a lot on RD&E. But relative to the competition in absolute terms, they do spend and they -- I think they can turn into a real market leader on the innovation as well as the market leader where they already are. Just the same way we saw the effect of R&D on the growth rate that we see within Detection recently or the growth rate that we saw in -- we now see in Smiths Interconnect with that focus on semiconductor that they had, for example. So yes, I think expect more on the innovation side from us, but not necessarily spending more money on that. Operator: Dear speakers, there are no further questions for today. Thank you for joining the conference today. You may all disconnect. Have a nice day. Roland Carter: Thank you very much. Julian Fagge: Thank you.
Operator: Good day, ladies and gentlemen, and welcome to Kingfisher plc's Half Year 2025 to 2026 results presentation. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to Thierry Garnier to start the presentation. Thierry Dominique Garnier: Hello, everyone. Today, I am at our Camden Screwfix store in London, and it's great to review the progress of our Screwfix City format with the team. So thank you for joining us for Kingfisher's half year results presentation. Bhavesh and I will take you through our H1 results, our outlook for the year and provide an update on our key strategic initiatives. Following this presentation will be our usual Q&A. I want to start with an overview of Kingfisher's attractive investment story, which drives our medium-term financial priorities and outlook. We have the #1 or #2 leading positions in our markets, and those markets worth GBP 160 billion, have attractive and structural growth drivers. Secondly, our powered by Kingfisher model provides us with clear competitive advantages. We operate a diverse portfolio of banners, each with distinct formats and propositions that address a wide range of customer needs. Across these banners, we maintain a well-balanced mix of trade and retail customers. Our own exclusive brands are industry-leading and a powerful competitive advantage. Combined with our advanced technology and e-commerce proposition, we offer customers both speed and choice. As a group, our scale enables us to unlock synergies in buying and sourcing while also supporting continued investment in technology. Our strategic growth initiatives are driving market share gains. A key part of this is expanding our reach across our trade customers with compelling propositions firmly established across all banners. Our trade strategy is now very much proven and delivering results. Our online, 1P and marketplace platforms significantly increase product choice for our customers and offer fast fulfillment times. We also see exciting potential in Retail Media with an ambition to grow Retail Media income to up to 3% of Group e-commerce sales. And finally, we continue to expand our store footprint, primarily through the expansion of Screwfix and growth opportunities we see in Poland. Bringing all these elements together, we are committed to our financial priorities, which are to grow sales ahead of our markets, grow adjusted profit before tax ahead of sales and to generate strong free cash flows. We have a disciplined capital allocation framework, prioritizing investment in organic growth, maintaining a strong balance sheet and returning surplus cash to our shareholders. So moving to our results. You will have seen from our RNS published this morning that we have had a strong first half. And there are 3 key messages I want to highlight: First, our strategic growth initiatives are driving market share gains, a key leading indicator of our progress beyond macroeconomic trends. While several factors have contributed to our performance in the half, I'm particularly pleased with the strong contribution from these initiatives. We delivered double-digit growth in both trade and e-commerce sales during the half. And importantly, they offer a substantial runway for future expansion. In addition, we continue to strengthen our retail fundamentals. This includes successful innovation across our big-ticket categories, competitive pricing and ensuring high product availability in store during period of peak demand. Second, we are seeing some healthy growth indicators across our business. Growth in the half was of high quality, driven by increased volumes and transactions rather than inflation. In our core categories, we have seen consistent quarter-on-quarter growth, including a tenth consecutive quarter of underlying growth in the U.K. Q2 marked our third consecutive quarter of underlying growth in big-ticket sales, and we have a strong order book at the end of the half. Our banners in France and Poland are also showing improving sequential trends despite operating in more subdued markets. And third, we are raising our profit and free cash flow guidance for the full year. Our expectations for markets for the year remain consistent with what we outlined in March, whilst mindful of mixed consumer sentiment and political uncertainty. We are also accelerating our share buyback program due to the combination of our strong free cash flow generation and some one-off positive cash inflows. Back in March, I said that Kingfisher was in its best operational shape in years, and I stand by that today. While there is much more to do, our H1 results and our improved guidance demonstrate the momentum in the business and our confidence in the future. I will now hand over to Bhavesh to talk you through our H1 financials and full year outlook. Bhavesh Mistry: Thank you, Thierry, and good morning, everyone. Let me start with an overview of our performance in the half, starting with the top line. I'm pleased with the relative outperformance of our banners in the half and our sales growing ahead of our markets. Total sales for the group were GBP 6.8 billion, with like-for-like sales up 1.9%, excluding a negative calendar impact of minus 0.6%. We delivered an adjusted profit before tax of GBP 368 million, up 10.2% in the half and adjusted EPS of 15.3p, up 16.5%, driven by gross margin accretion of 100 basis points and retail operating margin accretion of 40 basis points, alongside a 4% uplift from our share buyback program. Free cash flow generation in the half was GBP 478 million, an increase of 13.5%, and net leverage stood at 1.3x at the end of the half. Turning now to our sales growth, starting with a view by category. All of our categories delivered growth in H1. Core Products represent around 2/3 of our portfolio, and we were pleased to see improving sequential growth trends with underlying like-for-like flat in Q1, rising to 1.2% in Q2. Key Subcategories which performed well in the half include tools and hardware and indoor paint. Big Ticket delivered a third consecutive quarter of underlying growth. That growth has been driven largely by group-led innovation in our kitchen ranges and some improvement in the kitchen and bathroom market. Our order book also ended the half in a positive position. Seasonal sales benefited from record warm weather in the U.K. over the spring months. Clearly, there was some pull forward from Q2 into Q1 as we called out in our Q1 trading update. It's worth noting that we'll be lapping the strong seasonal performance in Q1 next year. Turning now to our sales by geography. In the U.K., B&Q delivered an excellent first half, significantly outperforming the market and driving growth across multiple fronts. These include TradePoint growth of 6.9%, fueled by our enhanced loyalty program and an increased investment in trade sales partners to help us better serve trade customers. E-commerce growth of 23.8%. Our 1P and 3P operations work together to enhance conversion, increase customer traffic and drive mutual growth. Benefits from the closure of Homebase and transference of customers to B&Q as well as the opening of the 8 stores we acquired, which our team rapidly opened in order to be ready for peak trading. And of course, seasonal product sales, which benefited from good weather in Q1. Screwfix delivered a strong performance across both quarters. Our Screwfix teams have executed at a high level, enhancing the customer proposition through targeted marketing and promotional campaigns, competitive pricing, robust inventory availability and deeper engagement with trade customers via app-driven reward initiatives. In France, against a subdued consumer backdrop, we were encouraged to see improving sequential trends in our like-for-like performance. Castorama like-for-like sales declined by 1.4% in the half and were flat in Q2. Amidst the soft market backdrop, Castorama saw an improving trend in core sales across the first 2 quarters and strong seasonal performance. As you'll hear from Thierry, following testing last year of our trade customer proposition, CastoPro, we've now rolled it out across our entire estate. Brico Depot's performance was in line with the market with an improving like-for-like trend across the half. We saw an elevated level of promotional activity during Q2, which impacted Brico Depot's everyday low-price model. Brico also has a greater weighting to building and joinery products and a lower exposure to seasonal categories, both of which are less supported by weather experienced by France in H1. We feel good about the Brico model with its clear customer offering of discounted prices and high product availability. Turning now to our business in Poland, where we remain very excited about the medium-term growth opportunities. Castorama Poland is a market-leading banner with opportunity to increase space, whilst building in both trade and e-commerce. We had a slow start to the year with poor weather, high interest rates and political uncertainty weighing on the economic backdrop. However, conditions improved in Q2 and have now stabilized on an underlying basis. We continue to make progress on our strategic initiatives. Trade penetration has reached 25%, and we've further grown our e-commerce penetration following the launch of our marketplace offering in January. We have a slide in the appendix to this presentation covering our other international markets. But to summarize very briefly: Screwfix France had a strong like-for-like growth of 52% at the store level, in line with our expectations. We completed the sale of Romania in May, a few months ahead of plan; and Iberia had an excellent H1 with 10.2% like-for-like growth, outperforming a growing market. As I said in March, we'll continue to drive opportunities on cost and gross margin, which have been an important driver of our profit and free cash flow delivery in the half. Let me give you a few examples. At a gross margin level, we've seen benefits from group buying and sourcing efficiencies, which contributed meaningfully to margin expansion in the half. And our Marketplace platform, which is gross margin accretive, added 10 basis points to group margin growth. Our operational cost initiatives are also delivering tangible results. At the store level, we've achieved savings through contact center efficiencies and the rollout of more self-service checkouts. We've also driven head office efficiencies, particularly at Castorama France, where we're on track to reduce headcount by 12%. Cost discipline will continue to be a key focus for us as we create the room in our P&L to invest for future growth and profitability. Let me now turn to our profit performance in the half. Adjusted profit before tax rose by 10% or 19% when excluding the GBP 24 million of one-off business rates refund received by B&Q in the first half of last year. One of the main drivers of our first half profit growth is 100 basis points of gross margin expansion, which is driven by positive top line growth and our margin initiatives, some of which I outlined earlier. In March, we said that we faced around GBP 145 million of cost headwinds from higher wages, inflation and taxes. These headwinds are playing out as expected, including the increase in U.K. national insurance costs in April. I'm pleased to say that in H1, our teams have done an excellent job mitigating these headwinds. The gross margin drivers, combined with our structural cost reduction program, enabled us to deliver 40 basis points of retail operating margin expansion to 6.6% and adjusted profit before tax of GBP 368 million. All of our banners delivered margin expansion in the half. In the U.K., margins were up 10 basis points or 80 basis points when adjusting for the B&Q business rates refund from last year. France delivered a 20 basis point margin improvement and Poland saw margin growth of 10 basis points. As is typical for our business, profit delivery remains weighted towards the first half. That seasonal pattern has been amplified by the strong Q1 trading I mentioned earlier. We also have a more H2-weighted marketing and technology investment this year compared to last. This is to support our strategic priorities. In the second half, we also see the full impact of the U.K. national insurance contributions increase following its implementation in April. EPS growth in the half was up 16.5%. Our profit delivery has driven around 2/3 of our EPS growth, while share buybacks contributed 1/3. In March, we announced our fourth share buyback program of GBP 300 million, and we've already repurchased GBP 100 million of our shares under this program. Given our strong trading performance and some material one-off cash inflows, we plan to accelerate purchases in the second half with the aim of completing the program by March 2026. Turning now to our group cash flow, starting on the left of this chart. We generated EBITDA of GBP 744 million. The change in working capital was a net inflow of GBP 100 million, driven primarily by an increase in payables, reflecting normal buying seasonality. We continue to focus on inventory management, reducing year-on-year same-store stock days by 6.5. Net rent paid was GBP 261 million. We saw GBP 40 million of inflows from tax, interest and other as we benefited from tax prepayment true-ups. CapEx spend totaled GBP 145 million. Together, these drove free cash flow of GBP 478 million in the half, a 13.5% improvement year-on-year. Our free cash flow generation of GBP 478 million is towards the upper end of our initial full year guidance. This reflects not only our profit delivery in H1, but also the timing of marketing, technology and CapEx investments, which are more second half weighted versus the prior year. These investments are supporting our strategic priorities and will ensure that we enter 2026 with strong momentum. As mentioned earlier, we also benefited from 2 exceptional nonrecurring cash inflows in the half, which sit outside of our free cash flow. First, net proceeds of GBP 33 million from the sale of our Romanian business in May. Second, proceeds of GBP 64 million from the successful resolution of an historic tax issue in relation to EU State aid. Net cash flow in the half was GBP 277 million, an increase of 120%, driven by free cash flow growth and these one-off items. We returned GBP 271 million to shareholders in the half through dividends and share buybacks, an increase of 8% year-on-year. Turning to our market outlook and guidance for the year. As Thierry mentioned earlier, the market outlook scenarios that we set out in March remain unchanged. In the U.K. & Ireland, we've seen a resilient consumer in H1, but remain mindful of potential softness in the market given both uncertainty around the upcoming autumn budget and rising inflation. To date, the market has delivered low single-digit growth, and we continue to expect market growth to be in the range of flat to low single digit. In France, the market has remained subdued in H1. Although we saw lower interest rates, higher mortgage lending and increased housing starts in the half, French consumer sentiment remains subdued amidst an uncertain political environment. We continue to expect a market of low to mid-single-digit decline to flat for the year, an improvement on the 7% market decline we experienced last year. In Poland, political factors and high interest rate and mortgage rates weighed on consumer confidence in the first half, impacting discretionary spending. However, we're now seeing some early signs of recovery, supported by 3 interest rate cuts this year and continued real wage growth. We reiterate our market outlook of low single-digit decline to low single-digit growth. And as you can see on the right-hand side of this slide, on the whole, our banners are tracking ahead of our markets for the first 6 months of this year. Now let me turn to our updated guidance for the year. Our full year market scenarios remain unchanged from the guidance that we set out in March. Given this and our strong start to the year, we're raising our full year profit and cash outlook today. We now expect to deliver the upper end of our adjusted profit before tax range of GBP 480 million to GBP 540 million. On free cash flow, we've already delivered the upper end of our full year range of GBP 420 million to GBP 480 million in H1. This reflects the phasing of our profit delivery and the H2 weighting of CapEx investment. Given the strong performance, we are raising our full year free cash flow guidance to GBP 480 million to GBP 520 million. And finally, our stronger cash position and nonrepeating cash inflows enables us to accelerate our current GBP 300 million share buyback program. We now expect to complete this within 12 months, which is by the end of March 2026. I'll now hand back to Thierry. Thierry Dominique Garnier: Thank you, Bhavesh. I want to start by sharing some of our strategic actions that are supporting our current performance and also setting us up for the future. We continue to progress at pace with all our strategic pillars, which we outlined in our RNS. For today, I would go deeper with trade and our digital ecosystem, a group strategy that we applied in the U.K. first and serves as a successful blueprint that we have now rolled out across our other markets. So let me start with trade. We continue to expand our exposure to trade customers, a segment that shops more frequently, spends more and follows more predictable purchase patterns. Through TradePoint, CastoPro and other dedicated trade formats, we are leveraging our existing store footprint to serve this valuable customer base. Our trade strategy enables us to grow our market share and to increase store sales densities with little to no additional CapEx. As a result, our trade business is both revenue and margin accretive at the retail operating level. Our online e-commerce and marketplace platforms significantly expand product choice for our customers. Marketplace leverages technology built by Kingfisher and is a high-margin growth driver. Retail Media also represents a compelling opportunity. Our ambition is for Retail Media income to reach up to 3% of the group's e-commerce sales with minimal capital employed, it is highly margin accretive. Trade now represents 28% of group sales, reflecting the continued development of our trade proposition across banners. We are expanding dedicated trade space within our stores and improving our product range, including high-quality trade-specific OEB and leading branded products. We continue to rapidly develop our loyalty programs dedicated to trade as we sign up new members and offer enhanced price benefits tailored for each of our markets. Based on feedback from our customers, we have also improved our service offering, including enhancements to our Pro app, our direct-to-site delivery options, our 2 rental services and we have launched new trade financing solutions. And none of this is possible without having the right people. We have significantly increased the number of dedicated trade colleagues and have enhanced our training programs and data to better understand, serve and grow our trade customers. As a consequence, in the half, our trade sales grew by plus 11.9%. Looking at our banners, TradePoint at B&Q now represents 22.4% of total B&Q sales with 6.9% growth in H1, and this is supported by a strong increase in sign-ups for our loyalty program and our successful trade-up accounts for around 25% of its online sales. We now have 77 trade sales partners in store, a 75% increase versus this time last year. And we continue to invest in this area and are recruiting an additional up to 40 trade sales partners in H2. We continue to leverage the learnings from the U.K., in France, in Iberia and Poland. As you can see, we now have dedicated loyalty schemes in every banner. In Castorama France, we have, in just a few months, rolled out our trade offering across the entire state. At Brico Depot, our trade penetration is now over 12%, an increase of 260 basis points in the half. We have created a trade desk in every Brico Depot stores with 131 dedicated trade colleagues. And in Poland, our trade penetration is over 25%, a circa 10 percentage points increase in H1. And we have large CastoPro zones already in 14 stores. And turning now to the broader digital ecosystem we are building, and it starts with a strong first-party e-commerce proposition with our stores at the center. We have strategically decided since 2020 to leverage our assets and to rely on our stores rather than on large fulfillment centers as our primary option to prepare online orders. This enables us to offer unbeatable fulfillment times for click & collect as for stores to home. And in parallel, click & collect generates more traffic to our stores. We have developed a digital hub store model, which ensures excellent availability of product to e-commerce orders, and we keep investing in agile technology to improve our online conversion. All this in turn drives increased traffic, which supports our third-party marketplace offering. So on marketplace, we are offering a large choice with several millions of SKU. We can confirm that this large choice in turn generates more traffic to our website, all of which fuels additional 1P sales. Our stores play an important role for marketplace to our stores accept marketplace returns. And B&Q is now offering marketplace in-store click & collect, driving increased footfall in store. Moving to our loyalty programs. They provide us with comprehensive customer data and enable us to deliver personalized offerings and targeted promotions. The market is increasingly shifting towards mobile-first and app-based engagements. This allows us to get access to data to improve and personalize customer interaction. And this leads us to monetization because we have traffic and comprehensive data, we can sell retail media. So to summarize, our digital ecosystem drives a virtuous cycle of value, leveraging our store assets and powered by Kingfisher technology. This support growth, but also value across our business. Our 1P e-commerce with stores at the center, is profitable, and this profitability is enhanced by our marketplace, our retail media and the monetization of our data. Moving to Slide 21, which sets out some statistics around our digital ecosystem. We leverage our stores for speed and convenience with 93% of 1P orders picked in stores and 88% delivered through click & collect. This enables click & collect in as little as 15 minutes at B&Q, 1 minute at Screwfix and 20 minutes site delivery with Screwfix print. Our Group marketplace GMV is up 62%, and B&Q marketplace makes a retail operating profit of around GBP 7 million in the half. 50% of marketplace customers are new to our website with around 15% subsequently buying a 1P product. So we continue to grow this platform and have started onboarding cross-border vendors across the group to provide even more choice for our customers. We have signed up 11% more loyalty members since July last year and are seeing a significant increase in app-driven revenue and sales from AI and data-driven recommendations. We are rapidly scaling our Retail Media. We have also created a vendor platform, Core IQ, to monetize our data. So as you can see, we are really excited about the potential we have here as it uses our assets and will generate long-term growth and value creation. So moving to Screwfix France, where we see strong like-for-like growth in stores. We are happy with the progress with 52% store like-for-like growth in H1 and 74,000 unique customers, a 30% increase year-on-year. We believe the key to its long-term success is leveraging all the things that make Screwfix great in the U.K.; the best prices, unrivaled fulfillment and a wide selection of products. We are seeing good momentum across all KPIs with stronger customer retention, growing national brand awareness and over 17,000 sign-ups to the trade loyalty. We can see evidence of this continuous concept improvement with our second cohort of stores growing at a faster pace in year 1 than the first cohort. All this is in line with our expectations and makes us confident about the future of Screwfix in France. Moving now to the competitive advantage that we generate from our own exclusive brands. Our own product development provides simple and innovative solutions to our customers at affordable prices. While cheaper for customers, our scale and sourcing of OEB products enables us to make higher gross margins than the branded equivalent. This affordable innovation has driven a large part of big-ticket categories growth and the good order book Bhavesh and I mentioned earlier. Slide 25 provides an illustration of these new ranges. Our Ashmead new kitchen range delivers standout style at entry-level pricing, while our Pragma, lowest-priced kitchen range, retails for less than EUR 200 and is 15% cheaper than branded alternatives. We are all very proud of the strong work that our teams have done in this area across the group. Now to an update on our plan for France. In March 2024, we announced a strong plan to take France to the next level, simplifying the organization and significantly improving the performance and profitability of Castorama. And we have made excellent progress in our plans since this announcement, but this is against a weaker market backdrop than expected with continued low consumer confidence and record household savings rates in a political environment that remains very uncertain. Against this backdrop, we have focused our energy on delivering against our plans, gaining market share and managing effectively our gross margin and cost. In H1, specifically, we grew our market share in France and improved our retail operating profit margin by 20 basis points to 3.5%. While we are pleased with the delivery of our plan since the announcement in March 2024 of our medium-term target of circa 5% to 7%, the French home improvement market declined by over 7% in 2024 and by a further 3% in the first half of 2025. We remain confident in delivering this target of circa 5% to 7% with the timing and trajectory of reaching this target dependent of the pace of the market recovery. Despite current headwinds, we remain optimistic on the outlook for the market in the medium term. Our new management teams at both banners are working at a high level and with fast pace to make us more competitive and more efficient. I'm very proud of what is delivered by the teams. As you can see, we are growing sales densities across both banners. We are seeing an improved customer NPS, and this is supported by our trade and e-commerce initiatives. Looking forward, we are focused on strategic range reviews at Castorama and the launch of a new e-commerce platform at Brico Depot. We also continue to deliver strong productivity and operating efficiencies. At Castorama, we are on track to remove 12% of head office roles. Across France, work is ongoing to reduce a further 14% in logistics space by year-end. The restructuring and modernization of approximately 1/3 of Castorama store network is well underway. We addressed 13 stores last year, which have delivered encouraging results with rightsized formats and comprehensive refits, all delivering sales densities ahead of the Castorama average. We also successfully transferred 1 store to Brico Depot and converted 2 stores to franchise model for the first time in June. By year-end, a total of 24 stores will have been addressed, including the 11 currently in progress, and we'll provide a further update on this at year-end. So to summarize, we operate in large and attractive markets with our leading banners. We have had a strong first half, and we are delivering on our financial priorities. We have grown sales ahead or in line of our markets. Our performance is underpinned by our strategic growth initiatives. We are driving profitable growth and high free cash flow generation. And we are confident to raise our full year targets and to accelerate our share buyback program. Kingfisher is in its best operational shape for years. While we continue to navigate a challenging environment characterized by consumer caution and political uncertainty, we remain focused on executing our strategic growth priorities, maintaining discipline on margin and cost and driving shareholder returns. We look to H2 and beyond with confidence in our plans. Over to you, Richard, and thank you, everyone. Operator: We will now begin the Q&A session. [Operator Instructions] I would like to remind all participants that this call is being recorded. We'll take our first question from Kate Calvert from Investec. Kate Calvert: First question is on your gross margin performance in the first half, which was a very good performance. It's not often, I think, we see 100 basis points improvement. You did talk about sort of 3 main buckets driving this. I was wondering if you could give us a feel for how that 100 basis points improvement is split between the buckets of sort of sourcing mix and better sort of markdown. And then I think basically, should we expect these gross margin drivers to continue into FY '27? I suppose I'm sort of trying to understand, is this a sustainable step change? And is there more to go after in some of those buckets? And then my second question is on costs that you highlighted the headwinds of marketing and tech in the second half. Should we expect these to continue into FY '27 as well? And where are your marketing costs at the moment as a percentage of sales versus the historic sort of norm? Thierry Dominique Garnier: Thank you for your question, Thierry speaking. So I will let Bhavesh answer your first question on gross margin and cost. Bhavesh Mistry: Okay. Thanks for your question. So yes, pleased with our gross margin performance in the half. A range of different drivers of that. Majority is our buying, so better buying and negotiation, both on our OEB and our branded that accounted for about 60 basis points. Marketplace is margin accretive. You heard Thierry talk about what we're doing with marketplace, most advanced in B&Q, but early days with our other markets. Banner mix helps. So B&Q's outperformance and the fact that Romania we disposed off. So that's a contributor. And some headwinds against that, we had packaging tax in the U.K. So it gives you a flavor for some of the drivers behind the margin. I guess stock losses, right, because we had better stock turn, better trading and therefore, lower stock losses. So that gives you a bit of color on gross margin. In terms of costs, in terms of -- we continue with some of our structural actions. I talked about that in the prepared remarks, 3 gears. Indirect procurement, store and head office efficiencies, all continuing to contribute to managing our cost base, very important given the GBP 145 million of headwinds that we signaled with inflation, national insurance, packaging tax, et cetera. And in terms of second half weighting of marketing and tech, that really is, again, linked to some of what we talked about today. It's in tech. It's further investment in our marketplace, early days, and we just launched in Poland in January, early days in France as well. So we continue to invest in marketplace, scaling our data tools. We now offer cross-border vendors, ability to trade on marketplace. The personalization -- Hello B&Q is now launched. We have Hello Casto, so that's sort of an AI-generated chatbox. But we also have higher national [indiscernible]. We have 6 months in the second half. We had 3 months in the first half. [indiscernible] typically go out around April. So you get full 6 months' time in the second half. So that gives you hopefully a bit of color in terms of some of the drivers of our cost running in the second half and investment in the second half. Kate Calvert: Yes, I suppose I was specifically asking more about marketing because obviously, that's one of the things that often gets cut when the market gets tougher. So I guess, when the market recovers, should we expect marketing as a percentage of sales to go up? And then I suppose the other thing is you have called out tech specifically. It's a general thing in the industry overall that tech costs are going up as a percentage of sales in retail. So is that something that we should expect to continue into next financial year? Or is that sort of a one-step change in tech? Thierry Dominique Garnier: Yes. I'd maybe get to -- Thierry speaking. I'll start with marketing. I think the H1, H2 dynamic is probably more tactical. I don't think you can go [indiscernible] from there. We had relatively calmer H1 because of weather and therefore, for some categories, we don't have to advertise more. On the other side, Screwfix peak in H2 with Big Black Friday, so we are usually investing a bit more in H2 in those categories. Maybe you have seen we have had a very good price cut campaign at B&Q just a few days ago. So there is no -- on marketing, not really much to draw from H1, H2 dynamics. I think on tech, I think for every, I would say, retailer, tech is becoming a very important component of the CapEx first dynamic and P&L. We plan for a long time, a bit more H2-weighted investment in tech. Is it business related? I can give you a few examples on marketplace. We are accelerating our cross-border vendors that require a specific tax engine to manage that properly. We are improving our buy box, happy to comment further if you want. As well on data and AI, we have more plans to roll out our markdown softwares to more banners. And as well on our core IT, seems like we are relying still a lot on Oracle ATG. We are decomposing Oracle ATG to move to a more agile IT. And in our plan was a bit more H2 weighted. Bhavesh Mistry: Just on your marketing question, Kate. Historically, our marketing costs have been about 2% of sales. It's a touch higher this year, but just to give you a sense of scale. Operator: Our next question comes from Richard Chamberlain with RBC. Richard Chamberlain: So a couple of questions from me, please. I think in the statement, you talked about improved returns on promo activity through the use of AI solutions. I wonder if you can give a bit more color on what you're doing there? And then second, on the group-wide trade penetration, I think you say it's 28%. So where is it now for the U.K.? And is there still upside in the U.K., do you think in terms of trade penetration going forward? Thierry Dominique Garnier: Thank you, Richard. On your first question, the fact that the base algorithm is all around elasticity versus price and volume. And that the same algorithm that somehow rent for markdown and promo and we are extending that to prices in the coming months at B&Q. So this is basically calculating at the SKU level and store level elasticity pattern. And therefore, this algorithm will give you daily recommendation for price per store and at the same time, is able to simulate a lot around what if I do [indiscernible] or minus 15 on [indiscernible]. And they give you immediately is a component of what does it mean for sales, what are the halo effect on other products. So that's a very powerful tool. We have rolled out this tool in B&Q and this year at Casto and the plan is to roll out that across the group. On [indiscernible] sales, Bhavesh will give you the precise figures, but I think we still have a lot to do on TradePoint. I think obviously, Screwfix, we have relatively stable trade penetration. And Screwfix is basically in first place a trade business. At TradePoint, we have the plan to reach GBP 1 billion. We are improving the trade penetration, and there is more to go, but I hand over to Bhavesh. Bhavesh Mistry: Yes. So [indiscernible] B&Q's trade penetration is 22.4%. So that was up a little bit from last year. And as Thierry said, Screwfix is a very much trade-focused business. Their trade penetration is 74%. Operator: Our next question comes from Grace Gilberg with Jefferies. Grace Gilberg: I just have 2 from me. In reference to the very strong H1 profit beat, can we talk a little bit more about the mechanics of what went into that specifically around how much of this was potentially more big-ticket driven? That's my first question. The second, and it kind of goes off from the first is that the new implied or the new guidance for the full year implies that second half would probably be a bit worse than previously expected. Is there anything that you're seeing now that should make H2 look a little bit worse? Or just any other color around that would be very helpful. Thierry Dominique Garnier: Thank you, Grace. Maybe I'll start by the profit bridge -- the profit beat and Bhavesh will give additional comments. I think first of all, in retail, it always starts from sales. So we are very pleased with the H1 sales dynamic because it's not coming from price. The price is broadly flat in H1. In fact, it's minus 0.1%. So all the growth is coming from volume sold and a little bit of mix because we have sold more big ticket as well as small positive mix impact. We have gained market share. We are seeing healthy dynamic on Core and Big Ticket. And another example is the positive order book at the end of July with a double-digit order book. And that's driven by our strategic initiative, our range reviews on, for example, on kitchen and bathroom. You have seen the trade and e-commerce sales progression. So I think healthy H1 on sales. Then I hand over to Bhavesh on margin and cost for H1. Bhavesh Mistry: So yes, look, just to reiterate what Thierry said, very pleased with what we've delivered in the first half. Beyond seasonal, you look at underline Core, Big Ticket, trade, e-commerce, all moving in the right direction. I remind you, we're an H1 weighted business. Our peak is in the first 6 months. And that was more amplified this year by the strong seasonal performance that we had that we talked about in Q1. And when we look at the second half, we've got 6 months of national insurance. We didn't have that in Q1. We've got 6 months of pay rise. We didn't have that in H1. And then the H2 weighted marketing and tech, some of the examples I gave earlier to Kate's question. So that sort of explains the H1/H2 dynamic. And then we're really just taking a balanced view when we set the full year guidance. We saw a resilient consumer in H1 in the U.K., a bit more subdued in France and Poland. And as you saw in our market outlook, we're just staying mindful of the consumer across our markets in H2. Grace Gilberg: No, I appreciate that. And actually, if I could just ask one more. This is kind of going off of question around gross margin improvement. And if I heard it correctly, you're saying that 60 bps of that 100 bps improvement is around better buying on own brand and also branded items. Is that expected to continue going into the full year? I would imagine that that's something that's more structural than particularly a one-off. Thierry Dominique Garnier: I think, yes, on what -- starting from raw material prices, we continue to see good price decrease in raw material prices in H2 and probably the early part of '26. We have positive FX component is a tailwind, and that's largely hedged so that should remain with us. And the key strategic initiative, marketplace, we mentioned, we have the positive contribution, for example, on clearance and losses from our new software and markdown promo software I mentioned. On the other side, growing trade is a negative because on gross margin specifically, trade gross margin has a lower gross margin, while the retail profit is very good. Operator: My next question comes from Ami Galla from Citi. Ami Galla: A couple of questions from me. The first one was on the competitive intensity across your markets. Can you give us some color as to how has that shaped up in the first half, particularly in France? The second one was just on Screwfix France and the growth that you've seen across that banner. Is there a revision to your network expansion plan, i.e., are we going to see an acceleration in the sort of new store openings in that banner? And the last one is on the franchise option in France. How is that route exploring more franchisees down the line? How is that kind of coming through to an extent? Thierry Dominique Garnier: Thank you, Ami, for your question. First, competitive intensity. The first thing I would say across the board is we have seen rational behavior from competitors on prices. Price index should always be top of our mind. I'm very happy with price index. An example is Brico Depot in France. We have improved our price position in the past 6 months. I'm very, very pleased with that. And we are constantly adjusting. We are -- if you look at the media, we are communicating on price cut at B&Q on specific categories a few days ago. Then on promo, I think U.K. relatively standard promo plan in H1, even probably because of the season was very strong. So we were relatively at a lower level on clearance. France, a very, very dynamic promo market in H1. And we were, I think, following that very, very carefully in our banners. And Poland as well, we have seen a relatively dynamic promo environment in H1. So very, very rational on price, but more competitive on promo in France and Poland. Screwfix France, yes, 52% store like-for-like. We are very happy with that. That's in line with our expectation. So at the same time, we should stay calm. It's good, but we need to deliver this kind of like-for-like because that's the plan. All the KPIs are good. But really, I stay with what I said in March '24 and March '25. We need a bit of time to have a certain number of stores reaching year 3 and year 4 to make sure the sales density of the store are in the right place. And therefore, all the plan, the breakeven and the profit per store is in line with our expectations. So I would say all in line with expectation, happy with what's going on, but I don't want to accelerate too much expansion before I'm pretty sure we have enough stores reaching what they need to do in profit and sales in year 4. Franchise, we are as well very excited with franchise. I think it's a very strategic move for France for the first time with our first 2 franchise store for Casto. Don't underestimate the amount of job we need to do to start one store. It's from legal contract, how we share the margin, how do you deliver product with your logistics, how you create IT link. And all this is a massive job done by the team. So more to come on franchise for Casto. And I can tell you as well that we are