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Operator: Good morning. Thank you for attending today's PageGroup full year results. My name is Sarah, and I'll be your moderator today. [Operator Instructions]. I would like to pass the conference over to your host, Nick Kirk, Chief Executive Officer. Please go ahead. Nicholas Kirk: Thank you. Good morning, everyone, and welcome to the PageGroup 2025 Full Year Results presentation. I'm Nick Kirk, Chief Executive Officer. On the call with me is Kelvin Stagg, Chief Financial Officer. The group produced a resilient performance despite continued market uncertainty. We saw variable market conditions across the regions with ongoing challenging conditions in Continental Europe and the U.K. However, we continue to grow in the U.S., and we saw improved conditions in Asia Pacific, particularly during the second half of the year. The conversion of interviews to accepted offers remained the most significant area of challenge as ongoing macroeconomic uncertainty continued to impact candidate and client confidence, which extended time to hire. As you know, we've taken robust action to optimize our cost base by simplifying our management structure, reducing our operational leadership team and improving the efficiency of our business support functions. We remain committed to our strategy, and I will update you on our progress later in the presentation. I will now hand you over to Kelvin to take you through our financial review. Kelvin Stagg: Thank you, Nick. Although I will not read it through, I'd just like to make reference to the legal formalities that are covered in the cautionary statement in the appendix to this presentation and which will also be available on our website following the call. In 2025, the group delivered gross profit of GBP 769.5 million, down 7.6% in constant currencies against 2024. Operating profit in 2025 was GBP 20.9 million, down from GBP 52.4 million, and our conversion rate was 2.7%. Earnings per share was 2.9p, and we ended the year with net cash of GBP 31.4 million. Today, the Board has proposed a final dividend of 3.21p per share. Combined with the interim dividend of 5.36p, this represents a total dividend of 8.57p. I will now take you through the financial review. Against the ongoing challenging trading conditions, we have taken robust action to optimize our cost base by simplifying our management structure, reducing our operational leadership team and further improving the efficiency of our business support functions. These initiatives incurred a one-off cost of around GBP 15 million in 2025, partially offset by savings of around GBP 5 million. This will deliver annualized savings of around GBP 15 million per year from 2026. Given the distortive effects of these one-off costs at a regional level, we have presented the conversion rates, both including and excluding these costs. Looking at each of our regions and starting with the largest, EMEA, our underlying conversion rate was 9.6%, down from 13.2% in the prior year. Profitability decreased on 2024 due to the tougher trading conditions seen in 2025. The Americas underlying conversion rate was broadly similar to 2024 at 4.4%. However, in Asia Pacific and the U.K., while our trading conversion was positive, after central cost allocations, both regions had a negative underlying conversion rate of minus 1.4% and minus 8.7%, respectively. The tax charge for the year was GBP 7.2 million, which represented an effective tax rate of 44.4%. The higher-than-normal tax rate is due primarily to the impact of irrecoverable overseas withholding taxes and permanent differences, which have a disproportionate effect due to the reduction in profits. In 2026, the effective tax rate is expected to be around 35%. The most significant item on our balance sheet was trade and other receivables of GBP 317 million, which decreased by GBP 11.4 million versus 2024. After returning a total of GBP 53.6 million to shareholders by way of ordinary dividends in 2025, net cash at the end of the year was GBP 31.4 million. Overall, net assets decreased by GBP 47.8 million from GBP 262.4 million to GBP 214.6 million. This slide shows the key movements in our cash throughout the year. Our EBITDA inflow was GBP 81.8 million, partially offset by an increase in net working capital of GBP 8.1 million. Tax and net interest payments were GBP 23.7 million and net capital expenditure was GBP 11.3 million (sic) [ GBP 11.4 million ], down from GBP 15.8 million in 2024. Payments made in relation to lease liabilities reduced cash by GBP 41.6 million. The group purchased GBP 8.3 million worth of shares into the Employee Benefit Trust to satisfy future committed obligations under our group share plans. The largest outflow of cash totaling GBP 53.6 million was dividends. The overall impact of these cash flows was to decrease the group's net cash position by GBP 63.9 million to GBP 31.4 million at the end of the year. The group aims to run the balance sheet in a position of net cash. We have a clear capital allocation strategy with 3 defined and well-established uses of cash. The first is to satisfy the operational and investment requirements of the group as well as the hedge liabilities under the group's share plans. Once the first requirement is met, the second is for payment of ordinary dividends, where our policy is to increase them at the long-term growth rate of the group, subject to affordability. Finally, any remaining cash surplus is to be distributed to shareholders by way of a supplementary return. While reviewing the group's current and future cash position, in light of the sustained challenging trading environment and the ongoing unpredictable nature of our markets, the Board believes it is prudent to declare a final dividend for 2025 of 3.21p per share. This action balances the group's current level of profitability and affordability with the desire to continue to invest in growth areas. The Board recognizes the importance of dividends to shareholders, and we'll continue to assess the level of dividend payments whilst considering the group's prospects. I'll now hand you over to Nick to take you through our strategic review. Nicholas Kirk: Thank you, Kelvin. We launched our strategy in September 2023 with 3 key strategic goals: delivering operating profit of GBP 400 million, changing 1 million lives and increasing our Net Promoter Score to over 60. Our primary financial goal is to deliver GBP 400 million of operating profit in the medium term. Despite the tougher market conditions, we have made progress with our strategy. We continue to reallocate resources into the areas of the business where we see the most significant long-term structural opportunities. I will talk about this in more detail later in the presentation. Against our social impact goal of changing 1 million lives, we performed strongly. Progress in this area is measured by the number of people whose lives we have changed by placing them into work as well as the number of people who access programs we run that support traditionally underrepresented groups accessing employment. In 2025, we changed over 140,000 lives, meaning that in total, we've changed over 790,000 since 2020. As a result of our continued commitment and success in this area, we are well on track to deliver our target by 2030. We also made excellent progress on our customer experience goal of achieving a client Net Promoter Score of over 60. From our pre-strategy baseline of 52, we saw improvements in 2023 and 2024. And in 2025, our score grew again to 66, rating us as excellent and exceeding our target for the second consecutive year. Our Net Promoter Score reflects the commitment we have to deliver for our customers. Our strategy prioritizes delivering what we are famous for, building on our existing strengths and leveraging our established global platform. To achieve our strategy, we have 4 pillars of growth: our core business, our technology business, Page Executive and Enterprise Solutions. Our core business is the main driver of group performance. We define our core business as Michael Page and Page Personnel, which covers all disciplines except technology. Technology recruitment is a scale play for the group, enabling us to build a high-volume, high-value business in what for us is already a significant market. Page Executive is a market gap play with a specialization in senior leadership search and recruitment as well as offering executive advisory services. Enterprise Solutions is a partnership play as we build out our capabilities and breadth of offering to create long-term mutual value with our strategic customers. I will now provide a brief update on the progress we've made within our 4 pillars of growth. Within our core business, despite the tougher market conditions, we've continued to reallocate resources to match activity levels as well as investing into business areas where we see the greatest long-term opportunities. Whilst the macroeconomic uncertainty continues to impact the majority of our geographies, in 2025, we saw a return to growth in our U.S. business and improved conditions in Asia Pacific. As we anticipated, this recovery has been driven almost entirely by an improvement in the conversion rate of offers to placements rather than increasing activity levels. As a reminder, in permanent recruitment, for every 5 offers a fee earner receives, in a normal trading environment, we would expect 4 to become placements. Over the past couple of years, this has fallen to around 3 out of 5. Reviewing our improved performance in the U.S. and Asia Pacific, what we have seen is a gradual return to a more normal level of conversion of offers to placements. This has been due to clients and candidates being more willing to engage in conversations and negotiations at the latter stages of the recruitment process. As has been widely reported in recent years, trading conditions in the technology sector have been challenging. Despite this, technology remains our second largest discipline at 12% of group gross profit. Within technology, we continue to see a more resilient performance from nonpermanent recruitment. We are reshaping this business from the pre-pandemic model, increasing our offering within contracting and interim roles. This is particularly evident in markets such as Brazil, Greater China, Colombia and Spain, which is now our second largest technology business after Germany. We've also been rolling out our proven contracting model from Germany into other markets in Northern Europe. Despite the tough conditions globally, we delivered a record performance in India, and we saw good growth across a number of individual markets, including the U.S., Colombia, Greater China and Japan. Page Executive continues to deliver strong results despite the challenging macro environment with gross profit down just 2% against a record comparator. Within this, our best-performing markets were Spain, Colombia, Greater China and Southeast Asia. A key element of our Page Executive strategy has been to focus on more senior leadership roles and as a result, increase the salary levels at which we place. This strategy continues to prove successful, and we've seen a notable increase in the median placement salary. Alongside this, the track record and the success of our well-tenured consultants in Page Executive has resulted in an increase in our median fee. We continue to believe that the market gap for Page Executive is a significant opportunity for the group and one that we are uniquely placed to exploit. Despite sector-wide challenges in recruitment outsourcing, Enterprise Solutions, which is our business focused on strategic customers, delivered an encouraging performance in 2025. Our well-established global platform across 34 markets allows us to consult with clients as they look to enter new territories. Our customer-centric approach highlighted by Net Promoter Score continues to make us the partner of choice for companies looking to go global. In 2025, against the backdrop of a difficult macro, we generated 12% more gross profit from our largest 20 clients than we did in our record year in 2022. Within Enterprise Solutions, our outsourcing business delivered growth of 18% and a record performance. We've also seen a strong increase in our sales pipeline as our strategic commitment to global customers gathers momentum. We remain focused on winning business that delivers conversion rates in line with our strategy. As many of you will know, I joined PageGroup in 1995. And over the last 31 years, I've seen huge changes in the sector and the technology that surrounds it. In more recent times, the proliferation of social media and 24-hour news has made the business world a very noisy and fragmented place with conflicting headlines, opinions and data points. When it comes to moving jobs or changing careers, it is now more important than ever for candidates to work with an expert who can filter out the noise and guide them through one of the biggest decisions they will make during their working lives. Our industry is built on human relationships, trust, judgment and insight, especially in white-collar professional recruitment. AI and technology will continue to accelerate the process, but it can't replace the conversations, trust and credibility our consultants bring. When it comes to AI at Page, we've talked before about the importance of building enterprise-wide platforms and having a globally aligned approach to data. We've told you how we've been working closely with major technology partners to build a single integrated data environment ready for AI-enabled products to be deployed quickly across markets. With these solid foundations now in place, we can be confident that we can exploit the wide range of AI that is available. Our strategy is not to replace the human element, but to augment it. For decisions on AI investment, the question that matters most for us at Page is, does it make money or will it save money? This mindset keeps us focused on tools that genuinely enhance consultant productivity, have a tangible benefit for our clients, and drive efficiencies in our business support functions. Companies that get this balance right will pull ahead of those that don't. Across the group, we put this strategy of augmentative AI into action and are already reaping the rewards. We're delivering qualified client leads through our AI-powered business development hub, which uses internal data and external feeds to help our consultants prioritize their time and focus their effort towards the roles we are most likely to fill. We are harnessing the power of Copilot with our consultants building the agents they need the most to transform how they research roles, prepare insights and craft follow-ups. We've also used AI to update over 7 million candidate records in 2025, saving our consultants from an otherwise manual task that equates to the equivalent of nearly 2,500 working days. We continue to see the benefits from AI tools we've highlighted to you in the past. Adverts created through our job ad generator delivered 48% more applications per job with double the number of candidates going on to shortlists compared to manually created adverts. To keep us looking forward, our established data and innovation lab gives us the ability to test and learn quickly, only the use cases that deliver clear commercial value move into production. Whilst AI will play an increasingly important role, we still see that as a supporting one. To repeat what I said earlier, our business is built on human relationships. It's about providing our clients and candidates with the kind of knowledge that comes from great questions and curiosity. Our focus is on using AI where it adds value and keeping people at the center of every meaningful interaction. I will now finish with a brief outlook. Whilst the market outlook remains uncertain due to the unpredictable economic environment, we will continue to control the controllables. We have a strong balance sheet. Our cost base is under constant review. And given our highly diversified and adaptable business model, we remain confident in the execution of our strategy. That concludes the formal presentation for this morning. Kelvin and I will now be happy to take any questions you may have. Operator: [Operator Instructions] Our first question is from Karl Green with RBC Capital Markets. Karl Green: First question just on the dividend. You've laid out a very clear capital allocation policy. But just drilling down into the potential balance over the medium to longer term between ordinary dividends and special dividends. Could you just elaborate on how you potentially see that unfolding, clearly subject to how trading unfolds in the meantime? And then the second question was just on CapEx. I mean, again, very controlled in the year just gone. Just wondered how you anticipate the CapEx budget developing over '26 and perhaps beyond? Kelvin Stagg: Yes. Certainly, on the dividend, it's really a question for us of affordability. We obviously have a high amount of operational gearing in the business, and we don't want to add financial gearing to that mix. So we're keen to keep the balance sheet with an element of net cash on it. We looked at the, therefore, affordability of a dividend in terms of our cash flow in June and felt that paying what amounts to GBP 10 million worth of dividend in June was the right amount to give us a fair balance of ending the year with enough cash to run the business. To probably reiterate what I said at the previous trading statement was that whilst we used to say that, that was probably around GBP 50 million of net cash to run the business, we now think we can run it on about GBP 25 million. Such is the efficiency of our cash management and processes nowadays. But I think in paying GBP 10 million, that will bring us in line with that sort of net cash and also allow us to make a decision on the interim dividend when we get to the interims in August. But I don't see that as a fundamental rebasing of the dividend. I feel that when we get back into affordability, i.e., we generate the cash that we need, we would move hopefully briskly back to the level of the dividends that we had in 2024, and that then would be the position that we would increase at the longer-term rate, which historically has been 4.5% per year. So this isn't a fundamental rebasing down to this level. It's a short-term affordability measure before we hopefully return back to the historical ordinary dividend levels. On CapEx, yes, well, historically, and by that, I mean, probably during the teens years, our CapEx spend was roughly GBP 24 million. And it would have been split pretty much GBP 12 million on software capitalization and GBP 12 million on leasehold fit-outs for two reasons, one being that largely, we finished all of our big software implementations. Our global finance system has been in place for 10 years now. We've got Salesforce in place, and that's been in place for at least 8 years now. We don't really have a huge amount of software implementation to do, coupled with the fact that now all of the software rollouts we're doing, including the HR system that we're rolling out at the moment, which is a relatively small expense in comparison to the two previous finance and operational implementations, are Software-as-a-Service. And Software-as-a-Service, you can't capitalize. So it's expensed through the P&L. So last year, 2025, the cost for software was about GBP 2 million. I'd expect that probably to be about the same going forward. We had very little leasehold fit-outs in '21 and '22 coming out of the pandemic as we look to try and better understand the ways of working and therefore, what the office of the future back then was going to look like. We realized that we didn't really need interview rooms. We interview all of our candidates pretty much online. And therefore, during '23 and '24 primarily, we spent quite a lot on office fit-outs as we moved out of the big offices that we had downsized, but also made them sort of places that people wanted to come to, break-out space, and different fit-out options. That peaked in 2024. Last year, 2025, that was about GBP 10 million. I'd probably expect current year and going forward, that will probably be around GBP 8 million. So my expectations for CapEx in 2026 are probably collectively about GBP 10 million, and I would expect that to go forward. Operator: Our next question is from Remi Grenu with Morgan Stanley. Remi Grenu: Just maybe 2 on my side. The first one, can you maybe tell us a bit more about the difference in performance between the brands, Page Personnel and Michael Page. So some kind of update on how the activity has trended within the 2 brands? And maybe an update as well on the progress that you're making in reallocating resources towards Michael Page and away from Page Personnel. I would like also to understand if it's a process that you're accelerating. So the first question on these 2 brands. And then the second one, any additional initiatives you think could be launched to further reduce the cost base? I'm trying to understand if we should think about potentially adding one-off costs to our forecast in 2026? Nicholas Kirk: Okay. Remi, thank you. I'll take the first one and Kelvin will take the second. I mean, your 2 questions are slightly kind of obviously linked, because it's quite hard to necessarily give you a fair view on the 2 brands because of the fact that we are moving business across from Page Personnel into Michael Page, and we're rebranding parts of the business. We're moving out of less profitable areas, maybe in lower level temp, and reassigning consultants into more senior contracting work or interim work. So it is distorted as a result of the work we're doing. So perhaps maybe it makes more sense to talk about what we are doing, which is as we move through the next few months, we're looking at the final 5 or 6 countries that we have that still run the Page Personnel brand and looking to sunset that brand and focus the business around Michael Page. We feel that, that's the right decision in terms of the job market and future trends around the pressure that you can see and will inevitably probably only grow at that level of admin heavy roles, clerical roles. So we don't want to be in that market. We want to be more focused around the Michael Page and Page Executive brands, which, as you know, are management roles, leadership roles, expert roles. So that's a very clear strategic decision, hence, the justification of moving towards those brand areas. And at the moment, the reason why it slightly distorts the results between the 2, and therefore, I'm not sure it would really help you in terms of making any particular decisions on those 2 areas. Kelvin Stagg: Yes, I can take the one on cost. I think I probably look at it in 2 different areas. One part of it is in operations. And so that's really about fee earner headcount. The challenge that we have at the moment is the issue in the business, if I frame it that way, is the conversion of offers into placements. So we need to have the fee earners there to work the jobs. If they're not working the jobs, then they don't have a percentage chance of converting it into fee rates. Obviously, if those job numbers come down, and we've seen that in parts of Europe, probably point towards France, you will see our fee earner headcount come down, and therefore, the cost will come down. But in other areas where fee earner headcount has been more static, that reflects the fact that the job numbers are relatively static, and it's the conversion of offers into placements and therefore, revenue that's become the problem. But expect to see fee earner headcount move during the year in line with that expectation. On the non-fee earner headcount, obviously, we will continue to align our transactional support staff in line with the activity that's going on. And you would see that in things like transactional finance, you'd see that in transactional HR, you'd see it in what we call middle office, which is non-perm administration for temps and contractors and the like. We have finished now the transition of our shared service center from Singapore into Kuala Lumpur. That's now very stable, but we obviously have the ability to improve the efficiency of that. Whenever we do one of these transitions, we slightly overstaff at the beginning and look to get efficiencies as things progress. We are right in the middle of the HR transformation, which is the implementation of an HR system, as I mentioned earlier, but it's also the transition of the HR transactional people from the local countries into primarily our shared service center in Kuala Lumpur. Whilst that will have a one-off cost, a small one-off cost, a couple of million in the current year, which is already accounted for in terms of where we are in consensus, that will deliver about a GBP 5 million annual saving kicking in partly during this year, but fully from next year. So yes, there are some strategic activity we've got at this point, I'm not going to announce any sort of large restructuring charge, but we'll continue to actively manage the cost base as we have done over the last few years. Remi Grenu: Understood. And one follow-up, if I may. Any trends or insights to take away from the first 2 months of trading in 2026? I mean, I appreciate these are smaller months, but anything to take away from that? Nicholas Kirk: Yes. No, you're right. They are smaller months. And I think on the basis that we're out again, Remi in about 5 weeks with our Q1 update, we'd rather see the big month of the quarter, which is March to get a complete picture. So that's what we decided to do. Operator: Our next question is from James Rowland Clark with Barclays. James Clark: Two questions, please. I was just curious as to the sort of operational practical difficulties of moving your recruiters from Page Personnel to Michael Page and moving upmarket into different sectors. Is there a sort of time lag to delivering full productivity for those individuals? And is that impacting the business today? And then also, how does that impact traction with clients as well, as you move different personnel into that relationship? And then secondly, on cash, I appreciate that GBP 25 million is now a level you're happy to run at. Are you comfortable to dip below that, I guess, as bonuses are paid out? Can you maybe elaborate on where you are with cash right now following sort of bonuses being paid out at the year-end? And how we should think about the sort of shape of that if market conditions remain as they are through the year? Nicholas Kirk: Thanks, James. As regard to your first question, I think your approach needs to be, with any significant change, to be very thoughtful, to be very careful, and to be patient. So we do it step by step, stage by stage. We've already been through this process in Asia, where we look to transition people across from Page Personnel to Michael Page. We've been through this process in the U.K., where we did exactly the same. So we've learned a lot of lessons from it. What you're likely to see is initially just a rebranding of operations from Page Personnel into Michael Page. And then steadily and slowly, we will move people upwards into more senior work, because the last thing we want to do clearly is disrupt relationships with clients, disrupt relationships with candidates, and just as importantly, disrupt the fee earners and their ability to earn and deliver for themselves and the company. So it's a process. It's not something that happens overnight where you come in one day and the working brand that you operate under has changed and your client base has changed and your candidates have changed and you've got a new market, that would be a ridiculous way of going about it. So as I say, it's something that's very intentional. It's very thoughtful. We're applying lessons that we've learned in other markets where we've done it already. We'll do it step by step, and we'll be careful to ensure that client relationships aren't impacted as a result, and the consultants' ability to earn remain. But the actual process of moving upwards into more senior work is actually a very normal one. I mean I think back to my time as a consultant. I mean, if you think about it, you start as, in my case, a 23-year-old, you're working on relatively junior jobs, entry-level jobs with candidates that are a similar age to you and you grow up with your candidates and your candidates become clients and you recruit them as clients and they become candidates again. So you move through a life cycle with them. And that happens to every single consultant. So this will actually enable us to more effectively do life cycle management of our candidates as they start to become more senior, because Michael Page obviously has that greater scope through those levels of roles. So yes, I mean, it's something I am very, very aware of, the team is very aware of, and we will be very thoughtful and intentional about the way we go about it. Kelvin Stagg: Yes, James, talking to cash. I mean, we operate with a philosophy of having net cash on the balance sheet. That's not a rule that we adhere to on a day-to-day basis. I mean, we have a number of facilities available to us, including an GBP 80 million revolving credit facility, we have a GBP 50 million invoice discount facility, and we have a GBP 20 million overdraft. So with a number of temp and non-perm businesses around the world, we need to be able to fund those. And we will and do dip into those facilities from time to time to fund working capital requirements for non-perm as well as dividends when we pay them out. So I'm not strictly adhering to having GBP 25 million in June for the dividend payment. I'm comfortable that we would dip into those for a short period of time. Our current cash balance would be less than GBP 25 million. But we're comfortable that we're forecasting to end the year without structural debt, and that's really the philosophy that we're trying to adhere to. Operator: Our next question is from Steve Woolf from Deutsche Bank. Steven Woolf: Just you mentioned earlier, Nick, about the level of median fees going up. Could I flip it to sort of fee rates if you look on a like-for-like basis year-over-year? How have you found those? Are they still at the record high levels you were speaking of before? Or has there been any sort of weakening in that over the past 12 months, I guess? Nicholas Kirk: No, I did that -- well, firstly, good morning, Steve. No, I did that assessment very recently actually just to compare '25 to '24. And no, they're pretty much flat. There might be the odd movement within a country where a country goes from, say, 30% to 29%, but that's offset by another country that goes from 25% to 26%. So the increase that we saw was within Page Executive, and that's really more through the levels that we're working at more senior roles, and also the ability to negotiate higher fee rates based on having well-tenured experienced consultants in a market where candidates are in high demand. So the fees naturally can be pushed up a little bit because clients need access to these individuals. But overall, to your question, no '24, '25, fees remain at record levels, little movements within countries, but as an overall figure, still at that same high level. Operator: [Operator Instructions] There are no questions waiting at this time. So I'll turn the conference back over to Kelvin Stagg, Chief Financial Officer, for the further remarks. Kelvin Stagg: Thank you, Sarah. As there are no further questions, thank you all for joining us this morning. Our next update will be our first quarter trading update on the 14th of April. Thank you very much. Operator: Thank you. That concludes PageGroup full year results. Thank you for your participation. You may now disconnect your lines.