planning to open our first Brico Depot France store in 2026 through a franchise model. That would be a conversion from [indiscernible] store that will become a Brico Depot store in '26. Bhavesh Mistry: Just on Screwfix France, I'd say each of these cohorts are in sort of different stages of life. Some very recently opened, others around 2 years open. And so on a brand that's new to the market. So for us, we look at some of those underlying durable metrics like repeat customers, like brand awareness, like trade penetration. That's what we're looking at measuring to ensure that the foundations are really strong to then move forward on further Screwfix expansion in France. Operator: Our next question comes from Yashraj Rajani from UBS. Yashraj Rajani: So 3 questions from me, please. The first one is on click & collect in B&Q. Given that's a newer initiative, can you give us some color on how the unit economics are looking in that business, how that's affecting frequency? And do we expect that to be a bigger margin driver in the second half than it was potentially in the first half? So that's the first question. The second question is on business rates. So can you give us any indication of what we need to keep in mind there for the second half and potentially next year as well? And the third question is on shareholder returns. So I appreciate we have some one-offs in free cash flow this year, but maybe beyond that, should we expect that the GBP 300 million buyback is something that we should expect every 12 months? Or do you think there's other opportunities like potentially exploring some freehold as well? Thierry Dominique Garnier: Thank you, Yash, for your question. Maybe I start with the first one and Bhavesh will answer the second and the third. I think first of all, using stores for our 1P operation is since 2020, really our core strategy. And you have seen the statistics, we are largely -- over 90% of our orders are prepared in stores and 88% delivered through click & collect. So one, it's a very profitable way to manage e-commerce. That's why our 1P operation is profitable. And secondly, it's great traffic to the store. So when the customer comes for click & collect order, we know that there is a good proportion of those customers that will enter the store and buy additional products. We have always tried to link our marketplace operation to the stores. So from the beginning of B&Q marketplace, returns were allowed in every store. You can order online a marketplace product and you can return the product in B&Q stores. And recently, we have started click & collect option for our marketplace vendors. I think we are the first one to do that in the U.K. And that's driving profitable business and additional footfall to the stores. So a bit too early to give you detailed data because it's just a few weeks, but the early data show a good traffic inflow -- footfall to the store from the people that come in to collect their marketplace product. So I think on business rate, I'll hand over to Bhavesh and as well on retail. Bhavesh Mistry: Yes. I mean, on your question, we had some rebates last year in B&Q. That's not repeating, and we're very clear in sort of calling that out. Going forward, we don't see any material sort of rebates or anything coming through. The broader challenge as you heard from other retailers is just the impact of business rates on brick-and-mortar retailers relative to what you see with some of the pure-play online, and that's something that we continue to lobby that challenge alongside our retail peers for a bit more of a level playing field. On shareholder returns, we have a good track record of delivering share buybacks after we invest in our business after we pay our dividend. This year, specifically, the reason we've accelerated is back to the 2 one-offs that I talked about in my prepared remarks. Our historical track record of buying back is around 18 months. So I wouldn't read anything into this year's acceleration simply as we had 2 one-offs, and we've invested at the right level in our business. We felt this is excess cash, and it made sense to accelerate the buyback only this year. Operator: We'll take our next question from Adam Cochrane from Deutsche Bank. Adam Cochrane: A couple of questions from me. Firstly, on the free cash flow guidance being increased, but the sort of top end of the profit before tax number not being increased. Can you just highlight what the incremental sort of GBP 40 million or so that you're generating on free cash flow above and beyond the increase in profit and where that comes from? And secondly, on the second half PBT decline, I understand the points you're making about on the cost side. But would you say that you're feeling more or less confident about the outlook in the second half versus the first half from where you were before. When you see the -- I think on some of the slide decks, you've got some sort of macro indicators. Are you feeling slightly cautious about what we see in France or what we might see in the U.K.? Just a little bit of how you're feeling about the wider consumer given some of the surveys and things that you guys do. And then the third question is on the big ticket, I think if I'm right, it sounds like your lower price point ranges have proven to be really successful. So from a volume perspective, would you say that your big ticket growth looks even more impressive than the value numbers that you presented? Thierry Dominique Garnier: Thank you, Adam. Let me start maybe with exactly reverse order, so 3, 2 and 1. So I think in big ticket, in short, the answer is yes, we are selling more lower price, let's say, lower tier kitchen across the group. So therefore, when you look at volume, yes, it's better than the sales you are looking at. Maybe let's spend 1 or 2 minutes on our view of the customer by region, and we'll do that methodically by country. So I think U.K., it's fair to say H1, we have seen a resilient consumer. And you see that through multiple quality indicators, transaction, volume were up, positive order book for big ticket, core and [indiscernible] categories. And when you look at the consumer sentiment, we are seeing a slightly improved consumer sentiment, slowly rising in H1 to now according to GfK. Now we are, like you, mindful of signs of softness in the labor market, the uncertainty of the budget ahead of us and we are seeing as well food inflation relatively high. So it's something we are looking. We are watching that H1, the consumer in the U.K. has been resilient. So therefore, we believe the middle of the scenario as a target for the full year is very relevant for the U.K. France, different story. We have seen H1, a subdued consumer, mainly driven by political uncertainty and the constant discussion around reforms, what should be the right reforms. And the consequence of that is a super high savings rates in France. We are about 400 or 500 basis points above historical average. So it's not as if the macro was a catastrophe or people have no money. In fact, people have money, but they save, they are not optimistic about the future. Consumer sentiment in France stay very low and is decreasing. So moving in sales is a good indicator, so moving from 92% in January to 88% in July, so not great. While we are seeing better macro indicator, interest rates is low, the mortgage year-on-year is up. The housing transaction are slightly up. So it's not around macro. It's all around political uncertainty. And we so far are relatively cautious about France in H2. We believe the consumer sentiment will remain subdued. The political environment is not improving. So we are cautious about France in H2. And therefore, scenario, we believe will be between the middle part of our range and the lowest end of the range for France. Poland H1 was a difficult H1, probably slightly worse than expected due to geopolitical factor in Q1 with the discussion around the war in Ukraine, political election at the end of Q1, relatively high inflation, relatively high interest rates and somehow consumer sentiment was low. But contrary to France, we are seeing some sign of, I would say, slow recovery, inflation now down to 3.1% in July. The real wage growth is really supportive. We have seen 3 interest cuts from the Central Bank of Poland and overall an improvement in the consumer sentiment. The macro are really supportive. So I would rather go for a slow improvement of the consumer sentiment in Poland in the coming months. And therefore, we are comfortable with the middle of our scenario. So a bit longer, but I think it's important everyone hear that. And then on the... Bhavesh Mistry: Your first question, Adam, on the free cash shape. So as I alluded to earlier, our peak is in H1. So our profit is H1 weighted. Our free cash is even more H1 weighted, and that's just the dynamic of working capital. We're selling through our stock in the first half. We tend to buy it in the second half. We also have a little bit more CapEx weighted in H2. That's our Screwfix store openings, both city and regular Screwfix. We've got more tech and maintenance CapEx. And then just some technicalities around the timing of Chinese New Year and Easter next year means there's more stock being ordered in the second half of this year. And again, that's just making sure we have it in and ready for peak trading when we hit the first half of the next financial year. Adam Cochrane: So if we think about a walk-through from where your free cash flow guidance was at the upper end at the beginning of the year and where it is now, obviously, your profit expectations haven't changed at the upper end, but your cash flow has. I understand the timing between 1H and 2H, but the absolute quantum of the GBP 40 million year-over-year, the timing of Chinese New Year as an example, I'm assuming you would have known that at the beginning of the year. So what's changed in terms of the upper end of the free cash flow? Is it that you've got lower inventory? Is it that -- what's the exact driver of higher free cash flow for the full year? Bhavesh Mistry: Well, profits. We had a tax refund [indiscernible] historical sort of true-ups of prepayments and tax. I'd say those are the 2. And we also took inventory days down, right. We took another 6 days down. So better management of our stock. Operator: Next question comes from Mia Strauss with BNP Paribas Exane. Mia Strauss: Maybe just 2 questions. On Castorama France, you've talked about the progress you've made on some of the store restructurings and the reduction in DC space. But maybe if you can give a bit more color on what that actually translates to in terms of pounds? And then secondly, on big ticket, as you said, we've seen 3 quarters of sequential growth. Is this kind of considered the new normal? Or are we going to start lapsing in tougher comps as we go into next year? Thierry Dominique Garnier: So I think maybe on Casto France, you have in the presentation really an update of the plan and we are really happy with the progress being on sales and really productivity and on the restructuring of the store network. Some of those actions will deliver results relatively in short term. And when you speak about costs, you have short-term impact, including logistics, head office, continuous work we are doing on efficiency. So that delivers relatively fast P&L impact. Store network, you need a bit more time when you do rightsizing, you need to do the job in the store, you need to bring the partner in the back-end space and you need the maturation of the stores. So I think clearly, the network, we need much more time to crystallize the profit than on short-term cost actions. Another example, when you speak about e-commerce and Pro as well, it's a long-term several years program, and we are very optimistic on it. On big ticket, I think in short, probably 2/3 of the growth is our self-help, 1/3 is the market. So when I look at H2 and '26, I think the momentum -- we should see the momentum from self-help for a few more months. It's a combination of range, but as well the churn by the team. I give you interesting data that installations were up 36% in H1, kitchen and restroom installations. So it's a good job done by the team around training, incentives, focus on selling more kitchen and bathroom installations. So we have really a strong plan on kitchen, bathroom. So 2/3 our action, 1/3 the market. Operator: Our next question comes from Georgina Johanan from JPMorgan. Georgina Johanan: [Audio Gap] the second one, thanks for all the color on gross margin. I just wondered to help us with modeling as we go into next year. Obviously, seasonal was so strong in the U.K. in Q1. If you could just give a sense in basis points of how much that supported the H1 gross margin in the U.K. in particular, please? And then finally, just on Poland, I think some of us are sort of more removed from that market, if you like, than U.K. and France. And I just wondered if there was anything happening that would be useful to be aware of in terms of the sort of competitive or structural environment there. So not necessarily related to sort of promo around the cyclical, but just whether there is any new competitors developing or competitors falling away as the case may be, I know action is rolling out strongly there, for example. So just anything you could share would be really helpful. Thierry Dominique Garnier: For sure. Thank you for the question. I'll start with the first one. I think about half of B&Qs are in a way impacted by Homebase closures. And we have tactical marketing action locally. So we did a piece of job to make sure we can reach the customer around the Homebase stores and attract them to B&Q. And we make sure we have enough stock in the store to make sure as well the sales transference was optimized in H1. So it's part of the sales of B&Q in H1, obviously, but there are many other levers, and we discussed big project, marketplace growth, the Pro, et cetera, and Homebase is part of that along with the good weather in H1. We have bought 8 stores from Homebase, 5 in the U.K., 3 in Poland. Again, very happy with the pace of the team because we converted them in a record few weeks. So we were -- the store already ready between April and early May, just before peak. I'm very happy with the sales of those 8 stores so far, really good start. Maybe on Poland, I will let Bhavesh speak around gross margin and seasonal. Competitive dynamic, we are clear #1. But there is a fight with [indiscernible] as well competing in this market. We see, as I mentioned, rational behavior on prices, relatively dynamic promo. And I think both us and [indiscernible], we keep opening stores. If you look at the past 3 years, we opened 11 stores between '23, '24 and H1 '25. So significantly more stores than [indiscernible] keep up new store on this side. I think big market -- big player in Poland is Allegro. I think if you tell me the past 5 years who is the #1 competitor is probably Allegro. So we are really working hard on our e-commerce proposition, our marketplace in Poland since early this year. A lot going on, on loyalty program, data apps in Poland to compete with Allegro. And like in other countries, yes, Allegro is a fantastic marketplace. But for DIY, and we see that in the U.K., we could become the reference marketplace in DIY in Poland. And then new discounters, you mentioned [indiscernible]. I think it's -- we are internally working very hard on how we react with discounters for the past few years through our lowest price, through dedicated OEB. As well Lidl, Lidl is doing good job on some categories. So that's something we are addressing very, very carefully. And I think we have a very good plan to compete with Lidl and [indiscernible] in Poland and across the globe. Now on seasonal and gross margin... Bhavesh Mistry: So our seasonal like-for-likes in the half were plus 5.1%. These are rough, rough numbers, but if you assume seasonal and more normal seasonal would be sort of 1% to 2% like-for-likes. When you take our gross margin of around 35%, it's a little bit lower in seasonal than other categories. Thierry talked about big ticket being sort of margin accretive relative to the other categories, then I'd roughly say around GBP 15 million of our profit uplift was a function of the seasonal outperformance or margin uplift. Operator: [Operator Instructions] There are no further questions on the webinar. I'll now hand over to Thierry for closing remarks. Thierry Dominique Garnier: Thank you, everyone, for joining, and thank you for all your questions and comments. And obviously, myself with the team, we are at your disposal if you want to discuss further or ask more questions and happy to meet you and talk to you very soon. Thank you, everyone.
Operator: Good day, ladies and gentlemen, and welcome to Kingfisher plc's Half Year 2025 to 2026 results presentation. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to Thierry Garnier to start the presentation. Thierry Dominique Garnier: Hello, everyone. Today, I am at our Camden Screwfix store in London, and it's great to review the progress of our Screwfix City format with the team. So thank you for joining us for Kingfisher's half year results presentation. Bhavesh and I will take you through our H1 results, our outlook for the year and provide an update on our key strategic initiatives. Following this presentation will be our usual Q&A. I want to start with an overview of Kingfisher's attractive investment story, which drives our medium-term financial priorities and outlook. We have the #1 or #2 leading positions in our markets, and those markets worth GBP 160 billion, have attractive and structural growth drivers. Secondly, our powered by Kingfisher model provides us with clear competitive advantages. We operate a diverse portfolio of banners, each with distinct formats and propositions that address a wide range of customer needs. Across these banners, we maintain a well-balanced mix of trade and retail customers. Our own exclusive brands are industry-leading and a powerful competitive advantage. Combined with our advanced technology and e-commerce proposition, we offer customers both speed and choice. As a group, our scale enables us to unlock synergies in buying and sourcing while also supporting continued investment in technology. Our strategic growth initiatives are driving market share gains. A key part of this is expanding our reach across our trade customers with compelling propositions firmly established across all banners. Our trade strategy is now very much proven and delivering results. Our online, 1P and marketplace platforms significantly increase product choice for our customers and offer fast fulfillment times. We also see exciting potential in Retail Media with an ambition to grow Retail Media income to up to 3% of Group e-commerce sales. And finally, we continue to expand our store footprint, primarily through the expansion of Screwfix and growth opportunities we see in Poland. Bringing all these elements together, we are committed to our financial priorities, which are to grow sales ahead of our markets, grow adjusted profit before tax ahead of sales and to generate strong free cash flows. We have a disciplined capital allocation framework, prioritizing investment in organic growth, maintaining a strong balance sheet and returning surplus cash to our shareholders. So moving to our results. You will have seen from our RNS published this morning that we have had a strong first half. And there are 3 key messages I want to highlight: First, our strategic growth initiatives are driving market share gains, a key leading indicator of our progress beyond macroeconomic trends. While several factors have contributed to our performance in the half, I'm particularly pleased with the strong contribution from these initiatives. We delivered double-digit growth in both trade and e-commerce sales during the half. And importantly, they offer a substantial runway for future expansion. In addition, we continue to strengthen our retail fundamentals. This includes successful innovation across our big-ticket categories, competitive pricing and ensuring high product availability in store during period of peak demand. Second, we are seeing some healthy growth indicators across our business. Growth in the half was of high quality, driven by increased volumes and transactions rather than inflation. In our core categories, we have seen consistent quarter-on-quarter growth, including a tenth consecutive quarter of underlying growth in the U.K. Q2 marked our third consecutive quarter of underlying growth in big-ticket sales, and we have a strong order book at the end of the half. Our banners in France and Poland are also showing improving sequential trends despite operating in more subdued markets. And third, we are raising our profit and free cash flow guidance for the full year. Our expectations for markets for the year remain consistent with what we outlined in March, whilst mindful of mixed consumer sentiment and political uncertainty. We are also accelerating our share buyback program due to the combination of our strong free cash flow generation and some one-off positive cash inflows. Back in March, I said that Kingfisher was in its best operational shape in years, and I stand by that today. While there is much more to do, our H1 results and our improved guidance demonstrate the momentum in the business and our confidence in the future. I will now hand over to Bhavesh to talk you through our H1 financials and full year outlook. Bhavesh Mistry: Thank you, Thierry, and good morning, everyone. Let me start with an overview of our performance in the half, starting with the top line. I'm pleased with the relative outperformance of our banners in the half and our sales growing ahead of our markets. Total sales for the group were GBP 6.8 billion, with like-for-like sales up 1.9%, excluding a negative calendar impact of minus 0.6%. We delivered an adjusted profit before tax of GBP 368 million, up 10.2% in the half and adjusted EPS of 15.3p, up 16.5%, driven by gross margin accretion of 100 basis points and retail operating margin accretion of 40 basis points, alongside a 4% uplift from our share buyback program. Free cash flow generation in the half was GBP 478 million, an increase of 13.5%, and net leverage stood at 1.3x at the end of the half. Turning now to our sales growth, starting with a view by category. All of our categories delivered growth in H1. Core Products represent around 2/3 of our portfolio, and we were pleased to see improving sequential growth trends with underlying like-for-like flat in Q1, rising to 1.2% in Q2. Key Subcategories which performed well in the half include tools and hardware and indoor paint. Big Ticket delivered a third consecutive quarter of underlying growth. That growth has been driven largely by group-led innovation in our kitchen ranges and some improvement in the kitchen and bathroom market. Our order book also ended the half in a positive position. Seasonal sales benefited from record warm weather in the U.K. over the spring months. Clearly, there was some pull forward from Q2 into Q1 as we called out in our Q1 trading update. It's worth noting that we'll be lapping the strong seasonal performance in Q1 next year. Turning now to our sales by geography. In the U.K., B&Q delivered an excellent first half, significantly outperforming the market and driving growth across multiple fronts. These include TradePoint growth of 6.9%, fueled by our enhanced loyalty program and an increased investment in trade sales partners to help us better serve trade customers. E-commerce growth of 23.8%. Our 1P and 3P operations work together to enhance conversion, increase customer traffic and drive mutual growth. Benefits from the closure of Homebase and transference of customers to B&Q as well as the opening of the 8 stores we acquired, which our team rapidly opened in order to be ready for peak trading. And of course, seasonal product sales, which benefited from good weather in Q1. Screwfix delivered a strong performance across both quarters. Our Screwfix teams have executed at a high level, enhancing the customer proposition through targeted marketing and promotional campaigns, competitive pricing, robust inventory availability and deeper engagement with trade customers via app-driven reward initiatives. In France, against a subdued consumer backdrop, we were encouraged to see improving sequential trends in our like-for-like performance. Castorama like-for-like sales declined by 1.4% in the half and were flat in Q2. Amidst the soft market backdrop, Castorama saw an improving trend in core sales across the first 2 quarters and strong seasonal performance. As you'll hear from Thierry, following testing last year of our trade customer proposition, CastoPro, we've now rolled it out across our entire estate. Brico Depot's performance was in line with the market with an improving like-for-like trend across the half. We saw an elevated level of promotional activity during Q2, which impacted Brico Depot's everyday low-price model. Brico also has a greater weighting to building and joinery products and a lower exposure to seasonal categories, both of which are less supported by weather experienced by France in H1. We feel good about the Brico model with its clear customer offering of discounted prices and high product availability. Turning now to our business in Poland, where we remain very excited about the medium-term growth opportunities. Castorama Poland is a market-leading banner with opportunity to increase space, whilst building in both trade and e-commerce. We had a slow start to the year with poor weather, high interest rates and political uncertainty weighing on the economic backdrop. However, conditions improved in Q2 and have now stabilized on an underlying basis. We continue to make progress on our strategic initiatives. Trade penetration has reached 25%, and we've further grown our e-commerce penetration following the launch of our marketplace offering in January. We have a slide in the appendix to this presentation covering our other international markets. But to summarize very briefly: Screwfix France had a strong like-for-like growth of 52% at the store level, in line with our expectations. We completed the sale of Romania in May, a few months ahead of plan; and Iberia had an excellent H1 with 10.2% like-for-like growth, outperforming a growing market. As I said in March, we'll continue to drive opportunities on cost and gross margin, which have been an important driver of our profit and free cash flow delivery in the half. Let me give you a few examples. At a gross margin level, we've seen benefits from group buying and sourcing efficiencies, which contributed meaningfully to margin expansion in the half. And our Marketplace platform, which is gross margin accretive, added 10 basis points to group margin growth. Our operational cost initiatives are also delivering tangible results. At the store level, we've achieved savings through contact center efficiencies and the rollout of more self-service checkouts. We've also driven head office efficiencies, particularly at Castorama France, where we're on track to reduce headcount by 12%. Cost discipline will continue to be a key focus for us as we create the room in our P&L to invest for future growth and profitability. Let me now turn to our profit performance in the half. Adjusted profit before tax rose by 10% or 19% when excluding the GBP 24 million of one-off business rates refund received by B&Q in the first half of last year. One of the main drivers of our first half profit growth is 100 basis points of gross margin expansion, which is driven by positive top line growth and our margin initiatives, some of which I outlined earlier. In March, we said that we faced around GBP 145 million of cost headwinds from higher wages, inflation and taxes. These headwinds are playing out as expected, including the increase in U.K. national insurance costs in April. I'm pleased to say that in H1, our teams have done an excellent job mitigating these headwinds. The gross margin drivers, combined with our structural cost reduction program, enabled us to deliver 40 basis points of retail operating margin expansion to 6.6% and adjusted profit before tax of GBP 368 million. All of our banners delivered margin expansion in the half. In the U.K., margins were up 10 basis points or 80 basis points when adjusting for the B&Q business rates refund from last year. France delivered a 20 basis point margin improvement and Poland saw margin growth of 10 basis points. As is typical for our business, profit delivery remains weighted towards the first half. That seasonal pattern has been amplified by the strong Q1 trading I mentioned earlier. We also have a more H2-weighted marketing and technology investment this year compared to last. This is to support our strategic priorities. In the second half, we also see the full impact of the U.K. national insurance contributions increase following its implementation in April. EPS growth in the half was up 16.5%. Our profit delivery has driven around 2/3 of our EPS growth, while share buybacks contributed 1/3. In March, we announced our fourth share buyback program of GBP 300 million, and we've already repurchased GBP 100 million of our shares under this program. Given our strong trading performance and some material one-off cash inflows, we plan to accelerate purchases in the second half with the aim of completing the program by March 2026. Turning now to our group cash flow, starting on the left of this chart. We generated EBITDA of GBP 744 million. The change in working capital was a net inflow of GBP 100 million, driven primarily by an increase in payables, reflecting normal buying seasonality. We continue to focus on inventory management, reducing year-on-year same-store stock days by 6.5. Net rent paid was GBP 261 million. We saw GBP 40 million of inflows from tax, interest and other as we benefited from tax prepayment true-ups. CapEx spend totaled GBP 145 million. Together, these drove free cash flow of GBP 478 million in the half, a 13.5% improvement year-on-year. Our free cash flow generation of GBP 478 million is towards the upper end of our initial full year guidance. This reflects not only our profit delivery in H1, but also the timing of marketing, technology and CapEx investments, which are more second half weighted versus the prior year. These investments are supporting our strategic priorities and will ensure that we enter 2026 with strong momentum. As mentioned earlier, we also benefited from 2 exceptional nonrecurring cash inflows in the half, which sit outside of our free cash flow. First, net proceeds of GBP 33 million from the sale of our Romanian business in May. Second, proceeds of GBP 64 million from the successful resolution of an historic tax issue in relation to EU State aid. Net cash flow in the half was GBP 277 million, an increase of 120%, driven by free cash flow growth and these one-off items. We returned GBP 271 million to shareholders in the half through dividends and share buybacks, an increase of 8% year-on-year. Turning to our market outlook and guidance for the year. As Thierry mentioned earlier, the market outlook scenarios that we set out in March remain unchanged. In the U.K. & Ireland, we've seen a resilient consumer in H1, but remain mindful of potential softness in the market given both uncertainty around the upcoming autumn budget and rising inflation. To date, the market has delivered low single-digit growth, and we continue to expect market growth to be in the range of flat to low single digit. In France, the market has remained subdued in H1. Although we saw lower interest rates, higher mortgage lending and increased housing starts in the half, French consumer sentiment remains subdued amidst an uncertain political environment. We continue to expect a market of low to mid-single-digit decline to flat for the year, an improvement on the 7% market decline we experienced last year. In Poland, political factors and high interest rate and mortgage rates weighed on consumer confidence in the first half, impacting discretionary spending. However, we're now seeing some early signs of recovery, supported by 3 interest rate cuts this year and continued real wage growth. We reiterate our market outlook of low single-digit decline to low single-digit growth. And as you can see on the right-hand side of this slide, on the whole, our banners are tracking ahead of our markets for the first 6 months of this year. Now let me turn to our updated guidance for the year. Our full year market scenarios remain unchanged from the guidance that we set out in March. Given this and our strong start to the year, we're raising our full year profit and cash outlook today. We now expect to deliver the upper end of our adjusted profit before tax range of GBP 480 million to GBP 540 million. On free cash flow, we've already delivered the upper end of our full year range of GBP 420 million to GBP 480 million in H1. This reflects the phasing of our profit delivery and the H2 weighting of CapEx investment. Given the strong performance, we are raising our full year free cash flow guidance to GBP 480 million to GBP 520 million. And finally, our stronger cash position and nonrepeating cash inflows enables us to accelerate our current GBP 300 million share buyback program. We now expect to complete this within 12 months, which is by the end of March 2026. I'll now hand back to Thierry. Thierry Dominique Garnier: Thank you, Bhavesh. I want to start by sharing some of our strategic actions that are supporting our current performance and also setting us up for the future. We continue to progress at pace with all our strategic pillars, which we outlined in our RNS. For today, I would go deeper with trade and our digital ecosystem, a group strategy that we applied in the U.K. first and serves as a successful blueprint that we have now rolled out across our other markets. So let me start with trade. We continue to expand our exposure to trade customers, a segment that shops more frequently, spends more and follows more predictable purchase patterns. Through TradePoint, CastoPro and other dedicated trade formats, we are leveraging our existing store footprint to serve this valuable customer base. Our trade strategy enables us to grow our market share and to increase store sales densities with little to no additional CapEx. As a result, our trade business is both revenue and margin accretive at the retail operating level. Our online e-commerce and marketplace platforms significantly expand product choice for our customers. Marketplace leverages technology built by Kingfisher and is a high-margin growth driver. Retail Media also represents a compelling opportunity. Our ambition is for Retail Media income to reach up to 3% of the group's e-commerce sales with minimal capital employed, it is highly margin accretive. Trade now represents 28% of group sales, reflecting the continued development of our trade proposition across banners. We are expanding dedicated trade space within our stores and improving our product range, including high-quality trade-specific OEB and leading branded products. We continue to rapidly develop our loyalty programs dedicated to trade as we sign up new members and offer enhanced price benefits tailored for each of our markets. Based on feedback from our customers, we have also improved our service offering, including enhancements to our Pro app, our direct-to-site delivery options, our 2 rental services and we have launched new trade financing solutions. And none of this is possible without having the right people. We have significantly increased the number of dedicated trade colleagues and have enhanced our training programs and data to better understand, serve and grow our trade customers. As a consequence, in the half, our trade sales grew by plus 11.9%. Looking at our banners, TradePoint at B&Q now represents 22.4% of total B&Q sales with 6.9% growth in H1, and this is supported by a strong increase in sign-ups for our loyalty program and our successful trade-up accounts for around 25% of its online sales. We now have 77 trade sales partners in store, a 75% increase versus this time last year. And we continue to invest in this area and are recruiting an additional up to 40 trade sales partners in H2. We continue to leverage the learnings from the U.K., in France, in Iberia and Poland. As you can see, we now have dedicated loyalty schemes in every banner. In Castorama France, we have, in just a few months, rolled out our trade offering across the entire state. At Brico Depot, our trade penetration is now over 12%, an increase of 260 basis points in the half. We have created a trade desk in every Brico Depot stores with 131 dedicated trade colleagues. And in Poland, our trade penetration is over 25%, a circa 10 percentage points increase in H1. And we have large CastoPro zones already in 14 stores. And turning now to the broader digital ecosystem we are building, and it starts with a strong first-party e-commerce proposition with our stores at the center. We have strategically decided since 2020 to leverage our assets and to rely on our stores rather than on large fulfillment centers as our primary option to prepare online orders. This enables us to offer unbeatable fulfillment times for click & collect as for stores to home. And in parallel, click & collect generates more traffic to our stores. We have developed a digital hub store model, which ensures excellent availability of product to e-commerce orders, and we keep investing in agile technology to improve our online conversion. All this in turn drives increased traffic, which supports our third-party marketplace offering. So on marketplace, we are offering a large choice with several millions of SKU. We can confirm that this large choice in turn generates more traffic to our website, all of which fuels additional 1P sales. Our stores play an important role for marketplace to our stores accept marketplace returns. And B&Q is now offering marketplace in-store click & collect, driving increased footfall in store. Moving to our loyalty programs. They provide us with comprehensive customer data and enable us to deliver personalized offerings and targeted promotions. The market is increasingly shifting towards mobile-first and app-based engagements. This allows us to get access to data to improve and personalize customer interaction. And this leads us to monetization because we have traffic and comprehensive data, we can sell retail media. So to summarize, our digital ecosystem drives a virtuous cycle of value, leveraging our store assets and powered by Kingfisher technology. This support growth, but also value across our business. Our 1P e-commerce with stores at the center, is profitable, and this profitability is enhanced by our marketplace, our retail media and the monetization of our data. Moving to Slide 21, which sets out some statistics around our digital ecosystem. We leverage our stores for speed and convenience with 93% of 1P orders picked in stores and 88% delivered through click & collect. This enables click & collect in as little as 15 minutes at B&Q, 1 minute at Screwfix and 20 minutes site delivery with Screwfix print. Our Group marketplace GMV is up 62%, and B&Q marketplace makes a retail operating profit of around GBP 7 million in the half. 50% of marketplace customers are new to our website with around 15% subsequently buying a 1P product. So we continue to grow this platform and have started onboarding cross-border vendors across the group to provide even more choice for our customers. We have signed up 11% more loyalty members since July last year and are seeing a significant increase in app-driven revenue and sales from AI and data-driven recommendations. We are rapidly scaling our Retail Media. We have also created a vendor platform, Core IQ, to monetize our data. So as you can see, we are really excited about the potential we have here as it uses our assets and will generate long-term growth and value creation. So moving to Screwfix France, where we see strong like-for-like growth in stores. We are happy with the progress with 52% store like-for-like growth in H1 and 74,000 unique customers, a 30% increase year-on-year. We believe the key to its long-term success is leveraging all the things that make Screwfix great in the U.K.; the best prices, unrivaled fulfillment and a wide selection of products. We are seeing good momentum across all KPIs with stronger customer retention, growing national brand awareness and over 17,000 sign-ups to the trade loyalty. We can see evidence of this continuous concept improvement with our second cohort of stores growing at a faster pace in year 1 than the first cohort. All this is in line with our expectations and makes us confident about the future of Screwfix in France. Moving now to the competitive advantage that we generate from our own exclusive brands. Our own product development provides simple and innovative solutions to our customers at affordable prices. While cheaper for customers, our scale and sourcing of OEB products enables us to make higher gross margins than the branded equivalent. This affordable innovation has driven a large part of big-ticket categories growth and the good order book Bhavesh and I mentioned earlier. Slide 25 provides an illustration of these new ranges. Our Ashmead new kitchen range delivers standout style at entry-level pricing, while our Pragma, lowest-priced kitchen range, retails for less than EUR 200 and is 15% cheaper than branded alternatives. We are all very proud of the strong work that our teams have done in this area across the group. Now to an update on our plan for France. In March 2024, we announced a strong plan to take France to the next level, simplifying the organization and significantly improving the performance and profitability of Castorama. And we have made excellent progress in our plans since this announcement, but this is against a weaker market backdrop than expected with continued low consumer confidence and record household savings rates in a political environment that remains very uncertain. Against this backdrop, we have focused our energy on delivering against our plans, gaining market share and managing effectively our gross margin and cost. In H1, specifically, we grew our market share in France and improved our retail operating profit margin by 20 basis points to 3.5%. While we are pleased with the delivery of our plan since the announcement in March 2024 of our medium-term target of circa 5% to 7%, the French home improvement market declined by over 7% in 2024 and by a further 3% in the first half of 2025. We remain confident in delivering this target of circa 5% to 7% with the timing and trajectory of reaching this target dependent of the pace of the market recovery. Despite current headwinds, we remain optimistic on the outlook for the market in the medium term. Our new management teams at both banners are working at a high level and with fast pace to make us more competitive and more efficient. I'm very proud of what is delivered by the teams. As you can see, we are growing sales densities across both banners. We are seeing an improved customer NPS, and this is supported by our trade and e-commerce initiatives. Looking forward, we are focused on strategic range reviews at Castorama and the launch of a new e-commerce platform at Brico Depot. We also continue to deliver strong productivity and operating efficiencies. At Castorama, we are on track to remove 12% of head office roles. Across France, work is ongoing to reduce a further 14% in logistics space by year-end. The restructuring and modernization of approximately 1/3 of Castorama store network is well underway. We addressed 13 stores last year, which have delivered encouraging results with rightsized formats and comprehensive refits, all delivering sales densities ahead of the Castorama average. We also successfully transferred 1 store to Brico Depot and converted 2 stores to franchise model for the first time in June. By year-end, a total of 24 stores will have been addressed, including the 11 currently in progress, and we'll provide a further update on this at year-end. So to summarize, we operate in large and attractive markets with our leading banners. We have had a strong first half, and we are delivering on our financial priorities. We have grown sales ahead or in line of our markets. Our performance is underpinned by our strategic growth initiatives. We are driving profitable growth and high free cash flow generation. And we are confident to raise our full year targets and to accelerate our share buyback program. Kingfisher is in its best operational shape for years. While we continue to navigate a challenging environment characterized by consumer caution and political uncertainty, we remain focused on executing our strategic growth priorities, maintaining discipline on margin and cost and driving shareholder returns. We look to H2 and beyond with confidence in our plans. Over to you, Richard, and thank you, everyone. Operator: We will now begin the Q&A session. [Operator Instructions] I would like to remind all participants that this call is being recorded. We'll take our first question from Kate Calvert from Investec. Kate Calvert: First question is on your gross margin performance in the first half, which was a very good performance. It's not often, I think, we see 100 basis points improvement. You did talk about sort of 3 main buckets driving this. I was wondering if you could give us a feel for how that 100 basis points improvement is split between the buckets of sort of sourcing mix and better sort of markdown. And then I think basically, should we expect these gross margin drivers to continue into FY '27? I suppose I'm sort of trying to understand, is this a sustainable step change? And is there more to go after in some of those buckets? And then my second question is on costs that you highlighted the headwinds of marketing and tech in the second half. Should we expect these to continue into FY '27 as well? And where are your marketing costs at the moment as a percentage of sales versus the historic sort of norm? Thierry Dominique Garnier: Thank you for your question, Thierry speaking. So I will let Bhavesh answer your first question on gross margin and cost. Bhavesh Mistry: Okay. Thanks for your question. So yes, pleased with our gross margin performance in the half. A range of different drivers of that. Majority is our buying, so better buying and negotiation, both on our OEB and our branded that accounted for about 60 basis points. Marketplace is margin accretive. You heard Thierry talk about what we're doing with marketplace, most advanced in B&Q, but early days with our other markets. Banner mix helps. So B&Q's outperformance and the fact that Romania we disposed off. So that's a contributor. And some headwinds against that, we had packaging tax in the U.K. So it gives you a flavor for some of the drivers behind the margin. I guess stock losses, right, because we had better stock turn, better trading and therefore, lower stock losses. So that gives you a bit of color on gross margin. In terms of costs, in terms of -- we continue with some of our structural actions. I talked about that in the prepared remarks, 3 gears. Indirect procurement, store and head office efficiencies, all continuing to contribute to managing our cost base, very important given the GBP 145 million of headwinds that we signaled with inflation, national insurance, packaging tax, et cetera. And in terms of second half weighting of marketing and tech, that really is, again, linked to some of what we talked about today. It's in tech. It's further investment in our marketplace, early days, and we just launched in Poland in January, early days in France as well. So we continue to invest in marketplace, scaling our data tools. We now offer cross-border vendors, ability to trade on marketplace. The personalization -- Hello B&Q is now launched. We have Hello Casto, so that's sort of an AI-generated chatbox. But we also have higher national [indiscernible]. We have 6 months in the second half. We had 3 months in the first half. [indiscernible] typically go out around April. So you get full 6 months' time in the second half. So that gives you hopefully a bit of color in terms of some of the drivers of our cost running in the second half and investment in the second half. Kate Calvert: Yes, I suppose I was specifically asking more about marketing because obviously, that's one of the things that often gets cut when the market gets tougher. So I guess, when the market recovers, should we expect marketing as a percentage of sales to go up? And then I suppose the other thing is you have called out tech specifically. It's a general thing in the industry overall that tech costs are going up as a percentage of sales in retail. So is that something that we should expect to continue into next financial year? Or is that sort of a one-step change in tech? Thierry Dominique Garnier: Yes. I'd maybe get to -- Thierry speaking. I'll start with marketing. I think the H1, H2 dynamic is probably more tactical. I don't think you can go [indiscernible] from there. We had relatively calmer H1 because of weather and therefore, for some categories, we don't have to advertise more. On the other side, Screwfix peak in H2 with Big Black Friday, so we are usually investing a bit more in H2 in those categories. Maybe you have seen we have had a very good price cut campaign at B&Q just a few days ago. So there is no -- on marketing, not really much to draw from H1, H2 dynamics. I think on tech, I think for every, I would say, retailer, tech is becoming a very important component of the CapEx first dynamic and P&L. We plan for a long time, a bit more H2-weighted investment in tech. Is it business related? I can give you a few examples on marketplace. We are accelerating our cross-border vendors that require a specific tax engine to manage that properly. We are improving our buy box, happy to comment further if you want. As well on data and AI, we have more plans to roll out our markdown softwares to more banners. And as well on our core IT, seems like we are relying still a lot on Oracle ATG. We are decomposing Oracle ATG to move to a more agile IT. And in our plan was a bit more H2 weighted. Bhavesh Mistry: Just on your marketing question, Kate. Historically, our marketing costs have been about 2% of sales. It's a touch higher this year, but just to give you a sense of scale. Operator: Our next question comes from Richard Chamberlain with RBC. Richard Chamberlain: So a couple of questions from me, please. I think in the statement, you talked about improved returns on promo activity through the use of AI solutions. I wonder if you can give a bit more color on what you're doing there? And then second, on the group-wide trade penetration, I think you say it's 28%. So where is it now for the U.K.? And is there still upside in the U.K., do you think in terms of trade penetration going forward? Thierry Dominique Garnier: Thank you, Richard. On your first question, the fact that the base algorithm is all around elasticity versus price and volume. And that the same algorithm that somehow rent for markdown and promo and we are extending that to prices in the coming months at B&Q. So this is basically calculating at the SKU level and store level elasticity pattern. And therefore, this algorithm will give you daily recommendation for price per store and at the same time, is able to simulate a lot around what if I do [indiscernible] or minus 15 on [indiscernible]. And they give you immediately is a component of what does it mean for sales, what are the halo effect on other products. So that's a very powerful tool. We have rolled out this tool in B&Q and this year at Casto and the plan is to roll out that across the group. On [indiscernible] sales, Bhavesh will give you the precise figures, but I think we still have a lot to do on TradePoint. I think obviously, Screwfix, we have relatively stable trade penetration. And Screwfix is basically in first place a trade business. At TradePoint, we have the plan to reach GBP 1 billion. We are improving the trade penetration, and there is more to go, but I hand over to Bhavesh. Bhavesh Mistry: Yes. So [indiscernible] B&Q's trade penetration is 22.4%. So that was up a little bit from last year. And as Thierry said, Screwfix is a very much trade-focused business. Their trade penetration is 74%. Operator: Our next question comes from Grace Gilberg with Jefferies. Grace Gilberg: I just have 2 from me. In reference to the very strong H1 profit beat, can we talk a little bit more about the mechanics of what went into that specifically around how much of this was potentially more big-ticket driven? That's my first question. The second, and it kind of goes off from the first is that the new implied or the new guidance for the full year implies that second half would probably be a bit worse than previously expected. Is there anything that you're seeing now that should make H2 look a little bit worse? Or just any other color around that would be very helpful. Thierry Dominique Garnier: Thank you, Grace. Maybe I'll start by the profit bridge -- the profit beat and Bhavesh will give additional comments. I think first of all, in retail, it always starts from sales. So we are very pleased with the H1 sales dynamic because it's not coming from price. The price is broadly flat in H1. In fact, it's minus 0.1%. So all the growth is coming from volume sold and a little bit of mix because we have sold more big ticket as well as small positive mix impact. We have gained market share. We are seeing healthy dynamic on Core and Big Ticket. And another example is the positive order book at the end of July with a double-digit order book. And that's driven by our strategic initiative, our range reviews on, for example, on kitchen and bathroom. You have seen the trade and e-commerce sales progression. So I think healthy H1 on sales. Then I hand over to Bhavesh on margin and cost for H1. Bhavesh Mistry: So yes, look, just to reiterate what Thierry said, very pleased with what we've delivered in the first half. Beyond seasonal, you look at underline Core, Big Ticket, trade, e-commerce, all moving in the right direction. I remind you, we're an H1 weighted business. Our peak is in the first 6 months. And that was more amplified this year by the strong seasonal performance that we had that we talked about in Q1. And when we look at the second half, we've got 6 months of national insurance. We didn't have that in Q1. We've got 6 months of pay rise. We didn't have that in H1. And then the H2 weighted marketing and tech, some of the examples I gave earlier to Kate's question. So that sort of explains the H1/H2 dynamic. And then we're really just taking a balanced view when we set the full year guidance. We saw a resilient consumer in H1 in the U.K., a bit more subdued in France and Poland. And as you saw in our market outlook, we're just staying mindful of the consumer across our markets in H2. Grace Gilberg: No, I appreciate that. And actually, if I could just ask one more. This is kind of going off of question around gross margin improvement. And if I heard it correctly, you're saying that 60 bps of that 100 bps improvement is around better buying on own brand and also branded items. Is that expected to continue going into the full year? I would imagine that that's something that's more structural than particularly a one-off. Thierry Dominique Garnier: I think, yes, on what -- starting from raw material prices, we continue to see good price decrease in raw material prices in H2 and probably the early part of '26. We have positive FX component is a tailwind, and that's largely hedged so that should remain with us. And the key strategic initiative, marketplace, we mentioned, we have the positive contribution, for example, on clearance and losses from our new software and markdown promo software I mentioned. On the other side, growing trade is a negative because on gross margin specifically, trade gross margin has a lower gross margin, while the retail profit is very good. Operator: My next question comes from Ami Galla from Citi. Ami Galla: A couple of questions from me. The first one was on the competitive intensity across your markets. Can you give us some color as to how has that shaped up in the first half, particularly in France? The second one was just on Screwfix France and the growth that you've seen across that banner. Is there a revision to your network expansion plan, i.e., are we going to see an acceleration in the sort of new store openings in that banner? And the last one is on the franchise option in France. How is that route exploring more franchisees down the line? How is that kind of coming through to an extent? Thierry Dominique Garnier: Thank you, Ami, for your question. First, competitive intensity. The first thing I would say across the board is we have seen rational behavior from competitors on prices. Price index should always be top of our mind. I'm very happy with price index. An example is Brico Depot in France. We have improved our price position in the past 6 months. I'm very, very pleased with that. And we are constantly adjusting. We are -- if you look at the media, we are communicating on price cut at B&Q on specific categories a few days ago. Then on promo, I think U.K. relatively standard promo plan in H1, even probably because of the season was very strong. So we were relatively at a lower level on clearance. France, a very, very dynamic promo market in H1. And we were, I think, following that very, very carefully in our banners. And Poland as well, we have seen a relatively dynamic promo environment in H1. So very, very rational on price, but more competitive on promo in France and Poland. Screwfix France, yes, 52% store like-for-like. We are very happy with that. That's in line with our expectation. So at the same time, we should stay calm. It's good, but we need to deliver this kind of like-for-like because that's the plan. All the KPIs are good. But really, I stay with what I said in March '24 and March '25. We need a bit of time to have a certain number of stores reaching year 3 and year 4 to make sure the sales density of the store are in the right place. And therefore, all the plan, the breakeven and the profit per store is in line with our expectations. So I would say all in line with expectation, happy with what's going on, but I don't want to accelerate too much expansion before I'm pretty sure we have enough stores reaching what they need to do in profit and sales in year 4. Franchise, we are as well very excited with franchise. I think it's a very strategic move for France for the first time with our first 2 franchise store for Casto. Don't underestimate the amount of job we need to do to start one store. It's from legal contract, how we share the margin, how do you deliver product with your logistics, how you create IT link. And all this is a massive job done by the team. So more to come on franchise for Casto. And I can tell you as well that we are planning to open our first Brico Depot France store in 2026 through a franchise model. That would be a conversion from [indiscernible] store that will become a Brico Depot store in '26. Bhavesh Mistry: Just on Screwfix France, I'd say each of these cohorts are in sort of different stages of life. Some very recently opened, others around 2 years open. And so on a brand that's new to the market. So for us, we look at some of those underlying durable metrics like repeat customers, like brand awareness, like trade penetration. That's what we're looking at measuring to ensure that the foundations are really strong to then move forward on further Screwfix expansion in France. Operator: Our next question comes from Yashraj Rajani from UBS. Yashraj Rajani: So 3 questions from me, please. The first one is on click & collect in B&Q. Given that's a newer initiative, can you give us some color on how the unit economics are looking in that business, how that's affecting frequency? And do we expect that to be a bigger margin driver in the second half than it was potentially in the first half? So that's the first question. The second question is on business rates. So can you give us any indication of what we need to keep in mind there for the second half and potentially next year as well? And the third question is on shareholder returns. So I appreciate we have some one-offs in free cash flow this year, but maybe beyond that, should we expect that the GBP 300 million buyback is something that we should expect every 12 months? Or do you think there's other opportunities like potentially exploring some freehold as well? Thierry Dominique Garnier: Thank you, Yash, for your question. Maybe I start with the first one and Bhavesh will answer the second and the third. I think first of all, using stores for our 1P operation is since 2020, really our core strategy. And you have seen the statistics, we are largely -- over 90% of our orders are prepared in stores and 88% delivered through click & collect. So one, it's a very profitable way to manage e-commerce. That's why our 1P operation is profitable. And secondly, it's great traffic to the store. So when the customer comes for click & collect order, we know that there is a good proportion of those customers that will enter the store and buy additional products. We have always tried to link our marketplace operation to the stores. So from the beginning of B&Q marketplace, returns were allowed in every store. You can order online a marketplace product and you can return the product in B&Q stores. And recently, we have started click & collect option for our marketplace vendors. I think we are the first one to do that in the U.K. And that's driving profitable business and additional footfall to the stores. So a bit too early to give you detailed data because it's just a few weeks, but the early data show a good traffic inflow -- footfall to the store from the people that come in to collect their marketplace product. So I think on business rate, I'll hand over to Bhavesh and as well on retail. Bhavesh Mistry: Yes. I mean, on your question, we had some rebates last year in B&Q. That's not repeating, and we're very clear in sort of calling that out. Going forward, we don't see any material sort of rebates or anything coming through. The broader challenge as you heard from other retailers is just the impact of business rates on brick-and-mortar retailers relative to what you see with some of the pure-play online, and that's something that we continue to lobby that challenge alongside our retail peers for a bit more of a level playing field. On shareholder returns, we have a good track record of delivering share buybacks after we invest in our business after we pay our dividend. This year, specifically, the reason we've accelerated is back to the 2 one-offs that I talked about in my prepared remarks. Our historical track record of buying back is around 18 months. So I wouldn't read anything into this year's acceleration simply as we had 2 one-offs, and we've invested at the right level in our business. We felt this is excess cash, and it made sense to accelerate the buyback only this year. Operator: We'll take our next question from Adam Cochrane from Deutsche Bank. Adam Cochrane: A couple of questions from me. Firstly, on the free cash flow guidance being increased, but the sort of top end of the profit before tax number not being increased. Can you just highlight what the incremental sort of GBP 40 million or so that you're generating on free cash flow above and beyond the increase in profit and where that comes from? And secondly, on the second half PBT decline, I understand the points you're making about on the cost side. But would you say that you're feeling more or less confident about the outlook in the second half versus the first half from where you were before. When you see the -- I think on some of the slide decks, you've got some sort of macro indicators. Are you feeling slightly cautious about what we see in France or what we might see in the U.K.? Just a little bit of how you're feeling about the wider consumer given some of the surveys and things that you guys do. And then the third question is on the big ticket, I think if I'm right, it sounds like your lower price point ranges have proven to be really successful. So from a volume perspective, would you say that your big ticket growth looks even more impressive than the value numbers that you presented? Thierry Dominique Garnier: Thank you, Adam. Let me start maybe with exactly reverse order, so 3, 2 and 1. So I think in big ticket, in short, the answer is yes, we are selling more lower price, let's say, lower tier kitchen across the group. So therefore, when you look at volume, yes, it's better than the sales you are looking at. Maybe let's spend 1 or 2 minutes on our view of the customer by region, and we'll do that methodically by country. So I think U.K., it's fair to say H1, we have seen a resilient consumer. And you see that through multiple quality indicators, transaction, volume were up, positive order book for big ticket, core and [indiscernible] categories. And when you look at the consumer sentiment, we are seeing a slightly improved consumer sentiment, slowly rising in H1 to now according to GfK. Now we are, like you, mindful of signs of softness in the labor market, the uncertainty of the budget ahead of us and we are seeing as well food inflation relatively high. So it's something we are looking. We are watching that H1, the consumer in the U.K. has been resilient. So therefore, we believe the middle of the scenario as a target for the full year is very relevant for the U.K. France, different story. We have seen H1, a subdued consumer, mainly driven by political uncertainty and the constant discussion around reforms, what should be the right reforms. And the consequence of that is a super high savings rates in France. We are about 400 or 500 basis points above historical average. So it's not as if the macro was a catastrophe or people have no money. In fact, people have money, but they save, they are not optimistic about the future. Consumer sentiment in France stay very low and is decreasing. So moving in sales is a good indicator, so moving from 92% in January to 88% in July, so not great. While we are seeing better macro indicator, interest rates is low, the mortgage year-on-year is up. The housing transaction are slightly up. So it's not around macro. It's all around political uncertainty. And we so far are relatively cautious about France in H2. We believe the consumer sentiment will remain subdued. The political environment is not improving. So we are cautious about France in H2. And therefore, scenario, we believe will be between the middle part of our range and the lowest end of the range for France. Poland H1 was a difficult H1, probably slightly worse than expected due to geopolitical factor in Q1 with the discussion around the war in Ukraine, political election at the end of Q1, relatively high inflation, relatively high interest rates and somehow consumer sentiment was low. But contrary to France, we are seeing some sign of, I would say, slow recovery, inflation now down to 3.1% in July. The real wage growth is really supportive. We have seen 3 interest cuts from the Central Bank of Poland and overall an improvement in the consumer sentiment. The macro are really supportive. So I would rather go for a slow improvement of the consumer sentiment in Poland in the coming months. And therefore, we are comfortable with the middle of our scenario. So a bit longer, but I think it's important everyone hear that. And then on the... Bhavesh Mistry: Your first question, Adam, on the free cash shape. So as I alluded to earlier, our peak is in H1. So our profit is H1 weighted. Our free cash is even more H1 weighted, and that's just the dynamic of working capital. We're selling through our stock in the first half. We tend to buy it in the second half. We also have a little bit more CapEx weighted in H2. That's our Screwfix store openings, both city and regular Screwfix. We've got more tech and maintenance CapEx. And then just some technicalities around the timing of Chinese New Year and Easter next year means there's more stock being ordered in the second half of this year. And again, that's just making sure we have it in and ready for peak trading when we hit the first half of the next financial year. Adam Cochrane: So if we think about a walk-through from where your free cash flow guidance was at the upper end at the beginning of the year and where it is now, obviously, your profit expectations haven't changed at the upper end, but your cash flow has. I understand the timing between 1H and 2H, but the absolute quantum of the GBP 40 million year-over-year, the timing of Chinese New Year as an example, I'm assuming you would have known that at the beginning of the year. So what's changed in terms of the upper end of the free cash flow? Is it that you've got lower inventory? Is it that -- what's the exact driver of higher free cash flow for the full year? Bhavesh Mistry: Well, profits. We had a tax refund [indiscernible] historical sort of true-ups of prepayments and tax. I'd say those are the 2. And we also took inventory days down, right. We took another 6 days down. So better management of our stock. Operator: Next question comes from Mia Strauss with BNP Paribas Exane. Mia Strauss: Maybe just 2 questions. On Castorama France, you've talked about the progress you've made on some of the store restructurings and the reduction in DC space. But maybe if you can give a bit more color on what that actually translates to in terms of pounds? And then secondly, on big ticket, as you said, we've seen 3 quarters of sequential growth. Is this kind of considered the new normal? Or are we going to start lapsing in tougher comps as we go into next year? Thierry Dominique Garnier: So I think maybe on Casto France, you have in the presentation really an update of the plan and we are really happy with the progress being on sales and really productivity and on the restructuring of the store network. Some of those actions will deliver results relatively in short term. And when you speak about costs, you have short-term impact, including logistics, head office, continuous work we are doing on efficiency. So that delivers relatively fast P&L impact. Store network, you need a bit more time when you do rightsizing, you need to do the job in the store, you need to bring the partner in the back-end space and you need the maturation of the stores. So I think clearly, the network, we need much more time to crystallize the profit than on short-term cost actions. Another example, when you speak about e-commerce and Pro as well, it's a long-term several years program, and we are very optimistic on it. On big ticket, I think in short, probably 2/3 of the growth is our self-help, 1/3 is the market. So when I look at H2 and '26, I think the momentum -- we should see the momentum from self-help for a few more months. It's a combination of range, but as well the churn by the team. I give you interesting data that installations were up 36% in H1, kitchen and restroom installations. So it's a good job done by the team around training, incentives, focus on selling more kitchen and bathroom installations. So we have really a strong plan on kitchen, bathroom. So 2/3 our action, 1/3 the market. Operator: Our next question comes from Georgina Johanan from JPMorgan. Georgina Johanan: [Audio Gap] the second one, thanks for all the color on gross margin. I just wondered to help us with modeling as we go into next year. Obviously, seasonal was so strong in the U.K. in Q1. If you could just give a sense in basis points of how much that supported the H1 gross margin in the U.K. in particular, please? And then finally, just on Poland, I think some of us are sort of more removed from that market, if you like, than U.K. and France. And I just wondered if there was anything happening that would be useful to be aware of in terms of the sort of competitive or structural environment there. So not necessarily related to sort of promo around the cyclical, but just whether there is any new competitors developing or competitors falling away as the case may be, I know action is rolling out strongly there, for example. So just anything you could share would be really helpful. Thierry Dominique Garnier: For sure. Thank you for the question. I'll start with the first one. I think about half of B&Qs are in a way impacted by Homebase closures. And we have tactical marketing action locally. So we did a piece of job to make sure we can reach the customer around the Homebase stores and attract them to B&Q. And we make sure we have enough stock in the store to make sure as well the sales transference was optimized in H1. So it's part of the sales of B&Q in H1, obviously, but there are many other levers, and we discussed big project, marketplace growth, the Pro, et cetera, and Homebase is part of that along with the good weather in H1. We have bought 8 stores from Homebase, 5 in the U.K., 3 in Poland. Again, very happy with the pace of the team because we converted them in a record few weeks. So we were -- the store already ready between April and early May, just before peak. I'm very happy with the sales of those 8 stores so far, really good start. Maybe on Poland, I will let Bhavesh speak around gross margin and seasonal. Competitive dynamic, we are clear #1. But there is a fight with [indiscernible] as well competing in this market. We see, as I mentioned, rational behavior on prices, relatively dynamic promo. And I think both us and [indiscernible], we keep opening stores. If you look at the past 3 years, we opened 11 stores between '23, '24 and H1 '25. So significantly more stores than [indiscernible] keep up new store on this side. I think big market -- big player in Poland is Allegro. I think if you tell me the past 5 years who is the #1 competitor is probably Allegro. So we are really working hard on our e-commerce proposition, our marketplace in Poland since early this year. A lot going on, on loyalty program, data apps in Poland to compete with Allegro. And like in other countries, yes, Allegro is a fantastic marketplace. But for DIY, and we see that in the U.K., we could become the reference marketplace in DIY in Poland. And then new discounters, you mentioned [indiscernible]. I think it's -- we are internally working very hard on how we react with discounters for the past few years through our lowest price, through dedicated OEB. As well Lidl, Lidl is doing good job on some categories. So that's something we are addressing very, very carefully. And I think we have a very good plan to compete with Lidl and [indiscernible] in Poland and across the globe. Now on seasonal and gross margin... Bhavesh Mistry: So our seasonal like-for-likes in the half were plus 5.1%. These are rough, rough numbers, but if you assume seasonal and more normal seasonal would be sort of 1% to 2% like-for-likes. When you take our gross margin of around 35%, it's a little bit lower in seasonal than other categories. Thierry talked about big ticket being sort of margin accretive relative to the other categories, then I'd roughly say around GBP 15 million of our profit uplift was a function of the seasonal outperformance or margin uplift. Operator: [Operator Instructions] There are no further questions on the webinar. I'll now hand over to Thierry for closing remarks. Thierry Dominique Garnier: Thank you, everyone, for joining, and thank you for all your questions and comments. And obviously, myself with the team, we are at your disposal if you want to discuss further or ask more questions and happy to meet you and talk to you very soon. Thank you, everyone.
William Crossland: Good morning, everyone. I'm William Crossland, CEO of Thermal Energy International. Thank you for joining us today for our earnings call for the fourth quarter and fiscal year ended May 31, 2025. Our news release, financial statements, and MD&A are available on our website and have been filed on SEDAR. Following my prepared remarks, we will have a question and answer session, at which time qualified equity analysts joining us on MS Teams will be able to ask questions. If you're joining us online, you should be able to see our slide presentation on your screen now. Before we get started, I'll point out that today's earnings call may contain forward-looking statements within the meaning of applicable securities laws. Forward-looking statements are subject to risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information, please refer to our financial statements and our MD&A for the quarter and our other filings with Canadian securities regulators. Here's a quick overview of what I'll be highlighting in this morning's call. First, we had record fiscal year revenue of $29.8 million. And while revenue was down from the quarter, our gross margin and adjusted EBITDA margin improved in Q4. We significantly paid down our long-term debt both in the quarter and the year, and looking ahead, our record Q1 order intake positions us well for a strong 2026. Finally, we've identified a few key strategic opportunities to drive sales growth and margin improvement going forward. Now looking at our revenue on slide four, while our revenue for 2025 was down 9% year over year, we achieved record revenue of $29.8 million for the year. This slide is great at illustrating how our revenue can be lumpy from quarter to quarter and why we tend to focus more on the trailing twelve months. As you can see, our fourth quarter revenue was down each of the past two years, but our fiscal year revenue increased by 41.2% over the last two years. We remain profitable in the quarter and the year. In fact, despite our lower revenue in Q4, our gross margin improved to 53.9% and our adjusted EBITDA margin improved to 5.8% for the quarter. Fourth quarter adjusted EBITDA was about $400,000, down 6% from the prior year. Contributing to the decrease was an increase in foreign exchange loss of $349,000 and an increase in general operating costs of $280,000 related to the growth in our team. These amounts were partially offset by higher gross margin and a decrease in quarterly R&D expenses. For the year, we had adjusted EBITDA of $1.05 million, down from $2 million the year before. The largest driver of this year-over-year variance was that fiscal year 2025 operating expenses include an additional $813,000 related to the growth in our headcount, primarily in our sales, marketing, and engineering team. Also contributing to the decrease were the lower gross profit for the year and inflation-related increases to regular operating costs. Our net income was down for the quarter and the year, but also still positive for both. In addition to the drivers I just discussed, adjusted EBITDA, net income from the quarter was impacted by a lower amount of income tax recovery than the previous fourth quarter, and for the year, we had about a $5,000 increase in income tax expense. But again, the main driver for the decreases in adjusted EBITDA and net income was the growth in our headcount. We continue to have a very strong balance sheet with cash and cash equivalents of $2.8 million and working capital of $2.4 million at year-end. Importantly, we significantly paid down our bank debt, repaying $2 million in fiscal 2025, including $1.1 million in the fourth quarter alone. Over the past three years, we have repaid $3.6 million in acquisition and pandemic-related debt with just $329,000 remaining at year-end. The remaining balance will be fully repaid by January 2026. The full repayment of our debt should not only help our bottom line going forward but also give us more flexibility with future growth plans. While our revenue for fiscal 2025 was a record, our order intake of $21.8 million for the year was down from the prior year. Likewise, our order backlog of $12.9 million at year-end was down from the prior year. But those of you that have been following the story for some time know that our business can be quite lumpy at times, with significant variance in the timing of orders. The good news is that we saw a strong rebound in orders, coming in subsequent to year-end, with order intake of $11.4 million between June 1 and September 22. As a result, our backlog has grown to $24.3 million as of September 22, which is a record for this time of year. The rebound in order intake included $11.3 million in orders received in 2026, which is a record amount for our Q1 period and it is about four times what we had in the first quarter last year. Within that $11.3 million, there are four orders we announced back in June and July that had a combined total of about $7.5 million, including $5.1 million in follow-up orders from one of the world's largest pharmaceutical companies. It's important to point out that given the typical revenue pattern for large turn projects like these, most of the revenues from these previously announced orders are expected to be realized in 2026. As such, we expect overall revenues in fiscal 2026 to be weighted more towards the back half of the year. I'd also note that our business development pipeline remains strong with numerous repeated opportunities from existing customers and potential opportunities with prospective new customers. The substantial investments we've made in our business over the past two-plus years have weighed on profitability, but they've also positioned us to scale the business much better. Building on this foundation, we have several strategic initiatives to further scale the business and drive profitable growth. These include developing indirect sales channels in North America and Europe, developing and promoting standardized equipment packages, establishing BEI manufacturing in Europe, and leveraging our award-winning carbon reduction efficiency scoping tool, or CREST for short, for both our direct and indirect sales channels. I'll take a few moments now to provide a high-level overview of each of these initiatives. First, we look to add indirect sales channels in North America and Europe by developing and cultivating networks of independent representative companies, or IMRs for short, to focus on smaller equipment sales. Many industrial products, including boiler and steam system-related products, are often sold by networks of IMRs who are responsible for promoting, selling, and commissioning in their territories. IMRs usually also have service groups, including those people that provide ongoing service to boilers, burners, steam traps, etcetera. Importantly, these representatives have established relationships and are in regular contact with end users. While BEI's distribution model already uses a manufactured representation network, there is an opportunity for the rest of our business to leverage IMRs to cost-effectively increase sales of equipment. In addition to providing extensive geographical coverage, the potential benefits include the opportunity to further grow sales with less investment as IMRs operate on a 100% success-based markup basis. And having IMRs handling smaller orders will free up our internal sales team to focus on larger, more strategic opportunities. Next, we see an opportunity to increase sales by developing and promoting a line of standardized equipment packages and standardized pre-engineered heat recovery solutions for smaller or less complex projects. IMRs could then sell these from a line card along with their other products and services. For smaller projects, this would reduce project development times as there would be no bespoke design required, and we would expect to benefit from a faster sales cycle as these smaller projects could be quoted on and sold directly from CREST survey data, as we'll talk about in a minute. BEI and Heat Sponge have been a great business for us, but sales have been mostly limited to North America so far. We see significant potential for Heat Sponge sales in Europe. As a result, we see an opportunity to expand Heat Sponge sales by adding manufacturing in Europe. At first, BEI's existing US shop would supply components for assembly and testing in Europe. Then later, as orders increase, we may possibly move the European manufacturing business to a contract manufacturing shop in Europe. Europe is largely an untapped market for Heat Sponge, and having a manufacturing operation in Europe would result in shorter lead times and a more cost-effective way to service the European market. As mentioned earlier, each of these initiatives can be supercharged by CREST, our powerful mobile app platform that not only uncovers thermal energy savings and carbon reduction opportunities but also saves time, accelerates the sales cycle, and helps both our sales team and new independent representatives spot opportunities that might otherwise be missed, including cross-selling and other repeat business potential. Additionally, CREST can help reduce the time needed for internal salespeople and IMRs training and ramp-up time. So in summary, some key takeaways from the presentation are we have a strong balance sheet with little debt. Our record first quarter order intake and growing backlog position us well for a strong half of 2026. We have identified a few key opportunities to drive sales growth and margin improvement, including developing indirect sales channels so our internal sales team can focus on larger, more strategic opportunities, increasing sales of standardized equipment packages, expanding BEI into Europe, and leveraging CREST in each of these areas and throughout our business. This concludes my prepared remarks. I would now like to open the call for questions. I will turn it over to Trevor Heisler, and MBC Capital Market Advisors, who will moderate our Q&A session. Please go ahead, Trevor. Trevor Heisler: Thank you, Bill. If you're a qualified equity analyst joining us on MS Teams and would like to ask a question, please notify me now by using the raise your hand feature. And it doesn't look like we have any questions at this time, Bill. Please go ahead. William Crossland: Okay. Well, thank you for your continued support of Thermal Energy International. We look forward to speaking to you again next quarter. Have a great day.