Operator: Ladies and gentlemen, welcome to the LEG Immobilien Full Year 2025 Conference Call and Live Webcast. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Frank Kopfinger, Head of Investor Relations. Please go ahead. Frank Kopfinger: Thank you, Valentina, and good morning, everyone, from Dusseldorf. Welcome to our call for our full year 2025 results, and thank you for your participation. We have in the call our entire management team with our CEO, Lars von Lackum; our CFO, Kathrin Kohling; as well as our COO, Volker Wiegel. You'll find the presentation document as well as the annual report and documents within the IR section of our homepage. Please note that, there is also a disclaimer, which you'll find on Page 2 of our presentation. And without further ado, I hand it over to you, Lars. Lars Von Lackum: Thank you, Frank. Good morning, everyone, and thank you for joining our analyst and investor call today. I am very proud to share that 2025 has been an outstanding year for us. We have delivered AFFO of EUR 220.5 million, marking a 10% increase, the highest level in our company's history. This performance is a clear reflection of our disciplined execution, our strong portfolio and our willingness to capture opportunities, like we did with BCP. Building on this success, we are proposing a dividend increase of 8% to EUR 2.92 per share. This reflects the full 100% payout of our AFFO, a strong signal of both cash generation as well as our financial health. We have also made solid progress on the balance sheet. Our loan-to-value ratio has improved to 46.8%, and we remain on track to reach 45% in 2026. This improvement was supported by a 3% positive valuation effect, which is backed by our own disposals and markets building higher confidence, although admittedly, markets remain at lower transaction volumes. On the portfolio side, we have completed or agreed on the sale of 3,100 units in 2025. These disposals further optimize our balance sheet and the efficiency of our portfolio. We are well on track with further disposals in 2026. The planned sale of the Glasmacher development plot in Dusseldorf has made significant progress. Renowned real estate developer, Hines signed a purchase option for the site with LEG just yesterday. We confirm our 2026 guidance with AFFO expected between EUR 220 million and EUR 240 million. We will grow cash generation also this year, while weathering higher interest costs as well as lower subsidies. Looking further ahead, I am equally excited about our midterm growth outlook. From 2028 to 2030, we see strong potential driven by a substantial part of units running off subsidization in 2028 and by the creation of a new operating model based on comprehensive digitalization across our business. These initiatives will not only strengthen our competitive position, but at the same time, create long-term value for all stakeholders. In summary, 2025 has been a year of achievement, strategic progress and measurable results. We have delivered growth, improved resilience and positioned ourselves for an even stronger future. Thank you to our teams for their dedication and to our investors for their trust. The foundation we have built today ensures that the years ahead will be just as successful. Let's now turn to Slide 6 and the 2025 financial highlights, a year that truly embodies our theme of promised and delivered. We entered 2025 with a clear set of targets, and I am proud to say we did not just meet them, we partially exceeded them. Starting with the net cold rent. We closed the year at EUR 919.9 million, representing a 7% increase year-over-year. This growth was supported by a healthy 3.5% like-for-like rent increase, but equally by the successful integration of BCP, which added 9,000 high-quality units to our portfolio. This integration was executed seamlessly and has already begun contributing to earnings as planned. On operating profitability, our adjusted EBITDA margin came in at 78.1%, well above our planned level of 76% and even above our improved guided level of roughly 77%. Those 110 basis points of outperformance reflect both our tight cost discipline and our continued success in driving efficiencies across operations. Moving to our earnings metrics. FFO I reached EUR 481.5 million, a 5.2% increase, lending right above the midpoint of our guidance range of EUR 470 million to EUR 490 million. Even more impressively, AFFO grew by a strong 10% to EUR 220.5 million, lending smoothly within our improved guidance range of EUR 215 million to EUR 225 million. This marks a record high for the company. And speaking of returns, our dividend proposal of EUR 2.92 per share reflect a 100% payout ratio of AFFO. Year-on-year, this is an increase of 8% and ensures that our investors benefit directly from these strong results. Let me now turn to one specific growth driver going forward, our subsidized units coming off restriction from 2028 onwards. Today, we have around 30,000 subsidized units that are still subject to rent regulation under the so-called cost rent regime. These units are currently rented out for about EUR 5.40 per square meter, which is significantly below market levels. By comparison, the relevant market rent for a similar mix of units is roughly EUR 9 per square meter. This means there exists a rent gap of more than 60%. As these units get off restriction, we can start closing that gap in a controlled and sustainable way like we have done with smaller numbers of subsidized units over the past years. In general, we will apply the 15% or 20% rent increase on all units getting off restriction depending on whether they are based in tense or non-tense markets. However, the cost rent adjustments executed in 2026 as well as the new lettings in 2026 and 2027 absorb parts of that maximum rent increase potential. As of today, we assume that this limits the rent increase potential to around 12% in 2028. On the portfolio level, that alone translates into about 1 percentage point to our overall rental growth in 2028. And importantly, the effects do not stop there. We expect spillover effects into 2029 and beyond as further adjustments and relettings will deliver further rent growth. This will become a recurring and predictable growth driver for our residential portfolio as it will take quite some time until we can close the gap towards market rent level. In short, as soon as these restrictions expire, we are going to not only unlock immediate rental uplift, but also secure a long-term structural growth contributor. That will support our earnings trajectory well beyond 2028 until the gap towards market level is fully closed. Let me now turn to our second midterm growth driver that will become equally important to LEG's value creation going forward, our technology and digitalization agenda. Our industry environment has changed fundamentally. The regulatory framework in the German residential real estate sector is becoming even more restrictive, whether in terms of rent regulation, energy efficiency requirements or tenant protection. The traditional levers for operational optimization are reaching their limits. This makes it even more important to identify new sources of efficiency and value creation. And we are firmly convinced that technology and digitalization represent the most significant untapped lever available to us today. We have made a very deliberate strategic choice in how we approach this. We are dedicated to building a completely new operating model by making the best use of technology and digitalization, not just implementing software, but truly embracing it and redefining the way we serve our tenants. We manage our buildings, we steer our contractors. Rather than diverting resources to building proprietary software, we pursue a disciplined Buy & Partner strategy. And we have chosen 2 world-class partners to execute on this vision. The first one is ServiceNow. With ServiceNow, we are building an end-to-end system architecture that spans our entire operative value chain from customer service to technical operations to administrative processes. This gives us the flexibility to deploy AI at every touch point along that chain rather than in isolated pockets and thus enables us to drive automation to unprecedented levels. We are, to our knowledge, among the first residential real estate platforms globally to adopt ServiceNow as a core platform, and we see this as a genuine competitive advantage. The second is SAP. We have made a consequent commitment to building on the most modern ERP system available in the market. In fact, we have been operating on the latest version of SAP since the end of 2024. This positions us ahead of many peers who are still facing complex migration journeys. Together, SAP and ServiceNow form our central tech backbone, enabling not only system consolidation and process standardization, but critically the systematic scaling of AI across our operations and administration. Our technology investments are designed to drive AFFO and FFO I optimization along 3 core value drivers: efficiency, top line and investment management. The first focus will be on efficiency, streamlining our customer-facing technical and administrative processes with best-in-class AI-powered solutions. Beyond that, we see meaningful opportunities to leverage technology for revenue growth and smarter capital allocation across our portfolio. We are investing meaningfully in this transformation with the bulk of spending concentrated in the near-term implementation phase. This is a conscious front-loading of investment. From 2028, we expect these initiatives to turn cash flow positive, building to a contribution of more than EUR 10 million in AFFO from 2030. In short, in an environment where traditional optimization levers are increasingly constrained, we are building the technological foundation that will make LEG a more efficient, more scalable and ultimately more profitable platform for the years to come. And with this, I hand it over to Volker for some insights into the operations. Volker Wiegel: Thank you, Lars, and good morning to everyone from the shiny AI future back to 2025 and specifically to our rent development. As we mentioned earlier in the year, rent growth followed a different quarterly trajectory compared to last year. After 9 months, we were at 3.1%, but I'm very pleased to report that, as promised, we delivered fully on our guidance range of 3.4% to 3.6%. We closed the year right at the midpoint of 3.5% like-for-like in-place rent growth. At year-end, the average in-place rent of our residential portfolio stood at EUR 7.04 per square meter on a like-for-like basis. This compares to EUR 6.81 in the previous year. The drivers behind this growth were well balanced. 2% came from rent table increases and another 1.5% from modernization and reletting activities. Looking across our market segments, stable markets showed the highest momentum with 3.8% like-for-like rent growth, while higher-yielding markets grew by 3.1%. Our free financed units specifically saw rent increases of 4%, which reflects the underlying strong momentum in the market. Specifically, we saw rent table publications in Hilden with 11%, Wilhelmshaven with 7% and Leverkusen with 5%. However, the growth momentum seems to have reached its maximum level, while years with higher rent growth are reflected in the published rent tables, lower growth rates will limit this development going forward. As expected, there was no effect yet from the cost rent adjustment for the subsidized portfolio in 2025. Importantly, this growth came with an ultra-low vacancy. Our like-for-like EPRA vacancy rate remained at 2.3%, virtually unchanged versus last year, confirming the strong demand we continue to see across our markets. Looking ahead, for the current fiscal year, our goal is to deliver 3.8% to 4% like-for-like rent growth as already indicated with our Q3 numbers. The cost rent adjustment should contribute around 40 to 50 basis points to that result. Moving on to our investments in 2025 on Slide 10. Our guidance for the year was to invest more than EUR 35 per square meter, and I'm pleased to confirm that we exceeded that target coming in at EUR 36.11 per square meter. In absolute terms, we invested slightly more than EUR 400 million into our portfolio, an increase of 10% year-on-year. This increase to the prior year was largely driven by the integration of the BCP portfolio where we had to accelerate necessary investment measures. Looking at the composition of investments in more detail. CapEx accounted for EUR 228 million or EUR 0.46 per square meter, while maintenance represented EUR 175 million or EUR 15.65 per square meter. Altogether, this brought the per square meter figure up by 6.2% versus last year. Our capitalization ratio remained broadly unchanged at 57%. With substantially lower new construction activity, recurring CapEx still increased by a moderate 2%, reaching EUR 261 million. Overall, 2025 was another year of disciplined and targeted portfolio investment. We delivered above guidance, managed the BCP integration successfully and continued to invest responsibly in the quality and long-term value of our housing stock. For 2026, we are guiding for investments of more than EUR 35 per square meter, which remains similar to the investment level of 2025. Let me now touch on one of our operational growth drivers, our value-add businesses. These operations are a key pillar of LEG's strategy and a reliable growth driver for the company. They allow us to generate additional earnings beyond pure rent growth, while at the same time, those improve service quality and efficiency for our tenants. I'm very pleased to report that in 2025, we achieved strong FFO I growth of around 20% in this segment, increasing from EUR 50 million in 2024 to around EUR 60 million in 2025. While others in the market are still talking about the value-add additions, we are delivering real results. The foundation of this success lies in our technician and craftsmen services, our project management and electrical service units and of course, our energy and heating business as well as the multimedia business. In particular, we are very optimistic about the continuing growth of our energy services, which benefit from the ongoing focus on energy efficiency and shift towards heat pumps as well as our small repairs and in-house maintenance business. Beyond these established value-add services, we are also building momentum in our Green Ventures. These include new climate-focused services such as RENOWATE for serial refurbishment; termios, with smart thermostats for hydraulic optimization and dekarbo for the installation and maintenance of heat pumps. It is important to note that the Green Ventures are not yet included in the financial numbers shown on this chart, but they will become a meaningful growth contributor over the next few years. Between 2024 and 2028, we strive to generate a cumulative contribution of around EUR 20 million from our Green Ventures. To sum up, our value-add business combines stable cash flows, operational synergies and sustainability, while our Green Ventures offer the chance to participate in one of the fastest-growing segments in our market, decarbonization of real estate. They significantly enhance the resilience and profitability of LEG's business model and will continue to be a strong source of earnings growth forward. Let's now take a look at our disposals in 2025 on Slide 12. In total, we completed or agreed on sales for around 3,100 units and a total of more than EUR 250 million. During the year, we sold 2,252 residential units for total proceeds of around EUR 190 million. After deducting financing redemption fees and taxes, net proceeds amounted to roughly EUR 100 million. The transaction market remained subdued throughout the year. Overall, investment volumes in the German residential sector declined by about 4%. Even more telling, the share of large-scale transactions above EUR 100 million fell sharply from 63% in 2024, down to just 34% in 2025. You find additional information for the transaction activity in the German market on Slide 29 in the appendix. Against this challenging backdrop and while maintaining our strict disposal discipline, we are very satisfied with the year's outcome. All in all, disposals were executed at or above book values, fully in line with our policy of value-preserving capital recycling. The chart on the slide shows the units that have been transferred in 2025, but there's more to come. Year-to-date, we had already signed additional sales contracts for roughly 950 units, representing around EUR 70 million in proceeds. These transactions will transfer in the first half of 2026, and we already issued a press release about the majority of them in early January. Within these transactions, we also made strong progress on the Glasmacher district development plot in Dusseldorf. This would certainly contribute to our deleveraging strategy. As already described by Lars, we were able to agree with Hines on an option to buy the plot. The next step will be an agreement between Hines and the city of Dusseldorf. In case that works well, we expect to sign the deal by end of September, the latest. However, please be aware that the sales proceeds will follow the progress made in the building permission process. Moreover, we continue to advance our broader disposal program of up to 5,000 units, including around 1,400 units in Eastern Germany. Overall, our selective approach, i.e., focusing on sales of smaller portfolios or even single multifamily houses in the current market environment clearly demonstrates our ability to deliver on disposals. We remain focused on execution, disciplined pricing and support to our balance sheet as well as improvement of the overall quality of our portfolio. And with this, I hand it over to Kathrin. Kathrin Köhling: Thanks, Volker, and good morning also from my side. Let us now look at Slide #13, which covers our most recent portfolio revaluation. The results clearly confirm that market conditions are stabilizing. They also reflect the upward trend seen in leading market indicators such as the VDP Property Index and the German Real Estate Index GREIX. While the VDP Index recorded an increase of around 5.3%, the GREIX showed an increase of 4.8% for 2025. Against this backdrop, our portfolio valuation result in the second half of 2025 posted a 1.8% uplift, which was even stronger than the 1.2% increase we saw in the first half of the year. Altogether, for the full financial year 2025, we saw a valuation result of 3%, demonstrating clear upward momentum. Further details can be found in the appendix on Slide 30, where we show valuation changes by market segment. Our gross yield now stands at 4.8%, which continues to offer a comfortable spread versus bond yields, an important buffer in a still cautious investment environment. On a net initial yield basis, excluding incidental acquisition costs, we stand at 4.3%. The average gross asset value per square meter amounts currently to EUR 1,710, ranging from about EUR 2,320 in high-growth markets to EUR 1,190 in higher-yielding markets. Overall, the valuation result confirms that the correction phase of the past 2 years is behind us. We remain confident that this recovery path will continue into 2026, driven by renewed investor interest, more stable financing conditions and the intrinsic strength of the German residential sector. The trend has turned positive and the positive outlook is being supported by the view of major real estate experts such as CBRE, JLL as well as Moody's. Let's turn to Slide #14 and take a closer look at the development of our AFFO in 2025. We ended the year with an AFFO of EUR 220.5 million, representing a 10% increase year-on-year or about EUR 20 million higher compared to the prior year's EUR 200.4 million. The main driver behind this growth was, as expected, higher net cold rent. Altogether, this contributed roughly EUR 60 million. From that, about EUR 28 million comes from organic rent growth and another EUR 49 million from the acquisition of BCP. These positive effects more than offset the EUR 17 million negative impact from disposals. Net cash interest rose by EUR 12 million, driven by the increase in debt due to BCP and by higher refinancing costs. Still, I would like to highlight that we were able to keep our average interest cost at a very competitive 1.66%, which is an excellent outcome given the current interest rate environment. In addition, our Green Ventures still in their early investment phase, had a temporary negative impact of EUR 4.2 million on AFFO in the reporting period. Maintenance and CapEx spending amounted to about EUR 13 million more after subsidies, reflecting the enlarged asset base. To sum up, 2025 was another solid year of strong growth and recurring cash flows, underlining both the resilience of our operating platform and the profitability contribution from the BCP integration. Finally, let's turn to Slide #15, which highlights LEG's financing structure and key figures, starting with our loan-to-value ratio. We closed 2025 at 46.8%, coming down by 110 basis points year-on-year. That puts us well on track to reach our target of 45% during 2026. This continued deleveraging is driven by our solid cash generation, disposal proceeds as well as valuation effects. In addition to LTV, another key indicator, especially with regard to our bond covenants is the interest coverage ratio or ICR. Our ICR stands at a very strong 4.3x, and also all other bond covenants have ample headroom. For those interested in more detail, we've provided the full overview in the appendix. Our average interest cost increased modestly by just 17 basis points to 1.66%, still a very low level in today's market environment. At the same time, the average debt maturity remains comfortable at 5.5 years. Our liquidity position remains very strong, with more than EUR 800 million available as of year-end 2025 and undrawn revolving credit facilities of EUR 750 million. As already discussed in the last earnings call, all debt maturities for 2026 are covered. At the beginning of this year, we redeemed our EUR 500 million bond, and we are now evaluating refinancing options for the 2027 maturities, including the next bond, which comes due only in November 2027. We'll continue to take an opportunistic and disciplined approach here, depending on market conditions. All in all, our balance sheet is resilient. Our maturity profile is well structured, and we are in a very strong financing position with ample flexibility going forward. And with this, I'll hand it back to Lars. Lars Von Lackum: Thanks, Kathrin. Let me conclude today's presentation, with a brief summary of our guidance for 2026, as shown on Slide 16. These targets were already introduced with our Q3 2025 results, and I'm happy to reconfirm today that our guidance remains fully in place. For 2026, we expect a further improvement in our cash generation with AFFO between EUR 220 million and EUR 240 million. That represents continued growth on top of the strong performance we delivered in 2025. In line with that, our FFO I is expected to come in between EUR 475 million and EUR 495 million, supported by an adjusted EBITDA margin of around 78%. On the operational side, we target like-for-like rent growth between 3.8% and 4%, driven by our solid rent dynamics, targeted modernizations and the cost rent adjustment for subsidized units. Our investment volume will again exceed EUR 35 per square meter, ensuring that we maintain the quality, energy efficiency and long-term attractiveness of our housing stock. On the balance sheet, we remain fully committed to further deleveraging. With our LTV expected at around 45% by year-end 2026, we are well on track to achieve this. As announced, we plan to distribute 100% of AFFO to our shareholders, reflecting both our strong cash flow generation and our disciplined capital allocation approach. We will propose a dividend of EUR 2.92 either in cash or shares, the latter depending on the market environment. Beyond the financials, we also continue to make measurable progress in sustainability. In 2026, we target a CO2 reduction of about 7,600 tonnes. And by 2029, we aim to lower our relative CO2 emission saving costs per ton by 20%. To sum it up, LEG remains on a clear and consistent path, generating reliable cash flow, maintaining financial discipline and building long-term value for our shareholders and tenants alike. As we've said before, cash flow remains king and the best metric to steer our business. Our 2026 guidance once again underlines the strength and resilience of our business model. And with this, I come to the end of our presentation, and we are now looking forward to answer your questions. Operator: [Operator Instructions] The first question comes from Marios Pastou from Bernstein. Marios Pastou: I've got 2 questions from my side. So firstly, on the 5,000 unit disposal pool. Can you provide an update here on the progress you're having with current discussions? I think on the last update call, you mentioned you were in exclusivity in East Germany. So any comments on the progress there would be helpful. And then secondly, on the slide with the 16,000 units coming off restriction in 2028. Based on your prior experience when adjusting the rents, do you foresee any vacancy risk here, the uplift being 15% or 20% depending on the cap level seems like quite a step change in one go. So any comments there will be helpful. Lars Von Lackum: Marios, thanks a lot for your questions. So with regards to the 5,000 units disposal portfolio we have on the market, around 1,400 units are in Eastern Germany. So for parts of it, we are in exclusivity. And unfortunately, still the transaction times are much longer than initially expected. This is partially due to the financing and the more stricter view of banks with regards to real estate. Those processes still take much longer than we had forecasted. So therefore, yes, there are still portfolios in exclusivity. And certainly, we hope that we can close those over the course of Q1 and Q2. With regards to the remaining 5,000 units, we are selling those in smaller portfolios as well as single multifamily houses exactly as Volker has laid out during his presentation. So it is unfortunately not the case that we see bigger investors or transaction liquidity to have increased since the beginning of the year. So let's wait how the discussions at MIPIM next year -- next week will look like. It might certainly be that this brings additional liquidity to the market. With regards to the subsidized units, which run off, you might have seen that most of those which are getting off restriction are those in the high-growth markets. So the non-tense markets account for around 2/3 of those units getting off restriction. So therefore, I have full confidence in Volker and his team that they will relet those very quickly and easily because the undersupply in those markets is quite strong. Volker Wiegel: And even to add up, we don't see the risk of higher -- significantly higher fluctuation. Of course, there will be some fluctuation, but not in a way that we will not be able to cover it. And on Slide 27 in the appendix, you see the spread to the market rent, and you see that it's hard to find a substitute which is at the previous cost. Operator: The next question comes from Veronique Meertens from Van Lanschot Kempen. Veronique Meertens: A few from my side. So first, on the Dusseldorf land plot, could you please elaborate what you exactly meant with the time line you see for the sales proceeds of this disposal because I didn't fully understand it. Lars Von Lackum: Veronique, thanks a lot for the question. So unfortunately, first of all, let me say that certainly, we have a U.S. investor on the other side. So confidentiality requirements are quite strict. I try to give you as much of an insight as possible as of today's stage. So we have signed a purchase option with Hines yesterday, and they can make use of that call option until the end of September. If they are agreeing to that call option, we have a fully laid out contract with regards to the acquisition of the plots. So that contract will then be signed immediately and all those terms and conditions are pre-agreed, certainly including the price and the payment pattern. The payment pattern then foresees that a certain part of the sales proceeds will be paid by year-end, and the remaining payments will depend on the progress of the building permission process. And that is what I can disclose as of today. Veronique Meertens: Okay. That's clear. And then maybe that also rolls into my next question. So your LTV target is still 45%. It sounds that you're not probably get all the proceeds of this disposal in '26. So how strict is that target? How do you expect to get there as in what have you assumed in terms of disposals and value gains? And also, are you willing to sell at a discount if that means that that's what's necessary to meet that target? Lars Von Lackum: Yes. So Veronique, as you know, we have currently 5,000 units in the market. We will strictly stick to the levels which we were sticking to for all the previous years, which means we are not willing to sell below book value. So that is what we have executed over the last -- much more difficult years, and we will also stick to that guidance for this year. In order to arrive at those 45%, certainly a contribution comes from the sales proceeds, and we are also seeing a positive development in the market. Let's wait whether that is consistent over the year. Certainly, we now have a big war in the Middle East. If that tends to be longer than initially assumed, that certainly might have an impact. As of today, and looking into whatever we heard at least, it might be not that, that war is extending for weeks. So therefore, if that's not going to happen, we are quite confident that we can reach our 45% target. And this is, as of today, what we are now striving for, and we are quite confident to reach that within 2026. Operator: The next question comes from Andres Toome from Green Street. Andres Toome: You have a pretty clear focus on disposals for the next 12 months or so, it seems. But I was just wondering on the other side of it, if large disposals in the market today require "portfolio discounts", then is there a case where you can see actually accretive acquisition opportunities yourself to be a buyer, which would be financed through an equity raise? And I guess I'm particularly thinking about some of these news flows around open-ended funds for German residential that need to fulfill their redemption needs. Lars Von Lackum: Yes, Andres. And thanks for your question. So with regards to our own acquisition activity, I think we have just acquired a big portfolio, BCP, 9,000 units, integrated that fully. Certainly, we are being offered bigger portfolios on a regular basis. I can tell you that we have not seen any of those willing sellers to give in on price. So therefore, there was nothing comparable with regards to any acquisition opportunity with regards to the quality and also the pricing of the BCP portfolio. Looking at our share price, I think it would be very, very difficult to identify anything which in the current market would then really end up with an accretive value for our shareholders, making the next acquisition. So therefore, our focus currently is strictly on deleveraging, reaching that 45% target, getting sales executed. Andres Toome: That's clear. And then maybe related to this, maybe not in terms of pure straight equity raise, but are you perhaps seeing any options where the seller would accept LEG shares as a buying consideration? I think we've seen some of these examples in other geographies in Europe, but I wonder if there's any discussions around that in Germany. Lars Von Lackum: So currently, we haven't had that discussion with any of the willing sellers. Andres Toome: Understood. And then my final question was just on the points you made around AI. And I think one of the points you highlighted was gaining also some revenue upside. I just wanted to understand how does that work in a regulated residential market? What are the levers you can pull beyond the regulatory constraints you already have in putting through in place rent increases? Lars Von Lackum: Yes. As you know, Andres, the number of criteria with regards to the rent tables can be up to 100 for a single rent table. So the qualitative criteria, which you need to take into consideration is quite a long list. Certainly, being more precise on those different criteria can certainly give you additional upside to just mention one of the examples with -- which certainly gives you an additional rental potential to be realized if you are using more AI. Operator: The next question comes from Thomas Neuhold from Kepler Cheuvreux. Thomas Neuhold: I have 2. The first one is a follow-up on the Gerresheimer project. I understand you're bound by NDA. But I was wondering, would you be able to sell the land plot at or above book value? Can you comment on that? Lars Von Lackum: Yes, so the book value is at around EUR 71 million, and we've been able to realize a substantial uplift on that if we get the sales contract signed end of September. Thomas Neuhold: Good. The second question is on the regulatory environment. I was wondering, if there have been any recent important news on the planned change to the rent regulation. Did you hear anything important? Lars Von Lackum: Yes. So if you look at the current discussion in Berlin, I think on a federal level, you might be aware that there are still discussions on how the regulation for refurbished apartments will look like, how index rents will be limited and also how those pure payments are being regulated. So those are the 3 big issues the Social Democrats are currently forcing through. And from our perspective, that is already a given and that's going to be agreed. With regard to the city of Berlin, there's certainly a lot of discussion and let's wait of what's going to happen now. As you know, we do not own a single unit in Berlin. So we will be not affected by whatever is being decided or at least being discussed in the upcoming election in Berlin. Operator: The next question comes from Kai Klose from Berenberg. Kai Klose: I've got 3 quick questions, if I may. The first one is on the -- actually, the first 2 are on the AFFO statement. Could you indicate or give more details on the increase for the nonrecurring special items from EUR 16 million to EUR 33.9 million and if there will be a similar level or similar increase in '26? Second question is on the green investments, which -- investment income from Green Ventures, where you mentioned that this will leave the investment phase in '26. So can you read that there will be a positive contribution to the AFFO in 2026? And the third question would be on maintenance. You mentioned there was an increase in '26 -- '25 because of the BCP portfolio. Has this been -- this increase only in '25? Or can we expect slightly higher levels because of ongoing work for BCP -- ex BCP assets in '26? Kathrin Köhling: Thanks, Kai, for your questions. With regard to the first one on the nonrecurring special items, this was a special case this year because of BCP. Obviously, we had some integration costs that took place this year, and that's why this number was higher than in the previous year. As long as we don't buy another BCP this year, this should be lower next year. Volker Wiegel: On the second question on Green Ventures, yes, we expect a positive result will not be record high. And of course, there's more risk in these ventures as it's new, but we expect a positive result and yes, expect breakeven. Lars Von Lackum: And to conclude the round here, so with regards to the maintenance expenditures we had in 2025, we do not expect an additional expenditure on the BCP portfolio within 2026. Operator: The next question comes from Paul May from Barclays. Paul May: Three, if I may, probably doing one at a time might be easier. Just following on from the question earlier around acquisitions out of the open-ended funds. I appreciate you said they're not willing to move on price, but there comes a point where they don't have a choice. They do need to meet those redemptions. So I assume that opportunity may still come. You mentioned it wouldn't be accretive for investors if you fund it with equity. Just wondering how you're viewing that, whether you're viewing that on a cash flow basis or whether you're viewing that on a kind of balance sheet made up value basis. That would be great. And then we live it next to separately. Lars Von Lackum: Yes, Paul, thanks for your question. So with regards to the acquisition opportunities out in the market, I think you rightly assume that certainly some of those open-ended funds will sell portfolios. What we still see in those discussions is that liquidity there does not seem to be so stretched that they are under pressure to do really fire sales. So therefore, currently, no indication for them really giving in on price. Certainly, and you might have seen that, we had 2 funds which have also stopped accepting redemptions. You can close down on the fund for 3 years. So that once again also might be a prolonged period where you are not seeing those funds to really do for selling. So therefore, that is what we've currently seen in the market with regards to those funds currently offering portfolios in the market. Secondly, with regards to how we view those acquisition opportunities, we certainly look at it from a cash flow basis, but also from an NTA perspective. And currently, we were not willing to really offer our shareholders any exposure towards those acquisitions. From our perspective, we are well advised to be strict on sales and do our deleveraging path in 2026, in order to arrive at that 45% LTV target. Paul May: Just sort of following on that, I guess, you mentioned the trend in the market, I think it was in Kathrin's commentary has turned positive. I mean, to some extent, the only thing that's positive is valuation prints. Transaction market is lower. Swap rates and bonds have moved higher now versus the average through 2025. So one might argue that the activity levels are lower and worse versus the valuation prints that have got better. Just wondering how you're reconciling those 2 things, which seem to be moving in opposite directions. Kathrin Köhling: Yes. So happy to take your question. When you just look at what is happening in the market with the undersupply that we continue to see, we still expect that rent growth will be a key driver for property values also this year. And yes, it is -- it has been a low year in terms of transaction volumes last year. But when we look at what the big valuators are expecting for this year, they are expecting at least transaction volumes, which are a little bit higher than last year. So we've seen around EUR 9 billion last year. We'll probably see around EUR 10 billion this year. So there are some positive signs. I mean, given currently the Iranian conflict, things look quite different these days, but we have to see what will happen ultimately over the next weeks. If we were to come back to a rather normal environment, which we've had like a week ago, then I'm quite positive that we will see what I just said. Paul May: I think the brokers were quite positive on improving last year as well and ended up being slightly worse, but just be interested to see how that comes out. And then I think again for you, Kathrin, just another one. So over the next 6 years, I think it is roughly, you've got about EUR 1 billion of debt maturing. I think it's just over EUR 1 billion of debt per annum with an average cost of about 1.3% at the moment. Obviously, the cost of that will likely go up by somewhere around 220, 230 basis points, which I think implies a financial headwind to FFO of about 28% versus 2025 FFO and about 63% headwind to AFFO based on FY '25 AFFO. I appreciate that we offset to some extent by rental growth. But just wondering your thoughts there, how you're going to manage that? And obviously, you mentioned disposals, but those in theory come at a higher EBIT yield than your financing costs. Otherwise, you're better off refinancing and holding on to those assets. So I just wonder how you're going to manage that sort of headwind to FFO and AFFO moving forwards over the next 6 years. Lars Von Lackum: Yes. Thanks a lot for your question, Paul. With regards to our midterm planning, our assumption currently is that we can realize, on average, a 5% growth of our key KPI, AFFO over the coming years despite the headwind from interest rates, which you have just mentioned. Certainly, exactly as you mentioned, we are expecting the core business to deliver strongly due to the undersupply in the market and the additional element, which we have disclosed hopefully, in a bit more detail as of today, the substantial number of subsidized units running out of those subsidization schemes and then being treated as free financed units. Secondly, you've seen what happened to the value-added businesses. We are quite confident that we can grow those value-added businesses going forward. That was certainly a very strong year, EUR 50 million to EUR 60 million. So please do not extrapolate that going forward. But that's certainly a contribution we are going to see. Green Ventures, you heard that. That was the last investment year. Last year, they are supposed to contribute substantially. Cumulatively, we strive for a profit of around EUR 20 million until 2028. That's an ambitious target. Certainly, as always, it's under risk if you are talking about start-ups, but the market certainly on the decarbonization side is huge. And finally, we will strive for a new digital operating model, and that certainly will give rise for efficiency gains, lower investments and certainly and most importantly, also additional top line. So with those elements, we feel comfortable to say over the next years, despite the headwind from interest rates, we can increase AFFO per year at around 5%. Paul May: Cool. Perfect. And just to check, the marginal financing costs you're assuming in that 5%, just so you got a sense. Lars Von Lackum: The marginal financing cost for a 10-year financing in the -- in the... Paul May: In your planning, you mentioned 5% per annum AFFO growth. So I just wondered, what is the assumed marginal financing cost? Lars Von Lackum: Yes. So what we do is that we certainly use the interest rate curve as of the time where we are preparing and finally deciding the midterm planning, which was October last year. So certainly, if that is going to change, that will have an impact. But believe me, everyone here in the management team and the full team is fully dedicated to deliver those returns going forward. Paul May: Okay. So we're about sort of 15-ish basis points higher on that versus October last year. Operator: The next question comes from Thomas Rothaeusler from Deutsche Bank. Thomas Rothaeusler: A couple of questions, I think 2 or 3. The first one is on subsidized rents and the adjustment potential, more looking at the long-term upside. I mean, should we expect a structurally higher rental growth rate from '28 considering the higher reversion potential? I mean, you can almost double the rents over time, as you've shown. Maybe you could provide a rough idea about the long-term impact on rental growth. Volker Wiegel: You will have significant impact on the next 3 years starting 2028. Thomas Rothaeusler: But I mean from there, like more the very long term, I mean, you can basically adjust by 12%, as I understand, in '28. But then from there, actually, there is much more adjustment potential, I think, given the low level where subsidized rents come from. Volker Wiegel: Yes, it's -- well, you see the spread to the market rent, and it will take time to adjust it until it's there. And market rent also develops. So this will -- there will be a significant gap that we need to close. And of course, we have the German rent regulation where we can adjust all 3 years then the rents. And we haven't simulated for the next 20 years, but it will have a structural impact over the next decade, I would say. Thomas Rothaeusler: Okay. And then on value-add services, I mean, which contributed a record EUR 60 million in '25. Just wondering what to expect in the coming years? Lars Von Lackum: Yes. So please do not expect that value-added services are now increasing on a regular basis by 20%. That would be highly unrealistic. So that we had -- that lower growth over the last 3 years was certainly very much driven by the energy crisis and the Ukraine war. So that was a strong impact on the Energy Services business. So from our perspective, for this year, assumes something in the growth range for the AFFO. So that will be growing pretty in line with AFFO for this year. Thomas Rothaeusler: Okay. Last one, yes, on property values. I'm just wondering if you could -- if you already got any indication from your appraisers for the first half? Kathrin Köhling: Yes, we just finished our last valuation. So as always, we will start with our new valuation with our cutoff date end of March. And then we'll have more insights once we meet again in May, and then we will give you an indication on H1 as we've always done. Operator: The next question comes from Neeraj Kumar from Barclays. Neeraj Kumar: I've seen a couple of questions on equity raise, so I'll probably not ask that. But on the other side, I would say that it's assuring that you see your values are strong and you don't look to sell below book values. But given your current share price, which seems to be pricing more than 50% discount to your NTA, do you see a potential in saying disposal of EUR 500 million assets of your least profitable assets at 10% discount to your book value and then using those proceeds to buy back shares? If yes, why you're not considering it? And if not, then how do you think about your share price here? Do you think it's fairly representing your property values? I'm just trying to understand if we should be believing your reported property values or your share price implied property values here. Lars Von Lackum: Yes. Thanks a lot, Neeraj, for the question. So it's always difficult with hypothetical questions. So we have not thought about doing that, and we will not do that. So from our perspective and looking at the value increases, especially with those with the lowest yields, those have grown substantially in value over the last 2 years. So therefore, from our perspective, that's nothing which we would -- we would look at. Neeraj Kumar: Okay. So if I understand correctly, like selling assets at 10% discount to book value is not accretive, if you were to use that to buy your shares at more than 50% discount to book value? Lars Von Lackum: This is not what I said, Neeraj. I said that we are not thinking about doing so because from our perspective, the highest value creation on those assets is still to come due to the strong undersupply in the especially high-growth markets. Neeraj Kumar: Got it. And last question. You seem to have been able to refinance your debt with good success with Baa2 rating. I was just trying to understand how critical the LTV target of 45% or a potential rating of Baa1 for you is? Or you think that is better in terms of running with high leverage and doing more share accretive stuff here? Kathrin Köhling: Yes. So of course, as I've always said, the 45% LTV is definitely something that would help to get an upgrade from Moody's on our rating. Although, as you know, it's not the only thing -- the only KPI and the only qualitative factor they look at. So obviously, we would love to have a better rating, but is it essential? Like do we need it to refinance? No. We have refinanced also in the past years. We have refinanced at very attractive levels. So it is not an absolute need that we get this rating upgrade. But however, it's still something nice to have. Operator: [Operator Instructions] The next question comes from Manuel Martin from ODDO BHF. Manuel Martin: Two questions from my side, please. One follow-up question on the units getting off restriction in 2028. Having looked from a political perspective, have you heard anything from the political players in the locations where the units will come off restrictions, i.e., could there be some headwinds to be expected? Maybe you can elaborate a bit on that and thereafter, will be my second question. Lars Von Lackum: Yes, Manuel, thanks a lot for the question. So we have not heard from any political resistance. If you look at the prices of those subsidized units, EUR 5.40 versus the market level EUR 9, that is the difference you're currently seeing in the market. We paid back the subsidized loans already in 2018. So there was a waiting period for another 10 years. So therefore, from our perspective, nothing to be expected on the political side, no political pushback also with regards to those units, which were getting off restriction over the past years. So also no political pushback to be expected from that bigger portfolio. Volker Wiegel: And maybe to add, we are in close contact with almost every mayor and every bigger location, and they understand what's going on and accept it. Manuel Martin: Okay. Perfect. Second question about project development, you're not actively doing that. Do you think this could become an option again for LEG to restart project development? It might be a bit too early, but maybe you can say a word on that, please. Lars Von Lackum: Yes. So very happy to do so, Manuel. We are still struggling to come up with a return worthwhile taking the additional risk on our balance sheet. It is still something which certainly we have explored with that big plot in Dusseldorf of 19 hectares. Finally, we were not making or coming up with a business plan, which will have at least brought about the return worthwhile spending additional money on that plot. So therefore, from our perspective, no, the current regulation is still very strict. The Bau-Turbo, so that's speeding up of building permission processes, we have not seen that really kicking in. We still wait for that building type E, which is assumed to reduce some of the requirements with regards to the building type and the building qualities. Also, those reductions are still not being decided or not in a way currently being discussed politically, which would come then finally to lower construction costs. So therefore, from our perspective, no, we currently do not see any real benefit of that for us to reenter the development market. So that is the current status there. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Frank Kopfinger for any closing remarks. Frank Kopfinger: Yes. Thank you, Valentina, and thanks for all your questions. And as always, should you have further questions, then please do not hesitate and contact us. Otherwise, please note that our next scheduled reporting event is on the 13th of May when we report our Q1 results. And with this, we close the call, and we wish you all the best and hope to see you soon on one of our upcoming roadshows and conferences. Thank you, and goodbye, everybody. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Amanda Blanc: Okay. Good morning, everyone, and thank you for joining us today for our full year results presentation. I'll start with a quick update on our 2025 performance and how Aviva will deliver today and for the future before Charlotte takes you through the results. Then we'll open for questions. So let me begin with the key messages. Aviva has delivered another outstanding set of results in 2025, extending our multiyear track record of delivery. We have achieved our 2026 targets of full year early and have now raised our ambitions. And we have enormous potential to go even further for the longer term. We are set up to make the most of the opportunities across the market, whether that's with artificial intelligence as technology changes the game, general insurance as the importance of scale and brand grows, wealth as the market expands with regulatory tailwinds or in retirement for the next wave of pensioners as the U.K. ages. And I'll cover some of these in more detail later. So let's get into the numbers, which include the 6-month contribution from Direct Line. As you can see, it's been a great year. Operating profit rose 25%. IFRS return on equity increased and cash and capital generation are growing. We now have over 25 million customers and an opportunity to serve even more of their needs with over 7 million of those customers being multiproduct holders. Operating EPS growth is well into the double digits. And today, we are announcing a final dividend of 26.2p per share, up 10% year-on-year. And we are resuming the share buyback now at a higher level of GBP 350 million. Every business contributed to these results. In General Insurance, premiums are up 18%. We are now approaching the sub 94% combined ratio ambition, and we are already achieving this in our U.K. business. In Wealth, we are extending our #1 position with over GBP 230 billion of assets. And we are growing with record net flows of almost GBP 11 billion. In Protection, we have improved margins and are nearing completion of the AIG Protection integration program. In Health, we have grown in-force premiums by double digits with a low 90s combined ratio. And in Retirement, we have written GBP 4.6 billion of bulk annuities at attractive returns, supported by real asset origination in Aviva Investors. Turning now to targets. As I've said, today's results mean that we have already delivered our 2026 targets. This is a fantastic achievement, and I'm really proud of Aviva's performance. So I want to thank the whole Aviva team for their hard work. In November, we set new 3-year targets across operating EPS, IFRS return on equity and cash remittances. These now include Direct Line and better reflect our trajectory as a diversified capital-light business. Charlotte will cover more details on the numbers shortly. But now I'd like to talk about Aviva's longer-term potential. This has been a journey where we have driven sustained growth, served more customers and stepped up for shareholders year in and year out. And we continue to create longer-term value with smart strategic M&A resulting in today where we are the U.K.'s only diversified insurer with a clear strategy that is delivering results. Our focus is now on hitting the new targets, further accelerating beyond 75% capital-light and realizing the full benefit of Direct Line. But this is just the next step in our journey. There is more long-term potential beyond this 3-year time horizon. Clearly, we are set up to capitalize on a range of opportunities across all our markets, but I'll prioritize three of these today. First, how we outperform right through the cycle in General Insurance; secondly, why we are uniquely positioned to lead in Wealth; and thirdly, how we are using artificial intelligence to shape the future of Aviva. And supporting all of this is one constant, our leading customer franchise and preeminent brand. So let's start with General Insurance. This is and always will be a cyclical market. And after more than 325 years in the industry, we know how to navigate cycles. And we have been through disruption time and time again. Direct Line changed the industry by selling directly over the phone. Price comparison websites then reshaped the market. And now we have generative AI with autonomous vehicles to come. And through all of these changes, Aviva continues to deliver, bringing in fantastic people, launching innovative products like Aviva Zero, expanding distribution onto PCWs and through Lloyd's and so much more. And we have tripled profits over the last 5 years. The U.K. is the most competitive insurance market in the world with high regulatory barriers to entry. And Aviva is the standout #1 insurer here and the only player operating at scale across Personal and Commercial Lines. We have always adapted and we will keep adapting. When we acquired Direct Line, we knew that market conditions would continue to evolve. And the same is true when we set our new group targets. But we also knew that Aviva has the scale, discipline, technical expertise, proprietary data, brand strength and diversified group model to grow profitably. And there's plenty of room to grow, unlocking value from Direct Line, expanding partnerships, scaling SME in Canada, building out our Lloyd's presence, not to mention the opportunity with our 25 million customers. The market will keep changing, and that's exactly why we invest in innovation. We are ahead on EVs, telematics, automation and AI, and we'll stay ahead. So our portfolio is built to deliver performance for years and decades to come. Looking first at Personal Lines in the U.K. Owen and the team have a track record of outperformance, delivering profitable growth through COVID, periods of high inflation and pricing practices where many others struggled. And though the market is challenging today, we are still writing at target margins. It is not by chance that we have been able to do this. Our scale is unrivaled with breadth across distribution and game-changing amounts of proprietary data. We have the only wholly owned repair network in the U.K., which saves us around GBP 500 per repair. And we have huge potential with Direct Line, not just with the cost synergies, but growth headroom with leading brands and new products such as Pet, Green Flag Rescue and Micro-SME. Turning now to Commercial Lines, where it's a similar story. We are successfully navigating tougher conditions. We have built up our pricing strength, and we are able to quote above the technical prices in our models. Putting margins first has always been our priority, and that's why we have delivered consistent profits year-after-year. We have unique strengths to win in this market. So let me just highlight a few. We are a leader in SME and mid-market, and these segments are more resilient. We have first-class underwriting with strength across motor fleet and liability. So we are very well positioned for any future shift with autonomous vehicles. And with access to Lloyd's through Probitas, we can tap into a wide range of attractive lines, having launched 8 since the acquisition. This now includes high net worth, which is complementary to our already leading proposition here. So across both Commercial Lines and Personal Lines, we are well set up for success today and in the future. Moving to Wealth, which is a huge opportunity for us. There are GBP 2.7 trillion worth of assets today, growing at double digits, and the market is set to surpass GBP 4 trillion by 2030. This strong growth is underpinned by clear structural trends and regulatory tailwinds. At Aviva, we have a leading Workplace and Adviser Platform businesses. And we are leveraging advice capabilities in Succession Wealth and scaling fast in Direct Wealth. We have built a competitive edge that no one else can match. We have a leading customer franchise with a significant affluent opportunity. Our holistic offering and trusted brand means that we can support customers throughout their lifetime. We have always invested in our platform, which is ranked by de facto as the #1 in the market. Our modern technology platform brings scale benefits. And of course, we have leading investment solutions with Aviva Investors. And the performance of our Wealth business is testament to all of this. Since 2022, we have grown assets faster than the market, and we have improved margins at the same time. In Workplace, our profit margin is up by almost 2 points over the last 2 years, which makes this business a key driver of growth and a major contributor to our profits. So we are on track for our GBP 280 million Wealth profit ambition in 2027. And the importance of Wealth within our portfolio is growing. It is fast approaching 10% of our group earnings, further increasing our share of attractive fee-based income. But the longer opportunity here is even more exciting. Take Workplace. It is a highly attractive market, which has grown four-fold over the past decade. And with a constant flow of employer and employee contributions, it is expected to triple over the next decade. This growth is not only strong, but it is also very resilient. Aviva has an incredible track record here, and we're accelerating. The business is a genuine growth engine with 1,500 scheme wins over the last 3 years and a near 100% retention. And we are very pleased to now be the sole administration partner for the Mercer Master Trust, expected to bring around GBP 8 billion worth of assets over the next 12 to 18 months. The strength of our proposition is powered by leading Aviva Investors default funds. And we recently launched our My Future Vision Fund, which gives customers access to private markets and reinforces our commitment to the Mansion House Compact. So when you bring together our Workplace, Direct Wealth, and Advice businesses, you get a truly unique Wealth offering. We are able to retain and serve customers from their very first job all the way through to their retirement. And we are tapping into 4.5 million affluent customers who hold more than GBP 1 trillion worth of assets. We're also leveraging technology and innovation to deliver advice and guidance at scale. Targeted Support is a huge opportunity for us. This is a new service that sits between guidance and full financial advice, and it will allow us to offer easy-to-access support to so many more people. Our first journeys here will focus on how people save for their pensions, launching around the middle of this year. And there's still so much more to share on the Wealth business. So we will do a deeper dive at the next in-focus session, which will be in Q4 this year. Finally, turning to Artificial Intelligence. So we know that this is going to be transformational. And here at Aviva, we have a greater opportunity than most. For any opportunity that you have seen in the media, and there's been quite a few recently, there are key enablers that you actually need to drive the value. It is not enough to just have the technology. You need access to millions of customers, the ability to deploy and reuse at scale, capacity to invest, and most importantly, proprietary customer and claims data. Aviva has all of these in spades, and our diversified model is more resilient for any disruption. This technology isn't new to us either. We have been using traditional AI capabilities for over a decade now. In fact, over 98% of retail business in U.K. Personal Lines is priced with machine learning. And we have been training over 150 machine learning models in claims with our own data for years. Generative AI and Agentic are just the next steps on this journey. And because of our targeted investments in technology and talent, we already have many of the AI-ready foundations in place, so we are well positioned for this shift. We have built an in-house platform to deliver use cases at speed, and we are already seeing tangible benefits. We have halved the time taken to review each case in medical underwriting. And we have also reduced call wrap times by 20% for customer service agents in Direct Wealth, which we are now rolling out more broadly in IW&R. All of our colleagues have access to AI tools, and we continue to enhance and streamline all of our data. We are proud of what we've achieved so far, but we are aiming much higher and always balancing ambition with pragmatism. Our focus now is on prioritizing progressively bigger end-to-end opportunities where AI can transform areas like customer engagement and distribution, underwriting and claims right through to back-office operations. This is the kind of change that will shape Aviva's future. And some of this is closer than you think. So let me give you an example in U.K. General Insurance claims. We have already saved nearly GBP 100 million through our claims transformation and Agentic has the potential to unlock much more. Over the next few months, we will be testing an AI-enabled claims agent built in-house and launching later this year. This will enable us to handle simple claims from start to finish without human support. And the best part is that this is voice-enabled. Most claims begin on the phone. So this will be transformative for customers, delivering faster, clearer and more consistent outcomes. And finally, I'm delighted to announce our partnership with OpenAI, which is a really important step for us. Combining OpenAI's cutting-edge capabilities with our expertise and data will help us to deliver powerful AI solutions for our customers and our colleagues. So there's a lot more to come, and we'll share more with you at our half year results in August. Now I'll finish with what brings all of this together. Aviva's powerful unique model. We have diversification and growth advantage with market-leading positions and a majority capital-light portfolio. We have a customer advantage with almost 22 million U.K. customers and a leading brand. We have a scale, technology and data advantage, including the opportunity that AI brings. All of this gives us real confidence for the future over the next 3 years and well beyond. And with that, I'm going to hand over to Charlotte, who's going to take you through the results in more detail. Charlotte Jones: Thanks, Amanda, and good morning, everyone. It's great to be here for another full year results presentation. 2025 was a strong year for Aviva once again, as we continued our growth momentum. Operating profit was up 25% to GBP 2.2 billion, which translated to an EPS of 56p and a return on equity of 17.5%. Cash remittances were up 4% to GBP 2.1 billion, and this excludes the funding for Direct Line, which is reported separately. Solvency of 180% is at the top end of our working range, supported by GBP 2.3 billion of own funds generation or OFG, the solvency measure of operating performance. In November, we said we were on track to meet our 2026 group targets a year early, and I'm pleased to confirm that we have achieved that. We exceeded our GBP 2 billion operating profit target before the contribution from Direct Line. The group total of GBP 2.2 billion is in line with November's guidance. And we comfortably achieved our OFG target a year early and are ahead of schedule on our cash remittance target. This demonstrates the grip we have on performance management to actively manage through the cycle and outperform peers. So given our excellent progress, we set new and ambitious 3-year targets in November, reflecting the shape of our group today and our plans for the next 3 years. These targets allow better comparability with peers, align with our capital management framework and support our plans to grow in capital-light businesses. These targets are ambitious and achievable. They take into account the outlook for each business, including good visibility of where we are in the cycle. So we're targeting an 11% operating EPS CAGR from 2025 through to 2028. This reflects the operating earnings growth and share count reduction from regular and sustainable capital returns. So our 2025 EPS of 56p is ahead of the 55p baseline that we set in November, as the last few weeks of the year saw more benign weather than expected. And we're not assuming this favorable weather repeats. So the 11% target is from the 55p baseline and builds to around 75p by 2028. We're really confident in our plans to drive progressive earnings across the group. And combined with share buybacks, we're well placed to achieve this and our other group targets. So I'll now unpack the group results in a bit more detail, starting with General Insurance, which was 56% of business unit operating profit. Top line growth has been an impressive 14% over recent years, and margin has improved too, with the combined ratio better by 1.6 points. The investment return has grown in line with the portfolio, all of which together means operating profit has grown to almost GBP 1.5 billion. In the U.K. and Ireland, premiums grew 27%. A large component of this was the addition of Direct Line reported as part of U.K. Personal Lines, where we saw 50% premium increase. Commercial Lines premiums grew 7% as we build GCS, integrate Probitas and leverage the strength of our SME and mid-market propositions. The combined ratio in the U.K. for both Commercial and Personal Lines is a strong 93.9%. This is a 1 point improvement, reflecting the earn-through of pricing and some favorable weather. In Commercial Lines, positive prior year development was more than offset by elevated large losses in the current year. And including Ireland, COR was 94.1%, reflecting the impact of storm Eowyn back in Q1. Overall, operating profit for U.K. and Ireland grew 52% to over GBP 1 billion. Now in 2026, growth will benefit from a full year of premiums for Direct Line. Now looking at the U.K. and Ireland business as a whole, we expect to deliver a 2026 combined ratio of better than 94%, subject, of course, to normal weather patterns. We come from a position of strength with good rate adequacy and relative to the softer market, we have held rate. We leverage the strength of our brand, scale, pricing sophistication, proprietary data and diversification. And we have extensive experience in managing pricing cycles and disruption. So we're really well placed to navigate the current conditions. Premiums in Canada, up 2% in constant currency. The Canadian market is at a different stage in the pricing cycle compared to the U.K. And so Personal Lines grew as we secured pricing increases across property and auto, maintaining strong retention. This was offset by some portfolio actions taken in Commercial Lines that I covered at the half year. And the undiscounted core was almost 3 points better, largely reflecting weather experience, which was broadly in line with our budget compared with the elevated cat activity in 2024. There was improved large loss experience compared to '24 as well as pricing actions earning through. Investment income was marginally down, but operating profit was up 49% to GBP 408 million. And for 2026, we expect to deliver a combined ratio approaching 94% for Canada. The Personal Lines rating environment remains supportive with further pricing increases expected. In Commercial Lines, though, the dynamics are similar to the U.K. with softer conditions that vary line-by-line. So across the portfolio, we will navigate the cycle with discipline. Now moving to Insurance, Wealth and Retirement and starting with the Insurance businesses, Health & Protection. Demand for Health has been affected by cost of living pressures for consumers and small businesses re-prioritizing spend to absorb the national insurance changes. Despite this, in-force premiums were up 12%, and we maintained a low 90s COR. Operating profit was up 9% as the business grows in line with our ambition. Now as expected and in line with the first 9 months, protection sales were lower following the consolidation of AIG and Aviva propositions back in August 2024. Margins have improved by 90 basis points as we reprice the business. And all of this is in line with our integration plans. Operating profit was up 97% as we had some adverse assumption changes back in 2024. And in '25, we recognized a onetime integration benefit following the legal transfer of business acquired from AIG. Now moving to Wealth. Workplace net flows were up 6% as member contributions grew and we onboarded new schemes. The resilience of this business is demonstrated by the impressive GBP 1 billion of regular monthly contributions. Our Adviser Platform performed strongly with flows up 11% despite elevated outflows around the time of the U.K. budget. And in our Direct business, the customer base grew by almost 1/3 to over 100,000, and we're continuing to invest in developing the proposition. Wealth operating profit was up 36% with operating margin improving by 1.1 basis points as the business grows and leverages the cost base. Operating profit as a portion of revenue is 23%, up 4 points. And as Amanda mentioned, we are on track to meet our near-term ambitions. And beyond that, the opportunity is even more exciting for the group's long-term growth. We have a strong brand proposition and scale from which to build. So we anticipate further improvements in operating margin and profit progression. In Retirement, we wrote a more typical GBP 4.6 billion of BPA following an elevated 2024. Importantly, Aviva Investors originated GBP 3.5 billion of real assets to support the business. Now this is an increasingly competitive market, and our team has continued to trade well and with discipline. We achieved a mid-teens IRR, well above our low teens guidance, and the business has been written a relatively low strain. Individual annuity sales were up 19% to GBP 1.6 billion, our highest level since 2015 pension reforms, supported by a new product launch. Operating profit was 5% lower as higher releases from the contractual service margin were offset by a lower investment result. And we expect to remain active this year in retirement, and we'll be disciplined in the competitive environment. Now turning to costs and efficiency. The ratios are broadly stable despite the temporary uplift effects from acquisitions and new partnerships. Across the group, we continue to invest in exciting growth and productivity initiatives, including the use of AI and in automation. And we expect this investment to drive efficiencies in each of our businesses. It will improve operating leverage and unlock significant long-term value from our extensive customer base and proprietary data. Now the application of our consistent capital allocation framework is a critical part of what we do to optimize our diversified group. And this slide summarizes how we think about performance and financial strength and what that means for uses of capital. We continue to build sustainable growth in earnings and cash and work to maintain our balance sheet strength. We grow the regular dividends. We invest in the business for growth and efficiency, and we return capital to shareholders. Nothing here is new, but it's important that you see we do this really well. And as an example of the framework in action, I'll pause for a moment on solvency. One of the advantages of the model we have built is proactive balance sheet management. A year ago, our cover ratio was 203% as we prepared to complete the Direct Line transaction. This used 31 points of capital ahead of the realization of the capital synergies. We've delivered elevated management actions of 11 points and accelerated 3 points of Direct Line synergies by temporarily moving the business to standard formula. This has supported building solvency back up to 180%. The underlying capital generation of 16 points includes a couple of points of favorable one-offs, including positive weather and reinsurance pricing impacts, which we can't assume will repeat, but we do expect to unlock the remainder of the Direct Line synergies. Specifically, we're on track to deliver at least GBP 350 million or 7 points of solvency around the end of this year. And looking forward, we expect a progressive build of operating capital generation of around 20 points in 2027. This assumes normal levels of management actions of around 200 points. And depending on whether these impact own funds or SCR or both, this translates to between 2 and 4 points of solvency. This level of capital generation will continue to grow and provides headroom in excess of the annual dividend and regular buyback. Now moving to a few words on Direct Line. The integration continues to progress well and at speed. We have successfully implemented our pricing models into Direct Line with an improvement in written calls in the fourth quarter. We've made excellent progress on the Direct Line branded PCW sales, doubling the number of policies in Q3 and almost doubling them again in Q4. We've transferred GBP 2.9 billion of assets to Aviva Investors with more to come. And we've made good progress rationalizing two office locations and three motor repair sites. We're progressing and removing duplicate roles and have an incredibly strong leadership team in place with a proven track record. All of this is enabling us to deliver material financial benefits. So in November, you'll remember, we uplifted our cost savings ambition to GBP 225 million and confirm Direct Line's own cost program of GBP 100 million had been achieved. We have delivered the first GBP 50 million of cost savings in the second half of 2025. This will fully earn through in '26 and contributed around GBP 10 million to operating profit in 2025. We expect to deliver the remaining GBP 175 million of savings fairly evenly over the next 3 years. And we're also investing around GBP 50 million to unlock claims cost benefits of at least GBP 50 million each year. And all the work on the acquisition balance sheet has now been completed. Now I'll briefly cover the delivery of our commitments on dividends. Today, we've announced the final dividend of 26.2p, giving a total dividend of 39.3p, a 10% increase on 2024. This includes the regular dividend growth plus the 5% uplift we promised following the acquisition of Direct Line. We've also resumed the buyback, launching a new GBP 350 million program increased to reflect the higher share count. And as we go forward, our consistent dividend policy of mid-single-digit increases in the cash cost of the dividends builds from this higher point. And combined with the resumption of the regular buyback, this will deliver a highly -- a higher progressive DPS development. So to summarize, 2025 was another great year for Aviva and the outlook for '26 and beyond is positive. Our diversified business model and the addition of Direct Line leaves us well placed to continue our track record of growth and earnings momentum. We will continue to invest in data, customer engagement and operating efficiency, ensuring we keep winning in an ever-changing world. And of course, we will maintain a firm grip on performance management across the group. All of this gives us great confidence in delivering the ambitious targets we have set and the future beyond that time frame. And with that, I'll hand back to Amanda. Amanda Blanc: Okay. Thanks, Charlotte. So before we move to Q&A, let me conclude with the key points. We have real momentum, and we are building on it every single year. 2025 extends our track record of strong profitable growth. We have already delivered another set of targets, and we are driving towards the raised ambitions that we have set for our next chapter. Aviva is in a stronger position than ever. And this isn't just a strong position for the next few years. Aviva is uniquely placed for longer-term success. Here is why. We are the U.K.'s national champion and the only diversified insurer. We are accelerating capital-light and unlocking higher returns. We have an outstanding customer franchise of more than 25 million customers globally. We are the U.K.'s most trusted insurance brand. We have proprietary data at scale, driving better pricing, better risk selection and better customer outcomes. And all of this fuels our superior returns for shareholders with strong and sustainable earnings growth and attractive dividend and regular share buyback. So these strengths and many more give me deep confidence that we will unlock the full potential of Aviva in the years ahead. So thank you for listening. Let's move to your questions. Unknown Executive: Thank you. And as usual, if you just raise a hand and give us a moment to get a microphone to you. We'll start at the front here with Andrew Baker. Andrew Baker: Andrew Baker, Goldman Sachs. First one, I guess, on your '26 combined ratio guidance. If I look at U.K. and Ireland, I think the underlying is about 96.7% in 2025. So it's quite a jump to get to less than 94%. So can you just help us with the bridge there? And then similarly on Canada, how do you get from sort of the 96.5% underlying to approaching the 94% that you've highlighted? And then secondly, I can see you added a slide in the appendix giving a bit more detail on autonomous vehicles. Are you able just to give us sort of your view on maybe the timing here, opportunities, threats and I guess, ultimately, how you think Aviva is positioned to win in this market? Amanda Blanc: Okay. Charlotte, do you want to take the first one? Charlotte Jones: Yes, I'll take the first one. Thanks, Andrew. So look, I'll start by saying we're very pleased with the COR of 94.6% for the group. And underlying COR has increased across the group from 1.4% to 96.7%. But I'm very comfortable with the position. So let me try and explain. So in Canada, we've seen about 0.7% of improvement in the underlying as we've seen price increases earn through, and we've seen auto theft trends improve. And we see having put around 10% through in Personal lines and those trends continuing, we can see the continued trend towards the sort of approaching 94%. We took those portfolio actions in the Commercial book. So again, some of that profitability will improve as a result of that, already coming through in the second half, but you'll get a full year effect of that. In the U.K., yes, the underlying COR I've got is 96.3%. But in there, you've got some elevated Commercial Lines, large loss experience, which was kind of in the second half. So just as I won't assume weather is better than long-term averages and I don't assume prior year development coming through. I also assume that large losses will be at a kind of regular loss loading. And when you look at the nature of the large losses, they were idiosyncratic in nature. So they were good underwriting decisions, just a bit of bad luck. So again, I wouldn't assume they repeat. Now they were about 1.7 points higher than the long-term averages or the loadings that we set. So if I take that off the 96.3%, you can see that's already quite a lot of an improvement. Then I've got Direct Line coming in, in the second half, it's still not at the performance level we would want it to be. So it's got a negative impact in the second half. But as we see that earning through and we see more of the cost synergies come through, then again, that will drive a lot of the improvement. So we have the plans, and we've got the good line of sight to the guidance we've given. Amanda Blanc: On autonomous vehicles, so yes, we did put the slides in the deck because we sort of thought that there might be one or two questions on it. There's obviously been a lot of media