Operator: Thank you for standing by, and welcome to Micron Technology's Fiscal Fourth Quarter 2025 Financial Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. To remove yourself from the queue, please press star 11 again. I would now like to hand the call over to Satya Kumar, Investor Relations. Please go ahead. Satya Kumar: Thank you, and welcome to Micron Technology's fiscal fourth quarter 2025 financial conference call. On the call with me today are Sanjay Mehrotra, our Chairman and President and CEO, and Mark Murphy, our CFO. Today's call is being webcast from our Investor Relations site at investors.micron.com, including audio and slides. In addition, the press release detailing our quarterly results has been posted on the website, along with prepared remarks for this call. Today's discussion contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include statements regarding our future financial and operating performance, including our guidance as well as trends and expectations in our business, market, industry, and regulatory and other matters. These statements are based on our current assumptions, and we assume no obligation to update these statements. Please refer to our most recent financial report on Form 10-Ks and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. Today's discussion of financial results is presented on a non-GAAP financial basis unless otherwise specified. A reconciliation of GAAP to non-GAAP financial measures can be found on our website. I'll now turn the call over to Sanjay. Sanjay Mehrotra: Thank you, Satya. Good afternoon, everyone. Micron had an outstanding finish to fiscal 2025, delivering fiscal Q4 revenue, gross margin, and EPS all above the high end of our updated guidance ranges, driven by pricing execution and strong performance across end markets. We achieved record revenue in Q4. In our March 2024 earnings call, we said that we expect Micron to be one of the biggest beneficiaries of AI in the semiconductor industry and that we expect to deliver record revenue and significantly improve profitability in fiscal 2025. I'm pleased to report that in fiscal 2025, Micron's revenue grew nearly 50% to a record $37.4 billion, and gross margins expanded by 17 percentage points to 41%. This performance was supported by the ramp of our high-value data center products and our broad-based DRAM pricing strength across end markets. The combined revenue from HBM, high-capacity DIMMs, and LP server DRAM reached $10 billion, more than a fivefold increase compared to the prior fiscal year. Our data center SSD business reached record revenue and market share in fiscal 2025. I want to thank our global Micron team for their focus and execution, which made these results possible. As we enter fiscal 2026, Micron is positioned better than ever. Our leadership in advanced technologies, including HBM, one gamma DRAM, and g9 NAND, enables a differentiated product portfolio that drives strong ROI. AI-driven demand is accelerating, and industry DRAM supply is tight. Our HBM performance has been strong, and robust demand, tight DRAM supply, and disciplined execution have significantly strengthened the profitability of the rest of our DRAM portfolio. In NAND, our higher mix to data center and improving industry conditions are contributing to profitability. Our fiscal Q1 guidance reflects new records for revenue and EPS. In addition to being a demand driver, AI is also a powerful productivity driver for Micron, contributing to our strong competitive position and financial performance. We are using AI throughout the company across product design, technology development, manufacturing, and other functional growth. We have seen strong adoption and as much as a 30 to 40% productivity uplift in select GenAI use cases such as code generation. In design simulation, AI is accelerating our silicon to systems design cycle to advance modeling and reduce iterations. In manufacturing, we have driven a fivefold increase in wafer images analyzed in the past year and doubled the amount of useful data and telemetry collected and analyzed from our fab tools, all of which improve our yield performance. These AI capabilities enable us to achieve superior product specifications, quality, and time to market at scale. Turning to technology and operations, we are proud to announce that our one gamma DRAM node reached mature yields in record time, 50% faster than in the prior generation. We are the first in the industry to ship one gamma DRAM and will leverage one gamma across our entire DRAM portfolio to maximize the benefits of this leadership technology. We achieved first revenue from a major hyperscale customer on our one gamma products for server DRAM in the quarter. Our g9 NAND production ramp has been progressing well, while scaling at a pace aligned with market demand. We have ramped our g9 NAND node for both TLC and QLC NAND and have qualified our g9 QLC NAND for enterprise storage. In fiscal Q4, we received a CHIPS grant disbursement following the completion of a key construction milestone for our new high-volume manufacturing fab in Idaho, with the first wafer output expected to begin in 2027. We began design work for our second Idaho manufacturing fab, which will provide additional capacity beyond 2028. In New York, we have completed initial phases of our environmental impact study and continue to work with state and federal authorities towards starting ground preparation. In fiscal Q4, we installed the first EUV tool for our Japan fab to enable one gamma capability, which will complement our existing one gamma supply from our fabs in Taiwan. The time from receiving this tool to completing installation was a record for all EUV tools globally, demonstrating Micron's expertise with this equipment. We plan to continue to invest in our Japan production capability to meet the requirements of the advanced memory technologies of the future. Our continued HPM assembly and test investments position us well to meet growing HBM capacity requirements in calendar 2026. We are making good progress on our Singapore HBM assembly and test facility construction, which is on track to contribute to our HBM supply capability beginning in calendar 2027. Turning to our end markets, in data center, we now expect calendar 2025 total server units to grow approximately 10%, up from our prior expectations of mid-single-digit percentage growth. The calendar 2025 traditional server growth outlook has strengthened significantly from flat to growth in the mid-single-digit range. We believe this change in outlook is in part related to the growth of AI agents and the traditional server workloads agents initiate as they execute tasks on behalf of users. Continued growth in traditional server applications in enterprises is also contributing to additional demand growth. In addition to traditional servers, AI server growth continues to be very robust. This growth in both traditional and AI servers is driving strong demand for our DRAM products. Data centers require some of our most complex and high-value products, and meeting this demand has presented several opportunities to enhance our product mix and profitability. In fiscal 2025, Micron's data center business reached a record 56% of total company revenue with gross margins of 52%. Our HPM business has posted many quarters of strong growth. In fiscal Q4, our HPM revenue grew to nearly $2 billion, implying an annualized run rate of nearly $8 billion, driven by the ramp of our industry-leading HBM CE products. We are pleased to note that our HPM share is on track to grow again and be in line with our overall DRAM share in this calendar Q3, delivering on our target that we have discussed for several quarters now. Micron's HPM four twelve high remains on track to support customer platform ramps even as the performance requirements for the HBM four bandwidth and pin speeds have increased. We have recently shipped customer samples of our HMM four with industry-leading bandwidth exceeding 2.8 terabytes per second and pin speeds over 11 gigabits per second. We believe Micron's HPM four outperforms all competing HBM four products, delivering industry-leading performance as well as best-in-class power efficiency. Our proven one beta DRAM, innovative and power-efficient HBM four design, in-house advanced CMOS-based die, and advanced packaging innovations are key differentiators enabling this best-in-class product. For HBM four e, Micron will offer standard products as well as the option for customization of the base logic die. We are partnering with TSMC for manufacturing the HVM four e base logic die for both standard and customized products. Customization requires close collaboration with customers, and we expect HPM four e with customized base logic dies to deliver higher gross margins than standard HPM four e. Our HBM customer base has expanded and now includes six customers. We have pricing agreements with almost all customers for a vast majority of our HBM three e supply in calendar 2026. We are in active discussions with customers on the specifications and volumes for HBM four, and we expect to conclude agreements to sell out the remainder of our total HPM calendar 2026 supply in the coming months. Micron's LPDD five for servers had over 50% sequential growth in the quarter and reached record revenue. In close collaboration with NVIDIA, Micron has pioneered the adoption of LPDRAM for servers, and since NVIDIA's launch of LPDRAM in their GB product family, Micron has been the sole supplier of LPDRAM to the data center. In addition to our leadership in HPM and LP five, Micron is also well-positioned with our GDDR seven products, which are designed to deliver ultrafast performance with pin speeds exceeding 40 gigabits per second along with best-in-class power efficiency to address the needs of certain future AI systems. In data center NAND, AI-influenced use cases, such as KV cache tiering and vector database search and indexing, are driving demand for performance storage, while AI server growth is driving demand for high-capacity SSDs for capacity storage. Micron is gaining share in these markets with our customer-focused technology leadership, vertical integration, and execution. We strengthened our portfolio with the industry's first g9 NAND data center products, including first-to-market PCIe Gen six SSDs. Near term, we see continued growth in the data center storage market, with HDD supply shortages expected to improve NAND demand and drive a healthier supply-demand environment. Turning to PCs, the end of life of Windows 10 and greater adoption of AI-enabled PCs are driving an improved PC demand outlook. We now expect PC unit shipments to grow at a mid-single-digit percentage level in calendar 2025 versus our low single-digit percentage growth expectations previously. During the quarter, we achieved our first OEM customer qualification of our 16-gigabit one gamma-based d five and commenced volume shipments. In NAND, we successfully qualified our first g9 NAND SSDs in both performance and mainstream categories with OEM customers. Our strong SSD portfolio enabled us to achieve record client SSD revenue in the quarter and in fiscal year 2025. Smartphone unit shipment expectations remain unchanged at a low single-digit percentage range in calendar 2025. An increasing mix of AI-ready smartphones continues to be a key catalyst for DRAM content growth in mobile devices. Notably, one-third of the flagship smartphones shipped in calendar Q2 contain 12 gigabytes or more, and given recent product launches from Apple, Samsung, and other smartphone OEMs, we expect this mix to increase over the coming quarters. In fiscal Q4, Micron ceased future mobile managed NAND product development in order to focus our resources and investments on higher ROI opportunities in our portfolio. We will continue to support existing mobile managed NAND products. Micron remains committed to serving the mobile DRAM market with our industry-leading portfolio. In fiscal Q4, we achieved OEM qualification of our first 10.7 gigabit per second one beta second-generation LP five x products at 16 gigabyte and 24 gigabyte capacities. Turning to auto, industrial, and embedded, in automotive, trends such as ADAS and AI-enhanced in-cabin experiences require significantly higher memory and storage content, making it a higher growth part of the industry. In embedded, we expect physical AI, such as drones, advanced robots, and ARVR, to become a more important driver of demand over time. Automotive and industrial demand strengthened throughout the quarter, exceeding our initial forecast. We are seeing improved profitability in this business with stronger pricing and an increased mix of advanced technology nodes, with greater adoption of d five and LP five products. We continue to see supply constraints in d four and LP four. In June, Micron announced investments in our Virginia facility in an effort to support our long life cycle customers' demand for d four and LP four. Now turning to our market outlook. Customer inventory levels are healthy overall across end markets. We expect calendar 2025 industry DRAM bit demand growth to be in the high teens percentage range, somewhat higher than our previous outlook. We expect calendar 2025 industry NAND bit demand growth to also be higher than our previous outlook, now in the low to mid-teens percentage range. We expect Micron's calendar 2025 bits to be below industry bit demand growth for non-HPM DRAM and for NAND. Robust data center demand, including the uptick in server unit growth, has contributed to a tight industry DRAM environment and strengthened NAND market conditions. Additionally, broadening of demand across end markets has also constrained DRAM supply. On the supply side, we expect low supplier inventories, constrained node migration, as industry supports extended d four and LP four end of life, longer lead times, and higher costs globally for new wafer capacity, all to limit the pace of supply growth for DRAM in 2026. In calendar 2026, we anticipate further DRAM supply tightness in the industry and continued strengthening in NAND market conditions. Over the medium term, we anticipate industry bit demand growth of mid-teens CAGR for both DRAM and NAND. Micron invested $13.8 billion in CapEx in fiscal 2025. As we continue to make one gamma DRAM and HPM-related investments, we expect fiscal 2026 CapEx to be higher than fiscal 2025 levels. DRAM front-end equipment and fab construction will drive higher capital spending in fiscal 2026. Our continued technology node migration to one gamma will provide the majority of our supply growth for DRAM in calendar 2026. As we transition more products to one gamma, our one beta capacity will support HBM growth in 2026. I'll now hand over the call to Mark to provide more color on our fiscal fourth quarter and fiscal 2025 financials. Mark Murphy: Thank you, Sanjay. Good afternoon, everyone. Micron delivered strong results to close out the fiscal year, with Q4 revenue, gross margin, and EPS all exceeding our updated guidance. For the full year, we achieved record revenue of $37.4 billion, up 49% year over year. Gross margins expanded to 41%, a 17 percentage point improvement from fiscal 2024. EPS reached $8.29, reflecting a 538% increase compared to the prior year. Total fiscal Q4 revenue was $11.3 billion, up 22% sequentially and up 46% year over year, and a quarterly record for Micron. Higher sequential revenue was driven by growth across our end markets, including record data center revenues and strong sequential growth in consumer-oriented markets. Fiscal Q4 DRAM revenue was $9 billion, up 69% year over year and represented 79% of total revenue. Sequentially, DRAM revenue increased 27%. Bit shipments increased in the low teens percent driven by strong demand across all end markets. Prices increased in the low double-digit percentage range driven by tight industry DRAM supply, pricing execution, and favorable mix. Fiscal 2025 DRAM revenues were a record $28.6 billion, up 62% year over year. Fiscal 2025 DRAM all-in costs inclusive of HBM were down by low single-digit percentage points. Fiscal Q4 NAND revenue was $2.3 billion, down 5% year over year, and represented 20% of Micron's total revenue. Sequentially, NAND revenue increased 5%. NAND bit shipments declined in the mid-single-digit percentage range, and prices increased in the high single-digit percentage range due to favorable mix. Fiscal 2025 NAND revenues were a record $8.5 billion, up 18% year over year. Fiscal 2025 NAND all-in cost reductions were around low teens percentage. Now turning to quarterly financial performance by business unit. Our new segment disclosures for our business units, which you see starting in today's press release and will see in future filings, highlight the improvements in our profitability and changing business mix. The cloud memory business unit and core data center business unit combined represent the totality of our data center business. Cloud memory business unit revenue was $4.5 billion and represented 40% of total company revenue. CMB revenues were up 34% sequentially, driven by robust bit shipment growth. HBM revenues reached a new quarterly record. CMBU gross margins were 59%, higher by 120 basis points sequentially, supported by cost reductions. Core data center business unit revenue was $1.6 billion and represented 14% of total company revenue. CDBU revenues were up 3% sequentially. CDBU gross margins were 41%, up 400 basis points sequentially, driven by higher pricing and favorable mix. Mobile client business unit revenue was $3.8 billion and represented 33% of total company revenue. MCBU revenues were up 16% sequentially, driven by higher DRAM shipments and improved pricing. MCBU gross margins were 36%, up 12 percentage points sequentially, driven by higher pricing and favorable mix. Automotive and embedded business unit revenue was $1.4 billion and represented 13% of total company revenue. AEBU revenues were up 27% sequentially, driven by higher bit shipments. AEBU gross margins were 31%, up 540 basis points sequentially, driven by higher pricing. The consolidated gross margin for fiscal Q4 was 45.7%, up 670 basis points sequentially. Sequential gross margin improvement was driven by favorable product mix, better DRAM pricing, and strong execution on cost reductions. Operating expenses in fiscal Q4 were $1.2 billion, up $81 million quarter over quarter and in line with our guidance range. The sequential increase was driven primarily by higher R&D. We generated operating income of $4 billion in fiscal Q4, resulting in an operating margin of 35%, up 820 basis points sequentially and 12 percentage points year over year. Fiscal Q4 taxes were $471 million on an effective tax rate of 12%, lower than our guidance due to favorability in certain discrete items. Non-GAAP diluted earnings per share in fiscal Q4 was $3.03, with 59% sequential growth and a 157% increase versus the year-ago quarter. Turning to cash flows and capital expenditures. In fiscal Q4, our operating cash flows were $5.7 billion, and our capital expenditures were $4.9 billion, resulting in free cash flows of $803 million. The increase in capital expenditures was driven by planned investments for DRAM. For the full year fiscal 2025, we generated $3.7 billion in free cash flow, representing 10% of revenue. Ending inventory for fiscal Q4 was $8.4 billion or 124 days. Inventory was down $372 million sequentially, and inventory days were down fifteen days, driven by strong sequential bit shipment growth in DRAM. DRAM inventory days are below target levels, and NAND inventory days improved sequentially. On the balance sheet, we held $11.9 billion of cash and investments at quarter-end and maintained $15.4 billion of liquidity when including our untapped credit facility. During fiscal Q4, we reduced debt by $900 million through the paydown of $700 million term loans and repurchased approximately $200 million of our senior notes. We closed the quarter with $14.6 billion of debt, maintaining low net leverage and a weighted average debt maturity of 2033. Now turning to the outlook for the first fiscal quarter. We expect price, cost, and mix to all contribute to strengthening gross margins in Q1. Operating expenses for fiscal Q1 are projected to be approximately $1.34 billion, with the sequential increase driven by R&D related to data center product innovation and development. Micron's fiscal 2026 will be a fifty-three-week fiscal year compared to fiscal 2025, which was a fifty-two-week fiscal year. As a result, fiscal Q4 2026 OpEx will reflect the effect of an additional work week in the quarter. We expect the fiscal Q1 and fiscal year 2026 tax rate to be around 16.5%. We expect our fiscal Q1 capital spending to be approximately $4.5 billion. While quarterly spend may fluctuate, this level serves as a reasonable quarterly baseline for the planned capital spend in fiscal 2026. We will continue to exercise supply discipline as we pursue our growth opportunities. We expect free cash flow to strengthen in fiscal Q1, and we project significantly higher annual free cash flow year over year in fiscal 2026. Any impacts that may occur due to potential new tariffs are not included in our guidance. With all these factors in mind, our non-GAAP guidance for fiscal Q1 is as follows: We expect revenue to be a record $12.5 billion, plus or minus $300 million, gross margin to be in the range of 51.5%, plus or minus 100 basis points, and operating expenses to be approximately $1.34 billion, plus or minus $20 million. Based on a share count of approximately 1.15 billion shares, we expect EPS to be a record $3.75 per share, plus or minus 15¢. I'll now turn it over to Sanjay to close. Sanjay Mehrotra: Thank you, Mark. Fiscal 2025 was a year of many records for Micron, as we have highlighted today. We have strong momentum entering fiscal 2026, with a robust fiscal Q1 demand outlook led by data center, and the most competitive position in our history. Over the coming years, we expect trillions of dollars to be invested in AI, and a significant portion will be spent on memory. As the only US-based manufacturer of memory, Micron is uniquely positioned to benefit from the AI opportunity ahead. Thank you for joining us today. We will now open for questions. Operator: Thank you. As a reminder, to ask a question, you will need to press 11 on your telephone. To remove yourself from the queue, you may press 11 again. Please limit yourself to one question and one follow-up to allow everyone the opportunity to participate. Please standby while we compile the Q&A roster. Our first question comes from the line of Timothy Arcuri of UBS. Please go ahead, Timothy. Timothy Arcuri: Thanks a lot. Mark, I was wondering if you could help on the guidance a little bit. I know you do not want to get into too much detail, but of the, let's say, $2.2 billion sequential that you're or sorry. The, you know, $200 million sequential revenue. Can you help us how that splits out between DRAM and NAND? And I guess, any gross margin puts and takes that you might have as well would be helpful. Mark Murphy: Yeah. Tim, you were breaking up a bit at the end, but I believe I've got it. So in the first quarter, we'll be heavier DRAM mix than NAND in that growth. As you mentioned, we're not gonna break out, you know, bits in ASP, but we are, you know, guiding up, you know, 580 basis points sequentially. It is split across, you know, mixed pricing and strong execution on our cost reductions. We're in a very constructive pricing environment. Supply is tight for DRAM and improving substantially in NAND. Yeah. We've got, you know, we've got essentially strong demand and supply factors at work. As you heard in the script today. On the demand side, data center spend remains robust. Projected to grow. Traditional server spend is improving and expected to grow. Refresh and inference workload demand drivers, and then PC, smartphone, auto all have increased content growth, and that's becoming clear. And then on the supply side, we'll get into that more in the Q&A here, but that is, you know, tight as well due to a number of factors that are structural. So, yeah, we're focused on our execution. And, again, sequentially here, expect price mix and strong execution to drive that 580 basis point margin expansion. Timothy Arcuri: Thanks a lot, Mark. And then Sanjay, I guess you had previously guided us to, like, a $100 billion HPN TAM by 2028, but since you gave us that number, there's been some massive numbers given out, some, you know, TAM numbers by NVIDIA and some, you know, some investments that are, you know, going on at and whatnot. So it's obvious that the Compute TAM is much bigger than what I think you probably would have seen at that time. So do I give an update to that number? I would assume it's bigger than that number, and maybe if you could comment on sort of what you see next year. I know this year sounds like mid-thirties. I'm wondering if you can give us any, like, milestone year and, you know, update that, you know, $100 billion and, you know, 2020. Thanks. Sanjay Mehrotra: But, Tim, your connection is poor, and you were breaking up a lot. But I think I got the gist of your question. What we have said before regarding longer-term HBM TAM, we have said that by 2030, we expect HPM TAM to reach $100 billion. And we had also said that HPM BIT CAGR will grow faster than the DRAM CAGR. And we see that in absolutely 2026 as well, you know, in terms of bits in HPM will outgrow the overall DRAM bits. And, of course, you know, as we look ahead, the value proposition of HBM continues to increase. And, of course, as we talked about, HPM now in 2026, transitioning to HPM four, Micron, of course, well-positioned. The market is starting to require even higher performances. And we today pointed out that Micron with our HPM four will have the highest performance product with over 11 gigabits per second and, of course, highest power efficiency as well. So the specs of HVM are becoming increasingly more demanding, which is exciting for us because we are very well positioned with these products. So this just means the value proposition of HPM just continues to grow. So we definitely continue to see strong long-term growth, very excited about all these various announcements of massive data center infrastructure spend. We have talked about trillions of dollars of spend over the next several years. And, of course, memory is very much at the heart of this AI revolution. This means a tremendous opportunity for memory and certainly a tremendous opportunity for HPM. So we feel very good about HPM longer-term opportunities, good about HPM opportunities in 2026, and very good about Micron's positioning. With our very strong product portfolio and strong execution, our track record, and the trust that we have built with our customers and our ability to supply quality and meet our customers' volume requirements. So exciting times ahead, and we are, of course, continuing to work very closely with our customers. Timothy Arcuri: Thanks a lot. Thank you. Operator: Our next question comes from the line of Vivek Arya of Bank of America. Please go ahead, Vivek. Vivek Arya: Thank you for taking my question. I'm curious. How do you see the transition from HPM three e to four? When do you expect the crossover next year? And I think as part of that, you mentioned that the pricing for three e is settled for 26. And I'm curious what is the direction of that pricing versus what you're getting now? Is it higher or lower? And do you expect your CE share to stay the same or change next year? Sanjay Mehrotra: So with respect to HPM four, you know, this is, of course, we will be at the forefront of this production ramp very much aligned with customers' timing. And, as we have mentioned, we have the best product in the industry, with the highest performance over 11 gigabits per second, and we have sampled that product. As well as low power. So industry-leading product performance. And so we will be ramping it up in line with customer demands, of course, you know, first production shipment and CQ2 of 26 time frame and production will ramp during the course of 2026. Again, in line with customer demand. And overall, in 2026, versus 2025, we see our share growing, product well-positioned. We are not commenting on the pricing of HPMC e. We had told you that HPMC e, we have pricing agreements completed with almost all customers for the vast majority of our HPMC e supply in 2026, and we are in discussions with regarding HPM four with our customers. What I will tell you is that supply is tight. We expect a healthy demand supply environment in 2026 for overall DRAM, and that bodes well for the profitability of DRAM, profitability of HBM, and, of course, profitability of non-HBM as well. Is experiencing tight supply. Vivek Arya: And for my follow-up, maybe, Mark, on the gross margin side, one is just conceptually, how do you think about the puts and takes of gross margins as you go through the rest of the year, the 51.5 this kind of the baseline? And as long as sales grow, can you expand off of this level? And then, you know, related to that, when I look at your cloud data center business, gross margin's 59%, operating margin's 48%. How much more room is there to from those very strong levels right now? Thank you. Mark Murphy: Yeah. Vivek, so we're not providing out quarter guidance, but what we will say is that we believe or we expect gross margin to improve sequentially first to second quarter. And it's on this tight DRAM supply and the associated pricing along with, you know, NAND business continuing to improve. And then just mix effects as we continue to steer bits towards high-value markets. And then our cost performance continues to be good. As, you know, mentioned in the prepared remarks, these supply-demand factors are, we believe, they're durable on the demand side. Data center spend continues to increase. I talked earlier about traditional server spend, and then the edge and auto. Having increased content. And then on the supply side, you know, customer inventory levels are healthy. Our supply is lean. Our DRAM inventories are below target. Band continues to improve. You know, we are, you know, we're working to be as efficient as we can in providing a supply response. You know, we're doing node transitions, but as the industry extends support for d four, that's constrained those node transitions. And then finally, it just takes a long time and is expensive to add new clean room space. And we all know the silicon intensity of HBM creating the urgency for that capacity requirement. So it's a good setup as we go into 26. And we, you know, delivered this strong guide on the first quarter gross margin, and we expect to see gross margins up in Q2. I also wanna reiterate something Sanjay mentioned that we expect margins to be healthy in both HBM and non-HBM in '26. So I'd leave it at that on the Alcorder guidance. Vivek Arya: Thank you. Operator: Thank you. Our next question comes from the line of CJ Muse of Cantor Fitzgerald. Your line is open, CJ. CJ Muse: Yeah. Good afternoon. Thank you for taking the question. I guess first question, you know, it certainly feels like in the last month or two, there's been an inflection in DRAM demand led by inference hyperscalers. So curious if you could kinda speak to what you have seen, the breadth of demand, and particularly the sustainability of that, and we'd love your thoughts. You've talked about tightness expected into fiscal 26. Your thoughts into this what is typically seasonally slower February should we see kind of normal seasonality? Or are there supply trends so limited that things can hold up much better than kinda normal seasonality? Sanjay Mehrotra: So, of course, we are not providing you f Q2 guidance at this point. But, you know, certainly, the AI trends are strong. And as you noted, not just in training, but in finance as well. And as the AI applications broaden, innovations increase, you know, greater different architectures, you know, all of this is only continuing to broaden the demand vector for AI, you know, in the data center as well as on edge devices such as smartphones. In the data center, of course, AI servers have driven strong demand as we have all known. Particularly with, you know, adjust the increasing demand and increasing demand for all DRAM, not just HPM, but LPDRAM, high-density DRAM module. But we are also seeing traditional server demand, as we noted in our remarks, increased as well. So this is really driving a strong growth trend overall for the industry. And then the demand vectors are broadening, as I noted, smartphones in particular, you have seen some recent launches of and shipments already starting of AI-enabled smartphones, which have higher content of DRAM in them versus the prior generation phones. And, of course, PCs is another tailwind. AI PCs and end of life for Windows 10 as the AIPCs are a tailwind for DRAM content as well. So overall, AI trends are strong, and this is across data center, across AI-enabled smartphones, and AI-enabled PCs. And this is what leads to, you know, strong demand in 2026. Across 2026, and we have talked about tight supply as well. Mark just laid out the factors for tight supply, which we also discussed in our prepared remarks. So overall, we look forward to a healthy demand supply environment in calendar year '26 for us. CJ Muse: Very helpful. And I guess that's my inventories customer inventories as well as supplier inventories. Are in good place. I mean, supplier inventories are actually running lean. Micron DRAM supply is very tight. CJ Muse: Thank you for that. As a quick follow-up on CapEx, Mark, it appears net CapEx implied $18 billion versus $13.8 billion last year. I think you talked about front-end equipment versus clean room space in DRAM. Is there a way to kinda partition how much, you know, on equipment versus clean room? And then can you share with us what the implied gross CapEx is for fiscal 26? Thanks so much. Mark Murphy: Yeah. Yeah. Yeah. We've not laid out in detail. It's just that our spend in '26 will be the majority, the vast majority will be for DRAM, and we've got construction and facilities related to that, some tools for node transitions and beginning to install for the new greenfield. As it relates to you're right that we guided, you know, framework to be at around $18 billion. We will generally talk about CapEx in the context of net, which is gross CapEx offset by proceeds from government incentives. Yeah. We're not gonna talk about, you know, the gross and net for twenty-six. But you can see the components. You can bit back into the components here on what you've seen in the filings. For the gross spend in '25. And then the government incentives. And so we ended up at 13.8 net, and we were at 15.8 gross with 2 billion of government incentives. In '25. Yeah. You'll, yeah, you'll see that going forward. And, you know, the government incentives in '25 are largely the US, Singapore, and Japan. And we can talk more about those in the future. CJ Muse: Thank you. Mark Murphy: Thank you. Operator: Our next question comes from the line of Harlan Sur of JPMorgan. Please go ahead, Harlan. Harlan Sur: Yeah. Good afternoon. Thanks for taking my question. Days of inventory are now at your target levels as you had expected previously. And within that, DRAM is actually below your targets. Right? So given the strong three e 12 high RAM, continued strong demand pull for non-AI DRAM. How are you guys thinking about your total and DRAM inventories exiting this quarter? Will days of inventory continue to come down? Just given the overall supply tightness, are your lead times extending? And customers placing orders further in advance? And is this better visibility? What gives the team confidence on continued tightness into calendar '26? Mark Murphy: Yeah. Harlan, I'll cover that. We do expect inventories to remain at or better on DIO than we've seen in the fourth quarter. DRAM will remain very tight as we talked about through the year, so we would expect to be, you know, below target. And then NAND, you know, we're being very disciplined around NAND, and that market continues to improve. So we do expect NAND DIO to decrease as well. Sanjay Mehrotra: And, of course, we work closely with our customers. And customers are fully aware that the demand environment is strong and the supply is very tight in the DRAM and supply outlook is tight. So we work closely with the customers. And I just want to point out that as we look ahead at our supply, we are looking at one gamma ramp to support our demand. In non-HBM products. HBM products we will support them with our one beta. And, of course, continue maintaining focus on, you know, maximum production efficiencies leveraging the clean room space that is available to implement the technology transitions as well as drive maximum production efficiency. Harlan Sur: No. I appreciate that. Thank you for the insights there. And Sanjay, you know, as your customers continue to differentiate their GPU and XPU platforms, memory continues to be sort of that key focus area of differentiation. As you mentioned, some of your HPM four customers are looking for as much as 25% more bandwidth versus the plain vanilla Jetix standard. Looks like the Micron team delivered a solution that's 40% more performant than the Jetix spec, right, and well exceeding your customers' requirements. Did the team have to redesign the base logic diet to achieve these impressive results? Just wondering if the higher performance HBM four skew maybe pushed out customer calls or have the call schedules remained on track relative to your original plan? But more importantly, even with the higher speeds, is your power consumption still superior to your competitive solutions? Sanjay Mehrotra: Very good questions, Harlan, and thank you for asking those questions. Very proud of our team's execution. Proud of our team's design, of our DRAM die and the SIEM advanced CMOS technology that is used in their DRAM die. As well as our base die, which has advanced CMOS as well. Combination of all of this, our innovative design, our memory architecture, our advanced CMOS in the DRAM, as well as advanced CMOS in the base die, and, of course, that advanced CMOS base die is manufactured here by Micron giving us a competitive advantage. All of this actually has enabled us to achieve, you know, customers' increasingly higher requirements bandwidth, at 2.8 gigabyte per second and speed at 11 more than 11 gigabits per second as well. And this has really positioned us well, you know, getting ready for the production ramp of our HP four product. With these kind of specs, and as I said, with these kind of specs, we'll be at the forefront of HPM shipment ramp, keeping it in line with customer demand. Thank you. Harlan Sur: And I just wanted to hear, I think I said for Bandwidth, 2.8 terabyte per second. I hope that came across clearly. 2.8 terabyte. Per second. Speed, 11 gigabit per second. Operator: Thank you. Our next question comes from the line of Krish Sankar of TD Cowen. Krish Sankar: Yeah. Hi. Thanks for taking my question. I told them, Sanjay, you mentioned about getting sold out in HPM, hopefully, in the next few months. Is there a way to quantify the supply opportunity in calendar twenty-six? Assuming you're fully sold out? And also, if the HBM demand is start better than expected, can you increase supply in calendar twenty-six? You're sold out in the next few months? And then I had a quick follow-up. Sanjay Mehrotra: Yeah. We are not breaking down the supply volumes, etcetera. But, yes, HPM three e as we mentioned, pricing agreements are done with the vast majority of our HPM CE for our vast majority of our HP and CE supply, and volume is also fixed for HBM three e with most customers. And as our customers are looking at their finalizing their plans with HPM four, particularly plans with increased specifications and their own deployment of that in their next-generation platforms. We expect to be concluding our agreement on, you know, HPM four supply as well as all of 2026, HPM supply here in 2026. I mean, in the next few months. And really very pleased with our industry-leading HPM four product specifications, absolutely outperforming the rest. So we are well positioned with this. And it really, you know, with respect to your question, we will, of course, manage the mix of in our now that we have reached our HPM share, in CQ3, to be in line with our industry DRAM share, we will manage and non-HPM being, you know, healthy margins as well. We will now manage the mix of our portfolio keeping in mind, of course, ROI on our portfolio as well as being disciplined with our total investment. We as you can well understand, we have, of course, flexibility to opportunistically manage share here for HPN because at the front end, it uses the same one beta wafers as rest some of the rest of our products as well. So that gives us fungibility at the front end in terms of supply management and assembly and test we have, of course, all the investments that we have made over the course of last several quarters, we are well positioned with capacity in assembly and test as well. So our investments and our team's strong execution in ramping up capacity and giving us the total confidence gives us now the flexibility to manage the mix of the full portfolio between HPM and non-HPM keeping ROI in mind, and, of course, staying disciplined here with our investments as well. Krish Sankar: Got it. Thanks, miss, Sanjay. Another quick question on HVM four. It's nice to see the 11 gigabits per second pin speed. You also said that you have the offering of both your in-house base dial, so that's customized TSM logic die. There a way to figure out what do you expect that mix to be? Do you expect more customers to go with the in-house die or the TSM die? And how easy is it for you from the Micron standpoint of switching between the two based on customer demand? Sanjay Mehrotra: So HBM four is the product that is with our internal base die. And HBM four e is where we said in our remarks, that, you know, we will be offering standard products as well as customized products. HBM four e is where we are partnering with TSMC. HVM four e is not in the industry, it's not the 2026 product that will be, you know, 2027. Kind of product, and we'll share more details with you, and we will have both standard and customized products in HBM four e. HVM four, using our own base die in the industry, HVM four is what will be the product that will be ramping in production. And as you mentioned that with, you know, the value proposition of HPM continues to increase, and with HPM four e, value proposition increases even further. And we would certainly expect, you know, the customization to provide high gross margin as I indicated in my prepared remarks. And once again, I would like to point out our HPM uses our own logic die. That means Micron's own CMOS and that gives us unique advantages and, of course, has been a key contributor along with our DRAM design and DRAM architecture as well as the CMOS that is embedded inside the DRAM. All of that gives us a unique advantage in terms of industry-leading performance. Operator: Thank you. And as that is all the time we have for Q&A today, that does conclude the Q&A portion of this call and today's conference call. Thank you for participating. You may now disconnect.