activity on this in the last couple of weeks. But you've also -- you've seen sort of two extremes of that really. This is going to -- everything is doomsday scenario to the sort of major manufacturers coming out only last week and saying that they've abandoned their Level 3 driving system plan. So I think that we've got to just manage some of the noise that sits around the topic. Now on saying that, we do recognize that this will bring a change in the market. And just the same as I think we've adapted to hybrid vehicles, to electric vehicles, pricing sophistication, now generative AI, I think we sort of feel very ready for this. Our view is we've looked at the WEF analysis and the BCG analysis. And we would concur that the widespread adoption is not expected until the 2040s. And even then, I think if you think about the upgrading of the car park globally is going to cost trillions of dollars. I mean, I don't think we should just underestimate even that an average car price today versus what it costs to have a fully autonomous vehicle, you're talking about tens of thousands of cost difference. So I think you sort of have to balance that. But when it comes to it, who's going to win in this autonomous vehicle world? Well, I think, first of all, this is the most competitive market in the world, as I said in the presentation. So I would bank on the U.K. being able to deal with this. We've got a deep -- as Aviva, we have deep understanding of vehicle technology. So we are the #1 insurer for EVs today. We have our own repair network. So the feedback loop in terms of that repair is going to be important. We've got -- we're one of three telematics players in the market. We've got about 3 billion miles of telematics data since that product was first offered. By the 2040s, as you can imagine, we're going to have a lot more data. So all of that data will matter. But I think ultimately, you're never going to have this as being a pure Commercial Lines product because at some point, the vehicle may get stolen, and I don't think that the vehicle manufacturer is going to take responsibility for that. There will be times when the vehicle is being driven in difficult driving conditions on country roads where it's not going to be fully autonomous. And so what you're going to need is this balance between Personal Lines and Commercial Lines. And I would put Aviva out there to be able to deal with that as probably the only player in the U.K. today that actually can. So I think we have to be circumspect about it. We have to recognize that the market will change. But I think genuinely, we are thinking it's a good way off. But we thought we'd put the slide in because we thought you may be interested. Unknown Executive: If we come to Farooq. Farooq Hanif: Just one numbers question and one non-numbers question. So on the numbers, I noticed your investment income in General Insurance was up quite a lot, certainly compared to what I expected. Is that a sustainable level? And will that get the margin with the unwind of the discount as well? I mean, can we expect that to sort of be a sustainable level that might grow from here? And then secondly, on -- going back to AI, I mean, there's also been a lot of kind of wild scenarios about how Wealth will be affected by AI and how distribution will be killed and margins will disappear and lots of doomsday stuff on that, too. So what are your thoughts on Wealth, particularly around Targeted Advice and how you could use Gen AI to your advantage? Charlotte Jones: Okay. Yes. So I think nothing particularly to call out on the investment income. It is obviously affected by having the Direct Line portfolio. But the rates that we were earning is pretty consistent. So LTR as a percentage of average assets aligned to the prior at 4.2%. So nothing untoward or nothing particularly to call out in the investment income. So, no. Amanda Blanc: Okay. So on AI in Wealth specifically, but I think more broadly. If we think about the investment that needs to go into AI and how you will reuse that across the business, I think if you think about Aviva, if you think just even on claims summarization, we've taken things for motor that we will apply to home, to travel, to health, to protection, to various other areas. So if you think about the investment spread across the business, we feel that we're in a good position to be able to sort of get more maximum use and maybe keep more of the benefit of that and not pass all of that on to -- in a competitive environment. On Wealth specifically, if we think about this new term of the moat, which is obviously new to all of us in the last -- the AI moat, like what is Aviva's AI moat? And I would say that one of the biggest moats that we have is our workplace pension business. Why is that the case? Because it is basically connected to employer, employee and provider. And effectively, with 4.5 million workplace pension customers, with the data that we have on those customers, we know what they are saving and the ability for us to be able to use AI and all the other data that we may have on them from things like motor, home and everything else to be able to provide a more personalized proposition via targeted support or simplified advice or going right through to sort of the full fat advice. I think that we're in a really good position to be able to capitalize on that. So I think we've seen disintermediation in many places before. Take price comparison website. I mean that massively transformed the motor market and disintermediated to almost a whole extent where today, 95% of quotes come that way. As a mass affluent player, we are in a perfect position to be able to manage that any potential disintermediation. But I still believe that advice will be there. I just think that the advisers will be given better information, more support, and they'll spend more of their time with the customers, where the customers want that face-to-face advice. But I think for those many people, 91% of the population today that don't take advice. AI will facilitate the ability to be able to do that and mean that they will get better guidance. And you've got 12.5 million people in the U.K. today that do not save enough for their retirement. I think it gives a real opportunity to be able to do that. So I would say we're bordering on the sort of excited end of the scale in terms of the opportunity that, that provides Aviva. Unknown Executive: Larissa? Larissa van Deventer: Larissa Van Deventer from Barclays. Three quick ones on my side. The first one, just on Canadian Commercial. Is the culling now done? Or should we expect some of that to linger into 2026? On the Life value of new business, if you could please give us a little bit more color on what drove the decline and how we should think about margin evolution going forward, basically was to separate the one-offs from any structural change that you may see? And the last one on Workplace. You've been very positive on this for some time. What needs to happen for you to meet your targets? And do you see -- and specifically on that, how do you see margin or potential margin compression in that space? Amanda Blanc: Okay. So I'll pick up one and three and then hand over to Charlotte to take the margins bit of three. So on the Canadian portfolio remediation, yes, that is largely done. And I think if we think about Canada, we really see a big opportunity there to improve the performance of the Canadian business. I think there's a number of areas, a push out in terms of SME, a move more from Ontario as well as into Quebec, where we're not largely represented in Quebec today. We've got big partnerships with Loblaw and RBC, which we will be capitalizing on. And so I think the Canadian business has made some really strong improvements that they will continue to build on over the coming period. And that's why Charlotte was able to give the guidance that she wanted to there. On the Life VNB, Charlotte, and then hand back on Workplace. Charlotte Jones: Yes. So I suppose there's a couple of things. In general, there's an element coming down because of the retirement levels of the BPA volumes being less. Then we've got a slightly strange effect coming through in Wealth in the fourth quarter, and that's allowing for some assumption changes, which kind of are relevant for the whole year, but they come through in the fourth quarter. There's a little bit -- so there's a little bit on Retirement margin and a little bit on Wealth. But I would encourage you on Wealth to always look at the flows and the operating margin and how we're improving the operating leverage there and therefore, the opportunities on the profitability. The VNB metric isn't that applicable, but we give it so that you can see the overall IWR level. Amanda Blanc: I mean on Workplace, so what gives me the confidence here? Well, I think the progress that has been made, you've only got to look at the sort of the progress towards the GBP 280 million ambition. And that is primarily driven by the contribution from the Adviser Platform and the Workplace business. So Workplace AUM is up 19% to GBP 153 billion. So strong new business and growing member contributions. Net flows of GBP 7 billion, so that's 6% of AUM. We're getting regular GBP 1 billion member contributions every month. We talked about the new scheme wins, the win rate of 75%, which I think is pretty impressive. And so we've got a very positive outlook on Workplace. And we announced the new deal this morning with the Mercer transfer, that's GBP 8 billion being transferred in over the next 12 to 18 months. So I think the team are in -- they're doing exceptionally well here. On the margin, Charlotte, do you just want to comment on Workplace margins? Charlotte Jones: Sorry, yes. On Workplace margins, we have shown the improvement in the operating margin. So if I look at it at the overall Wealth level, it's gone from about 7% to 8.1%. If I look at Workplace, which has not been so much diluted by some of the investment that we're spending, it's improved from about 10.7% to 11.5%. So all the pressure that you constantly always expect at the revenue margin level, which continues to be there, we're compensating by the scale that we have, the operating leverage that, that drives and that keeps going forward. And so, we also gave you a stat on sort of the expense margin as well, which is sort of like the inverse of a cost/income ratio. And again, that's showing an improvement to 25% now for the whole Wealth business. So I think we've got to keep on it. We've got to make sure that we're protecting as much of the revenue margin as we can. And we do that through being competitive. We have to be competitive, but then there's a lot of incremental contributions into Workplace that sometimes attract a slightly higher margin per item. So we have to keep mind on that, but the real driver is making sure that the operating leverage continues to build. Unknown Executive: Andrew? Andrew Crean: It's Andrew Crean, Autonomous. Could you talk a little bit about Direct Lines, premiums and your retentions there? Is that working out the way you planned as you renew business? Secondly, I noticed the CSM, the net flow -- value net flow is negative to the tune of about 2%. Is that something which you think will continue in the long term, i.e., that your releases will be more than your expected return on new business? And then can you talk about U.K. retail pricing? What's happening in the market in terms of rates? And how you see rates going over this year? Amanda Blanc: Okay. Shall I pick up? Charlotte Jones: Yes, do pricing first and I'll do the two. Amanda Blanc: Yes. So on the -- we're not going to break down the individual brands, Andrew, in terms of like policy count or retentions because we don't do that for Quotemehappy, for Aviva Zero, and everything else. But what I would say is that I think we are incredibly pleased with the Direct Line deal. Actually, one of the real strengths in the Direct Line portfolio is the retention and their ability to retain. And we were with some of the teams earlier this week where their marketing team, particularly were commenting on the strength of the talent within the team around retention. So we feel very good that the team is set up to do that. On the -- on the pricing of the portfolio, on motor, which I assume is the sort of where you're heading. So what do we think about this? So we always give you the numbers. So bear with me just a second. So if we think about our performance in 2025 on Personal Lines motor new business, we were up about 1% on rate. I think the Pearson Ham data was showing rate down minus 11%. On home, we were sort of broadly flat, I think, on new business, and we were up about 8% on rate for home. So I think that shows really good discipline. And I think what it shows is us using our different distribution channels effectively. Obviously, we've got the Nationwide deal, which has come in for travel and home, and that will build over the course of this year. In terms of what we see going forward, I think that obviously, we see inflation in the sort of mid-single digits. We've -- Charlotte talked about us guiding to overall 94%. So that will give you confidence, hopefully, that we will be disciplined. And we do see that the rates are starting to flatten out. And I think the competitors are saying the same thing. You saw the ABI data come through just a few weeks before. So we believe that it is time to start increasing the rates, and we will be very disciplined about how we do that in what is obviously still a competitive market. Charlotte Jones: Then on the CSM, if I look at it, excluding Heritage, it's pretty stable at just under GBP 6.5 billion. Obviously, with a lower volume of BPAs, you've got a smaller amount of that new business CSM going in. Then my interest accretion, that's a little bit higher because we had the higher opening CSM and because of the business written back in 2024, and that was written at higher rates than the portfolio average. So that's kind of driving that. Then experience variances were broadly neutral, whereas the previous year, they've been a bit positive. And assumption changes are relatively minimal across the both. So when I look at the release, it's a bit higher because my starting point is higher. Now if I put Heritage back in there, because that's got no new business and is only coming out, then there's a bit -- the reduction is down to 7.7% from 7.768%. So it's pretty marginal. When I look at the percentage, the release is 10.3%. Again, that's slightly higher than the previous year, which was 10.1%. But that sort of level is expected to repeat. But again, it will depend a little bit on mix and volumes of new business written. But I think it's always important to remember, this is the capital-intense part of the portfolio, and it's throwing off cash that we're investing in Wealth and Health. And obviously, protection is within the CSM. But it's stable to level and obviously will be impacted by how much annuity business we write in every year. But again, it's only part of the picture for IWR. Unknown Executive: Give it to Dom. Dominic O''mahony: Dom O'Mahony, BNP Paribas. Three questions, if that's all right. Just one clarification on the Mercer flow piece. If I've understood that correctly, is that just straight GBP 8 billion to the flows sort of over and above what you would get normally? Maybe if you could just expand on that, that sounds very helpful. Second question, just to come back on the investment income. I think opening yields presumably are lower than 12 months ago. Could you just speak to whether that -- well, firstly, whether that's actually right for your portfolio, but also whether that's a headwind to investment income across the different business lines and/or discounting and/or whether there's anything you could do to offset that? And then the third question, just on the capital generation. So OCG underlying, I mean, much stronger than I was expecting with -- in particular, the SCR growth is interesting, because I think it was ever so slightly negative in the second half as in a release. Is that the reinsurance change that you referred to, Charlotte? I wonder if you might just expand on why the SCR dynamic within the OCG is so benign? Amanda Blanc: So I'll answer the first one, which is a very straightforward one. And then I'll leave Charlotte to answer the two difficult ones. Charlotte Jones: So look, let me just repeat your OCG question again. It's obviously strong, strong underlying and strong management actions. Dominic O''mahony: The SCR, which underlying GBP 36 million headwind in the full year, I think it's about GBP 20 million better than it was in the half year, which implies an underlying release of SCR, a small one. I did this math on the gee, so I might have got it wrong. But I assume that the reinsurance piece that you just -- you spoke to earlier is an SCR release in the underlying? Charlotte Jones: That's correct. Dominic O''mahony: Just wondering how big that is, whether there's anything else explaining the very good print there. Charlotte Jones: So within the underlying -- so management actions tend to apply only to really the IWR world and then we have a little bit in international. So anything that's sort of not run of the mill in the GI businesses still sits in underlying. So yes, there's some approaching a point coming through from -- in the OCG from the reinsurance. There's a little bit of an additional benefit coming through from weather. Then we -- what else have we got? Yes, that's the main thing. Then obviously, we've got the 3 points coming through from Direct Line moving that to standard formula in the short term. We did -- we talk about -- in the IWR side, we talk about moving to the -- moving the credit model and getting an improvement on the way we model credit risk. That's predominantly a benefit in IWR, but there actually is a little bit of a benefit coming across the other areas as well. So that's also impacting the SCR as well. Dominic O''mahony: And sorry, just to clarify, the Direct Line model change, that's going through the underlying, not through the other? Charlotte Jones: Yes, that's right. Dominic O''mahony: Okay. Understood. That was very clear. Charlotte Jones: And then what was your -- your other question was on investment income again. I mean, there's really not a particular headwind. It's a very consistent portfolio. We've got the bigger size and scale because the book is bigger. Then we've added Direct Line. The mix of assets is similar. We've moved the assets across to Direct Line. That's a helpful thing from an investment income perspective as well as fees for Aviva Investors. And then again, nothing much. There's a bit of a mix point, I suppose. And overall, it's a little bit helpful for discounting, but nothing really major to call out. Unknown Executive: Mandeep? Mandeep Jagpal: Mandeep Jagpal, RBC Capital Markets. Two questions for me, please, both on Life. Firstly, given the fixed income market conditions, how have you invested your annuity premiums you received in 2025 versus your target allocation? And does the current allocation create an opportunity for more management actions or margin enhancement in the future? And then on the Retirement IFRS earnings, in the appendix on Slide 56, it looks like experience variances, the line there was quite negative for both operating profit and CSM. Could you provide some color on what drove that negative line? Is there anything to call out here in terms of changing trends in longevity or mortality in the U.K. post the COVID period? Charlotte Jones: Right. So the first question was on the mix of assets supporting the Retirement business. I mean, in general, we've continued to keep a low reliance on corporate bonds in the low spread environment. So that's meant that we've largely written at a relatively low capital spend. When I look at the mix between liquids and illiquids, it's still kind of around the target mix that we have, which is a little over 50% in the illiquids. So we've kind of achieved that. The GBP 3.5 billion of real assets gathered by AI have contributed to that. Obviously, that will be more than 50%. So some of that is then actually in a warehouse ready for deals that we do this year and a portion of that has been an element of back book activity as well. So that's roughly the mix there. And we constantly look at what rebalancing we can do for the back book where as part of the overall ALM. But -- and the spreads, as I say, in corporate bonds has meant that we haven't allocated as much there. So we've still got a higher allocation of gilts. On your second question, which was Retirement IFRS 17. Let me -- I might -- Yes. So look, I think what we've got in Retirement is historically, we've ended up with a little bit of new business, which is slightly unintuitive for the Retirement business because normally, when you write Retirement business, it all goes into the CSM. But in the last few years, we've ended up with a bit of benefit, and that's because the way it's allocated to the CSM is based on the target asset mix at the time and the pricing thereof. If by the time we actually transact, it's slightly different and then that will drive a new business line. So this year, we haven't got that repeating, which is more likely what you would expect from IFRS 17. But in the past, we've ended up with a little bit of new business coming through. In terms of assumption changes, I mean, they were honestly relatively benign. And then you've kind of got experience variance effects. We had more coming out of the CSM because we started with a bigger position. And then the investment return was a little bit lower, and that is because we use a 1-year rate to derive the expected return, and we saw a slightly bigger discount unwind from the higher opening CSM. So -- I mean, there's a few mixed pieces going up and down. But overall, that is a function of IFRS 17. Unknown Executive: Tom? Charlotte Jones: Longevity. What was your question on longevity? Amanda Blanc: Was there have been any changes, any trends? Charlotte Jones: So on longevity, what I would say there is, we have moved to the latest tables. We have reflected essentially the CMI '24, moving from CMI '23 to '24 hasn't led to a big release or anything. We continue to apply a 0 weighting to '22 and '23. And that's -- instead of that, we apply a sort of temporary uplift for the mortality rates in the post-pandemic drivers. So things like the COVID and the NHS pressures. As we kind of look forward, we retain -- so -- and we assume that will run off over a 10-year period, but we keep that under review. We then retain our long-term improvement rate, so we assume that, that continues to improve. So longevity still continues to improve, but the tapers sort of once people are in that 85-plus age bracket. We generally have greater mortality improvements than we see in the general population. That's a function of our portfolio. And so there is -- we are assuming greater mortality improvements than the population more generally. And that will include, but not exclusively factors such as weight loss drugs and other sort of improvements in medical experience. So we are still having an assumption that longevity is improving. Unknown Executive: Tom? Thomas Bateman: Thomas Bateman from Mediobanca. Just a question on Wealth. It's a bit of a fluffy question. But obviously, the GBP 280 million guidance for, I think it's, 2027 is really good in Wealth, quite a big jump from where we are. Could you just break us down? I think it's investment spend, but there's quite a big jump there. Is it just that? And more generally, when you talk about Wealth, it always seems so fantastic, the win rate is really good. So how are you tracking versus that longer-term GBP 500 million guidance? I think it was 2030 or something. And second question, again, on AI. I hear everything else you're saying on the group impact, but you haven't talked much about cost impact on AI. Is that something that we could expect to hear more from you in the long term in terms of cost savings? And third question, just very quickly on the new lines of business at Probitas, what's the contribution from them? Amanda Blanc: Okay. I can pick up one and three, and Charlotte will pick up two. So on Wealth, on the GBP 280 million, so I think if we sort of go back to the in-focus session that Doug did 2 years ago now, we talked then about the getting to the GBP 280 million would be primarily driven by the two big lines of business, which would be -- which is the Workplace business and the Adviser Platform and that we would be investing in the Direct Wealth over the course -- the biggest investment was in 2024. Then there was more investment in 2025. And then that sort of -- that will drop out or become more normalized. I wouldn't say drop out, because you're always going to be investing in the business as we move forward. So that's why we have -- so there is an investment drag, yes. And obviously, we've had some success in Direct Wealth. We've now got 100,000 customers. We've built the platform. We've put proposition onto that platform. And so we see some real traction in that business. So -- but I think we've always said that the benefit from Direct Wealth comes after this GBP 280 million ambition. So are we confident about the continued growth of Wealth post the GBP 280 million? Absolutely. Because we can see that the Workplace engine continues to grow. I mean, I feel like I'm sort of boring you to death on this, but it is quite important, like Workplace contributions are today, that market is GBP 760 billion. It will be GBP 1.3 trillion by 2030. And I'm going to make a number of like GBP 2 trillion by 2035 or something like that, and I'm looking to the team to not to say that, that is the right number. So as we have a close on 25% market share there, and we're retaining at a high level, and you've seen the benefits of the operating margin improvements, we've invested in the technology platform. Doug talked about that when he presented. So we're on modern technology. We're sort of built for this business to just keep growing and growing efficiently. And then you've got some of the tailwinds coming from the regulatory environment. So yes, I'm super positive because it's a growing market. We are really good at it. We've got the sort of AI opportunity and 4.5 million current members, and we've just -- and we're winning schemes like the Mercer scheme. So I feel very good about that. In terms of -- what was the second question? Charlotte Jones: Second question, AI and cost benefits, et cetera. I mean, I think it's very hard to put a specific cost benefit on this yet. Obviously, we -- when we are thinking about it, and what's already embedded in our numbers. So I think on one of my slides, I talked about as an annual BAU spending on growth, efficiency and customer change initiatives, we have about GBP 450 million. That's embedded in the business plans for the markets and the functions, and it's separate to the I&R spend that we have and regulatory-driven stuff. But it's a wide range of investment in our business. And that's a recurring amount that's been going on for a number of years. And as each -- as part of the planning cycle, we work through how we're going to spend that money and some of the projects are multiyear. But you've heard us talk about things like the development of the app, the single source of the customer data, the work on Direct Wealth. That is all -- some of it is automation, some of it is AI. You've heard us talk about claims summarization, which takes call hold time down by 50%. You've heard us talk about the large language models that we're developing that enables protection and underwriting to be done with automated reading of many doctors' notes. So all of that is driving productivity. And each time we spend money on those initiatives. There's a business case that's put forward that has benefits. And that's how we allocate all of the change money across the group. So this is no different. And so to the extent that we've got those activities in flight and they're driving benefits to the business, they are part of the improvements that will drive us to those EPS targets. That's real, and that's built into all our numbers. As we start talking about some of the more advanced things that are still an early stage, such as the Gen AI agent or the Agentic agents and where they will drive benefit, there are probably benefits beyond the planned time horizon. So they're not so incorporated in the targets that we have. But they are partly funded. And as the business cases