Operator: Greetings. Welcome to the Aytu BioPharma, Inc. report for fiscal 2025 full year and fourth quarter operational and financial results on September 23, 2025, conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone would like to ask a question, please press 1. To remove your question from the queue, please press 2. Please note this conference is being recorded. I will now turn the conference over to your host, Robert Blum with Latham Partners. You may begin. Robert Blum: All right. Thank you very much, and good afternoon, everyone. As the operator indicated, during today's call, we will be discussing Aytu BioPharma, Inc.'s fiscal 2025 full year and fourth quarter operational and financial results for the period ended June 30, 2025. Joining us on today's call is Aytu's Chief Executive Officer, Josh Disbrow, and Ryan Selhorn, the company's Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question and answer session. I'd like to remind everyone that today's call is being recorded. A replay of today's call will be available by using the telephone numbers and conference ID provided in the press release issued earlier today or by utilizing the link on the company's website under events and presentations. Finally, I'd also like to call to your attention the customary safe harbor disclosure regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of Aytu BioPharma, Inc. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including but not limited to, the factors set forth in the company's filings with the SEC. Aytu undertakes no obligation to update or revise any of these forward-looking statements. With that said, let me turn the call over to Josh Disbrow, Chief Executive Officer of Aytu BioPharma, Inc. Josh Disbrow: Thank you, Robert, and welcome, everyone. This is an extremely exciting time for Aytu given the strong financial performance during the recent fiscal year and perhaps more importantly, the upcoming launch of ExuA, which we believe significantly transforms Aytu for years to come. At a high level, fiscal year 2025, which as a reminder, we have a June 30 year-end, saw stability within our existing ADHD and pediatric portfolios, as well as our focus on driving efficiencies across our operations to report our ninth consecutive quarter and third consecutive year of positive adjusted EBITDA. For the year, net revenue was $66.4 million, which was a slight increase from the previous year. On the adjusted EBITDA line, we came in at $9.2 million. Again, this is now three consecutive years of positive adjusted EBITDA as we really pivoted this company the past few years to focus on our pharmaceutical business while we halted our development efforts, wound down and sold our consumer health business, and outsourced our ADHD manufacturing to a US-based CMO. It should not be overstated how different we look today from just a few years ago. I give tremendous credit to the entire team for their efforts to unlock value in Aytu, and thank them for all they are doing to put us in this strong position. With all the heavy lifting completed over the last few years, we positioned ourselves to build upon the uniqueness of our Salesforce's psychiatry focus and alignment with our proprietary Aytu RxConnect patient access platform, to begin the next stage of focus: product acquisitions which can align with our psychiatry focus. To that end, in June, we announced what we believe is a truly transformational opportunity for Aytu by signing an exclusive agreement to commercialize ExuA in the United States. With ExuA, we are bringing to market a novel first-in-class treatment for major depressive disorder or MDD in an over $22 billion US market. The keyword here is novel. ExuA is not an SSRI, nor is it an SNRI. It does not inhibit neurotransmitter reuptake. It is in a new class of MDD treatment as a 5-HT1A receptor agonist. It is a partial agonist of the 5-HT1A receptor, and it's long-acting. By upregulating the 5-HT1A receptor, ExuA uniquely targets a receptor chiefly implicated in mood, notably depression and anxiety. Because ExuA targets this specific receptor so selectively, it does not carry the same risk of sexual dysfunction and doesn't cause weight changes when compared to placebo, which the SSRIs and SNRIs routinely do. As it relates specifically to sexual function, not only does it not cause related side effects such as low libido, ejaculatory delay, and erectile dysfunction, recently published work actually shows ExuA will improve sexual function and desire in depressed patients. And while that isn't an approved claim we will specifically make with clinicians, that data is peer-reviewed and published and in the public domain. So while SSRIs and SNRIs are generally effective for some patients in treating MDD, the problems associated from a side effect perspective, particularly as it relates to sexual dysfunction and weight gain, commonly lead to patient dissatisfaction with treatment. As you can imagine, these side effects are many times simply untenable for patients already struggling with their mental health. And thus many patients stop these treatments altogether or seek alternatives. Thus, we believe a significant market need exists for targeted and specific therapies minimizing off-target effects and adverse events such as sexual side effects and weight gain while effectively treating the symptoms of MDD. This is key to the market positioning for ExuA. As I mentioned, this is an over $22 billion market in the US with over 340 million prescriptions written annually in the US for antidepressants. SSRIs and SNRIs represent approximately 220 million TRxs or over 60% of all antidepressants prescribed. While the category is largely genericized, there are numerous branded products that have entered the market relatively recently, including newer antidepressants like Trintellix, Alvelity, and Spravato. These products have received strong physician uptake despite having some of the same side effects older products present, particularly Trintellix and Alvelity. Both products list adverse events specifically including sexual dysfunction among others. So we view ExuA as having a potentially favorable profile compared to those two, given its unique MOA and high receptor selectivity and lack of sexual dysfunction. Further, as it relates to Alvelity, that's dosed twice daily. So ExuA's once-daily dosing may offer a benefit in terms of patient convenience and compliance. Trintellix, a product that generated over 2 million prescriptions in calendar 2024, has an exceedingly high rate of sexual side effects, 29% to 34% at the highest approved doses in men and women respectively. Sexual dysfunction is actually listed as a warning for Trintellix. So this is a very real problem with this product. So, frankly, even if ExuA was only the recipient of Trintellix failures or dissatisfied patients, that would make ExuA a significant success for us. All this said, we obviously won't just target one or two of those products' failures, as there are many millions more prescriptions to pull from across the spectrum of approved MDD treatments, particularly the SSRIs and SNRIs that dominate the MDD market despite their shortcomings. Needless to say, our expectations for ExuA are high as we believe we can help patients that are dissatisfied or are dealing with side effects with current treatment options. And there are many based on our market research and conversations with the psychiatry community. So let's turn to our key ExuA launch activities that are underway. Since completing the transaction in June, we've been working rapidly to bring the product to market. As a reminder, ExuA is already FDA approved. We are currently finalizing product manufacturing, packaging, validation, labeling, serialization, and delivery to our third-party logistics provider. This is the biggest gating factor at the moment with the current expectation that we will have product available by the end of the calendar year. On the medical affairs front, we have brought on Dr. Gerwin Westfield as our Senior Vice President of Scientific Affairs. Dr. Westfield is a distinguished leader in the medical and pharmaceutical fields whose work has contributed to a Nobel Prize. Dr. Westfield previously worked with us at Aytu from 2015 to 2021 as our Director of Medical Affairs. Led by Dr. Westfield, we are focused on broadening the clinical profile via peer-reviewed publications and key opinion leader engagement. As you need to do with any successful product launch. With this, we expect to employ an active education, publication, and presentation approach highlighting ExuA's sexual function and anxiety data in conjunction, of course, with the product's depression efficacy data and safety data over the thousands of patients studied. On the sales front, we have refined our sales territory alignment and physician targeting. It's important to note that our existing psychiatry-centric 40-plus person Salesforce will make ExuA their primary promotional responsibility going forward. Our sales team already overlaps with a significant majority of targeted writers in our current geography, and thus, this really is a plug and play enabling us to efficiently launch with only a slightly modified footprint. And we'll be specifically aligned to high branded antidepressant prescribing psychiatrists and psychiatrist-aligned nurse practitioners and PAs. We don't intend to significantly expand the sales team initially. But realignment of territories is now essentially complete to ensure maximum reach while also aligning with where market access is expected to be stronger and, of course, prescribing potential is expected to be the highest. I'll remind you that for government payers, major depressive disorder has nearly universal coverage as this condition is a federally mandated protected class where MDD prescriptions must be covered. And importantly, the government pay segment represents approximately 30-plus percent of the MDD covered lives depending on the geography. So with 30 or even 40% of the antidepressant category depending on geography, covered by virtue of this protective status, we are, of course, aligning sales territories appropriately to ensure optimal patient access with respect to both government and commercial payers. As it relates to the branding and promotional aspect, we continue to work internally and with our agency to optimize product positioning and messaging, prepare promotional materials, and refine our overall platform around ExuA from a commercial perspective. We plan to implement a comprehensive promotional program whereby we establish a clear positioning for ExuA based on its attributes, the competitive landscape, and ultimately where we believe we can win with this product. You'll see more on this in the months ahead as we formally make ExuA commercially available and launch ExuA through our Salesforce. From a payer and distribution perspective, we do plan to integrate ExuA into our Aytu RxConnect access platform. We expect to drive distribution through and dispensing from our RxConnect network pharmacies as we do now with our ADHD portfolio. This will enable us to gain strong insights on reimbursement and coverage rates to help guide selective and smart payer contracts we will consider. As you know, with our current products, we're able to successfully navigate the payer landscape even in a category like ADHD for which brand reimbursement is spotty at best. And we've always been very judicious and selective in payer contracting. We will take contracting and rebating on a case-by-case basis as we do now, but our single biggest objective around reimbursement with ExuA will be to minimize coverage barriers and to help get patients successfully on therapy. The payer landscape in MDD is materially better than in ADHD based on the class's protected status and other factors, so we're anticipating materially higher net pricing and better overall coverage and reimbursement rates. More to follow on pricing and reimbursement as this piece unfolds and as we get closer to and into the actual launch. Finalization of manufacturing is the gating factor to launch. But today, we feel comfortable that we are on track to have ExuA available at the end of the calendar year. While efforts in the near future are on the ExuA launch, a question that frequently comes up is around opportunities to efficiently extend ExuA's life cycle, whether that's through considering the pursuit of additional intellectual property or exploring alternate formulations or one of Geparin's active metabolites. As a reminder, ExuA's IP will extend to late 2030 or early 2031 through a combination of patent term extension being worked on through along with the new chemical entity designation granted by the FDA. So as we think about it, this is a nice runway already from a patent or exclusivity perspective. Of course, there can be no guarantee we'll be able to execute on extensions to this late 2030, early 2031 timeline, we're having early discussions with prospective partners on ways that we believe those could be accomplished to make an already attractive opportunity for Aytu potentially even more so if we do, in fact, extend the IP. Our entire team is beyond thrilled to get things rolling on all things ExuA. As I said at the beginning, for us, the ExuA opportunity is quite simply transformational. And we look forward to executing on this opportunity in the quarters and years to come. Before I turn it over to Ryan to review the financials in more detail, just a few comments on our ADHD portfolio. As most of you know, there's been a long since negotiated paragraph four settlement agreement with Teva whereby Leo Neos allowed them to enter the market with a generic to Adzenys on September 1, 2025. As we sit here today, three weeks into September, they have activated their ANDA in the orange book and thus have signaled their intent to at some point enter the market but they have yet to officially launch. Importantly, we have also launched an authorized generic of Adzenys. In fact, we launched it on September 2. And this product's early trajectory in the early weeks is very encouraging to say the least. This HE will serve as an important offensive tool, and we believe helping us maintain a material share of the Adzenys market irrespective of Teva's potential entry by having a truly equivalent product available that is now being sold as a generic. Through the first few weeks of the month of September, we have not seen any impact on script trends to our overall ADHD portfolio by virtue of the fact, as I just mentioned, Teva has not yet entered. So, of course, we're pleased with that. This may, of course, change in the future if and when Teva does enter the market. But I believe it bears reminding that we have optimism that the impact on our business will be far less than under normal circumstances when prescription brands are sold through broad retail distribution including the large national retail pharmacy chains. There are a few reasons behind this that I always like to point out. First, approximately 85% of our ADHD scripts go through our RxConnect platform. This is important as we have very tight controls and highly specific insights into the vast majority of prescriptions running through the platform. We see the plan coverage and reimbursement rates realized by the pharmacies and ultimately the dispensing pharmacies' margin on the scripts they dispense. And, again, by virtue of how we manage this highly integrated system of analytics, business rules, and algorithms, we ensure margin anytime a pharmacy is dispensing our brand and now our AG. Through our systems, we're able to price match or better in the face of pharmacies having an alternative option to dispense. This is critical as we look at blunting potential erosion from an ANDA. Second, the ADHD category is already a highly genericized market with minimal switching. Opportunities have existed for many years to prescribe and fill alternatives, yet we've held a consistent, albeit small share of the market with both Adzenys and Cotempla. Importantly, prescribers do prefer brands in the ADHD category given the reliability and the consistency from a PK perspective. So with our brands having this unique co-pay backstop, we offer commercially insured patients of paying no more than $50 out of pocket. We've been able to carve out a solid niche and a seat of cheap generics. Third, the gross to nets on our ADHD portfolio are already below what industry observers might expect when generics typically enter the market. This is to say that the substitution impact and transition to a generic market is not as high as you might see in other similar circumstances. While we don't publish our gross to nets, we do generally communicate that our net selling price for both Adzenys and Cotempla are materially lower than what industry observers associate with typical Rx brands. So the potential for price erosion beyond our current net selling price per unit is also materially lower. That said, we don't yet know what and how Teva will approach pricing or contracting. There are several other interrelated factors at play as well to give us comfort that the Adzenys franchise has good market share protections in place but the three I just covered are really the key ones. More to follow if and when Teva enters. But for now, it remains business as usual for Aytu. One other small detail. Every year, we pay an annual what's called a PDUFA fee to the FDA of about $2 million for Adzenys. This is a standard fee all branded manufacturers pay and the fee goes up for each SKU the product has. Importantly, by law, when an AB rated generic is activated in the orange book, that fee goes away. So the savings which, by the way, is within our COGS line, will offset some initial impact we might see. Additionally, starting in late fiscal 2026 and then really as we start to get into fiscal 2027 and beyond, we expect further COGS reductions through improvements in packaging configurations. So once we fully move both ADHD brands to a more compact and efficient packaging setup, we expect to realize additional savings, which we'll talk to as we get closer to that implementation. That said, we expect those COGS improvements to be material if we maintain current volume. Look. We know time will tell as it relates to the impact we might see within our ADHD portfolio from generics, and I don't want to come out and say we expect no impact. But, again, given the uniqueness of RxConnect and the various other factors we've discussed, we don't believe this will be as much of an impact as what might be seen in other situations where products are distributed in a more traditional way. With that, let me turn the call over to Ryan to go into detail on the financials. I'll make a few closing comments, and then we'll look to address any questions you might have. Ryan? Ryan Selhorn: Thank you, Josh. Please note that our June full year and fourth quarter fiscal 2025 financial results are detailed in both our press release and fiscal 2025 Form 10-K that we filed today with the SEC. I'm going to focus my comments primarily on the annual results. If there are any questions on details pertaining to the fourth quarter, please let me know. Start with the revenue line. Net revenue for the full year fiscal 2025 was $66.4 million compared to $65.2 million for the prior year. Breaking it down, the ADHD portfolio net revenue was $57.6 million compared to $57.8 million in the prior year period. The change was a result of a decrease in the number of scripts written offset by improvements in the gross to net through assertive management of our brand economics as enabled through the Aytu RxConnect platform. The pediatric portfolio was $8.8 million in the full year fiscal 2025 compared to $7.3 million. The pediatric portfolio growth reflects the positive effect from the company's recently implemented return to growth plan with an increase in the number of units sold during the fiscal year, slightly offset by a decrease in gross to net by virtue of some changes within RxConnect to regain prescription volume. Gross margin was 69% in the full year fiscal 2025 compared to 75% last year. The decrease in gross profit percentage is primarily related to increased cost of sales in our ADHD inventory. We've talked about this in the past, but as a reminder, the inventory's higher cost resulted from the allocation of certain overhead costs associated with the now closed Grand Prairie, Texas manufacturing facility to a reduced amount of ADHD products that were produced there. The situation occurred as we ramped up production at our contract and concurrently decreased production at the Grand Prairie, Texas facility. We expect the gross margins to improve in coming quarters as this inventory is fully depleted. To add clarity in our fiscal 2025 gross margins, the contribution margin, which incorporates only the variable cost in our cost of goods sold, was 77.9%. Our fixed costs within cost of goods sold amounted to $4.5 million for the year, and the non-cash amortization cost amounted to $1.3 million. The PDUFA fee for Adzenys that Josh referenced earlier, which should not continue after September 2025, represented $1.5 million of the $4.5 million within the fixed cost amount for the year. The pro forma aggregate gross margin would have been 71.3% without such PDUFA fee in fiscal 2025. Turning to OpEx. Operating expenses, excluding amortization of intangible assets, restructuring costs, and impairment expense, were $39.6 million in the full year fiscal 2025 compared to $44.8 million in the prior year. The decrease primarily is a result of continued cost reduction efforts and improved operational efficiencies as part of the company's overall strategic alignment. With the shutdown of the Grand Prairie manufacturing facility and divestiture of the consumer health business in 2025, this is the second quarter in a row that we have been able to demonstrate the new cost structure which projects a pro forma annual expense of $36.3 million. We will certainly incur additional expenses related to the ExuA launch in fiscal 2026, this new cost structure results in a breakeven level of about $52.6 million annually or $13.2 million quarterly for our current base business of ADHD and pediatric portfolio. We are excited that the hard work over the past three years to reduce expenses has positioned us well as we prepare for this new product launch. For the year, net loss was $13.6 million compared to a net loss of $15.8 million in the prior year. The full year fiscal 2025 results were impacted by an $8.3 million impairment expense on our pediatric portfolio, primarily the result of our shifted focus on our commercial efforts for ExuA and our ADHD portfolio. $1.7 million of derivative warrant liabilities lost due to primarily an increase in the fair value of the $8.2 million liability classified prefunded warrants from when they were issued in June 2025 until the end of 2025. Partially offset by a decrease in the fair value of our other warrants and prefunded warrants due to an overall decrease in our stock price during fiscal 2025. And a $2 million restructuring cost primarily related to the closure of our Grand Prairie, Texas manufacturing site. If you were to exclude these various impacts, net loss would have been about $1.5 million in fiscal 2025 compared equivalently with a $9.7 million loss in fiscal 2024. Finally, on the adjusted EBITDA line, as Josh mentioned, we reported our third consecutive year of positive adjusted EBITDA coming in at $9.2 million in the full year fiscal 2025 compared to $10.8 million in the prior year period. For the fourth quarter, adjusted EBITDA was $2 million which was flat with the year-ago quarter. Turning now to the balance sheet. Cash and cash equivalents were $31 million at June 30, 2025. This compares to $18.2 million at March 31, 2025. As a reminder, in June 2025, we accompanied the ExuA agreement with a highly successful upside at the market public offering of common stock with full exercise of the overallotment totaling $16.6 million gross and just under $15 million net after fees and expenses. Led by our current and some new healthcare-focused institutional investors. We greatly appreciate the ongoing support of Non Sahara Capital, Stonepine Capital, and the new investors that came alongside with this at the time at the market financing. We view this strong support from long-term life science-focused investors as further validation of the ExuA deal and the opportunity it presents to Aytu. Our thanks also go out to our banking colleagues at BookRunner Lake Street Capital Markets, lead manager, Maxim Group, and financial adviser, Ascendiant Capital Markets as our partners in getting this deal done. A couple of other small notes on the balance sheet. We topped off our loan with Eclipse from $11.1 million to $13 million and extended maturity to June 2029. We also temporarily increased our maximum revolving line of credit by $1.5 million. We continue to pay down some higher interest liabilities during the quarter, namely the Tris fixed payment arrangement by another $1.2 million. The remaining balance of this arrangement of $3.1 million was paid off in full in July 2025 using the funds obtained from the Eclipse loan refinancing. You will see that there's a reduction in other current liabilities on the balance sheet. With this liability eliminated, we anticipate a reduction in our interest expense of almost $1.5 million in fiscal 2026. As I mentioned a moment ago, we incurred $8.3 million of impairment expense on our pediatric portfolio, primarily as a result of our shifted focus on commercial efforts for ExuA and our ADHD portfolio as well as the reduced net revenue compared with previous years and expectations going forward for the portfolio. You will see this as a reduction in intangible assets. Finally, the offering we conducted was basically a straight common deal with prefunded warrants as ownership percentage for lockers. Due to the accounting for the prefunded warrants as liabilities, a portion of the issuance costs were recorded in other expenses in the amount of $1.3 million as opposed to in APIC as is traditionally done in common stock capital raises. Before I turn it back over to Josh, let me spend a few minutes walking through some of the investments we plan to make in the ExuA launch and ensure everyone has a good understanding of the modeling moving forward. First off, we plan to launch ExuA in the 2025, which is our 2026 or the December 2025 quarter ending. This will be the initial product load-in. We would not expect there to be any significant revenue to report during the second fiscal quarter. The launch will continue into the March ending quarter where we expect to see some small initial ramp in revenue but the real story is expected to occur in the June 2026 quarter and beyond. From a gross margin perspective, as a reminder, we have a 28% royalty on ExuA in addition to a true-up on COGS. Think about it in essence as about a 31% cost of goods sold or 69% gross contribution margin. We do anticipate some fixed expenses to be incurred in the cost of goods sold following the launch as well. The upfront fee, the post-launch fee, and any milestone payments will be reported as intangible assets and amortized in operating expenses initiating once we launch the product. From an OpEx perspective, we expect to invest approximately $10 million in the initial launch of ExuA here in fiscal 2026. This was well defined in the plans heading into the product acquisition and financing we conducted and we expect this puts us in a good cash position as ExuA begins to ramp as we exit fiscal 2026. To reiterate Josh's sentiment, we are thrilled with the opportunity ahead of us. The work we have done over the past three years to focus on our prescription pharmaceutical business by way of halting our development efforts, winding down and selling our consumer health business, and outsourcing our manufacturing to a US-based CMO has put us in the position to make all of this happen. With a base business driven by our ADHD and pediatric portfolio lines, and then the layering in of ExuA, we have the ability to transform the outlook of Aytu for years to come. We are intent on executing efficiently on the opportunity. Again, happy to go over any details during Q&A. With that, Josh, let me turn it back over to you. Josh Disbrow: Thanks, Ryan. And before I turn it over to your questions, let me just share some personal experience I've had while being in the field with a couple of our sales representatives over the past month or so. As it relates to ExuA, which reaffirms mine and really our overall excitement for the product. I've traveled with a couple of our top sales specialists visiting with doctors in Texas as we began the process of presenting ExuA to the market. And over a two and a half day period, we met with more than 30 psychiatrists and psychiatric nurse practitioners and PAs. Every single one of them indicated that they have at least one patient for whom they'd be willing to try ExuA when it became available. It was highly positive feedback. And I will tell you, it is this positive feedback that reconfirms an independent market research study that we had conducted also indicating that virtually every physician and specifically psychiatrists, psychiatric PAs, NPs, every one interviewed saw a role for ExuA in their treatment of depression. And finally, it reconfirms a survey that Lake Street conducted, which similarly asked 20 respondents, all psychiatrists, would you prescribe Geparin ER for your patients with MDD, for which all 20 indicated yes. Three different surveys, three different sources essentially all indicated that they would prescribe ExuA. This reconfirms everything that we've thought about the long-term opportunity for this unique product. And as we said, while we don't expect revenue in the immediate or near term given ramp expectations around any branded product launch, as we exit our fiscal 2026, so again, late spring and into early summer of next year, we believe the signs of trajectory and momentum will start to appear. Okay. So we went a little longer than we might normally go, but we thought it was important to provide a little added color given the excitement surrounding the ExuA launch and some discussion around our ADHD portfolio. As you can hopefully hear, our excitement really is at an all-time high. As I stated in the press release, as we ramp up our commercial focus on ExuA, it is our expectation that we will exit fiscal 2026 on a trajectory that positions Aytu as one of the fastest-growing CNS-focused companies in the industry. This is certainly an exciting time for all of us here at Aytu. And for everyone involved. As always, I want to thank everyone participating on today's call. Now be happy to answer some questions. Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, please pick up your handset before pressing the keys. One moment, please, while we poll for questions. Once again, please press 1 if you have a question or a comment. And our first question comes from Thomas Flaten with Lake Street. Please proceed. Thomas Flaten: Hey, guys. Good afternoon. Thanks for taking the questions. Hey, Josh. If you guys are loading the channel in the fourth calendar quarter, should we just assume then that you're having a national sales meeting kind of full launch in the first calendar quarter? Or will you how are you thinking of sequencing those two events? Josh Disbrow: Yeah. Good question, Thomas. That's exactly right. We would expect to load in kind of by or near the end of the 2025 calendar with a sales get-together launch meeting and then full-out launch immediately thereafter. So I'd be thinking kind of, you know, initial physician detailing happening in the Q1 calendar time frame. That's exactly right. Thomas Flaten: Got it. And then just related to that timing with the recent warning letters that came in, is it your plan to preclear promotional materials, or will you forego that? Josh Disbrow: No. We and good question about the warning letters and just sort of the general environment. We do not plan to preclear. We've got a, we think, a very solid, very compliant promotional platform, having actually just reviewed a good deal of that yesterday, myself and some of the other members of the management team. So given, frankly, the time that would be involved in pre-clearing with the FDA given their current staffing issues, and again, given our strong sense that we've got a highly compliant message, we don't feel a need to do that. So we will do the traditional 2253 submission process. So, yeah, good question. Thomas Flaten: Got it. And then just one final one for me if I could. So you mentioned that your intent to engage with payers on a case-by-case basis. So do we read into that one that you haven't been out doing any kind of prelaunch discussions with payers? And what is it that would trigger a case-by-case basis review with the payers? I didn't know so I know there's two questions in there, but it get what I'm go if you get where I'm going with. Josh Disbrow: Yeah. Exactly. So, you know, as we do with the current business, Thomas, as you're probably aware, we are highly selective because based on just some of the structures of some of these rebates, you end up putting yourself really in a bit of an upside-down circumstance from a margin perspective if you're not careful. It really all comes down to plan pull-through. And even if you've got a contract with the PBM, if plans aren't putting product on formulary or removing some of the mechanisms with through utilization management, you may not be getting what you're paying for. Furthermore, in this category, because the government pays scenario is so positive given that it's essentially near-universal coverage, really universal coverage, and that there is this mandate to have products for both depression and schizophrenia covered under both Medicare and Medicaid plans. It doesn't make a lot of sense to proactively contract on the commercial side. So as not to trip best price. Understanding that the government's gonna get a flat 23.1% rebate, and we wanna preserve the on that side of the ledger. So that really is what will drive the very selective contracting first and foremost, getting a sense for where we are from a government perspective, in terms of distribution of prescriptions across the geographies that have favorable government pay schemes, and then layer in only as appropriate very selective, and only really favorable contracting on the commercial side. But, again, it's really critical that we pay attention to both sides of the ledger. On the left side, the commercial side, again, being selective to make sure that we're getting what we're paying for in the context of rebates that actually result in pull-through. On the right side of the ledger, on the government side, making sure we're not doing anything that would undermine that 23.1 flat discount that you give to payers because the second you contract at a rate higher than that, you reset the price lower as I'm sure you're aware. So we'll be very judicious. But importantly, as I said, we will run these prescriptions preferentially through the RxConnect platform. And as we do now, we think we'll be very good in navigating just the overall flow of these prescriptions, make sure we're identifying exactly where scripts are covered and obviously maximizing those and, obviously, still backstopping patients to the degree that it makes sense to ensure that patients are still able to get the product. So again, not to sum up what we're doing now. We're just gonna be smart and really take it one by one. We're not gonna go out and blast press releases that suggest we've picked up 30 or 40 or 50 million American lives when in reality that might actually net us something negative in terms of our ultimate margin, and it still may not actually improve patient access. Sorry for the long-winded question, but, hopefully, that covers it. Thomas Flaten: Yeah. That's great. Appreciate you guys taking the questions. Thank you. Operator: Thank you. The next question comes from Naz Rahman with Maxim Group. Please proceed. Naz Rahman: Hi, everyone. Thanks for taking my questions. I only have a couple. The first one is on the base. Let's just call it ADHD and pediatric franchise. Obviously, the focus is entirely on ExuA. ADHD has been very volatile over, let's call, the last eight quarters in terms of sales and fees. Obviously had that reimbursement impact. I guess at this point, while pulling Salesforce efforts, where do you sort of see these two businesses sort of leveling out in terms of potential annual sales and contributions? Josh Disbrow: So I'll answer it from a general perspective. And then, Ryan, maybe you can layer in in terms of really what the base business kind of needs to be to kind of, you know, operate at breakeven and then going forward. You know, we are as we said during our prepared remarks, Naz, shifting promotional resources, you know, almost entirely to ExuA, understanding that the base business has, you know, has some relative stickiness from a volume perspective, and we see in both covered and non-covered geographies that these products do have some level of stick. And so while we might expect some level of drift from a volume perspective just as time goes on, with the launch of the AG, particularly as it relates to Adzenys, we actually may see some improvement in terms of net selling price. Further to that, though, as you think about a standalone P&L as it relates to the base business, obviously, we'll be shifting expenses off of that business such that it should cash flow even at a lower level. So, we're not necessarily in a position to guide to what we think top line will be, but I'm comfortable in saying that that business will be margin positive just, again, given the fact that the expense will be largely removed from that. But Ryan, maybe you can speak to kind of where that base business needs to be in order for us to, you know, essentially contribute cash or at the very least breakeven, you know, as it stands with just the ADHD and pediatric portfolio. Ryan Selhorn: Yeah. Absolutely. So, as I kind of mentioned in our prepared remarks, our ADHD portfolio kind of hit the $57.6 million this year. Our pediatric portfolio is at $8.8 million. You know, going forward, like Josh said, if you look at all the sales and the majority of that will get shifted to ExuA. So the ADHD and pediatric portfolios will basically be covering our G&A going forward. Just in on the core base business, like I mentioned, with our current expense run rate, we really only need to hit about $13 million a quarter to breakeven. So we're kind of leveraging this new cost structure with the expectation that, yes, ADHD may slip a little bit, especially depending on, you know, the Teva entrance. But we think we're in a good position now that we're launching ExuA. Naz Rahman: Got it. Thanks. And on top of the Salesforce efforts, could you kind of talk a little bit about what the medical affairs effort right now is for ExuA? Are you guys planning on presenting at any conference, doing more physician education, publications, etcetera? Josh Disbrow: Yeah. An extensive effort is underway in the medical affairs, scientific affairs arena. Obviously, as I've mentioned, we've hired back Dr. Gerwin Westfield, and he's already made tremendous progress in aligning with several key opinion leaders. With that, we certainly do expect to have a presence at medical conferences. You know, we do conferences more surgically precise than I would say large companies whereby we don't go with big fanfare, large expensive booths, and sort of a high marketing spend. It really tends to be very oriented around one-on-one engagements with really the key opinion leaders. We've already engaged with multiple. We also from a med education perspective, aligning with really one of the absolute leaders in the field have already begun to outline educational programs to ensure that we're getting the word out on ExuA on both the branded as well as an unbranded perspective. And so, obviously, just getting psychiatrists familiar with the mechanism of action, review of this class of medications, which again, this is the first time this class has been approved in MDD. We will plan subsequent to that as we go through various data review access and potentially implement investigator-initiated trials. We would expect publications and presentations, abstracts being developed, as an output of a lot of those efforts. So, yeah, full fulsome effort underway. Understanding will be again, very surgically precise, very specific. We won't be everywhere all at once. We'll be very, very disciplined in how we deploy that, but Gerwin and his team are already well underway with that effort. So, yeah, a lot happening there behind the scenes. Naz Rahman: Got it. Thanks for taking my questions. Operator: Thank you. Once again, if you have a question or a comment, please press 1. The next question comes from Ed Woo with Ascendiant Capital. Please proceed. Ed Woo: Congratulations on all the progress. My question is a clarifying question for Ryan. Did you say that it was $39 million in operating expenses on kind of a pro forma basis? And then you mentioned that it's gonna be $10 million extra investments for the launch of ExuA. Is there a distribution pattern for the year? How should we figure out when that will be spent? Ryan Selhorn: Yeah. Just to clarify, pro forma for the year is about $39 million ongoing. And in terms of the interest expense, there's a decent amount of spend starting in Q2 of our December. So that's where I would start the expense and then we'll ramp up from there. And, you know, a lot of good amount of expenses and sales reps as well as doing marketing materials. I'd say a good chunk of about probably about 50% in Q2, and then the other 50% in Q3 and Q4. Ed Woo: Great. Well, thanks for answering my questions, and I wish you guys good luck. Thank you. Operator: Thank you. We have no further questions in queue. I'd like to turn the floor back to management for our closing remarks. Josh Disbrow: Thank you, John, and thanks, everyone. Thanks to the analysts who asked the questions. I really appreciate everyone's interest and time today. Really continue just to express our extreme enthusiasm for what we have in front of us here with ExuA. We know we still have a lot of work to do, and obviously, still some time until we are out there in the field and certainly a little bit more time than that to make an impact. But we really do think that coming out of '26 and then heading into our fiscal 2027 so into the middle of the calendar year is when we'll start to see really meaningful results, and I think folks will start to share our enthusiasm. But until that time, it's time to put our heads down, go back to work, and ensure readiness for the ExuA launch here late this year and as we get out into early 2026. Thanks very much for your time. Thanks for your support of Aytu BioPharma, Inc., and we'll talk to you at next quarter's earnings. Thanks very much. A good afternoon and evening. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Operator: Good morning, ladies and gentlemen, and welcome to the Origin Enterprises plc Preliminary Results Call 2025. Just a reminder that this call is being webcast live on the Internet, and the presentation is available to view on the Origin website. I will now pass over to Sean Coyle, CEO of Origin Enterprises plc. Please go ahead, sir. Sean Coyle: Thank you, and good morning, everyone. Welcome to the 2025 preliminary results call. I'm joined this morning by my colleagues, Colm Purcell, our CFO; TJ Kelly; the Divisional Managing Director of our Living Landscapes business; and Brendan Corcoran, our Head of Investor Relations. We're delighted to announce a strong set of results this morning. And really, these set of numbers are showcasing the 2 key strengths in the Origin model, the resilient nature of our agriculture business and strong cash generation coming from the agriculture business and the fantastic growth opportunity within our Living Landscapes business. You can see in the boxes on the top right of the page, the Agriculture business grew by 2.5% in the period, pretty much driven by a strong recovery in the performance of our Ireland, U.K. businesses. And our Living Landscapes business grew by almost 40%, about 1/3 of that coming from organic growth and roughly 2/3 coming from the acquisitions that we had in the period, plus a couple of acquisitions, which we're not reporting for a full year period in 2024. A number of our metrics have improved, and Colm will touch on those a little bit later on. And the business continues to see growth in strategic outlook from the point of view of additional leadership strengthening within the business. We've commissioned a new glasshouse facility within our Throws Farm research center, which will accelerate our investment in innovative products and the innovative products that we bring to market, particularly biologicals. And we continue to see expansion of the products and services that we have within our Living Landscapes portfolio. Our Chair, Gary Britton, has informed the Board that he will step down as Chairman before the 2026 AGM, and the search for his successor is in process. We redesigned our brand and I suppose, reorganized the reporting of the business into Agriculture and Living Landscapes last year, and we continue to report on this basis in the current financial year. And I think it gives a better picture of the nature of the businesses that we are operating in and gives better visibility to investors on the breakdown of profitability across the group, the growth dynamic within the group, the increased diversification and the market opportunity in the group, and we'll see a little bit more of that later on. From an ESG perspective, some of the highlights for 2025. We continued the movement and migration of our agricultural businesses towards green-listed solutions. And apart from our fertilizer business, which has had carbon ratings on all of our fertilizers now for a number of years, the expansion of our BAM portfolio and the biologicals, adjuvants and micronutrients portfolio, which is a key part of the transition to new products. We have also, in recent years, delivered sustainable ratings on all of our seeds and within our crop protection portfolio, ratings from a sustainability perspective on crop protection as well. So we continue to allow our Agronomy teams select the best products and best outcomes as well as practicing integrated pest management and all of the preferred practices from an agronomic perspective. We had a 26% in our Scope 1 and Scope 2 emissions since 2019. Unfortunately, that number is slightly higher than last year's number because of an increase in volume, particularly within our PB Kent operation, which is a gas-powered plant, but we do intend to try and migrate to alternative fuel sources within that business in the coming years and continue on the trajectory of hitting our 2032 science-based target metrics and commitments. Our employee engagement score continues to be strong within the period at 81%. And unfortunately, our accidents and reportable incidents rate increased to 10.7 from 4.2. There is a significant increase in reporting, awareness and culture from a health and safety point of view across the group. So we are certainly getting very strong visibility now right out into all of our businesses around health and safety. And with no particular concerns about the increased reporting level, although clearly, we would like to see a better number at the end of each year. So within each of our agricultural businesses, I'll go into a little bit of detail now and just explain some of the dynamics within the individual reporting units. So across Ireland and U.K., we had a strong recovery in planted area, particularly in U.K. autumn planting, which, as you know, is a key driver of the applications and agronomy results within the financial year. And we saw a significant improvement in the reported profit from our Agri U.K. operating business. Despite the fact that the spring was dry and that, I suppose, drove limited amount of spending over the spring period as pest and disease prevalence was not all that high, the business saw a significant jump in operating profit. And our agronomists were helping growers manage their input spend carefully with targeted applications. And that, in particular, was relevant because of the falling grain and oilseed prices through the year. And that can be a challenge for our farm customers and the amount of spending that they have on inputs can change as a result of end market pricing. The soil nutrition businesses saw very strong demand and certainly strong market share growth as well. And we saw the business with a well-positioned order book and good stock management through the period, which meant that we saw certainly growth in market share and the businesses delivered a good result. And our Animal Nutrition businesses also saw very strong volume growth in the period, underpinned really by strong customer demand because of high end prices in all of the key markets, dairy, beef, poultry, pork and egg prices, all really delivering strong demand at a customer level and that pulling through feed demand for the businesses, both in our feed importation business and in our joint venture businesses. And so we're very happy with the outcome in those businesses. And it's certainly prevailing in the first half of the current year, although we're not going to forecast any prices for the year as a whole. So we're certainly seeing that initial demand being strong in the first half of 2026. Within our Continental European businesses, profit was slightly down. The Continental European business really was characterized by differing outcomes across the 2 geographies. The Polish market had strong growth in profitability and strong growth in volume. And although our Romanian business also saw strong growth in volume, there was a migration towards a cheaper product set and a more economical product set for the farmer because of the economics on farm and the ability of the Romanian farmer to spend following 2 successive years of drought in the 2023 and 2024 reporting periods left the Romanian farmer really with a poor balance sheet and an inability to spend significantly on crop inputs as a result. The team did very well, though, and we did see strong growth. And the market, I would say, is characterized by poor collections, although not necessarily in our own business and a little bit of a chaotic distributor base and supplier base in the Romanian market as a result of the collection dynamics within that market. Our Latin American business reported like-for-like profit in line with last year on a constant currency basis. Unfortunately, the depreciation of the Brazilian real meant that, that resulted in a decline in profit in line with the currency depreciation of about 14%. And the business saw strong volume growth, close to 12% although the price pressure within the market and the challenges in the market did mean that margins saw some squeeze with margins falling from 11.6% to 10.1% in the period. We've had a number of competitors, a number of distributors and a number of players at farm level use the Chapter 11 process to cram down debt and use legal restructurings to cram down debt. And while the impact on us directly was reasonably small, we did have to constrain sales in a number of cases. We did have to watch our relationships with a number of our retail distributors and farm distributors in order to guard against significant bad debt. So the business really has performed very resiliently in the context of what is ongoing in Brazil. And you will know that a couple of the listed entities at an ag retail level have seen collapses in their share price over the last couple of years. And I suppose a comparable biologicals player in the same place has also seen a significant contraction in its share price. So we're very happy with the operating results in Brazil and the team there have managed very well through what has been a very challenging period. So I'll hand over to TJ now to bring you through the performance of the Living Landscapes business. T. Kelly: Thanks, Sean. As Sean mentioned earlier, as we've split the business into Agriculture and Living Landscapes, these pages are intended to give a little bit more color and context on the component elements of Living Landscapes, our Sports business, our Landscapes business and our Environmental business. And this year is intended to give you a sense of the customer and end-use segments that we play into across each of those businesses. Looking at trading overall, Living Landscapes delivered a strong year of growth in FY '25, contributing 18.4% of group operating profit at EUR 16.6 million. That compares to 14.2% of the group operating profits in '24, and that's all relative to our ambition to finish FY '26 at an annualized 30% of group operating profit. The increase in OP in the year reflected good organic growth at approximately 11% in the segment and earnings from acquisitions at about 20% with some marginal currency benefit giving an overall growth of 39% in operating profit. Our margins improved by 90 basis points to 8.9%, really driven by an improved mix of the higher-margin Environmental businesses and the continued focus on revenue and buying synergy extraction across the businesses within the portfolio. Looking at the businesses individually then, the -- as a general comment, the Landscapes business benefited from a strong start to the season with good planting and on-site conditions back in autumn '24 this time last year. combined with what was a strong spring season this year, so good conditions in early spring, which really helped carry the business through what was a challenging summer from a drought perspective. And as we look forward then into autumn this year, we've seen a solid start to the year this year with a good mix of moisture and warm conditions, allowing a lot of what was planned maintenance to get underway, some of which would have been deferred from the summer, especially in the sports area. And generally, we're seeing strong demand across the Environmental businesses over last year and into the early part of the season. During the year then, in addition to our focus on integration and synergy realization, we further strengthened our management team with the appointment of 2 managing directors for both our Sports and Landscapes businesses, which enhanced the leadership capability further alongside our existing Managing Director for the Environmental businesses. We continue to see strong momentum behind the Living Landscapes structural growth drivers, which again affords us the opportunity to build out our services and product offerings across the portfolio. Demand is strong for high-quality advice in the sports turf and amenity space in the U.K., for example, and we're building our resources to better exploit that know-how and capability further across Mainland Europe, where we have a relatively small but growing presence, but whereas very similar growth drivers exist to the U.K. market. Looking then at biodiversity net gain obligations and legislation such as the EU Nature Restoration Act, we see continued strong demand for Environmental, Landscapes services and solutions and continue to further exploit organic growth opportunities, both in the U.K. and assess opportunities for further inorganic growth, both in the U.K. and Europe. In addition, we continue to focus on incorporating biological and eco-friendly products into our portfolio, not just in the Living Landscapes portfolio, but also, of course, in our Agricultural portfolio, given the fundamental role that those products will play in the long-term protection of natural capital and the importance of the protection of that natural capital for sustainable longer-term economic activity and growth. With that, I'll hand it back to Colm. Colm Purcell: Good morning, everyone. So starting with some of the highlights on financial performance on Page 16 of the presentation. As you'll see, it was a strong year for our financial performance with positive growth across all of our financial KPIs. Group revenue of EUR 2.1 billion is 2.7% ahead of prior year on a constant currency basis, largely driven by a 2.3% volume growth and 0.9% benefit from acquisitions. Pricing was relatively constant in the year with a negative 0.5% impact overall for the year. We grew our wholly owned operating profit for the year by 8.7% constant currency to EUR 90 million with growth across both of our segments, Agriculture and Living Landscapes. Agriculture delivered good growth in the year with operating profit of 4.1%, primarily driven by the strong recovery in our U.K. and Ireland region. And Living Landscapes had a strong year as TJ just outlined, with growth of 36.3%. Our associates and joint ventures results showed strong growth in the year as well, largely continued high demand for animal feed supported by the high output pricing that we see for dairy, beef and poultry. And overall, group operating profit with the inclusion of our associates and joint ventures delivered 10.1% growth to EUR 99 million for the year. Our operating margin for the year at 4.3% was up 20 basis points, highlighting the improved agricultural performance in the Ireland U.K. region, offsetting the reduced margin in CE and LATAM and the higher contribution of the higher-margin in Living Landscapes business. Our overall EPS for the year was EUR 0.5421, which is ahead of our Q3 guidance following a strong Q4 performance and delivers growth of 12.8% or 14.4% on a constant currency basis. This growth demonstrates the benefits of the diversified nature of the group with strong contributions from Living Landscapes and Ireland U.K. agriculture more than offsetting the challenges in other markets and particularly Romania and Brazil. Looking at our cash performance then on Page 17. It was also a strong year for cash generation with our free cash flow at EUR 60.8 million, representing a free cash flow conversion of 117.9% and ahead of our Capital Markets Day target of 80%. This was in spite of making additional payments of EUR 23.5 million in respect of previously withheld amounts due to sanctioned parties. We now have just over EUR 5.7 million left to pay in respect of these, if you remember, of an original amount of around EUR 70 million. So we're nearly complete on those payments. The strong cash generation in the year allowed us to invest EUR 22.8 million into strategic capital expenditure, invest nearly EUR 18 million on our 6 new additions to the Living Landscapes portfolio and returned just under EUR 20 million to our shareholders through dividends and the balance of our EUR 20 million share buyback program, which commenced in the prior year. Our strategic capital expenditure was down from EUR 34 million in the prior year, and we expect this to reduce further in FY '26 as we've now largely completed the U.K. and Ireland ERP rollout and a number of other specific projects like our new state-of-the-art glasshouse facility in our R&D center at Throws Farm. Our overall net debt position at the end of the year was EUR 70.8 million, which was down EUR 0.9 million on last year. This equates to just under 0.6x of our EBITDA and well within our banking covenant position at the end of the year. The decrease in net debt largely due to lower working capital outflows and the higher profits as we noted earlier. Overall, our finance costs amounted to just under EUR 20 million for the year, an increase of EUR 1.4 million on the prior year as a result of a higher average debt over the full year. And overall, our ROCE for the year at 12% is back to our target of 12.5%. So this is up 80 basis points on the prior year, largely driven by our improved profitability that we've seen. From a facilities perspective, we completed the refinancing of a new EUR 440 million revolver facility in the first half, an increase of EUR 40 million on the prior year, all now maturing in FY '30 with the option to extend for a further 2 years. So we are well positioned now to support the future growth of the business. However, with higher interest rate environment, we continue to monitor capital allocation and continue to focus on working capital management. Just turning then to Page 18 and looking at our capital allocation since the start of our current strategy period in 2022, as I said, we continue to pursue a disciplined approach to capital allocation with balance across investing in growth and returning cash to our shareholders. Cash generation and working capital discipline has been good over the period, which has resulted in an average free cash flow conversion of 110%, again, compared to our target of 80% that we set out at our Capital Markets Day. This has allowed us to invest EUR 102 million into organic growth of our business to expand our capacity and our capability across the regions to invest in R&D, to invest in our health and safety and in the technology for the future with investments in a new ERP platform and expanding our additional capabilities to our customers. We've also invested over EUR 93 million in our diversification strategy, which includes the final payments in respect of our LATAM Brazil business and expanding our Living Landscapes business from 7.4% of operating profit back in '22 to just over 18.4% in FY '25. We've also returned over EUR 162 million to our shareholders through the completion of the EUR 80 million buyback program outlined at the 2022 Capital Markets Day and through our annual dividends and this equates to about 40% of our current market capitalization. For our shareholders, we're proposing a final dividend of EUR 0.1415 which will bring our full year dividend to EUR 0.173, which represents a 3% increase on FY '24 and above the 35% payout ratio that we outlined at the Capital Markets Day. Finally, then, to give an overview of our progress against the Capital Markets Day targets, we're 80% of the way through the 5-year program to 2026 and as you'll see against the operating profit target, we're now 93% delivered and against our free cash flow target, we're 86% delivered. As noted earlier, we also closed out on the final EUR 20 million share buyback program in early September, delivering in the Capital Markets Day commitment of EUR 80 million. So very much on track to deliver and exceed our Capital Markets Day ambition. I'll hand back to Sean. Sean Coyle: Thanks, Colm. So the focus for the upcoming 12 months really is to continue with the optimization of the agriculture businesses and in particular, the financial discipline around working capital and return on capital employed will continue to prevail. I would call out 2 markets in particular there, which have been challenging in that regard. Brazil and Romania are certainly 2 markets where we would have the greatest concern about the collectibility of debt, although we're very well provided and provisioned and the teams are doing a great job there. But keeping that focus hugely important within the business. We continue to flex individual businesses across the group and adjust services and adjust capabilities to try and enhance returns. And we had to do a small level of restructuring within our Brazilian business last year when it became clear that the margin pressure that the business was under -- was going to lead to a worse outcome than budgeted. So we reduced some headcount in the business in the autumn. We similarly conducted reviews of our digital business and our Agri U.K. business the previous year. So we will adjust headcount and adjust services to try and enhance returns for the group as a whole. Alongside that, we are continuing to invest in growing our capabilities within the organization, retaining key talent within the organization and recruiting new talent to come in from the outside. And we've seen some appointments in the business over the last 12 months to try and grow the team, but we're also investing in 40 individuals who are undergoing a global leadership development program to try and grow talent from inside the organization. From a Living Landscapes perspective, the ambition is still to exit the 2026 year with a 30% run rate of profit in our Living Landscapes business and the mix will improve next year organically as some of the acquisitions that we had in the current year are in place for a full year. But in addition to that, then we do expect a slightly faster organic growth rate from our Living Landscapes businesses relative to the agriculture businesses. And I think the outcome for the current financial year at 18.5% probably would have been a little bit higher as a proportion of our overall profitability, had it not been for the stunning performance of a couple of our agricultural businesses in the last quarter. So we're still happy to take profit from our agricultural businesses when it's generated. The portfolio within Living Landscapes continues to be examined for cross-sell, upsell opportunities and the capability of selling more of the portfolio across existing businesses. So as we delve deeper at a product level into each of the businesses that we have acquired, we're seeing opportunities to bring some of the product portfolio across into other businesses that we own and combining the back office opportunity, and combining the procurement opportunity around those and getting some synergies. And we have recruited 2 heads now to bring our export business up into Western Europe, and we're also looking at acquiring businesses in Western Europe from a distribution and manufacturing perspective. So the line marking paint that we manufacture is already exported from the U.K. to multiples of markets in Europe, North America and Australasia and we're looking at growing that. We already sell a number of our products from PB Kent into other markets. and we'll also sell some of our OAS product range into other markets via third-party distributors, and we may be looking at the opportunity to acquire in that space as well. So we will continue to expand the offering into Western Europe and develop some additional markets there. And finally then, we're going to continue enhancing the foundations for a further level of growth. And as Colm mentioned, really the strategic CapEx across the organization is tapering off now, but we will continue to try and utilize the capability that we've built in our FoliQ plant, in our Timisoara bottling plant in South America across all of our fertilizer businesses to continue to improve the product mix within the organization and grow product sales within all of those business units. And we're continuing to move towards a more sustainable range of products across each of our businesses over time. And the regulatory challenges on agriculture are not going to go away, but it's hugely important that we continue to change the product mix to more sustainable product offerings over time. Our digital tools continue to be enhanced, and we are building additional capabilities within the digital tools and the big plan for the next 12 months is to integrate our digital capability into the Telus farm management information systems. Telus is a Canadian digital organization, and they have acquired the 2 major farm management systems on farm in the U.K. and are rolling out a new system over the course of the next 12 months, and our digital capability will be completely integrated into that will allow for a seamless flow of propping information and applications between the Telus system and our digital tools. And finally, then, now that we finalized the rollout of the ERP within our bigger businesses, we really want to try and drive insights from those tools. So using the information within them to further drive cross-selling and upselling opportunities. and beginning to roll out the ERP system across some of our smaller businesses in Ireland, U.K. and doing upgrades within our European and Latin American business over the next 12 months, although they'll be less costly because they're less complex compared to the deployment of Dynamics 365 within our core businesses. So to summarize, I'm very pleased with the earnings growth in the period. Earnings per share up by almost 13% and our group operating profit up to EUR 99 million, which is the second highest year of profitability that we've seen in the group, only bettered by the really unusual fertilizer profit year that we had in 2022. We continue to see a broadening of the earnings base, which is leading to more stability in earnings predictability, which is good news from our perspective. And the Living Landscapes business having grown by close to 40%, now represents 18.5% of group earnings. This business generates significant cash and returns every year, a lot of which goes back to shareholders in terms of share buybacks and deployment via dividend, and we're pleased to do that. But the capability of this business to continue to back itself and reinvest in itself is fantastic because of the cash generation capability within the business. And the organization is seeing strengthened Board and business leadership which I think is going to drive another level of organic growth within the business. And we continue to invest in the innovation and R&D and technical capability to support future growth. So over the next 12 months, really, we want to maintain our disciplined approach to capital allocation and continuing to drive shareholder returns. While we are likely to see a lower CapEx level in the medium term, really, we're -- key for us over the next 12 months, I think, will be driving down the average debt level in the group. So I know there'll probably be a question or 2 on share buybacks when we go to the questions at the end of this session. But the interest bill that we have as an organization is high, and we would prefer to see slightly lower level of average debt within the business to try and bring down that interest cost for the organization as a whole. There will be some incremental investment in what is margin accretive organic growth and M&A growth. And you can see the impact of that in the Living Landscapes growth this year and the effect that it has on the operating margin for the group as a whole. The diversification is certainly supporting our lower earnings volatility. And the challenging weather year that we had in 2024 or indeed any challenging weather now that we see around the group, whether it's in South America or 2 years of consecutive drought in Romania, the impact of such weather events now is much minimized compared to the challenging reporting periods that we had in 2016 and 2020. We continue to broaden our offering within the emerging nature economy and the legislation in that regard in both the U.K. and Europe continues to drive incremental investment within the living landscapes sector. So getting exposure to that from our perspective continues to be important. And it's our ambition before the end of the current fiscal year 2026 to set out a new 5-year strategic ambition for the organization at some point at a Capital Markets Day in the next 12 months. So that will be the intention. So with that, we'll turn to questions. Thank you very much to the team here presenting alongside me, but also to all of our staff across the group who have contributed to what is a really good set of results in 2025. Sean Coyle: So you have to bear with us. We have a combination of online questions, which are coming through in text format on the screen. And I think we also have some questions perhaps coming through over the phone as well. So the instructions for people who are phoning to ask a question. Operator: [Operator Instructions] Sean Coyle: I can see 2 questions. Operator: The next question comes from Matthew Abraham from Berenberg. Matthew Abraham: First of which just relates to Living Landscapes. Just wondering if you can give some color on which markets you expect to be the primary drivers of growth across FY '26? T. Kelly: Yes, I think there is still opportunity for organic growth in our core markets in the U.K. across each of the 3 of sports landscapes and the environmental businesses. And again, as we said, we've acquired 5 businesses in that portfolio in environmental through the year. So certainly, we'll see the full year impact of that come through in '26 and organic growth. And the organic growth piece is not just in terms of revenue and looking at where we take more market share of wallet across our existing portfolio of customers across the 3 businesses within Living Landscapes, but it's also opportunities for buying synergies and leveraging the scale of the organization that we have. I think in terms of -- beyond that, the markets where we would see further growth, I mean the Western European developed economies typically where we have some presence with our sports portfolio, as Sean mentioned, our line marking business and our granulated fertilizer offerings as well as our Origin Amenity Solutions offerings. We see opportunity, and that's reflected in us putting more investment on the ground there with additional market development sales resources to exploit those markets. So Western European economies typically kind of follow similar structural growth drivers as we see in the U.K. So that would be a primary area of focus organically, but also looking at M&A opportunities, both distribution and manufacturing. And beyond that then, we have presence in Australia, across Asia and across into North America with relatively small footprints that being said, but still opportunity for further growth. I think one of the things that we're seeing and learning is that the provenance of U.K. agronomic advice and sports tarp advice is quite strong, and that's an area that we seek to leverage both with service and products across those markets. Matthew Abraham: Great. And then just one more relates to Romania. I'm just wondering if you can put color on outlook expectations for '26 given the differences in dynamics across both of those jurisdictions. Sean Coyle: Yes. I mean we typically don't give guidance until quite late in the fiscal year, given the challenges of predicting the year from an agronomic perspective. So the first time at which we get any real color on outlook will be our November statement. And we generally give good guidance on the level of winter planting in the U.K. context at that point in time, and you'll have a good sense of how trading has been in our Latin American business, which is more geared towards the first half of the year. But really, the weather and spring challenges are obviously a big impact on the outcome for trading for the year as a whole. So what I can say is the significant drops in profit that maybe we have seen in previous years like 2016 and 2020 are certainly not going to be at levels even in a very challenging weather year that we might have seen in those particular years. And I suppose over a 5-year time horizon, the predictability of the business will become much improved. So there are always going to be intra-year impacts from weather on the operating profit performance of this business. But the trajectory, as Colm has shown in the '22 to '26 outcomes relative to the predictions made in '22 is upwards. And I think if we take a 5-year bubble of profit for the subsequent 5-year period, we'd be confident that there is further growth to come in the operating profit performance of the business on a cumulative 5-year basis, but there is always going to be some intra-year volatility in the Origin business. So there's growth there. there is significant cash flow and free cash flow within the business that generates good return for shareholders, but there can always be intra-year volatility in earnings as a result of the weather challenges that we might experience in any 1 year. Operator: The next question comes from Fintan Ryan from Goodbody. Fintan Ryan: Fintan Ryan here from Goodbody. Two questions from me, please. Firstly, just with regards to your Living Landscapes business, I appreciate there's still some M&A to be completed to get to that 30% profit run rate by the end of FY '26. But as we sit here today with the deals done so far, what do you reckon will be the sort of the outturn of profit mix from Living Landscapes for FY '26? And how much more do you need to do to contribute in terms of incremental M&A to get towards that 30% target by the end of FY '26? And then secondly, just on the Brazilian market. I appreciate there's been a lot of moving parts and challenging for some of the retailer distributors... T. Kelly: Good morning Fintan. It's TJ here. I'll take the first...Sorry we have... Fintan Ryan: I was just asking a second question on Brazil. What visibility you have on any sort of improvement in sentiment on the ground there and given capacity as well in the industry? Sean Coyle: Yes. Maybe I'll take the Brazilian question first, and then TJ, you can come back to your expected growth for Living Landscapes organically. The Brazil market is, I would say, still in an element of flux. I think largely the stock at a retail level and the stock at a distributor level has walked through the system now but a number of players are still going through board processes in relation to reorganization of themselves and cramming down debt. So Lavoro is the most recent of those. It's a listed entity, and they have come to an arrangement with a lot of their creditors to pay back debt in full over a longer-term period. But some of the creditors who are not inside that arrangement will see their debt significantly down as a result. So we're amongst the group that have agreed to take payment over the 5-year period that is part of the court arrange scheme. We had significantly reduced our trading with Lavoro in the run into this court process because we were aware that they were challenged and perhaps might seek to go through a scheme of this nature. So I'm not sure that we can tell how many more organizations in Brazil are going to go through this type of process. But I do know that we keep a very close eye on our Brazilian debtor book that we're receiving regular payments from many of the debtors that we have there and that we have [ Coface ] insurance on almost 50% of our debtor book in the Brazilian market as well as guarantees from another 45% of the debtor book. So we got personal guarantees or guarantees over land or other instruments, which will allow us to collect the debt from those types of players. So it's a well-controlled debtor book. It's a well-controlled business from the point of view of the risk profile of the business that we do down there. I don't know when the pain in Brazil will end. But certainly, the retail channel stock levels have come down appreciably. The other dynamic, I would say, is grain prices, soy prices and oilseed prices generally are at lower levels than they have been for the last couple of years. So while the output price dynamic is challenged, the capacity to spend on inputs and the price pressure on inputs will probably continue to be a feature of the Brazilian market for some time to come. And I think that's a feature in predicting outcomes for 2026 as well even in a European context. Our farmers not going to be that inclined to spend on fertilizer, which is at elevated prices because of the fertilizer supply situation in circumstances where wheat and corn prices are much reduced compared to where they were a couple of years ago. So the supply-demand imbalance between output prices and input prices, I would say, is not in perfect harmony. And that can cause some level of volume attrition or as we've spoken about in previous years, farmers applying nitrogen only and taking what's called a P&K holiday and not necessarily applying the more complex fertilizers and NPKs as a result of higher fertilizer prices. So nothing that we're overly concerned about, but that is a feature of the equilibrium of the markets at the moment, I would say, Fintan. T. Kelly: Fintan, on your organic growth M&A question, I mean, we'd look in '26, we'd look for the proportion of [indiscernible] on an organic kind of growth basis to be about 20% to 21% of operating profit. And obviously, that leaves a gap then to the kind of exit rate of about 30% annualized by the end of the year. So that's the kind of scale of the M&A type of opportunity to be filled. I mean the M&A hopper, we're active, as I'm sure you can imagine, but the pace and timing of delivery and execution of any of those potential targets is a variable thing. So we continue to, as I said, focus on embedding kind of what is a new management team across the businesses driving those kind of organic growth opportunities, but also been very active on the M&A piece. But as I say, it's just -- it's a variable piece in terms of the timing. And ultimately, what's critical here is discipline around the M&A process, which we've shown over the years. So it's about getting the right asset that's the right strategic fit with the right management capability, and that will be -- continue to be the focus. So those targets are out there, obviously, as some direction and overarching perspective in terms of where we want to get to. But ultimately, we will maintain discipline in the process around the M&A hopper. Operator: [Operator Instructions] The next question comes from Cathal Kenny from Davy. Cathal Kenny: Two questions from my side. Firstly, on working capital, good progress in the last financial year. Just interested to know what's the quantum of opportunity to lower working capital intensity over the next 2 years? That's my first question. Second question then is on inventory within the supply chain in U.K. and Ireland for fertilizer. Perhaps you could provide some color on that both at farm gate and the distributor work. Sean Coyle: Sorry, Cathal, just give me the second part of the question there. Cathal Kenny: Second question related to color on the levels of inventory within the fert supply chain in the U.K. and Ireland, both at the farm gate and distributor level, yes. Sean Coyle: Yes. No, I would say on the kind of inventory on farm, it's de minimis. So the fertilizer price has been out of line with grain prices now probably since March or April. And I would imagine that whatever fertilizer farmers had acquired in a U.K. context, it has been applied and there's not a lot of fertilizer on farm. So grain prices have been declining and troughing since March, April. And with wheat now at kind of GBP 167 a tonne in the U.K., we're probably 5% or 10% away from what's an optimal level for kind of spending on fertilizer. Our fertilizer book in the U.K. is in reasonable shape. I would say the order book in the U.K. is slightly stronger than it was this time last year. And conversely, the order book in an Irish context is slightly weaker than it was this time last year. Again, I would say there's limited fertilizer in retail or co-op level in Ireland. And really, farmers are probably going to wait until harvest is complete before committing to significant additional fertilizer volumes. As you know, Cathal, Ireland is closed for fertilizer application between the middle of September and the end of January. So we wouldn't expect much business to be done in the autumn in an Irish context. And while fertilizer sales continue in a U.K. context through the autumn, as I said earlier on, the book is stronger than it was this time last year. And what we had in the spring last year was a very frantic season for fertilizer in a U.K. context because farmers hadn't committed to autumn purchases. And that commitment is there this year compared to last year. So that's good. So maybe, Colm, do you want to take the question on opportunities to reduce working capital? Colm Purcell: Yes. I suppose what I'd say on working capital is it's something that's looked at on a daily basis. Obviously, it's the biggest driver of our net debt over the year and obviously financing the cycle through the process, particularly on the agricultural side. As we see more Living Landscapes companies come into the group, obviously, they're less capital intensive and have less of a working capital need. Obviously, on the agricultural side, those cycles are inherent in the business. So we're not going to see too much change there. Where I will see the opportunities probably in the markets we called out earlier on in relation to Brazil and into Romania and probably Romania in particular, there'll be an opportunity. They've had a good harvest this year, we would hope over the next 12 months to see stronger collections and particularly more timely collections in Romania, which would give us some additional working capital relief there. T. Kelly: There's a question online about the M&A pipeline. So the question is, can you give us some color on the M&A pipeline, which I'm happy to take. So we've -- in the pipeline at the moment, we've got a number of different assets, some European-based, some U.K.-based, some in the manufacturing space for products that we supply ourselves and some manufacturing products that we see as an opportunity to expand our portfolio with. And taking position manufacturing obviously gives you access to the manufacturing IP does, of course, bring working capital and slightly more capital intensity to it. But the counterbalance is the IP that it brings and also access to potential further distribution networks and capabilities that would allow us to upsell and cross-sell from our existing portfolio of products. So I suppose assessing those both Mainland Europe, U.K. and also looking at some distribution businesses across the European markets. We already have European partners and distributors. And I suppose the opportunity, as I mentioned earlier, as we put more resource on the ground ourselves to look at that organic growth but also with it presents opportunity to acquire value-add distribution capability across some of those markets. So we're, I suppose, in the midst of kind of working through those assets that are in the hopper, some of them are at kind of early stage of progression, some of them slightly more advanced. And scale, I suppose, is the other question that we would -- you typically would get asked and the scale of the assets can range from the relatively small single million euro EBITDA range up to the much more significant double-digit million euro EBITDA assets and targets. So we've still got quite a broad range, I would say, in the hopper and as I said, various stages of progression with them. Sean Coyle: Thanks, TJ. Okay. We don't seem to have any further questions. We'll maybe give it one second just in case there's anybody else who wants to come in. No? Okay. All right. Thank you very much, everybody, for attending this morning's conference call, and we look forward to seeing you on the road over the next few days or catching up once we're back from the road show. So thank you very much for attending. T. Kelly: Thank you. Operator: That concludes our conference call for today. Thank you for participating. You may now disconnect your lines.