build, we will start to think through how much of that annual budget is allocated in that direction. So I think it's very dynamic. But what I'm trying to say is, yes, where it's real and tangible and we can put our arms around it, it's both funded and it's included in the benefits that are in the numbers that you can see, where it's more early stage and it's likely to leave benefits longer term, then it's outside of the target range. But people have talked around 15% to 20% of savings. And you can sort of begin to imagine how that might come. Now some of that will be in the work we do with outsources, because a lot of the -- a lot of the work that we have with outsources is the real mechanical stuff that we would look to automate and drive savings there. So some of it will come in the way we deal with those third parties as well. So it's a multiple range of things. What I'm trying to do is give you assurance that it's normal course for us to be investing, have business cases, reflect those in the numbers and deliver. Amanda Blanc: On Probitas, so obviously, we are benefiting from the greater access to markets with the 8 lines of business. So illustratively, for 2025, we wrote about GBP 73 million worth of new business that neither Probitas on their own or Aviva's GCS would have written without previously. So I think we are showing progress. But here, I would say, again, it's about discipline in the current market environment. We've got those lines of business. We're not just going to write for the sake of top line. We will write profitable business. Unknown Executive: Give it to Nasib and then Fahad. Nasib Ahmed: Nasib Ahmed From UBS. So firstly, on capital management, I think pro forma, you're at 187% plus on the solvency. You're above the holding company cash of GBP 1 billion. And Charlotte, you were saying you're generating solvency above the dividend and the share buyback. And similarly on the cash remittances, if I roll that forward, you're generating more cash than you need. What is the binding constraint on distributable cash? Is it leverage where you're kind of around 30%? Secondly, on bulk annuities, it seems like the second half last year was very competitive and probably getting more competitive with the transactions that are probably going to close this year. Why are you still in this market given your focus on capital light? And then thirdly, on PYD first half versus second half, it seems like you've done some reserve strengthening in the second half, both in Canada and U.K. If you can talk a little bit about that. Amanda Blanc: Okay. I'll let Charlotte do one. I'll do two and she can do three. Charlotte Jones: Yes. So look, I think -- just trying to think how best to answer your question. I mean, look, we are talking around -- we're at 180%. Now I'm struggling with your number, 187%, what are you... Nasib Ahmed: With Direct Line coming through 7 points. Charlotte Jones: I see. Okay. So the way I think you need to think about it is, we gave guidance for '27 of 20 points. I am going to get to your question, but let me just set the scene how I see it. So for 2027, I'm giving guidance of 20 points. And that comes from the sort of 12 points that we've had in the past, which is kind of like the 1 point a month of regular underlying OCG plus about 3 points coming from Direct Line. So we had about 1.5 points. This is just the regular performance of Direct Line. We had about 1.5 points in the latter part of the second half of the year. So if I take the 12 points plus the 3 points that's coming from Direct Line, then I think of the business improvements, I'm getting to an underlying of about 17 points. And management actions on a recurring basis will be about 3 points. That gets me to the 20 points. So that's kind of '27. That's looking beyond when the Direct Line synergy benefits come through. So at that point, dividends will probably be about 14 points and buybacks is about 4 points. So 20 versus 18 kind of gives me the couple of points of headroom. '26 is a complicated year because you've kind of got a higher SCR going into the year. I would definitely expect that the underlying generation will continue to improve, but we will be focusing hugely on getting the 7 points of synergies coming out of Direct Line. And then kind of that will then drive the SCR down. But obviously, all the time, there's new business growth, which is driving the SCR up. So each year, the same number of points is leading to more pound notes in terms of capital generation. When I think of just the near term, we've got dividends and buybacks to come out. So my 180% will go down. I've also got a bit of solvency, a bit of a few debt instruments or previously grandfathered instruments that stopping. So I've got some drags on capital coming from that. So I'm not sure I would give the pro forma, and I really don't want to give guidance for '26 because it's quite a complicated year. But what the 20 points looking through that to '27 is, I think, important for modeling. And it is a step-up from '25 when you think of -- obviously, we had extremely high levels of management actions, but that aside, it is a step-up on that. Amanda Blanc: On bulks, so first of all, I think your question was why do we do it? Well, we're actually quite good at it. So we've been doing it for a very long time. We are delivering results that are sort of mid-teens IRRs. So I think that's a pretty good return. It is a significant contributor to the cash and the dividend payment of the group. And what we've always said is that the role of bulks is to sort of stay like this, whilst the capital-light businesses go like this. But we've never said that bulks don't play an important role. So we've got -- we're confident in the business. We've written GBP 4.6 billion of deals -- business across 86 deals. Yes, it's competitive, but our IRRs are attractive. We've got a really strong proposition called Clarity, which is the smaller deals, which we've sort of launched over the last couple of years. We've got a very experienced team. And yes, there are new competitors in the market. But what you have to do when that happens is you have to sit back, you have to make sure that you are disciplined and you allow them to do what they will do. And it's not easy in this market from a regulatory perspective, making sure that you are disciplined to do this well. So we will watch how that plays out. But we would still say that our GBP 15 billion to GBP 20 billion sort of guidance for 2025 to 2027 is there. The other thing I would say is that on individual annuities, which is part of this business, the sales are up 19%. And in our guided retirement proposition, which has got how do people draw down, how do they retire, that individual annuities plays a really important role as does equity release. So I think you have to look at the combination effect of bulks of individual annuities and equity release. And I think that, yes, it will be competitive. And we will maintain discipline. I've said that about every line of business. And I think that's going to be the way that we will play this. We've got a scale position today, and we will make sure that we manage this business for profit. And that's mine and Charlotte's role, and the team are all completely aligned with that. On Canada? Charlotte Jones: So PYD, first half, second half reserving, I mean, we definitely had a positive impact on core from PYD. That's in the disclosures. And it was kind of actually across all the markets. I'm not going to go into the detail of reserving, but we had some larger losses, as I talked about before. We will reserve adequately for those. As we've looked through, again, best estimate reserving across the place, but there are -- there have been some areas that we've strengthened reserves here and there, but nothing major to call out. Unknown Executive: I'm aware others are reporting this morning. So we'll take one last question from William Hawkins at the back, and then we'll take the other questions offline afterwards. William Hawkins: William from KBW. Hopefully, I'll be quick for the others. First of all, thank you for providing more financial information in Excel format. I know it's a really small point, but it is really helpful. Two questions. It feels like ancient history, but can you just go back to the Life Insurance Stress Test and just tell us, did you learn anything that you thought was commercially helpful for your business or your understanding of the market? And then secondly, a lot of talk today about the 94% combined ratio for 2026. What's your feeling about the long-term sustainability of underwriting margins? Is this a ratio that can keep improving because of the great stuff of AI and how you can keep growing the business because you've got amazing diversification? Or is this still a cyclical business? And so at some point, combined ratios have to be poorer. I'm not clear about sort of the long-term view on that. Charlotte Jones: Should I take Life Stress Test? So look, I think the Life Stress Test was, as you say, somewhat ancient history at this stage, but it was back in December -- or November, December when it was reported. I think it did provided some helpful reassurance that the sector is well capitalized and can deal with reasonably severe stresses. And -- but it was done entity level, so it wasn't kind of group level. But nonetheless, the individual and the collective disclosure and the confirmation from the PRA that the framework is working well and they see the sector is resilient. I think was a net positive and partly because -- more specific than that, partly because we do a lot of stress and scenario tests anyway, we work through that. And for us, it is important how the group behaves overall. So neutral to helpful, I suppose. Amanda Blanc: And on the 94% COR, so I think we have to congratulate the U.K. team for getting to 93.9% in a very sort of competitive and dynamic environment. You asked, is insurance going to be still cyclical? My bet on this having done 35 years is, I think it probably is going to continue to be cyclical. I think the winners that come out of that cyclicality, if that's the right word, are those that are constantly looking at the cost and looking at the innovation within the business, making sure that you have pricing discipline that you're able to sort of flex according to the market. The investment in AI and machine learning that we know that, that makes a massive difference to our ability to be able to price in a sophisticated way. But in a competitive environment, you're always going to be giving some of that back because your competitors, it's a bit like an arms race. You will invest in something, you will have a fraud tool or you're not getting rid of that fraudster. What you're doing is pushing that fraudster somewhere else. They'll keep trying, you have to keep going. So I would say in the U.K. market, particularly as I think the most competitive market, I would say that we will be aiming for that 94%, which we've said, I think, for the last 4, 5 years, weather aside, that's where we're aiming. Obviously, we will constantly be looking to improve all of the time, but you also have to recognize cyclicality and the competitive nature of the market. But I think we are set up to win because of our scale, because of our supply chain and because of all of the data that we have and the sophistication that we have within the business. And on that, I'm conscious that you have other places that you might need to get to. So I just want to thank you very much for your questions. Obviously, we're around. If there are any follow-up questions, apologies that we couldn't get to absolutely everybody. But -- we have the brunch next Friday with Charlotte, which I'm sure you will deeply enjoy and you'll be able to ask her all the very detailed questions on appendices and everything else. So thank you very much.
Operator: We have reconnected with our speakers. Please proceed, Mary. Mary Chen: Thank you, Betsy, and welcome to our 2025 fourth quarter and full year earnings conference call. Joining me on the call today are Donald Dunde Yu, Tuniu Corporation's Founder, Chairman and Chief Executive Officer, and Anqiang Chen, Tuniu Corporation's Financial Controller. For today's agenda, management will discuss business updates, operational highlights, and financial performance for the fourth quarter and fiscal year 2025. Before we continue, please refer to our Safe Harbor statements in the earnings press release, which apply to this call, as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains our reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, note that unless otherwise stated, all figures mentioned during this conference call are in RMB. I would now like to turn the call over to our Founder, Chairman and Chief Executive Officer, Donald Dunde Yu. Donald Dunde Yu: Thank you, Mary. Good day, everyone. Welcome to our fourth quarter and full year 2025 earnings conference call. In the fourth quarter, our business continued to maintain solid growth momentum. Net revenues increased by 20% year over year, exceeding our previous guidance, while revenues from our core packaged tour products grew at an even faster pace, rising 35% year over year. At the same time, we achieved profitability for both the quarter and the year. This also marks the third consecutive year following the pandemic in which we have delivered a full year non-GAAP profitability. We have announced a long-term shareholder return plan totaling up to $50 million to be carried out during the three-year period from March 2026 via cash dividends and share repurchases. This plan reflects both our commitment to provide shareholders with sustainable returns and our confidence in the long-term outlook of the travel industry. The travel market continued to grow in a healthy manner in the past year. The extension of national holidays and other favorable policies further stimulated domestic travel demand, while the increasing number of visa-free destinations makes it easier for Chinese travelers to explore more destinations overseas. In 2025, we adopted a more proactive product strategy. By differentiating our products and product lines, we targeted distinct customer segments and offered a richer, more tailored portfolio based on customer needs. Meanwhile, we leveraged our supply chain growth to enhance price competitiveness and attract more customers. During the year, we continued to pursue an open and collaborative approach, attracting high-quality partners to expand new channels and enhance service quality for our customers. Contributions from channels such as live streaming, offline stores, and corporate clients continued to increase as a share of Tuniu Corporation's transaction volume. In addition, we actively embraced new technologies, leveraging innovation tools to further enhance our product and service and improve operational efficiency. Now I will walk you through our key achievements in more detail. First, our strong supply chain remains the foundation for delivering high-quality and price-competitive products. In 2025, we further enhanced our direct and centralized procurement strategy in order to lower purchasing costs. Moreover, based on customer needs and pain points, we consolidated flight resources and introduced several connecting flights for select long-haul travel products to niche destinations. This approach further expanded our departure city coverage, making it more convenient for travelers from lower-tier cities to travel abroad. It also enabled us to take advantage of airline discounts available in those hubs, allowing us to offer even more competitive pricing to our customers, and further boosted demand for related destinations. Many hub cities such as Chengdu are popular tourist destinations themselves, allowing travelers to combine stopovers with leisure visits. As a result, these products gained strong traction upon launch. For example, our Caucasus series using connecting flights recorded over 500% year-over-year growth in transaction volume in 2025. We will continue to expand these offerings by adding more departure points and destinations. In terms of products, we continue to adopt a differentiated strategy to better serve distinct customer segments. As the core customers of our New Tour products, experienced travelers and repeat customers tend to prioritize travel experience and typically have greater flexibility in both time and budget. In 2025, New Tour introduced a wider range of niche destination products, including the organizer tours to the Caucasus region in April and to South America in October. At the same time, we further enhanced the travel experience of New Tour products by implementing a zero-shopping policy throughout the trip and by including curated experiences such as Michelin-star dining and helicopter tours. In 2024, we launched our New Select series, offering a wider range of cost-effective products and further expanding Tuniu Corporation's price tiers. In 2025, we expanded our New Select offerings to cover a broader array of international destinations. With more competitive pricing, the New Select products have attracted a wider customer base, enabling travelers to either reduce their travel budgets or explore additional destinations within the same budget, an option that strongly appeals to travel fans, particularly younger ones. The New Select Singapore–Malaysia tour series launched in June recorded over 10,000 paid bookings during the summer holiday period. We also observed a continued rise in demand for self-guided tours, particularly in the domestic travel market. Last year, we expanded the supply of our Hotel Plus X products, with hotels at the core and supported by dynamic packaging technology. We broadened the coverage to all provinces in China's mainland and further penetrated lower-tier markets. During the 2025 Labor Day and National Day holidays, transaction volume for our self-drive tour products recorded triple-digit year-over-year growth. Going forward, we will continue this strategy by expanding the supply and destination coverage of our self-guided tour products. In addition, in 2025, we continued to explore and expand diversified channels. Live streaming is playing an increasingly important role for our sales. In 2025, both payment and verification volume through our live streaming channel continued to record double-digit year-over-year growth, while achieving profitability through a single channel. The live streaming channel contributed over 15% to our total transaction volume in 2025, compared to approximately 10% in 2024. On the product side, first, we expanded the range of live streaming offerings. Beyond the traditional hotel plus scenic spot packages, we added personalized service products such as travel photography as well as more high-ticket items like long-haul outbound travel products, enriching customers' choices. Second, we fully leveraged our supply chain advantages to ensure competitive pricing. For example, our New Select products are highly popular with live stream audiences due to their good value for money. In terms of format, we increased the number of our outdoor live streaming shows, including inviting live streamers to broadcast live from destination sites. In March, Tuniu Corporation partnered with multiple live streamers to conduct a 21-day on-site live streaming campaign across 10 islands in the Maldives, generating cumulative sales of over RMB100 million. On the service side, with more than a decade of experience in the travel industry, we provide professional tour guidance and comprehensive travel-related services. In addition, we have a dedicated verification team and specialized system support in place to deliver a smoother redemption experience for customers. Offline stores remain an essential part of our overall sales and service network. As of 2025, we operated more than 400 stores nationwide. We expanded our store presence in key cities, including major popular tourist destinations and transportation hubs such as Chengdu and Xi'an, building scale in local markets to enhance operational efficiency and reduce costs. In 2025, transaction volume from offline stores increased by nearly 20% year over year. We also continued to develop channels such as traffic platforms and corporate clients, tailoring our product offerings to the specific needs of each channel. On traffic platforms, sales of standalone products such as air tickets and hotel bookings grew rapidly. For corporate clients, in addition to providing business travel booking services, we leveraged our extensive experience in the leisure segment to offer customized group travel solutions as well as personal and family vacation products for employees. In 2025, transaction value from corporate clients increased by more than 20% year over year. In terms of technology, we are exploring the application of AI agents across various business scenarios. Last April, Tuniu Corporation officially launched our self-developed travel AI agent, AI Assistant Xiao Niu. The assistant integrates vertical travel application scenarios with large language models to provide customers with one-stop services, including smart search, automated price comparisons, personalized recommendations, and dynamic packaging. At the same time, we continued to integrate technological tools into our daily operations. These initiatives have improved efficiency and helped control operating costs. We are encouraged by the growing adoption of our AI tools among both customers and employees. In addition, we have adopted an open collaboration approach by gradually providing external AI agents such as OpenClaw with the same comprehensive travel booking capabilities available in our app via MCP interface, enabling them to search and place bookings directly. We will continue to embrace new technology to support high-quality growth. Over the past year, we have made steady progress while managing a range of challenges. Overall, the company continues to move forward on the sustainable development path. In the year ahead, we will remain focused on customer needs, continue refining our products and services, and expand our reach through diversified channels to support stable and sustainable growth. I will now turn the call over to Anqiang Chen, our Financial Controller, for the financial highlights. Anqiang Chen: Thank you, Donald. Hello, everyone. Now I will walk you through our fourth quarter and fiscal year 2025 financial results in greater detail. Please note that all amounts are in RMB unless otherwise stated. You can find the U.S. dollar equivalent of the numbers in our earnings release. For the fourth quarter of 2025, net revenues were RMB123.5 million, representing a year-over-year increase of 20% from the corresponding period in 2024. Revenues from packaged tours were up 35% year over year to RMB102.1 million and accounted for 83% of our total net revenues for the quarter. The increase was primarily due to the growth of organized tours and self-guided tours. Other revenues were down 21% year over year to RMB21.5 million and accounted for 17% of our total net revenues. The decrease was primarily due to the decrease of merchandise sales. Gross profit for the fourth quarter of 2025 was RMB70 million, almost in line with gross profit in the fourth quarter of 2024. Operating expenses for the fourth quarter of 2025 were million, down 16% year over year. Research and product development expenses for the fourth quarter of 2025 were RMB12.3 million, down 8% year over year. The decrease was primarily due to the decrease in research and product development personnel-related expenses. Sales and marketing expenses for the fourth quarter of 2025 were RMB44.1 million, up 3% year over year. The increase was primarily due to the increase in promotional expenses. General and administrative expenses for the fourth quarter of 2025 were RMB12.8 million, down 52% year over year. The decrease was primarily due to the impairment of property and equipment, net, recorded in the fourth quarter of 2024. Net income attributable to ordinary shareholders of Tuniu Corporation was RMB1.5 million in the fourth quarter of 2025. Non-GAAP net income attributable to ordinary shareholders of Tuniu Corporation, which excluded share-based compensation expenses and amortization of acquired intangible assets, was RMB3.5 million in the fourth quarter of 2025. As of December 31, 2025, the company had cash and cash equivalents, restricted cash, certain investments, and long-term deposits of RMB1.1 billion. Cash flow generated from operations for the fourth quarter of 2025 was RMB68.8 million. Capital expenditures for the fourth quarter of 2025 were RMB0.5 million. Now, moving to full year 2025 results. In 2025, net revenues were RMB578 million, representing a 13% year-over-year increase. Revenues from packaged tours were up 21% year over year to RMB493.5 million and accounted for 85% of our total net revenues in 2025. The increase was primarily due to the growth of organized tours and self-guided tours. Other revenues were down 20% year over year to RMB84.5 million and accounted for 15% of our total net revenues in 2025. The decrease was primarily due to the decrease in the commission fees received from other travel-related products. Gross profit was RMB335 million in 2025, down 6% year over year. Operating expenses were RMB323.7 million in 2025, up 10% year over year. Research and product development expenses were million in 2025, up 12% year over year. The increase was primarily due to the increase in research and product development personnel-related expenses. Sales and marketing expenses were RMB193.9 million in 2025, up 8% year over year. The increase was primarily due to the increase in promotional expenses. General and administrative expenses were RMB71.8 million in 2025, down 18% year over year. The decrease was primarily due to the decrease in general and administrative personnel-related expenses and impairment of property and equipment, net. Net income attributable to ordinary shareholders of Tuniu Corporation was RMB31.1 million in 2025. Non-GAAP net income attributable to ordinary shareholders of Tuniu Corporation, which excluded share-based compensation expenses, amortization of acquired intangible assets, and impairment of property and equipment, net, was RMB42.6 million in 2025. Capital expenditures were RMB4.4 million in 2025. For 2026, the company expects to generate RMB100 million to RMB131.6 million of net revenues, which represents a 7% to 12% increase year over year. Please note that this forecast reflects our current and preliminary views on the industry and our operations, which are subject to change. Thank you for listening. We are now ready for your questions. Operator: We will now open for questions. There are no questions at this time. I will now turn the call over to Tuniu Corporation's Director of Investor Relations, Mary Chen. Mary Chen: Once again, thank you for joining us today. Please do not hesitate to contact us if you have any further questions. Thank you for your continued support, and we look forward to speaking with you in the coming months. Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.