Operator: Good morning, ladies and gentlemen, and welcome to the Origin Enterprises plc Preliminary Results Call 2025. Just a reminder that this call is being webcast live on the Internet, and the presentation is available to view on the Origin website. I will now pass over to Sean Coyle, CEO of Origin Enterprises plc. Please go ahead, sir. Sean Coyle: Thank you, and good morning, everyone. Welcome to the 2025 preliminary results call. I'm joined this morning by my colleagues, Colm Purcell, our CFO; TJ Kelly; the Divisional Managing Director of our Living Landscapes business; and Brendan Corcoran, our Head of Investor Relations. We're delighted to announce a strong set of results this morning. And really, these set of numbers are showcasing the 2 key strengths in the Origin model, the resilient nature of our agriculture business and strong cash generation coming from the agriculture business and the fantastic growth opportunity within our Living Landscapes business. You can see in the boxes on the top right of the page, the Agriculture business grew by 2.5% in the period, pretty much driven by a strong recovery in the performance of our Ireland, U.K. businesses. And our Living Landscapes business grew by almost 40%, about 1/3 of that coming from organic growth and roughly 2/3 coming from the acquisitions that we had in the period, plus a couple of acquisitions, which we're not reporting for a full year period in 2024. A number of our metrics have improved, and Colm will touch on those a little bit later on. And the business continues to see growth in strategic outlook from the point of view of additional leadership strengthening within the business. We've commissioned a new glasshouse facility within our Throws Farm research center, which will accelerate our investment in innovative products and the innovative products that we bring to market, particularly biologicals. And we continue to see expansion of the products and services that we have within our Living Landscapes portfolio. Our Chair, Gary Britton, has informed the Board that he will step down as Chairman before the 2026 AGM, and the search for his successor is in process. We redesigned our brand and I suppose, reorganized the reporting of the business into Agriculture and Living Landscapes last year, and we continue to report on this basis in the current financial year. And I think it gives a better picture of the nature of the businesses that we are operating in and gives better visibility to investors on the breakdown of profitability across the group, the growth dynamic within the group, the increased diversification and the market opportunity in the group, and we'll see a little bit more of that later on. From an ESG perspective, some of the highlights for 2025. We continued the movement and migration of our agricultural businesses towards green-listed solutions. And apart from our fertilizer business, which has had carbon ratings on all of our fertilizers now for a number of years, the expansion of our BAM portfolio and the biologicals, adjuvants and micronutrients portfolio, which is a key part of the transition to new products. We have also, in recent years, delivered sustainable ratings on all of our seeds and within our crop protection portfolio, ratings from a sustainability perspective on crop protection as well. So we continue to allow our Agronomy teams select the best products and best outcomes as well as practicing integrated pest management and all of the preferred practices from an agronomic perspective. We had a 26% in our Scope 1 and Scope 2 emissions since 2019. Unfortunately, that number is slightly higher than last year's number because of an increase in volume, particularly within our PB Kent operation, which is a gas-powered plant, but we do intend to try and migrate to alternative fuel sources within that business in the coming years and continue on the trajectory of hitting our 2032 science-based target metrics and commitments. Our employee engagement score continues to be strong within the period at 81%. And unfortunately, our accidents and reportable incidents rate increased to 10.7 from 4.2. There is a significant increase in reporting, awareness and culture from a health and safety point of view across the group. So we are certainly getting very strong visibility now right out into all of our businesses around health and safety. And with no particular concerns about the increased reporting level, although clearly, we would like to see a better number at the end of each year. So within each of our agricultural businesses, I'll go into a little bit of detail now and just explain some of the dynamics within the individual reporting units. So across Ireland and U.K., we had a strong recovery in planted area, particularly in U.K. autumn planting, which, as you know, is a key driver of the applications and agronomy results within the financial year. And we saw a significant improvement in the reported profit from our Agri U.K. operating business. Despite the fact that the spring was dry and that, I suppose, drove limited amount of spending over the spring period as pest and disease prevalence was not all that high, the business saw a significant jump in operating profit. And our agronomists were helping growers manage their input spend carefully with targeted applications. And that, in particular, was relevant because of the falling grain and oilseed prices through the year. And that can be a challenge for our farm customers and the amount of spending that they have on inputs can change as a result of end market pricing. The soil nutrition businesses saw very strong demand and certainly strong market share growth as well. And we saw the business with a well-positioned order book and good stock management through the period, which meant that we saw certainly growth in market share and the businesses delivered a good result. And our Animal Nutrition businesses also saw very strong volume growth in the period, underpinned really by strong customer demand because of high end prices in all of the key markets, dairy, beef, poultry, pork and egg prices, all really delivering strong demand at a customer level and that pulling through feed demand for the businesses, both in our feed importation business and in our joint venture businesses. And so we're very happy with the outcome in those businesses. And it's certainly prevailing in the first half of the current year, although we're not going to forecast any prices for the year as a whole. So we're certainly seeing that initial demand being strong in the first half of 2026. Within our Continental European businesses, profit was slightly down. The Continental European business really was characterized by differing outcomes across the 2 geographies. The Polish market had strong growth in profitability and strong growth in volume. And although our Romanian business also saw strong growth in volume, there was a migration towards a cheaper product set and a more economical product set for the farmer because of the economics on farm and the ability of the Romanian farmer to spend following 2 successive years of drought in the 2023 and 2024 reporting periods left the Romanian farmer really with a poor balance sheet and an inability to spend significantly on crop inputs as a result. The team did very well, though, and we did see strong growth. And the market, I would say, is characterized by poor collections, although not necessarily in our own business and a little bit of a chaotic distributor base and supplier base in the Romanian market as a result of the collection dynamics within that market. Our Latin American business reported like-for-like profit in line with last year on a constant currency basis. Unfortunately, the depreciation of the Brazilian real meant that, that resulted in a decline in profit in line with the currency depreciation of about 14%. And the business saw strong volume growth, close to 12% although the price pressure within the market and the challenges in the market did mean that margins saw some squeeze with margins falling from 11.6% to 10.1% in the period. We've had a number of competitors, a number of distributors and a number of players at farm level use the Chapter 11 process to cram down debt and use legal restructurings to cram down debt. And while the impact on us directly was reasonably small, we did have to constrain sales in a number of cases. We did have to watch our relationships with a number of our retail distributors and farm distributors in order to guard against significant bad debt. So the business really has performed very resiliently in the context of what is ongoing in Brazil. And you will know that a couple of the listed entities at an ag retail level have seen collapses in their share price over the last couple of years. And I suppose a comparable biologicals player in the same place has also seen a significant contraction in its share price. So we're very happy with the operating results in Brazil and the team there have managed very well through what has been a very challenging period. So I'll hand over to TJ now to bring you through the performance of the Living Landscapes business. T. Kelly: Thanks, Sean. As Sean mentioned earlier, as we've split the business into Agriculture and Living Landscapes, these pages are intended to give a little bit more color and context on the component elements of Living Landscapes, our Sports business, our Landscapes business and our Environmental business. And this year is intended to give you a sense of the customer and end-use segments that we play into across each of those businesses. Looking at trading overall, Living Landscapes delivered a strong year of growth in FY '25, contributing 18.4% of group operating profit at EUR 16.6 million. That compares to 14.2% of the group operating profits in '24, and that's all relative to our ambition to finish FY '26 at an annualized 30% of group operating profit. The increase in OP in the year reflected good organic growth at approximately 11% in the segment and earnings from acquisitions at about 20% with some marginal currency benefit giving an overall growth of 39% in operating profit. Our margins improved by 90 basis points to 8.9%, really driven by an improved mix of the higher-margin Environmental businesses and the continued focus on revenue and buying synergy extraction across the businesses within the portfolio. Looking at the businesses individually then, the -- as a general comment, the Landscapes business benefited from a strong start to the season with good planting and on-site conditions back in autumn '24 this time last year. combined with what was a strong spring season this year, so good conditions in early spring, which really helped carry the business through what was a challenging summer from a drought perspective. And as we look forward then into autumn this year, we've seen a solid start to the year this year with a good mix of moisture and warm conditions, allowing a lot of what was planned maintenance to get underway, some of which would have been deferred from the summer, especially in the sports area. And generally, we're seeing strong demand across the Environmental businesses over last year and into the early part of the season. During the year then, in addition to our focus on integration and synergy realization, we further strengthened our management team with the appointment of 2 managing directors for both our Sports and Landscapes businesses, which enhanced the leadership capability further alongside our existing Managing Director for the Environmental businesses. We continue to see strong momentum behind the Living Landscapes structural growth drivers, which again affords us the opportunity to build out our services and product offerings across the portfolio. Demand is strong for high-quality advice in the sports turf and amenity space in the U.K., for example, and we're building our resources to better exploit that know-how and capability further across Mainland Europe, where we have a relatively small but growing presence, but whereas very similar growth drivers exist to the U.K. market. Looking then at biodiversity net gain obligations and legislation such as the EU Nature Restoration Act, we see continued strong demand for Environmental, Landscapes services and solutions and continue to further exploit organic growth opportunities, both in the U.K. and assess opportunities for further inorganic growth, both in the U.K. and Europe. In addition, we continue to focus on incorporating biological and eco-friendly products into our portfolio, not just in the Living Landscapes portfolio, but also, of course, in our Agricultural portfolio, given the fundamental role that those products will play in the long-term protection of natural capital and the importance of the protection of that natural capital for sustainable longer-term economic activity and growth. With that, I'll hand it back to Colm. Colm Purcell: Good morning, everyone. So starting with some of the highlights on financial performance on Page 16 of the presentation. As you'll see, it was a strong year for our financial performance with positive growth across all of our financial KPIs. Group revenue of EUR 2.1 billion is 2.7% ahead of prior year on a constant currency basis, largely driven by a 2.3% volume growth and 0.9% benefit from acquisitions. Pricing was relatively constant in the year with a negative 0.5% impact overall for the year. We grew our wholly owned operating profit for the year by 8.7% constant currency to EUR 90 million with growth across both of our segments, Agriculture and Living Landscapes. Agriculture delivered good growth in the year with operating profit of 4.1%, primarily driven by the strong recovery in our U.K. and Ireland region. And Living Landscapes had a strong year as TJ just outlined, with growth of 36.3%. Our associates and joint ventures results showed strong growth in the year as well, largely continued high demand for animal feed supported by the high output pricing that we see for dairy, beef and poultry. And overall, group operating profit with the inclusion of our associates and joint ventures delivered 10.1% growth to EUR 99 million for the year. Our operating margin for the year at 4.3% was up 20 basis points, highlighting the improved agricultural performance in the Ireland U.K. region, offsetting the reduced margin in CE and LATAM and the higher contribution of the higher-margin in Living Landscapes business. Our overall EPS for the year was EUR 0.5421, which is ahead of our Q3 guidance following a strong Q4 performance and delivers growth of 12.8% or 14.4% on a constant currency basis. This growth demonstrates the benefits of the diversified nature of the group with strong contributions from Living Landscapes and Ireland U.K. agriculture more than offsetting the challenges in other markets and particularly Romania and Brazil. Looking at our cash performance then on Page 17. It was also a strong year for cash generation with our free cash flow at EUR 60.8 million, representing a free cash flow conversion of 117.9% and ahead of our Capital Markets Day target of 80%. This was in spite of making additional payments of EUR 23.5 million in respect of previously withheld amounts due to sanctioned parties. We now have just over EUR 5.7 million left to pay in respect of these, if you remember, of an original amount of around EUR 70 million. So we're nearly complete on those payments. The strong cash generation in the year allowed us to invest EUR 22.8 million into strategic capital expenditure, invest nearly EUR 18 million on our 6 new additions to the Living Landscapes portfolio and returned just under EUR 20 million to our shareholders through dividends and the balance of our EUR 20 million share buyback program, which commenced in the prior year. Our strategic capital expenditure was down from EUR 34 million in the prior year, and we expect this to reduce further in FY '26 as we've now largely completed the U.K. and Ireland ERP rollout and a number of other specific projects like our new state-of-the-art glasshouse facility in our R&D center at Throws Farm. Our overall net debt position at the end of the year was EUR 70.8 million, which was down EUR 0.9 million on last year. This equates to just under 0.6x of our EBITDA and well within our banking covenant position at the end of the year. The decrease in net debt largely due to lower working capital outflows and the higher profits as we noted earlier. Overall, our finance costs amounted to just under EUR 20 million for the year, an increase of EUR 1.4 million on the prior year as a result of a higher average debt over the full year. And overall, our ROCE for the year at 12% is back to our target of 12.5%. So this is up 80 basis points on the prior year, largely driven by our improved profitability that we've seen. From a facilities perspective, we completed the refinancing of a new EUR 440 million revolver facility in the first half, an increase of EUR 40 million on the prior year, all now maturing in FY '30 with the option to extend for a further 2 years. So we are well positioned now to support the future growth of the business. However, with higher interest rate environment, we continue to monitor capital allocation and continue to focus on working capital management. Just turning then to Page 18 and looking at our capital allocation since the start of our current strategy period in 2022, as I said, we continue to pursue a disciplined approach to capital allocation with balance across investing in growth and returning cash to our shareholders. Cash generation and working capital discipline has been good over the period, which has resulted in an average free cash flow conversion of 110%, again, compared to our target of 80% that we set out at our Capital Markets Day. This has allowed us to invest EUR 102 million into organic growth of our business to expand our capacity and our capability across the regions to invest in R&D, to invest in our health and safety and in the technology for the future with investments in a new ERP platform and expanding our additional capabilities to our customers. We've also invested over EUR 93 million in our diversification strategy, which includes the final payments in respect of our LATAM Brazil business and expanding our Living Landscapes business from 7.4% of operating profit back in '22 to just over 18.4% in FY '25. We've also returned over EUR 162 million to our shareholders through the completion of the EUR 80 million buyback program outlined at the 2022 Capital Markets Day and through our annual dividends and this equates to about 40% of our current market capitalization. For our shareholders, we're proposing a final dividend of EUR 0.1415 which will bring our full year dividend to EUR 0.173, which represents a 3% increase on FY '24 and above the 35% payout ratio that we outlined at the Capital Markets Day. Finally, then, to give an overview of our progress against the Capital Markets Day targets, we're 80% of the way through the 5-year program to 2026 and as you'll see against the operating profit target, we're now 93% delivered and against our free cash flow target, we're 86% delivered. As noted earlier, we also closed out on the final EUR 20 million share buyback program in early September, delivering in the Capital Markets Day commitment of EUR 80 million. So very much on track to deliver and exceed our Capital Markets Day ambition. I'll hand back to Sean. Sean Coyle: Thanks, Colm. So the focus for the upcoming 12 months really is to continue with the optimization of the agriculture businesses and in particular, the financial discipline around working capital and return on capital employed will continue to prevail. I would call out 2 markets in particular there, which have been challenging in that regard. Brazil and Romania are certainly 2 markets where we would have the greatest concern about the collectibility of debt, although we're very well provided and provisioned and the teams are doing a great job there. But keeping that focus hugely important within the business. We continue to flex individual businesses across the group and adjust services and adjust capabilities to try and enhance returns. And we had to do a small level of restructuring within our Brazilian business last year when it became clear that the margin pressure that the business was under -- was going to lead to a worse outcome than budgeted. So we reduced some headcount in the business in the autumn. We similarly conducted reviews of our digital business and our Agri U.K. business the previous year. So we will adjust headcount and adjust services to try and enhance returns for the group as a whole. Alongside that, we are continuing to invest in growing our capabilities within the organization, retaining key talent within the organization and recruiting new talent to come in from the outside. And we've seen some appointments in the business over the last 12 months to try and grow the team, but we're also investing in 40 individuals who are undergoing a global leadership development program to try and grow talent from inside the organization. From a Living Landscapes perspective, the ambition is still to exit the 2026 year with a 30% run rate of profit in our Living Landscapes business and the mix will improve next year organically as some of the acquisitions that we had in the current year are in place for a full year. But in addition to that, then we do expect a slightly faster organic growth rate from our Living Landscapes businesses relative to the agriculture businesses. And I think the outcome for the current financial year at 18.5% probably would have been a little bit higher as a proportion of our overall profitability, had it not been for the stunning performance of a couple of our agricultural businesses in the last quarter. So we're still happy to take profit from our agricultural businesses when it's generated. The portfolio within Living Landscapes continues to be examined for cross-sell, upsell opportunities and the capability of selling more of the portfolio across existing businesses. So as we delve deeper at a product level into each of the businesses that we have acquired, we're seeing opportunities to bring some of the product portfolio across into other businesses that we own and combining the back office opportunity, and combining the procurement opportunity around those and getting some synergies. And we have recruited 2 heads now to bring our export business up into Western Europe, and we're also looking at acquiring businesses in Western Europe from a distribution and manufacturing perspective. So the line marking paint that we manufacture is already exported from the U.K. to multiples of markets in Europe, North America and Australasia and we're looking at growing that. We already sell a number of our products from PB Kent into other markets. and we'll also sell some of our OAS product range into other markets via third-party distributors, and we may be looking at the opportunity to acquire in that space as well. So we will continue to expand the offering into Western Europe and develop some additional markets there. And finally then, we're going to continue enhancing the foundations for a further level of growth. And as Colm mentioned, really the strategic CapEx across the organization is tapering off now, but we will continue to try and utilize the capability that we've built in our FoliQ plant, in our Timisoara bottling plant in South America across all of our fertilizer businesses to continue to improve the product mix within the organization and grow product sales within all of those business units. And we're continuing to move towards a more sustainable range of products across each of our businesses over time. And the regulatory challenges on agriculture are not going to go away, but it's hugely important that we continue to change the product mix to more sustainable product offerings over time. Our digital tools continue to be enhanced, and we are building additional capabilities within the digital tools and the big plan for the next 12 months is to integrate our digital capability into the Telus farm management information systems. Telus is a Canadian digital organization, and they have acquired the 2 major farm management systems on farm in the U.K. and are rolling out a new system over the course of the next 12 months, and our digital capability will be completely integrated into that will allow for a seamless flow of propping information and applications between the Telus system and our digital tools. And finally, then, now that we finalized the rollout of the ERP within our bigger businesses, we really want to try and drive insights from those tools. So using the information within them to further drive cross-selling and upselling opportunities. and beginning to roll out the ERP system across some of our smaller businesses in Ireland, U.K. and doing upgrades within our European and Latin American business over the next 12 months, although they'll be less costly because they're less complex compared to the deployment of Dynamics 365 within our core businesses. So to summarize, I'm very pleased with the earnings growth in the period. Earnings per share up by almost 13% and our group operating profit up to EUR 99 million, which is the second highest year of profitability that we've seen in the group, only bettered by the really unusual fertilizer profit year that we had in 2022. We continue to see a broadening of the earnings base, which is leading to more stability in earnings predictability, which is good news from our perspective. And the Living Landscapes business having grown by close to 40%, now represents 18.5% of group earnings. This business generates significant cash and returns every year, a lot of which goes back to shareholders in terms of share buybacks and deployment via dividend, and we're pleased to do that. But the capability of this business to continue to back itself and reinvest in itself is fantastic because of the cash generation capability within the business. And the organization is seeing strengthened Board and business leadership which I think is going to drive another level of organic growth within the business. And we continue to invest in the innovation and R&D and technical capability to support future growth. So over the next 12 months, really, we want to maintain our disciplined approach to capital allocation and continuing to drive shareholder returns. While we are likely to see a lower CapEx level in the medium term, really, we're -- key for us over the next 12 months, I think, will be driving down the average debt level in the group. So I know there'll probably be a question or 2 on share buybacks when we go to the questions at the end of this session. But the interest bill that we have as an organization is high, and we would prefer to see slightly lower level of average debt within the business to try and bring down that interest cost for the organization as a whole. There will be some incremental investment in what is margin accretive organic growth and M&A growth. And you can see the impact of that in the Living Landscapes growth this year and the effect that it has on the operating margin for the group as a whole. The diversification is certainly supporting our lower earnings volatility. And the challenging weather year that we had in 2024 or indeed any challenging weather now that we see around the group, whether it's in South America or 2 years of consecutive drought in Romania, the impact of such weather events now is much minimized compared to the challenging reporting periods that we had in 2016 and 2020. We continue to broaden our offering within the emerging nature economy and the legislation in that regard in both the U.K. and Europe continues to drive incremental investment within the living landscapes sector. So getting exposure to that from our perspective continues to be important. And it's our ambition before the end of the current fiscal year 2026 to set out a new 5-year strategic ambition for the organization at some point at a Capital Markets Day in the next 12 months. So that will be the intention. So with that, we'll turn to questions. Thank you very much to the team here presenting alongside me, but also to all of our staff across the group who have contributed to what is a really good set of results in 2025. Sean Coyle: So you have to bear with us. We have a combination of online questions, which are coming through in text format on the screen. And I think we also have some questions perhaps coming through over the phone as well. So the instructions for people who are phoning to ask a question. Operator: [Operator Instructions] Sean Coyle: I can see 2 questions. Operator: The next question comes from Matthew Abraham from Berenberg. Matthew Abraham: First of which just relates to Living Landscapes. Just wondering if you can give some color on which markets you expect to be the primary drivers of growth across FY '26? T. Kelly: Yes, I think there is still opportunity for organic growth in our core markets in the U.K. across each of the 3 of sports landscapes and the environmental businesses. And again, as we said, we've acquired 5 businesses in that portfolio in environmental through the year. So certainly, we'll see the full year impact of that come through in '26 and organic growth. And the organic growth piece is not just in terms of revenue and looking at where we take more market share of wallet across our existing portfolio of customers across the 3 businesses within Living Landscapes, but it's also opportunities for buying synergies and leveraging the scale of the organization that we have. I think in terms of -- beyond that, the markets where we would see further growth, I mean the Western European developed economies typically where we have some presence with our sports portfolio, as Sean mentioned, our line marking business and our granulated fertilizer offerings as well as our Origin Amenity Solutions offerings. We see opportunity, and that's reflected in us putting more investment on the ground there with additional market development sales resources to exploit those markets. So Western European economies typically kind of follow similar structural growth drivers as we see in the U.K. So that would be a primary area of focus organically, but also looking at M&A opportunities, both distribution and manufacturing. And beyond that then, we have presence in Australia, across Asia and across into North America with relatively small footprints that being said, but still opportunity for further growth. I think one of the things that we're seeing and learning is that the provenance of U.K. agronomic advice and sports tarp advice is quite strong, and that's an area that we seek to leverage both with service and products across those markets. Matthew Abraham: Great. And then just one more relates to Romania. I'm just wondering if you can put color on outlook expectations for '26 given the differences in dynamics across both of those jurisdictions. Sean Coyle: Yes. I mean we typically don't give guidance until quite late in the fiscal year, given the challenges of predicting the year from an agronomic perspective. So the first time at which we get any real color on outlook will be our November statement. And we generally give good guidance on the level of winter planting in the U.K. context at that point in time, and you'll have a good sense of how trading has been in our Latin American business, which is more geared towards the first half of the year. But really, the weather and spring challenges are obviously a big impact on the outcome for trading for the year as a whole. So what I can say is the significant drops in profit that maybe we have seen in previous years like 2016 and 2020 are certainly not going to be at levels even in a very challenging weather year that we might have seen in those particular years. And I suppose over a 5-year time horizon, the predictability of the business will become much improved. So there are always going to be intra-year impacts from weather on the operating profit performance of this business. But the trajectory, as Colm has shown in the '22 to '26 outcomes relative to the predictions made in '22 is upwards. And I think if we take a 5-year bubble of profit for the subsequent 5-year period, we'd be confident that there is further growth to come in the operating profit performance of the business on a cumulative 5-year basis, but there is always going to be some intra-year volatility in the Origin business. So there's growth there. there is significant cash flow and free cash flow within the business that generates good return for shareholders, but there can always be intra-year volatility in earnings as a result of the weather challenges that we might experience in any 1 year. Operator: The next question comes from Fintan Ryan from Goodbody. Fintan Ryan: Fintan Ryan here from Goodbody. Two questions from me, please. Firstly, just with regards to your Living Landscapes business, I appreciate there's still some M&A to be completed to get to that 30% profit run rate by the end of FY '26. But as we sit here today with the deals done so far, what do you reckon will be the sort of the outturn of profit mix from Living Landscapes for FY '26? And how much more do you need to do to contribute in terms of incremental M&A to get towards that 30% target by the end of FY '26? And then secondly, just on the Brazilian market. I appreciate there's been a lot of moving parts and challenging for some of the retailer distributors... T. Kelly: Good morning Fintan. It's TJ here. I'll take the first...Sorry we have... Fintan Ryan: I was just asking a second question on Brazil. What visibility you have on any sort of improvement in sentiment on the ground there and given capacity as well in the industry? Sean Coyle: Yes. Maybe I'll take the Brazilian question first, and then TJ, you can come back to your expected growth for Living Landscapes organically. The Brazil market is, I would say, still in an element of flux. I think largely the stock at a retail level and the stock at a distributor level has walked through the system now but a number of players are still going through board processes in relation to reorganization of themselves and cramming down debt. So Lavoro is the most recent of those. It's a listed entity, and they have come to an arrangement with a lot of their creditors to pay back debt in full over a longer-term period. But some of the creditors who are not inside that arrangement will see their debt significantly down as a result. So we're amongst the group that have agreed to take payment over the 5-year period that is part of the court arrange scheme. We had significantly reduced our trading with Lavoro in the run into this court process because we were aware that they were challenged and perhaps might seek to go through a scheme of this nature. So I'm not sure that we can tell how many more organizations in Brazil are going to go through this type of process. But I do know that we keep a very close eye on our Brazilian debtor book that we're receiving regular payments from many of the debtors that we have there and that we have [ Coface ] insurance on almost 50% of our debtor book in the Brazilian market as well as guarantees from another 45% of the debtor book. So we got personal guarantees or guarantees over land or other instruments, which will allow us to collect the debt from those types of players. So it's a well-controlled debtor book. It's a well-controlled business from the point of view of the risk profile of the business that we do down there. I don't know when the pain in Brazil will end. But certainly, the retail channel stock levels have come down appreciably. The other dynamic, I would say, is grain prices, soy prices and oilseed prices generally are at lower levels than they have been for the last couple of years. So while the output price dynamic is challenged, the capacity to spend on inputs and the price pressure on inputs will probably continue to be a feature of the Brazilian market for some time to come. And I think that's a feature in predicting outcomes for 2026 as well even in a European context. Our farmers not going to be that inclined to spend on fertilizer, which is at elevated prices because of the fertilizer supply situation in circumstances where wheat and corn prices are much reduced compared to where they were a couple of years ago. So the supply-demand imbalance between output prices and input prices, I would say, is not in perfect harmony. And that can cause some level of volume attrition or as we've spoken about in previous years, farmers applying nitrogen only and taking what's called a P&K holiday and not necessarily applying the more complex fertilizers and NPKs as a result of higher fertilizer prices. So nothing that we're overly concerned about, but that is a feature of the equilibrium of the markets at the moment, I would say, Fintan. T. Kelly: Fintan, on your organic growth M&A question, I mean, we'd look in '26, we'd look for the proportion of [indiscernible] on an organic kind of growth basis to be about 20% to 21% of operating profit. And obviously, that leaves a gap then to the kind of exit rate of about 30% annualized by the end of the year. So that's the kind of scale of the M&A type of opportunity to be filled. I mean the M&A hopper, we're active, as I'm sure you can imagine, but the pace and timing of delivery and execution of any of those potential targets is a variable thing. So we continue to, as I said, focus on embedding kind of what is a new management team across the businesses driving those kind of organic growth opportunities, but also been very active on the M&A piece. But as I say, it's just -- it's a variable piece in terms of the timing. And ultimately, what's critical here is discipline around the M&A process, which we've shown over the years. So it's about getting the right asset that's the right strategic fit with the right management capability, and that will be -- continue to be the focus. So those targets are out there, obviously, as some direction and overarching perspective in terms of where we want to get to. But ultimately, we will maintain discipline in the process around the M&A hopper. Operator: [Operator Instructions] The next question comes from Cathal Kenny from Davy. Cathal Kenny: Two questions from my side. Firstly, on working capital, good progress in the last financial year. Just interested to know what's the quantum of opportunity to lower working capital intensity over the next 2 years? That's my first question. Second question then is on inventory within the supply chain in U.K. and Ireland for fertilizer. Perhaps you could provide some color on that both at farm gate and the distributor work. Sean Coyle: Sorry, Cathal, just give me the second part of the question there. Cathal Kenny: Second question related to color on the levels of inventory within the fert supply chain in the U.K. and Ireland, both at the farm gate and distributor level, yes. Sean Coyle: Yes. No, I would say on the kind of inventory on farm, it's de minimis. So the fertilizer price has been out of line with grain prices now probably since March or April. And I would imagine that whatever fertilizer farmers had acquired in a U.K. context, it has been applied and there's not a lot of fertilizer on farm. So grain prices have been declining and troughing since March, April. And with wheat now at kind of GBP 167 a tonne in the U.K., we're probably 5% or 10% away from what's an optimal level for kind of spending on fertilizer. Our fertilizer book in the U.K. is in reasonable shape. I would say the order book in the U.K. is slightly stronger than it was this time last year. And conversely, the order book in an Irish context is slightly weaker than it was this time last year. Again, I would say there's limited fertilizer in retail or co-op level in Ireland. And really, farmers are probably going to wait until harvest is complete before committing to significant additional fertilizer volumes. As you know, Cathal, Ireland is closed for fertilizer application between the middle of September and the end of January. So we wouldn't expect much business to be done in the autumn in an Irish context. And while fertilizer sales continue in a U.K. context through the autumn, as I said earlier on, the book is stronger than it was this time last year. And what we had in the spring last year was a very frantic season for fertilizer in a U.K. context because farmers hadn't committed to autumn purchases. And that commitment is there this year compared to last year. So that's good. So maybe, Colm, do you want to take the question on opportunities to reduce working capital? Colm Purcell: Yes. I suppose what I'd say on working capital is it's something that's looked at on a daily basis. Obviously, it's the biggest driver of our net debt over the year and obviously financing the cycle through the process, particularly on the agricultural side. As we see more Living Landscapes companies come into the group, obviously, they're less capital intensive and have less of a working capital need. Obviously, on the agricultural side, those cycles are inherent in the business. So we're not going to see too much change there. Where I will see the opportunities probably in the markets we called out earlier on in relation to Brazil and into Romania and probably Romania in particular, there'll be an opportunity. They've had a good harvest this year, we would hope over the next 12 months to see stronger collections and particularly more timely collections in Romania, which would give us some additional working capital relief there. T. Kelly: There's a question online about the M&A pipeline. So the question is, can you give us some color on the M&A pipeline, which I'm happy to take. So we've -- in the pipeline at the moment, we've got a number of different assets, some European-based, some U.K.-based, some in the manufacturing space for products that we supply ourselves and some manufacturing products that we see as an opportunity to expand our portfolio with. And taking position manufacturing obviously gives you access to the manufacturing IP does, of course, bring working capital and slightly more capital intensity to it. But the counterbalance is the IP that it brings and also access to potential further distribution networks and capabilities that would allow us to upsell and cross-sell from our existing portfolio of products. So I suppose assessing those both Mainland Europe, U.K. and also looking at some distribution businesses across the European markets. We already have European partners and distributors. And I suppose the opportunity, as I mentioned earlier, as we put more resource on the ground ourselves to look at that organic growth but also with it presents opportunity to acquire value-add distribution capability across some of those markets. So we're, I suppose, in the midst of kind of working through those assets that are in the hopper, some of them are at kind of early stage of progression, some of them slightly more advanced. And scale, I suppose, is the other question that we would -- you typically would get asked and the scale of the assets can range from the relatively small single million euro EBITDA range up to the much more significant double-digit million euro EBITDA assets and targets. So we've still got quite a broad range, I would say, in the hopper and as I said, various stages of progression with them. Sean Coyle: Thanks, TJ. Okay. We don't seem to have any further questions. We'll maybe give it one second just in case there's anybody else who wants to come in. No? Okay. All right. Thank you very much, everybody, for attending this morning's conference call, and we look forward to seeing you on the road over the next few days or catching up once we're back from the road show. So thank you very much for attending. T. Kelly: Thank you. Operator: That concludes our conference call for today. Thank you for participating. You may now disconnect your lines.
Operator: Hello, everyone, and thank you for joining us for Marti Technologies First Half 2025 Conference Call. Before we begin, I'd like to mention that today's earnings release and slide presentation are available on Marti's Investor Relations website at ir.marti.tech, where you will also find links to our SEC filings, along with other information about Marti. Joining me on today's call are Oguz Alper Oktem, Marti's Founder and CEO; and Cankut Durgun, Marti's Co-Founder, President and COO. Before we begin, I'd like to remind everyone that statements made on this call as well as in today's earnings release and accompanying slide presentation contain forward-looking statements regarding our financial outlook, business plans, objectives, goals and strategies and other future events and developments, including statements about the market and revenue potential of our products and services. These forward-looking statements are certain to risks and uncertainties that may cause actual results to differ materially from those projected. These risks and uncertainties include those described in our filings with the SEC, today's earnings release and the accompanying slide presentation and are based on our current expectations and beliefs as of today, September 22, 2025. In addition, our discussion today will include references to certain supplemental non-GAAP financial measures, which should be considered in addition to and not as a substitute for our GAAP financial results. We use these non-GAAP measures in evaluating and managing Marti's business and believe they provide useful information to our investors. Reconciliations of the non-GAAP measures to the corresponding GAAP measures, where appropriate, can be found in today's earnings release and slide presentation as well as our filings with the SEC. With that, I will now turn the call over to Alper. Oguz Oktem: Thank you all for joining us today for Marti's first half 2025 Earnings Call. Marti is Türkiye’'s leading mobility super app, bringing together 6 transportation services on a single platform. These include our ride-hailing marketplace for cars, motorcycles and taxis as well as our owned and operated rental service for e-bikes, e-scooters and e-mopeds. Collectively, our ride-hailing operations and 2-wheeled electric vehicle rentals provide users with a seamless, flexible and a sustainable way to move around Türkiye. Three years ago, we made a key strategic business decision to evolve our business model to align with Türkiye's growing mobility demands, transitioning our primary focus from 2-wheeled electric vehicles to ride-hailing. We began monetizing our ride-hailing service in October 2024. And in January 2025, we introduced a dynamic pricing model to further enhance efficiency and rider and driver satisfaction. We believe that today's results demonstrate that this strategic move is working. We have strong momentum and are consistently exceeding operational targets for both unique ride-hailing riders and registered ride-hailing drivers. At the same time, in our 2-wheeled electric vehicle service, we have continued to implement critical profitability-enhancing measures and have successfully deployed efficiency initiatives, resulting in a notable reduction in both operating losses and capital requirements. Importantly, these efficiency initiatives have helped us channel field team attention and resources to our higher-margin ride-hailing service, translating into improved financial performance. We believe 2025 will be a pivotal year for scale and financial performance with strong revenue growth and a significant improvement in adjusted EBITDA as a move swiftly to capture the growing opportunity for ride-hailing in Türkiye. We are on track to almost double our revenue from $18.7 million in 2024 to $34 million in 2025 and continue to drive improvement in adjusted EBITDA. Lastly, the monetization of our ride-hailing and our first mover advantage are significantly enhancing our cash generation power and capital efficiency. We believe this bolstered financial strength positions us well to scale operations further and capture Türkiye’'’s long-term mobility market opportunity with increased resilience and flexibility. We are the #1 urban mobility app on both iOS and Android app stores in Türkiye’. We are the only operator offering car-hailing and motorcycle-hailing services at scale in the country and the largest electric vehicle operator in Türkiye’. We have served over 128.6 million rides to 6.4 million unique riders since our launch. In the first half of this year, we consistently outperformed our ride-hailing targets, hitting 2.28 million unique ride-hailing riders and 327,000 registered ride-hailing drivers. Although we are the youngest player in Türkiye’'s urban mobility market, we are the clear market leader. It's also important to note that the top 5 urban mobility apps in the country, 4 are operated by local players. This is in line with global benchmarks, which have demonstrated that local companies are often successful in mobility markets because of their operational advantages, deep local market knowledge, regulatory agility, strong rider and driver relationships, tailored service offerings and trust and brand perception in the countries they respectively operate in. Last year, in 2024, we solidified our ride-hailing business in 4 of Türkiye’'s largest cities, Istanbul, Ankara, Izmir, and Antalya. This strong foundation set the stage for our previously announced 2025-2026 investment plan. In 2025, we began executing on this plan and expanded into 6 additional metropolitan areas. Bursa, Konya, Adana, Kocaeli, Mersin and Kayseri, with operations now spanning in 10 cities, representing approximately half of Türkiye’'s population and nearly 2/3 of its GDP. We have significantly expanded our ride-hailing service reach. To accelerate adoption in these new markets, we are prioritizing growth and do not foresee monetizing services in these cities in 2025. This strategic expansion is a key step in our long-term vision. However, we're not just expanding our footprint, but we're building the infrastructure and the capabilities to make Marti the go-to ride-hailing platform across the country. In 2025, we've prioritized building the right organizational structure to support our rapid ride-hailing growth. We have structured our organization to ensure we can manage operations at scale. And as a part of our transformation, we introduced several new departments that strengthen our technological, commercial and operational capabilities. These new departments include AI engineering to optimize matching and pricing, growth in CRM functions to drive engagement and loyalty, performance and brand marketing to strengthen our market position and business and competitive intelligence to sharpen our decision-making. To give you a sense of the growth in the scale of our organization, at the beginning of this year, we had approximately 120 team members dedicated to ride-hailing. By the end of the first half of 2025, our ride-hailing team has increased to approximately 180 members, and we expect to reach around 260 team members by the end of this year. To further accelerate growth of our ride-hailing service, we also launched a major redesign of our app in 2025. The key change is placing ride-hailing more prominently at the center of our user experience, making it faster and more intuitive for riders to book a trip. Beyond the design of our app, we also streamlined our onboarding, improved our search and navigation and optimized the booking flow to reduce friction. We are encouraged by the impact of these decisions. Since launch, our conversion rate has increased by 2%, moving more visitors, meaning more visitors are successfully completing their ride requests. In addition, since launch, our average App Store rating is 4.9 out of 5, reflecting positive user sentiment. We're also seeing stronger user engagement. Weekly and monthly active users have increased by 16% and 12%, respectively. And importantly, user comments highlight that new design feels simpler, cleaner and more reliable. Overall, we believe the redesign not only strengthens our brand perception, but also directly drives higher adoption and usage of ride-hailing, which is central to our long-term growth strategy. As a result of our new city launches, the investments we're making in the growing of our organization and our app redesign, our number of unique ride-hailing riders have grown 107% year-over-year in the first half of this year from 1.1 million to 2.3 million. Our number of registered ride-hailing drivers grew by 92% year-over-year from 171,000 to 327,000. We intend to continue investing in the cost-effective growth of our ride-hailing service in 2025 and beyond and aim to reach 3.3 million unique riders and 450,000 registered drivers by the end of 2025. We achieved accelerated growth and substantial scale in riders and registered drivers with limited capital investment, demonstrating our commitment to capital-efficient growth of our ride-hailing business. Moving forward, we intend to make targeted investments to leverage multiple growth opportunities, including increasing organic growth in existing cities, improving our rider and driver experiences, initiating loyalty incentives, launching new cities to serve a greater share of Türkiye's urban population, refining our dynamic pricing engine and increasing our take rate. We believe these initiatives will support our path toward capturing an estimated $3 billion annual revenue opportunity in the ride-hailing business. Here is how we calculate the size of the revenue opportunity. With every global benchmark, we see that the introduction of ride-hailing service into a market uncovers unmet demand significantly eclipsing the demand for taxi service prior to the introduction of ride-hailing. This is because ride-hailing offers a significantly better, more accessible customer experience than taxis across all dimensions, including vehicle availability, price and driver and vehicle quality. For example, in New York City, ride-hailing increased the size of the taxi market by 1.6x. There were approximately 800,000 daily rides in Istanbul, our largest city when we launched our ride-hailing operations. We believe that -- what happened in New York is now happening in Istanbul, and we expect that there will be 1.3 million daily ride-hailing rides in Istanbul at steady state. Istanbul's taxi market accounts for about 45% of Türkiye’'s taxi market. So assuming similar market dynamics in Türkiye’'s other cities, we project that there will eventually be about 2.9 million daily ride-hailing rides in Türkiye’. This is about 1 billion rides a year or approximately $10 billion of potential gross annual booking value. At an assumed take rate of 30%, in line with global benchmarks, this equates to $3 billion of total annual revenue potential for Türkiye’'s ride-hailing market maturity. As we continue to prioritize ride-hailing as our strategic focus, this also shaped how we manage our 2-wheeled electric vehicle operations. In addition to channeling more field team attention and resources toward our higher-margin ride-hailing business, we also implemented operational efficiency projects in our 2-wheeled electric vehicle business to increase profitability. Our strategic focus on our higher-margin ride-hailing business and operational efficiency projects decreased our total cost of revenues by 25% compared to the same period last year in addition to our gross profit margin improving by 49%. Throughout the first half of 2025, the behavior of our riders supported our decision to offer multiple transportation services to our single app. We believe and the data continues to show that this multi-modal offering is aligned with rider performance. 70% of our e-bikes, 84% of our e-moped and 40% of our car-hailing and 83% of our motorcycle hailing riders use these services after previously being introduced to Marti by using another Marti service. Our existing services serve as an excellent cost-free rider acquisition channel for our new services. Furthermore, 70% of our e-bike, 80% of our e-moped, 26% of our car-hailing and 83% of our motorcycle-hailing riders subsequently used other Marti services after their first e-bike, e-moped, car hailing or motorcycle hailing rides, respectively. These data points all show an overwhelming rider preference for multi-modal transportation services. Serving multi-modal riders also creates economic benefits for Marti. Rides per rider is 3x higher and revenue per rider is 2.7x higher for our multi-modal riders than for our single service riders. These statistics reinforce our decision to invest in the balanced growth of our multi-modal services. I'd now like to turn it over to my partner, Cankut, to present our financials. Cankut Durgun: Thank you Oguz. Looking at our KPIs. We increased our total rides from 13.7 million in the first half of 2024 to 19.2 million in the first half of 2025. We also increased our unique riders. We used our services at least once during the half year from 1.4 million to 1.7 million. Both increases were primarily driven by an increase in ride-hailing rides and riders. Rides per unique rider increased to 11.4% in the first half of the year as a result of increased availability and rider awareness of our service offering across cities, which drove higher utilization. Our number of unique ride-hailing riders since our launch increased from 1.1 million to 2.3 million in the first half, while the number of registered drivers increased from 171,000 to 327,000 during the same time period. As a result of the gradual decommissioning of our existing 2-wheeled electric vehicle fleet, our number of average daily 2-wheeled electric vehicles deployed decreased from 34,600 in the first half of 2024 to 24,000 in the first half of 2025. We generated $14.3 million of revenue in the first half of the year, this is a 70% increase compared to the $8.4 million of revenue that we generated during the same period in 2024. This was primarily due to the monetization of our ride-hailing service. We reduced our cost of revenues by 25% from $9.9 million in the first half of '24 to $7.4 million in the first half of '25 as a result of increased field team attention and resources to our higher-margin ride-hailing business, and a continued focus on profitability enhancing measures in our 2-wheeled electric vehicle service. These projects included optimizing the numbers of our field staff, repair and maintenance staff as well as our logistics vehicle counts increasing the number of on field repairs as a share of total repairs and increasing our usage of refurbished electronic and spare parts. Our general and administrative expenses increased by 35% from $9.1 million in the first half of '24 to $12.2 million in the first half of 2025, driven by increased share-based compensation expense of $4.7 million. Excluding this non-cash share-based compensation expense, G&A expenses increased to $7.5 million or an increase of about 13% compared to the $6.6 million in G&A, excluding share-based compensation expense in the first half of '24. This increase is primarily attributable to the investments that we're making in our ride-hailing team. As a result, our adjusted EBITDA improved by $5.4 million from negative $11.3 million in the first half of 2024 to negative $6 million in the first half of 2025. We believe the accelerating performance of our ride-hailing business represents a pivotal milestone for our company's growth and profitability by the end of 2025 we reiterate our plans to nearly double our annual revenue from $18.7 million to $34 million and to improve our adjusted EBITDA by $2.3 million. This 2025 guidance incorporates the 2025-2026 investment plan we shared earlier, which includes the launch of ride-hailing in 6 new cities and the expansion of our ride-hailing team to support as scale operations. We thank you for participating today, and we'll be glad to answer any questions that you might have. Operator: [Operator Instructions] Today's first question is coming from Theodore O'Neill of Litchfield Hills Research. Theodore O'Neill: First question on the 2-wheeled electric vehicles deployed. Can you talk about, is there some level you're trying to get to? I'm assuming you're not trying to get it to 0? Cankut Durgun: That's right. Thanks for the question, Theo. We do believe that 2-wheeled electric vehicle operations are an integral part of our service offering because of the multi-modal statistics that Oguz shared earlier. We foresee operating all 3 of those modalities and having all 3 available in our app because they're not only an important source of -- sort of customer acquisition, we've also in some of the CRM campaigns that we launched recently are seeing that they're also a great source of driving traffic to our ride-hailing service. And the priority that we place to growing our ride-hailing service does mean that they're going to be an integral part of our service moving forward. The specific number we're going to be reevaluating in the summer -- in advance of the summer of 2026 at that time based on the decommissioning rates as well as the size of the fleet that we believe is necessary to, one, meet customer needs; and two, continue to direct as much additional traffic as possible to our ride-hailing business. We're going to be making the 2-wheeled electric vehicle fleet decision at that time. Theodore O'Neill: Okay. And could you comment overall on the driver supply and getting more drivers into the system as well as -- you talked about AI engineering, and I was wondering if you can talk about how the AI aspect is helping your business. Cankut Durgun: So on the driver supply side, we continue to face no constraints in onboarding additional drivers. So for example, if you look at other global markets, many of the companies operating in those markets as they have scaled they have needed to strike partnerships, for example with banks or car rental firms in order to increase their driver supply simply because in their respective markets, there weren't sufficient numbers of drivers with cars to continue to serve the platform. We're very, very far from reaching those constraints. We continue to grow drivers I believe we shared the figures, but I believe roughly 2x year-over-year. We're seeing -- on the contrary, we're actually seeing an increase rather than a decrease in the pace of new driver sign-ups. And I attribute that to the fact that as our marketplace grows larger because of the network effects intrinsic in the marketplace, what happens is drivers actually have the opportunity to earn more income when there are more riders on the service. And therefore, somewhat counterintuitively rather than base effects kicking in and then sort of driver growth declining, we have an increase in the pace of both driver acquisition as well as the engagement of those drivers as our rider base increases. With respect to your second question regarding the AI engineering team, so this is probably the most important team that we are building right now. And that's the reason why we highlighted it first in terms of the new teams that we're building as part of our new org structure. And the reason it's critical is because many decisions like pricing on the rider side, but also like the calculation of the take rates on the driver side as well as much of the rider and driver experience funnels are now being done by AI tools. And we're therefore fortunate to have access to the most talented individuals in Türkiye, but we're also working with advisers as well as new team members abroad, many of whom have deep experience working in these fields at other ride-hailing firms globally to ensure that we're able to deploy the same capabilities in Türkiye and offer the combination of the right customer and driver experiences, the right pricing, the same level of service that riders and drivers receive abroad will be available to them in Türkiye as a result of these investments. Operator: The next question is coming from Jack Halpert of Cantor Fitzgerald. John Halpert: Two, please. So First, on monetization. You've given a lot of color on where you see the long-term ride-hailing monetization going. Can you just elaborate on where current take rates are versus the global benchmarks and maybe where you were kind of us back in April and then sort of how you think these are evolving over the next 12 to 18 months. And then second real quick just on demand in new markets. Can you just talk a little bit about what you're seeing in terms of rider frequency and retention? I know you just kind of commented on the supply side, but curious on the demand side as well. Cankut Durgun: I'll take the question on the take rates. So our take rates continue to be in the high single digits as of the end of the first half of this year. That's similar to where they were in the prior earnings call, where -- I don't know if it was you, Jack, but there was a similar question. Therefore, we continue to have significant upside potential in increasing the take rates to positively impact our monetization levels moving forward. I'll let my partner, Alper take the second question. Oguz Oktem: In Türkiye’'s, if you consider it to be a part of Europe, it's the largest country in Europe with 85 million, probably 90 million people. In Türkiye’, there are 24 cities that have a population of 1 million or higher. The largest city in Europe is Istanbul. It is our largest market. But outside of it, we still have 23 very large cities with populations over 1 million. So where we -- wherever we go, we see very strong demand. Obviously, most of, if not all of these markets have never experienced any type of tech-based mobility solutions. No ride-hailing company ever entered these markets, these secondary cities in Türkiye or no taxi-hailing business ever scale there. So whenever we go, we see incredible demand and very high user excitement. Since we are a household name in Türkiye because of our social media presence and the popularity of our 2-wheeled electric vehicle segment and are just branding and marketing endeavors over the past few years. We expect a much larger percentage of our trips to be conducted or taken place in the secondary markets that we're launching into. Cankut Durgun: Let me just add a few numbers to that. So in our most recent press release, Jack, which we -- where we shared our progress toward meeting some of the quarterly targets that we suffer our ride-hailing business. We did share there, for example, that the share of our riders based outside of Istanbul, they grew from 13% to 24% over the last year, and that our share of registered drivers based out of Istanbul grew from 18% to 26%. And this is at a moment in time where the 6 new cities that we launched were relatively nascent. And as a result, these figures are primarily coming from our 4 city operations, Istanbul, Ankara, Antalya and Izmir. And even in looking at those 4 cities, you can see that close to 1/4 of the riders and drivers are coming from outside of Istanbul. As we add more cities, that number is going to, of course, further grow the steady state there is something that's implicit in the market sizing calculations we perform. And in the market sizing calculations, we perform, you can see that we assume that Istanbul is going to be 45% of the total in Türkiye. Personally, I believe that, that's sort of an upper limit, likely going to be less than that. But that's where we are now versus where we believe it's going to head, those are probably good numbers to keep in mind. Operator: Our next question is coming from Rohit Kulkarni of ROTH Capital Partners. Rohit Kulkarni: Nice set of results. I have a few questions. First is just talk through your kind of growth versus profitability plans over the next 6 to 18 months. I know you've started to launch into new cities that may not monetize while existing cities are probably monetizing at a higher rate. Perhaps talk through that where what is the second half implied guidance kind of say to us about revenues coming from existing cities versus investments into new cities? How are you thinking about that over the next 6 months and heading into '26. Oguz Oktem: I'll take the first question. I'll let my partner take the second. In terms of the [indiscernible] growth and profitability, we are in a very large position because we are the only player in the market, and we can play with take rates whenever we want, right? And we see the -- inelastic demand when it comes to ride-hailing. It's because in a city or in a country that is the price of any type of tech-enabled mobility solution, what we are doing is sort of like impossible to replace. The taxi situation in Istanbul or the rest of the country they obviously bad. So realistically, we are the only real solution to help people move around the city. As a result, we see inelastic demand. So what we're trying to do right now is just go as much as possible while we're the only player in the market. That's simply because the lower we charge in terms of take rates, the faster we grow. You could today potentially say, hey, we're going to jack up our take rates and increase our profitability. And since we're the only player in the market. And we face inelastic demand, we would increase our profitability immediately, I could just call someone and have them increased prices within 20 minutes and the entire outlook of the company financially would be different. But what we are doing right now is trying to optimize. And we're doing this day carefully with a lot of calculations and a lot of thought. What we're doing is we are taking as less as we possibly can to be in a financially strong position while we can promote growth as much as we can. So this is sort of like the optimal point of a very sophisticated equation that we're trying to solve as we move along. Cankut Durgun: And then on your question about the revenue mix and the profitability of other cities I think I touched on sort of the revenue mix in the answer to Jack's question. A good way to think about the revenue mix is as a share of the registered driver and rider base in the cities where we operate. And the figures that I shared earlier in that sort of 25% figure was at a moment in time where we had yet to launch the 6 new cities and therefore Istanbul versus Ankara, Antalya, Izmir that's a good way to think about the revenue mix of those cities. With regards to the profitability, what's important to note is that our -- the 4 cities that we originally launched those cities, if you look at their contribution margin, defined as the revenue that we earn from drivers in those cities, minus the variable cost to serve those cities minus the direct marketing costs. So those costs, they include performance marketing primarily designed to attract and retain individual riders and drivers. That excludes sort of brand building, offline marketing campaigns and so forth. But if you subtract the direct marketing costs, which are assigned to those cities, we're already profitable in each of those 4 existing cities. Therefore, now that we have that sort of under our belt with high single-digit take rate environment, our goal is to, one, now that we've shown that we have the ability to do that with sort of low single-digit take rates is -- our first goal is to continue to invest in growing as fast as possible in those cities as well as to launch new cities and beef up our ride-hailing team. Rohit Kulkarni: Fantastic. I guess -- and a couple of other somewhat unrelated topics to both of you. In terms of regulatory backdrop, any updates that you can share as far as where do you feel ride-sharing and regulatory environment is in Türkiye. Cankut Durgun: We believe that we're the only team that has the ability to introduce new transportation services that have never been deployed in Türkiye. Before, we also believe that we're the only team that has the ability to regulate these and we've shown this in other modalities, and we are working on doing the same in the ride-hailing modality. Rohit Kulkarni: And finally, recently, you announced that crypto treasury-related press release. Maybe talk through how you think about that as a strategy and given kind of the volatility in local currency, how this is something that investors should think about? Cankut Durgun: It's a very good question. It was somewhat surprising to be on the receiving end of that. But our strategy is as follows, right? We do know of several companies that announced crypto strategies, not as a means of diversification of their non-operating cash, but almost as an investment strategy almost as a -- sort of the launch of a new business line for the company. That's not the case for us. So our crypto strategy was designed by looking at the cash flow that we keep as a buffer at Marti that we do not use for our operations, it's sort of like rainy day cash flow, and that rainy day cash, that cash used to be stored in the form of U.S. dollars. And we looked at the performance, of course, of the U.S. dollar relative to crypto assets, which we believe have proven their ability to serve as a store of value. So not just any crypto asset, but crypto assets, which have proven their ability to serve as a store of value. And we said, let's take an initial position by diversifying the non-operating cash of the company across USD and Bitcoin initially, which we believe to date is the only cryptocurrency that has proven its ability to serve as a store of value. And even in doing so, the majority of our, let's call it, rainy day cash remains and held in the form of USD, but a certain fraction currently remains held as Bitcoin. Operator: Our next question is coming from Fawne Jiang of Benchmark Company. Yanfang Jiang: Two on my side. First, I just want to follow up on the unit economics. You didn't -- you did give the colors in terms of where you are on your existing city. I guess my question here is what's your current user incentive, if there are any driver incentive? How should we think about the dynamics there? And secondly, for your new cities, I understand it's still early-stage investment cycle. But do you foresee the unit economics in the 6 new cities may or may not be different from the first batch of your, I think, existing 4 cities. Any color there would be helpful. Cankut Durgun: Yes. Thanks for your questions, Fawne. So to respond to the first one regarding the rider and driver incentives, they remain very, very limited. So the reason why this question is -- the right question is because you're probably thinking of markets like the U.S. where when I was living there in the early 2010s, I remember competitors were giving $500 sign-up bonuses for drivers that were completing like a few trips, right? And that's not the case in Türkiye. If you look at our driver acquisition costs and you look at our rider acquisition costs, they are such that our driver acquisition costs, for example, we pay back our driver acquisition costs within a month of that driver driving for our service. On the rider side, are other than sort of cross promoting our service with our 2-wheeled electric vehicle fleet and other than one-off sort of rider acquisition campaigns, we have very, very negligible rider acquisition activities, and we leverage primarily the existing brand that Marti has the existing very large user base that we had from our 2-wheeled electric vehicle service. That's the reason why on both of those metrics, we've been able to grow very, very cost efficiently. With regards to how we see the unit economics playing out in our new city launches thinking through the parameters that are going to be a bit different. I don't believe, again, because the driver and rider acquisition costs are fairly low. I don't believe that those are going to be different. But we do see that the average fares for our new cities, in some cases, are lower than those in our core markets like Istanbul. That's only natural. That's a function of sort of purchasing power. But if you think of the cost to serve some of our variable costs are also similarly lower because of the local teams that we have in those cities. And as a result, we'll be able to -- sort of operate with similar margins, we believe, in the new cities as we have been operating with in the 4 existing cities where we first launched. Yanfang Jiang: Since we have compared Türkiye market with the global market, it seems like in the other regions, global, I think ride-hailing providers are embracing autonomous driving, robotaxi. I understand you guys very early stage of market. Just your thoughts on the, I think, a driving down the road and what's your positioning or thought -- strategic thought going forward? Cankut Durgun: We believe that autonomous driving is certainly going to constitute the majority of our ride-hailing trips. Perhaps within sort of a decade in markets like the U.S. and markets that are not only sort of advanced in terms of technology adoption, but also markets where the economics make sense, right? So many people in the U.S., for example, look at the autonomous ride-hailing market and they say, well, the solution -- the problem that needs to be solved is regulatory. Once there's a sort of regulatory acceptance then autonomous ride-hailing is going to be a thing. In Türkiye, while that is necessary, and there's an additional complicating factor, which is sort of the economics, right? The revenue per mile or kilometer that we have for our ride-hailing service in Türkiye is significantly lower than that in the U.S. And therefore, the sort of substitute transportation option in the form of sort of ride-hailing that autonomous vehicles need to undercut in terms of price, it's going to take a lot longer for autonomous vehicles to undercut ride-hailing prices in Türkiye than in markets like the U.S. However, as we have been in every other transportation -- tech-enabled transportation service category that we've introduced to Türkiye so far. We are also in active discussions to pioneer that introduction of autonomous vehicles in Türkiye as well, and we're in discussions with multiple partners for this. Operator: The next question is coming from Sid Havaldar of Crescent Enterprises. Siddharth Havaldar: Congrats to get on a great half and the growth in revenue. Just really 2 questions from my side. One, which are related, I mean, just given the existence of cash position, I love to understand how you're thinking about maybe raising more cash or how that balances out with the take rate for the ride-hailing operations, especially as you expand? Would it ideally be through issuing more convertible notes or increasing the take rates to achieve cash flow positive status? Cankut Durgun: So we raised an additional convertible note financial of $23 million in April and that fully funds the growth of the business with even our existing take rate over the net 12 months and therefore we're not looking to raise any additional capital for the foreseeable future. We also expect sort of developments in the new cities that we've launched, whether in terms of scale, in terms of monetization, existing cities and the incremental scale that they bring over time will also positively impact the cash position. So probably 6 to 12 months from now, we'll be having the discussions about what the right trade-off between additional fundraising and take rate will be. We'll have those discussions 6 to 12 months from now. Operator: This brings us to the end of the question-and-answer session. I would like to turn the floor back over to management for closing comments. Cankut Durgun: Thank you, everybody, for chiming in. Thanks for your questions. We look forward to seeing you next time. Oguz Oktem: Thanks, guys. Talk to you next time. Goodbye. Operator: Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.