Luc Van Ravenstein: All right. Good morning, everyone, and welcome to the Elementis 2025 Results Presentation, and thank you for joining us. Great to see you. In terms of agenda, I'll begin with our highlights for the year and Kath, our new CFO, will then run you through our financial performance. Then I'll take you through our strategic progress over the past year and finally, to our outlook for 2026. And we'll then open for questions. It has been quite the year. Looking back 10 months into the job, I'm really proud of everything we've achieved together. We delivered strong profit growth and margin expansion despite soft demand environment, and that's a clear proof of the quality and resilience of our business. From a strategic perspective, the sale of the Talc business and launching our Elevate Elementis strategy were more than milestones. They set the foundation for this company can achieve when we focus and move forward as one team. And we're making solid progress across all of our strategic priorities, such as innovation sales up to a record of 16.4% and 0 lost time accidents. So lots of positive momentum. You might remember a version of this slide from our last half year result presentations. Our portfolio has fundamentally transformed over the past years. We've reshaped Elementis into a pure-play specialty chemicals business, focused on our 2 segments, Personal Care and Coatings. Selling Talc was a major step in making this happen, and it was my first priority when I started as CEO. And with Chromium sold in 2023, we exited these commoditized capital-intensive businesses, and it was absolutely the right decision. It allows us to focus on our core strengths and capabilities. As you will have seen this morning, I'm pleased to share that we've agreed to sell our pharmaceutical business to ABF, and this sale is in line with our strategy as well, further sharpens our focus. More on this on the next slide. In November, we added Alchemy to the portfolio, a fantastic bolt-on right in our personal care sweet spot. It's a fast-growing, high-margin business that strengthens our position in skin care and cosmetics. So this is the new Elementis. We're a company with a unique position built on 3 real differentiators: hectorite, rheology and formulation solutions. And we're really pleased with the shape of the portfolio, and we're well positioned for growth. So we announced today that we reached an agreement to sell our noncore pharmaceutical manufacturing business to ABF. Last year, the business made $35 million in revenue. Our pharmaceutical business was originally acquired as a part of SummitReheis in 2017. It manufactures antacids and pharmaceutical excipients from our Ludwigshafen site in Germany. And while the business has performed well, it's clear that it no longer fits with our strategic focus. And because of that, the sale we announced today is the best outcome for both the Pharma business and for Elementis. It's a straightforward, clean transaction. It will reduce our capital intensity and on a pro forma basis, will deliver an uplift to 2025 group operating margins. We're working towards the completion in Q2. With the Talc business sold, we accelerated the delivery of all of our 2026 financial targets by 1 full year, which is a fantastic result. And with Elevate Elementis, we shared our new targets, mid-single-digit revenue growth, operating margins of more than 23% and 3-year operating cash conversion to be above 90%, ROCE, excluding goodwill, of more than 30%. And our proven track record gives us the confidence that we can meet these targets and be among the top of our peer group. Moving to sustainability. Next slide. Starting with safety, which is fundamental to how we operate. Last year, we achieved our first 0 lost time accidents since 2019. That's a big milestone. On the environment, we continue to make good progress. The divestments of Talc and Chromium have significantly reduced our carbon footprint, which is now nearly 80% lower than 2019. And we continue to transition to a more sustainable and responsible business. For example, at our hectorite mine, we moved to almost entirely renewable energy from a 0% base last year. Finally, on people, we've made a lot of changes in the organization with Fit for the Future, which was a big reorganization for us. And the engagement scores actually improved with voluntary attrition down by 40%. We're well below industry average now. But for me, even more importantly, I see it when I visit our sites, how proud the team is when I visit the Newberry, which is where we have our hectorite site or when I visit the new Porto team. And with that, I'm delighted to hand you over to Kath, our new CFO, to cover our financial performance. Katharina Helen Kearney-Croft: Thank you, Luca, and good morning, everybody. Before I begin, I'd just like to share some initial reflections of my first few months in Elementis. I've been here for 4 months now and 2 months as the CFO, and I've been genuinely impressed and frankly, relieved by what I've seen. I've had a really warm welcome with lots of people taking time out of their busy schedules to help me on-board. And it's clear, everyone is working with real commitment to unlock the full potential of Elementis. I've had the opportunity to visit locations in the U.K., Europe and U.S.A., and I really enjoyed learning about the business. There's nothing quite like the manufacturing environment, seeing products being made and looking to see what we're talking about in the meetings. And the real highlights for me have been hands-on in the Alchemy lab and visiting the hectorite mine. What has really stood out is the passion, dedication, commitment and pride of our people. They care deeply about the company and rightly so. And I'm confident that we can continue to build on these strong foundations, demonstrating that we have opportunities to grow revenue and profit and continue to generate strong cash and returns. When I look at the macro backdrop for 2025, we could be standing here looking at a very different set of results, and I'm definitely glad that I don't have to present that. Despite the challenging market, we have made good progress in 2025, and the team have done a fantastic job. And it's in this context, I'd like to cover the results for the prior year. Following the sale of Talc, the 2024 P&L and cash flow figures have been restated for continuing operations and used for comparison purposes. I wanted to show a brief overview of the metrics for 2025. Most of these will cover in the following slides, so we won't go into detail here other than highlighting. Despite a small decline in group revenues, we delivered strong growth in adjusted operating profit and a 150 basis point improvement in margins. In combination with lower net finance costs and a lower number of shares following the buyback, adjusted earnings per share was up 14.2% to $0.137, an outstanding performance considering the challenging operating environment that Luc referenced earlier. And as we turn to look at group revenue, you'll see that despite the backdrop, we delivered a resilient performance with overall revenue down 1% on a reported basis and 1.9% on a constant currency basis to $597.5 million. Bridging from 2024, we had a favorable FX tailwind of approximately $5.2 million. Volumes were down $5.6 million due to the weak demand environment in Coatings, resulting in a reduction of $14.1 million, and this was partially offset by volume growth in Personal Care of $8.5 million. On pricing, we delivered $7.8 million across both businesses, a testament to the specialty nature of our portfolio. Of note, a combination of proactive pricing, procurement agility and supply chain optimization actions helped us to fully offset the direct impact of tariffs in the year. And we believe the latest news on this topic, at least of Saturday, 21st of February, will continue to leave us in a neutral position. Turning lastly to mix. This was down $13.7 million, primarily due to a combination of one-off sales in Coatings of $3.4 million in 2024, not repeated in 2025, along with the continued softness in industrial coatings and decorative end markets. And AP actives saw strong growth in lower-priced but margin-accretive products as well as a consumer-driven shift from aerosol to roll-on formats in LatAm. As we turn our eyes to adjusted operating profit, we delivered strong growth, which increased 4.6% to $126.7 million. Within this, we benefited from favorable FX of $1.9 million. Lower volumes had an adverse impact of $1.9 million and the net price impact after offsetting inflation was $10.5 million. These headwinds were mitigated by the ongoing delivery of our self-help initiatives, which led to $18 million of total cost savings in the year and more to come on this shortly. As noted earlier, our strong profit performance helped drive higher margins, increasing 150 basis points to 21.2%, so let's take a look deeper into the reporting segments. Starting with Personal Care. Revenue was up 2.4% to $224.5 million with strong growth in skin care and cosmetics, offsetting a slight decline in AP actives. Looking at the regional performance, we saw higher revenues in EMEA and Americas with Asia flat compared to last year. Adjusted operating profit was up strongly at $72.8 million or 16.9% and importantly, brings the absolute profitability of the Personal Care segment in line with the Coatings segment. This improved profitability was driven by improved volumes and pricing alongside cost savings. The higher profits in turn helped to drive higher margin, which is up 410 basis points to 32.4%, including the benefit of one-off volume and cost savings in H1 previously noted at the half year. And lastly, on this slide, I wanted to highlight that our results in 2025 included the pro rata contribution from the recent acquisition of Alchemy, a small quantum for the year given the late acquisition timing, but meaningful strategically. And now moving on to the Coatings segment. We delivered a resilient performance with revenue of $373 million compared to $386.4 million last year, with a decline in Coatings partially offset by strong performance from our Energy business. The year-on-year decline was impacted by the benefit of high-margin one-off sales in Q4 2024. The drop-through from the lower revenue led to a lower adjusted operating profit of $70.4 million. However, the combination of higher pricing and our self-help actions supported the operating margins, finishing the year at 18.9% compared to 20.3% in the year before. You will recall at H1, we highlighted some operational challenges at St. Louis that were holding back our Coatings performance. Whilst there's still progress to be made, I wanted to share positive news that the debottlenecking program at St. Louis is progressing well and leading to improved performance, which Luc will cover more fully later. Last year, we successfully completed the balance of our 2-year $30 million cost savings program by delivering $12 million via our Fit for the Future restructuring and supply chain initiatives. In addition to this, we announced in July a further $10 million in savings that we were aiming to deliver over the remainder of 2025 and 2026. These are net of planned additional R&D spend, which will increase our total spend from 2% of revenue to 3% over the next 2 years. As we announced this morning, we have delivered $6 million of savings already, and we will deliver the balance of $4 million by the end of 2026. Our cost saving programs have reduced complexity and improved operational efficiency. We will continue to proactively identify opportunities to streamline our cost base and capture further efficiencies as we deliver on our growth agenda and become a simpler and leaner company. Now taking a look at free cash flow. A key feature of this business is its strong cash flow generation. And I'm pleased to report that we generated good free cash flow of $41 million in 2025 compared to $51 million in the prior year. Looking at the key components, higher adjusted EBITDA was more than offset by the working capital outflow in the year, driven by higher receivables due to lower debt factoring and strategic inventory build. We also had higher CapEx as we increased our investment to support adjacent market growth and capital investment in support of the St. Louis improvement program. As a result of these movements, our adjusted operating cash flow was $104.7 million compared to $123.2 million in the prior year. As we move down the cash flow statement, it's worth calling out 2 items. Firstly, our cash taxes were lower by $4.4 million, primarily due to an IRS refund received relating to a 2024 claim to utilize net operating losses for prior periods. And also adjusting items were $6.7 million lower as the Fit for the Future program finished during the year. Our balance sheet remains robust. And whilst leverage ticked up to 1.3x, this was after acquiring Alchemy and returning cash to shareholders. Looking at the key movements from left to right, we started the year with a net debt balance of $157.2 million, adding back the free cash flow of $41 million as well as the proceeds from the Talc sale of $52.5 million, we had an increase in cash available for distribution of $93.5 million. Of this amount, we returned $79.1 million through our first buyback program and the 2024 final dividend and the 2025 interim dividend. The share buyback program led to the purchase and cancellation of approximately 4% of our issued share capital. In October, we completed the disposal of the disused Eaglescliffe site for a negative cash consideration of $11.1 million. I would like to specifically note the strategic divestment of both Talc and the Eaglescliffe site have enabled us to significantly reduce our environmental liabilities and provisions. In November, we completed the acquisition of Alchemy for a total upfront consideration of $20.1 million. Taking off the FX of $11.4 million, we ended the year with a net debt balance of $185.4 million and a net debt-to-EBITDA ratio of 1.3x. Our aim is to maximize return on invested capital while maintaining a strong balance sheet and strategic optionality. In relation to investments, our CapEx program will be focusing on investing in growth and productivity. We will also invest in R&D and have plans to increase total spend here from 2% to 3% of revenue. To complement these organic growth investments and as we demonstrated with the acquisition of Alchemy, we will selectively pursue bolt-on acquisitions whilst maintaining a strong balance sheet. On dividends, our policy is for a payout ratio of around 30% of adjusted earnings. And as we announced this morning, the Board has recommended a final dividend of $0.03, taking the full year dividend for 2025 to $0.043, up 7.5% from last year and represents a 31% payout ratio. In considering future additional returns, we will assess several factors, including prevailing market conditions, our existing progressive dividend policy, the investment requirements of the business and our desire to maintain a leverage around 1x net debt to EBITDA over time, which we anticipate we will achieve on an organic basis in 2026. In light of the announcement of the pharmaceutical manufacturing business disposal, our expectation is to distribute the net proceeds to shareholders following completion. and we will provide a further update upon closing. And lastly, for your reference, we've included some technical guidance for 2026 on Slide 19. So with that, I'll now hand over to Luc, who will take you through our strategic progress over the last 12 months and the outlook for the year. Thank you. Luc Van Ravenstein: Thank you, Kath. For those less familiar with Elevate Elementis, this is our new strategy. We presented that in July. The plan is simple. We have 3 strategic priorities. First, top line growth, and this is about focusing on what we do best in the areas that make Elementis unique without the distractions of Talc and Chromium. Our objective is to grow revenue by mid-single digit over the medium term. And in the next slides, I'll share a view of our growth opportunities and our progress in 2025. The second priority is about service delivery. Our ambition is to be best-in-class and the first choice for our customers. We've made some great progress, and I will show that later. Third, simplification and agility. We're building a simpler and leaner Elementis that empowers colleagues, makes us more agile and allows us to execute at pace. Delivering against these 3 priorities is what will drive value creation and will help us to deliver the new medium-term targets. So looking at our first priority. For us to grow and unlock our full potential, it is important to focus on what makes Elementis unique and what will allow us to win. We call these our winning differentiators, and let me briefly touch upon them. Hectorite, this is a very special asset. It's a white mineral that comes from our mine with long-term reserves. It has really unique properties because of its chemical composition and its platelet structure. We don't just sell hectorite. We modify it, add value to it, for example, by making preformulated gels for cosmetics, and our customers love its efficiency. You only need a tiny amount to get a big effect. It's natural, and it delivers the kind of premium skin feel that consumers are looking for. Rheology, this is the science of flow. It's what's needed to stabilize ingredients in a paint can. It's also what makes sunscreen spread evenly on a skin. And here, Elementis is the global leader. Formulation Solutions, this is our expertise built up over the years of our customers' formulations. It's how our people work together with our customers to improve the performance of a paint or a skin care product day in, day out. And our colleagues in the labs have worked at AkzoNobel or Estee Lauder. They talk our customers' language, and that's a huge benefit. Now we operate in big attractive markets, as you can see here. Our focus, though, is to target these niche areas where our winning differentiators set us apart. And we work together with our customers to improve their products. For example, in skin care, we're replacing synthetic additives by hectorite, giving a more premium texture. And in industrial coatings, we help the transition from solvent-borne to high-performance water-based formulas. I'm not going to go into the detail of all of these here, but the point is we are using our expertise and our unique portfolio to help our customers make better and more sustainable products. So lots to go for in our current markets. And outside of our existing markets, there is a large new adjacent space for us that we're tapping into as well. We're using the same model, and we have entered areas that we're going to scale. One example is hectorite for geothermal energy. And here, because the wells are extremely deep, you're facing ultra-high temperatures at which hectorite is stable. We're using our formulation knowledge and existing customer relationships to grow with this market. We had our first sales in 2025 and have a number of field trials planned for this year in the U.S. and Germany. So lots of exciting opportunities and potential for growth. So we're focusing on the right areas, building on our winning differentiators, but what levers are we pulling to now bring in this growth? First, we're investing more in R&D, 50% more. For example, in application knowledge to support customers, and we're building a hectorite center of excellence. We're already seeing the benefits. Last year, innovation sales reached a record of 16.4%. That has doubled in the last 5 years. We launched 19 new products, of which we sent more than 1,500 samples to our customers. Some of the innovation highlights from last year on the right-hand box. We launched DEOLUXE, our patent-pending non-metal-based active, and this is looking quite promising. Several large customers are testing, and we expect the first sales in the second half of this year. We also launched a number of new hectorite products, BENTONE ULTIMATE, also patent pending. It's a highly active hectorite technology that delivers exceptional skin feel, mostly for lipstick and mascara. And in coatings, we launched THIXATROL 5050W for metallic pigment orientation and waterborne automotive coatings. So lots of excitement around innovation. And next, we're covering more customers directly, also local and regional accounts. We want to understand firsthand about their needs. And we've made good progress last year. We now service about 67% of our customers directly. We're also building a local-for-local footprint, and this reduces cost and increases reliability. More and more customers are demanding local supply, particularly in China. So this is how we're going to look at growing organically. To complement our organic growth, we're looking at bolt-on acquisitions, but in a very disciplined way and only when it fits our strategy, which does not depend on M&A. But the acquisition of Alchemy is a great example. In November last year, we announced the acquisition of Alchemy right in our Personal Care sweet spot. And Alchemy develops innovative rheology modifiers for personal care. They are fully natural and can fully replace synthetic raw materials in cosmetics. And the business has done really well in recent years, delivering double-digit revenue growth and operating margins in line with our Personal Care business. And we're bringing on a team with incredible expertise in this market. We're already working together on new products, including with hectorite, quite a nice synergy. The point is, with Elementis behind it, Alchemy can scale faster, leveraging our global sales network as well as our application capabilities. It's a great example of how bolt-ons can strengthen our core and accelerate growth. To make the most of this growth agenda, we need to be the best supplier to our customers. An important measure is On-Time-In-Full. And in July, we shared our target to deliver a 20% uplift over the medium term. And I'm pleased to share that we're now already halfway, and we'll stay focused on this. Second, we talked about St. Louis in July, one of our largest sites, and we have been dealing with some backlogs there. We had a big opportunity, 30% by unlocking capacity. I've made some leadership changes there, brought some experienced people back, and we're seeing the results, a 20% improvement since the first half of 2025. That puts us 2/3 the way there. At the end of the day, all of this comes down to customer focus and mindset, whether you work in sales, R&D or in the plant. And with some of the changes we've made, we have a new top-notch customer service center in Porto, we've seen a 50% reduction in customer response times. We've also received external recognition that you can see on the screen, which is a great acknowledgment for the team. We're building a simpler, leaner Elementis. And to us, this means driving agility, faster execution and responsiveness, so we can scale and deliver more value to our customers. And we've made good progress. We've streamlined our organization and leadership team. We've eliminated the stranded costs related to Talc. And some of these things were low-hanging fruit like reducing office spaces that we didn't really need. And some things took more coordinated effort like qualifying 50 new suppliers that led to quite significant procurement savings. Looking ahead of 2026, we're not done here. There'll be more procurement savings to come. We're making our supply chain more efficient, and we'll continue to move towards a local-for-local model. This is a continuous journey. All right. On to our last slide, outlook. While we remain mindful of the recent geopolitical uncertainty, we're confident in another year of progress. We're seeing great momentum and excitement building in the business. And I'm pleased that we've made a solid start to 2026 and our priorities for the year are clear: deliver organic growth through R&D and customer intimacy, achieve best-in-class customer service levels; and lastly, drive operational efficiency and continue to deliver cost savings. And the team and I are fully focused on delivering this plan. Thank you very much. And with that, let's move to Q&A, please. Everybody could please say their name, speak to the microphone, so that folks on the call know who you are. Thank you. Vanessa Jeffriess: Vanessa Jeffriess from Jefferies. Just wondering if you could speak first about how the first quarter has started given weather in the U.S. and improving beauty markets and how you think about seasonality for the year given coatings is normally stronger in the first half, but we're probably not going to see much improvement soon. Luc Van Ravenstein: Hi Vanessa Jeffriess from Jefferies, thank you for that question. We had a solid start of the year which is encouraging -- Q4 was relatively soft. So solid start in coatings as well, which particularly was softer in Q4. And the seasonality is -- we expect it to be quite typical, 52-48 balance. So yes, encouraging start. Vanessa Jeffriess: And then just on your new growth areas, great that you were able to execute on Alchemy. But how do you think about the mix between achieving that growth from bolt-on M&A and not diluting margins, given I can't imagine there's much out there making the margins you are. Luc Van Ravenstein: Yes. Absolutely. Look, this is an organic-led strategy. So we're really focusing on organic growth, which there are great opportunities in our existing segments, as we say, Personal Care and Coatings as well as these new areas that we talked about. It really is organic-led. Look, we work with many, many companies out there, such as Alchemy. We knew that for a long time, this company -- those could be nice new arrows to our bow. But again, it's really organic-led. You're right, our margins are in a nice spot. We're driving them up further. And it's difficult to find companies that are actually accretive to our margins. Alchemy was one of those, by the way. So we're very happy to use them to grow faster. Vanessa Jeffriess: And then just on pharma. I know that you didn't give profit, but based on past commentary, I would guess that, that's making probably 10% margins. So it seems like you sold at a multiple similar to your own group multiple, which is interesting. I think since your undervaluation, but what else is left in the group do you think that is making similar margins and could be sold? Luc Van Ravenstein: I think you're absolutely spot on in terms of your analysis around the margins and what we did there with pharma. So for us, this was a really good step from a margin and a CapEx perspective, but also from a strategic perspective, most importantly. Pharma was really an activity that it's a really great piece of business, but it doesn't fit with us. Looking at the rest of the portfolio now, we're really pleased with the portfolio we have. We don't have any other business in this kind of margin area. So yes, right now, it's about growth really. That's what we're focused on. We're pleased with the portfolio. Kevin Fogarty: Kevin Fogarty from Deutsche Numis. If I could kick off firstly on innovation. So you called out some several examples of progress, I guess, in new rheology markets. It feels like you're making sort of more progress there perhaps rather than the current ones. It's obviously sort of quite a different sale in terms of new markets rather than the current. I just wondered if you could sort of talk a little bit about that process. And sort of I guess, culturally, how is that different in terms of what you're trying to do there relative to what Elementis has done in the past? You're at 16% in terms of innovation sales. Just thoughts on the 20% target you've got out there? And just secondly, if we can think about Personal Care, just if you could frame the benefits from cost savings perhaps during the year. Any thoughts on Personal Care Asia and dynamics there during the year would be quite useful and just sort of confidence on retaining the margin, which is clearly at a significantly higher level than in the past? Luc Van Ravenstein: Yes. Thank you, Kevin, for those questions. Perhaps I can take the first couple and then Kath, you can help me on the third, if you don't mind. Thank you. So in terms of the new markets, so indeed, look, we have a large market in Personal Care and Coatings where we have great opportunities for growth. We talked in July, for example, about replacing some of the synthetic additives in sun care. That's our existing markets, huge opportunities. And if I look at our growth going forward, probably the largest piece of growth is actually going to come from those existing markets. We have exciting opportunities in new markets for sure as well, where, frankly, we've started to look into only relatively recently. Some of these opportunities, we will actually be able to address and bring in with our current sales force, application knowledge, et cetera. I gave a little example of geothermal. So geothermal drilling is actually -- is happening a lot with our existing customer base already, the Schlumberger of this world. So we have the access to customers. We have the knowledge of deepwater drilling through our oil and gas business. So that's an opportunity we'll bring in with our existing setup. Other opportunities, for example, we've identified a new opportunity for hectorite to remove PFAS out of wastewater. That's really interesting, but we're not going to build a whole sales force and application knowledge to -- for wastewater removal. So there, we might work with a partner, right? So I think for these new opportunities, very large, some of them will bring in with our existing knowledge. Some we will build, some knowledge we'll build, for example, in the construction market. And some we'll just have to partner up with other people. So that's the way I look at that, but a lot of innovation coming from our existing markets. Your second question was around innovation and about our path towards the 20%. Absolutely key indeed, because if you think about everything we do in innovation, innovation sales typically generate 5% to 10% higher margins than the rest of our sales. So it's really important. It also helps us to -- in our relationship with our customers and our relevance to our customers. So we've made great steps last year, 200 basis points up to 16.4%. We foresee to further progress that with all the activities that are ongoing towards indeed our medium-term target of 20%, but we're making some good progress and the investment in R&D, which sometimes is also simply about bringing that application knowledge in is going to help. Your third question was around Personal Care, particularly Personal Care Asia. For us, Personal Care in Asia is still a relatively smaller business compared to the European and the U.S. Personal Care business. We had some movements in Personal Care in the first half last year, Korea, color cosmetic market is a big one for us, and there was some order timing for which H1 was relatively softer. We had a better second half of the year. So we continue to see good momentum. What I would say is in the fourth quarter, we did see in antiperspirant some softness, particularly from some format changes in Latin America, as I think Kath referred to. So aerosols moving to roll-ons. That's for the antiperspirant business. But in general, we see good momentum. We're very happy with the margins. As said, Alchemy is accretive there or it is actually in line with our Personal Care markets margins. I don't know, Kath, if you want to add anything on the margin point that Kevin was asking about. Katharina Helen Kearney-Croft: So I think last year, we made good progress with the Fit for the Future finalization and the start of the new cost savings. Personal Care specifically also benefited from the closure of the Middletown site. So that is directly related to Personal Care. But from the other perspective, a lot of it ends up being in allocations because we've got joint plants and back office, which ends up being allocated. Angelina Glazova: Angelina Glazova from JPMorgan. I have 2 questions. First, I wanted to ask about the midterm targets on margins for 23%. You have already talked us through some drivers for growth that you see in the midterm. How should we think about Elementis bridging the gap in operating margins from current level to target of 23% plus? And do you see any particular drivers as more important relative to others? And then there is also clearly a difference in margin profiles between the 2 divisions. So how do you see that developing? And is there anything maybe for the Coatings business where you see those actions that could help lift the margins? And then secondly, looking at 2026, are there any particular items in terms of cash flow generation, net debt development that we should be mindful of? Luc Van Ravenstein: I'll kick-off with the first question and then if you don't mind, to complement and go on to the second question. So in terms of the margin development, look, we made a nice step in the right direction. Actually, selling the pharma business is going to help us, like Vanessa just said, a little bit more. Look, this is really about growth. And as we just discussed, we're growing in areas that are actually margin accretive. Hectorite, we're actually looking to selling more hectorite and growing that double digit. So that's going to help the mix. That's going to help our margin development. Obviously, we're taking some more cost out this year, but there is a limit to that at a certain point. We're really -- the big reorganizations are behind us. We have Fit for the Future behind us. So this is about high-margin growth. Obviously, we continue to look at how we can do things more efficiently. We'll always think about how we can do things at a lower cost and having Kath come in with a fresh pair of eyes a couple of months ago has also really helped in that respect. But it is about growth and about high-margin growth, and that's the way we're going to really get to that 23% plus level. Kath, anything to add? Or you want to go to the second part? Katharina Helen Kearney-Croft: Well, I think it's also related to the profiles in Personal Care. It has got higher margins and higher growth, and therefore, that would naturally generate some accretive margin. Luc Van Ravenstein: Yes, good point. Katharina Helen Kearney-Croft: With respect to cash flow and net debt, so Page 19 has some technical guidance. We're flagging CapEx will be between 4% to 5% in 2026. We will also expect a small working capital outflow in the year. I referenced in my script that we still had some factoring at the end of 2025, we will not be factoring in 2026. And so that will naturally unwind. And then with the sales increase that we're expecting, we will need to fund that. I think from a sort of just big picture, we are expecting to be circa 1x leverage on an organic basis by the end of 2026. And when I say organic, I'm ignoring the sale of the pharma business because as we said, we expect to give the net proceeds back. Unknown Analyst: This is Madhumanti Sanyal from CaixaBank. So I want to know if there is -- if you think there is a strong synergy between the Coatings and the Personal Care business, like if Coatings continues to show lower-than-expected performance, would you consider a sale of the Coatings business without affecting the performance of the Personal Care business? Luc Van Ravenstein: Thank you for the question. Look, Coatings and Personal Care are different markets, right? So our customers in Coatings are Sherwin-Williams and PPG and AkzoNobel and in Personal Care, you talk to L'Oreal and Estee Lauder. So the markets are different. But in terms of how we operate at Elementis, there's a lot of synergies. So most of our manufacturing plants are actually multipurpose and multi-market plants. So they service both markets, so both Coatings and Personal Care. Our plant in Livingston in Scotland and the U.K. is about half-half Personal Care, Coatings. So in that respect, there's a lot of synergies. Also, if you look at the products that we manufacture and the knowledge that we have in our laboratories, we talked about rheology, we talked about hectorite, all of that ends up in both Coatings and Personal Care. So the product knowledge, the manufacturing footprint synergy, these businesses are intertwined. So no. But I would add to that as well is that we're actually quite pleased with the performance of Coatings. If you look back at Coatings, where we were 7, 8 years ago, the margins of the Coatings business were in a bad year, 10 percentage points around that. In a good year, it was 14%, 15%. Right now, in a low demand environment, we're at 18.9%. So we're actually quite pleased with the Coatings performance, and we're excited about the opportunities ahead. Operator: I've got some questions from Sebastian Bray at Berenberg. Has there been any change in the energy business that led to the strong performance as you've highlighted, despite the oil price decline? One. Second question, what are management's thoughts on additional buyback after receiving proceeds from the sale of the pharma business? And thirdly, are there any signs of the recovery in hectorite sales in Personal Care? Did these grow in 2025? And if not, why this was the case? Luc Van Ravenstein: Shall I take 1 and 3 and you do 2? Katharina Helen Kearney-Croft: Sounds good. Luc Van Ravenstein: All right. Let's do it. So Energy business, we're actually very pleased with the performance of the Energy business. And it is a relatively small business, give or take, $40 million, but it did very, very well last year. One thing that Sebastian might remember, we closed our Charleston site in the U.S. back in 2019 or early 2020, and that was at the time a purely energy-focused business, or plant, I should say. We moved the manufacturing of those products to St. Louis. So that helped us in terms of margins. That's one thing that helped us. I would also say that by doing so, we really transformed the energy business, which if I look --when I joined Elementis 14 years ago, it was a much larger business. But now we really focus this business, one on manufacturing only from St. Louis, focus on hectorite. Why on hectorite? Because we really have a unique winning differentiator with hectorite because it works very well for deepwater drilling. So if you go very deep, you have to drill at temperatures of 250, 280 degrees Celsius and hectorite is stable at those temperatures. So we refocused the team. We have a smaller portfolio. And actually looking at last year, we've had a lot of success indeed in difficult conditions for drilling such as deepwater. We talked about the geothermal energy opportunity. So that's what we're doing here. Smaller business, relatively small team, close the plant down to do cost out and focus on the areas that make Elementis unique. And we'll continue to do that actually. The third question was around Personal Care and hectorite. Yes, we have grown. Obviously, last year, with the markets being a little bit soft, also the Personal Care growth was low single digits also in hectorite. But if I look at Personal Care, again, I'm turning the clock back 14, 15 years ago when I joined, this was a $30-or-so million business. We actually reported it at a certain point under oil and gas, you wouldn't believe that. But that was a purely hectorite business. And we understood where else we could sell hectorite in Personal Care in adjacent areas. So looking at the last 5, 10, 14 years, hectorite in Personal Care has grown really, really nicely. Last year was relatively lower growth, but still growth. But looking at the opportunities ahead in Personal Care as well, replacing synthetics, which continues to be very, very exciting opportunity, entering skin care, which is a $20 million or so business for us now, we're going to scale that, lots of exciting opportunities. Katharina Helen Kearney-Croft: So I think with respect to the question on share buybacks. So as we said this morning, following the sale of the pharma manufacturing business, upon closing, we expect to distribute those funds to shareholders. We also have the target of net debt to EBITDA of about 1x, we expect to be there by the end of 2026. So that will give you a signal of what we're expecting in this year. And then as we look forward, we'll continue to take into consideration where we are on leverage and expectations. Operator: Sorry, I've got to pretend to be Anil now. Anil Shenoy from Barclays has sent 2 questions as well. We didn't see any guidance on 2026. So are you happy with where the consensus is at for adjusted EBIT? And if so, could you help to bridge the gap between 2025 EBIT to 2026 consensus EBIT. What are you assuming in terms of growth? And what are you assuming in terms of savings? Luc Van Ravenstein: Shall I do the first part and you the second? Katharina Helen Kearney-Croft: Okay. Luc Van Ravenstein: All right. Thank you, Anil, for those questions. Look, we had a solid start of the year, like we just mentioned. So we're quite happy with that. And therefore, comfortable with the consensus. In terms of the bridge EBIT '25, '26, I mean, Kath, do you want to add on that? Katharina Helen Kearney-Croft: So as I mentioned, we expect the incremental $4 million in savings to come through. We do expect volume growth, so we'll get some natural leverage and some margin accretion continue to drop through, and that's how we're moving from 2025 to 2026. So sort of steady as she goes with the additional cost savings. Operator: And just some last questions from Chetan Udeshi from JPMorgan. Are you expecting Q1 sales to be up compared to last year? And secondly, we didn't see volume growth this year. What are your expectations for volume growth for '26? Luc Van Ravenstein: I think for Q1, as I said, we made a solid start. I think the most important is that if you look at where we -- the exit rate of Q4 last year was relatively softer. So we're happy to see good progression after that. For the full year, again, back to the previous questions from Anil, we're comfortable with where consensus is. We are looking at a typical balance between H1, H2, which I think also can help Chetan in terms of his modeling. Anything to add, Kath? Katharina Helen Kearney-Croft: [indiscernible] but I would just note the geopolitical situation has weakened. So we have an expectation, and we hope we will deliver that, but some things are out of our hands. But we will maintain our focus on our strategic targets. Luc Van Ravenstein: Yes, we're 2 months in. It's early days. Good point. Unknown Analyst: [Technical Difficulty] Luc Van Ravenstein: Not so much anymore, actually. When we own Talc, I had the Dutch gas price on my phone here. I was tracking it every half an hour, and I didn't get a lot of sleep. Luckily, we don't have that business anymore. And we are in specialty chemicals. So if you look at how we generate our margins, it's about adding value to our customers' formulations rather than trying to squeeze out a cent on our costs. So very much a different situation than where we were a year ago. Good question. Thank you. And we'll continue to monitor. I mean, I think perhaps one of the things to add, we continue to monitor the situation, the situation that Kath mentioned, obviously, that the recent occurrence in the Middle East. And if our input costs go up, we typically look to price to compensate for that input cost increase, definitely. Thank you. Good question. No more questions? Katharina Helen Kearney-Croft: Can we just get a mic to you? Vanessa Jeffriess: Sorry, just to clarify what you just said that you're happy with consensus sales and EBIT, but you've got the loss of Pharma business, which is $35 million sales and $3.5 million EBIT, right? Katharina Helen Kearney-Croft: So that's on a pre-adjustment for pharma, but I do suggest that people wait until it actually closes before adjusting numbers. Operator: I am seeing no questions on the conference line. So with that, thank you very much. Luc Van Ravenstein: Thank you, everybody. Katharina Helen Kearney-Croft: Thank you.
Antti Vuolanto: Good morning, and welcome to Herantis Pharma's Full Year 2025 Results Webcast and Business Update. My name is Antti Vuolanto, I'm the CEO. And together with me, I have here CFO, Tone Kvale. During the webcast, we will review the key highlights of the past year and provide you an update of the business and R&D. After the presentation, we have a Q&A session, and you are welcome to submit questions throughout the webcast. With that, let's get started. And first, the necessary forward-looking statements and then a short reminder of what Herantis Pharma is and then we go into the last year's highlights. So Herantis Pharma, we are a clinical-stage public company listed here in Nasdaq First North Growth Market, Finland. And with our lead asset, HER-096, we aim to stop the progression of Parkinson's disease by protecting dopamine neurons from further degeneration and also support their functional restoration. We have just also announced that we have completed a Phase I program. We have solid safety data. We have shown efficient brain penetration. We have strong biomarker data, showing biological response in Parkinson's patients. And basically, we are ready to start a Phase II efficacy signal finding trial. So just a reminder what HER-096 is. It is a first-in-class peptide targeting key drivers of Parkinson's disease, specifically modulation of the unfolded protein response pathway, so proteostasis. And we have also shown a robust impact on mitochondrial function as well. HER-096 design is based on a protein, a neurotrophic factor called CDNF or cerebral dopamine neurotrophic factor. And we have shown in preclinical settings that, yes, we capture the full activity of the CDNF protein in terms of protection of the neurons and supporting the neurons for functional recovery. So if we think about the clinical and therapeutic profile of HER-096, we do have a disease modifying and symptomatic potential based on preclinical studies and earlier studies with the CDNF protein, so we can slow or even halt the neuron degeneration in midbrain, which is relevant for Parkinson's disease. As already mentioned, we have a biological validation with the biomarker data from Parkinson's patients. We have robustly confirmed the brain penetration after the subcutaneous administration. So we believe that we have all the ingredients that HER-096 can really be a game changing therapy that could really stop the progression of the Parkinson's disease, which currently is not possible. So there is an unmet clinical need in the disease. The current treatments can treat the symptoms, but not the disease itself. And many patients don't get a symptomatic benefit or they might have significant side effects. And also the effectiveness of the current treatments declined over time when the disease progresses on the background, always regardless of the current treatments. And of course, as a consequence of that, there is a huge market potential for HER-096. Parkinson's News Today is an organization who has evaluated that the estimated economic impact of Parkinson's disease globally is around USD 277 billion annually. So it's a huge impact on societies. It's forecasted that therapeutic market in PD will grow to USD 13 billion by 2033 (sic) [ 2034 ], and this is from global data. And we -- there are also estimates that from the currently approximately 10 million patients until 2050, there will be 25 million patients. So we are in the middle of a very large unmet clinical need, and we want to be among the first ones to really address this. So this was the short introduction to Herantis, and let's go into the highlights of 2025. So I'll start this with the business highlights. So a year ago, in February '25, we announced that we successfully completed a directed share issue. We raised EUR 5.2 million, and that was obviously used for finalizing the Phase Ib and being able to deliver the great data. We announced the top line data from the Phase Ib trial with Parkinson's disease patients in October. The trial met its all primary and secondary endpoints. So we demonstrated very nice safety profile and also the robust brain penetration in the Parkinson's patient's brain. In November, we announced that we have completed a 6 months preclinical toxicology study with HER-096, and this is, of course, a major milestone towards to be ready for Phase II trial as this kind of a long-term preclinical tox study is a prerequisite for starting a long Phase II efficacy trial. And right after the reporting period, we also have provided, actually, a lot of good news. So in early days in January, we reported the biomarker data showing that we have a very clear evidence of biological response to HER-096 exposure in Parkinson's disease patients. In early February, we announced a directed share issue. We raised EUR 4.2 million. And further in February, we announced that we have been selected for EUR 8 million Horizon Europe grant that will be used for supporting the conduct of the Phase II clinical trial. But let's go into the financial figures, and Tone will go through those. Tone Kvale: Yes. Thank you. So full year 2025 compared to last year, the total operating expenses, they went to the same level, but the difference you can see on the loss side is that, in 2024, we had the EIC Accelerator grant program, which ended now in 2025. So we got more grant in 2024 compared to 2025. We are spending the money on -- most of the money goes directly to the science. We spent it on finalizing the Phase Ib trial. We're also preparing for the Phase II and the development of biomarkers is also a big part of the costs. And then last year, we raised money in February 2025, and we had finance expenses relating to that. And we are continuing the focus on investor relations and partnering activities. So when it comes to the cash, we ended the year with EUR 2.6 million in the bank compared to EUR 2.1 million in 2024. Right after we closed the books, we had a successful fundraising and raised gross EUR 4.2 million. With the cash we have as of today, it takes us into Q1 2027. So to be able to start the Phase II clinical trial, we need to raise more money. So for the financial position, just going through the kind of -- some of the balance items for 2025. If you look into the balance sheet, you see that the long-term debt increased from EUR 2.1 million in 2024 to EUR 3.4 million in 2025 million, and that is due to the research funding, which we are receiving from Michael J. Fox and Parkinson's U.K. This is very good money that we have spent now on the Phase Ib. We had a temporary negative equity by the end of the year of EUR 1.7 million, but that went positive when we raised the money in February. And as Antti mentioned, for the financial events, we had the successful fundraising, and also we was selected for the EUR 8 million grant from Horizon, which is going to be spent on running the Phase II trial. So that's really good that we have the cash coming in. Antti Vuolanto: Very good. Thank you. And let's move on with the short business update. So as mentioned, we have a completed Phase I program, just a small short recap of what the Phase I program told us and what will be the next steps. So the Phase Ia clinical trial that we completed a couple of years ago was a single ascending dose study in healthy individuals. And we also had elderly individuals there to take cerebrospinal fluid samples to show the brain penetration profile of HER-096. And the main findings were very good safety and tolerability profile of the single dose. We demonstrated efficient brain penetration in elderly healthy individuals, and the brain penetration was, in a way, very much aligned with the preclinical findings we had reported earlier. And we also have very favorable pharmacokinetic profile considering the administration. And now we completed a Phase Ib clinical trial where we first had a couple of additional elderly individuals for single administration to complete the -- some of the pharmacokinetic work, and then we had Parkinson's patients in 2 cohorts or 2 dose levels, 200- and 300-milligram doses and placebo patients as well. And these patients received active -- they received HER-096 or placebo treatment for 4 weeks, 2 administrations per week. And the main findings, we continue to see good safety and tolerability profile in Parkinson's patients. We established the pharmacokinetics in the cerebrospinal fluid in these patients. And of course, then we have this biological response in biomarker analysis, which I will also provide some more insights here and recap of the webinar that we held early January. About the safety profile, here is a very high-level summary of the systemic safety findings from patients or healthy individuals receiving HER-096 dosing. So basically, on the systemic level, we didn't see any treatment emerged adverse events, no serious adverse events, no dose-limiting toxicities, and we didn't reach, obviously, the maximum tolerated dose. And this was very much aligned with the preclinical studies. The main incidence that we saw was related to the injection site. They were mild and transient and self-resolving. So exactly aligned with preclinical findings. And this is, of course, very good. And then the second part of the results is obviously the HER-096 presence in the cerebrospinal fluid. And this data summarizes what we learned from the Parkinson's patients in the Phase Ib with 200-milligram dose, we ended up close to 100 nanograms per ml, with 300-milligram dose, close to 150-nanograms per ml. And again, this is very much aligned with the preclinical data, and these levels are comparable to those levels that we have seen in preclinical settings to provide the maximum efficacy in those models. So we believe that 300-milligram dose will be a very good dose for going forward with Phase II, and this is also supported by the biomarker data. And just a short recap of what did we see in the biomarker data. And just a reminder that we analyzed different sample types with different technologies, but the main comparison was the change that we observed when we compared the before dosing sample of the last dose compared to the before dosing sample of the first dose. So a cumulative effect of 4 weeks exposure to HER-096. So we had samples from CSF, so demonstrating what happens in the CNS, central nervous system, and there, we showed an effect on proteostasis and oxidative stress and inflammation. So basically, really closely related to unfolded protein response pathway and then mitochondrial function as well. Then we had samples that is called Neuronal-enriched extracellular vesicles. So particles that comes from the central nervous system, the sample is taken from the blood. So we can't, for sure, say that all the signals come from the CNS, but maybe majority of that. And again, we see changes in mitochondrial functions and also inflammation, very much aligned with the mechanism of action. And then from plasma and blood, we also saw changes in proteostasis and in mitochondrial functions. So this multiple layers of data showing very concordant results across different sample types, different location or where we derive the samples shows that there is a very clear biological response, and this is a true response in Parkinson's patients, and the response is aligned with the mechanism of action. So if I summarize on one slide what we see. So at the baseline, Parkinson's patients, they have chronically activated unfolded protein response pathway. So there is a dysfunction of proteostasis, there is also lower activity of mitochondrial function. So mitochondria are the energy factors of the cell, and there is elevated oxidative stress. So overall, the stress level is high and the viability functionality is low. After HER-096 dosing, we see elevation of proteostasis activity. We see elevation of mitochondrial function activity. We see a decrease in oxidative stress. So we have decreased the stress and increased the viability functionality. And then, of course, the very good question is, as this is the data from the first month, what happens after a longer treatment period. And we, of course, believe and hope that it will result in symptomatic improvement and disease modification. And this is, of course, the purpose of running the Phase II trial to demonstrate this in Parkinson's patients, which would then allow going forward with the commercialization path. So if I summarize where we are with HER-096, we believe that we have reduced development risk based on the very successful Phase Ib trial. We have established very nice safety profile, confirmed brain penetration. We have biomarker-confirmed biological activity. So we believe that we have much reduced translational risk. We are ready for Phase II. So we are planning a signal-seeking proof-of-concept efficacy trial in approximately 100 early-stage Parkinson's patients. It will be a multicenter European study if we run that ourselves. And we are currently nearing the confirmation of the study design. It's not completely ready yet, but we, of course, will inform the market when we are ready to do so. HER-096 is very much differentiated asset. So it's a first-in-class molecule. We are addressing unfolded protein response pathway as the only company in clinical development. With that, we target the core drivers of Parkinson's pathology. And we really have designed from the beginning the asset to really modify or stop the progression of the disease. And of course, what we are currently doing, we are looking at the different routes and options, how we can execute the Phase II, and we are in discussions with strategic partners. We are in discussions with investors. We also confirmed the EUR 8 million EU Horizon grant that will support the conduct of the study. And we are also looking at different non-dilutive opportunities there might also be. But of course, we will inform the market as soon as we have anything material on this resourcing of the Phase II efficacy trial. I want to highlight the strong external validation and financial support that we have for HER-096. Parkinson's U.K., the Michael J. Fox Foundation, they have -- or they did finance the majority of the Phase Ib clinical trial with almost EUR 4 million research financing, and we obviously continue to discuss with them how they could support the conduct of the Phase II. We have also had very strong support from the European Union. We completed one -- a biomarker development program of EUR 2.5 million grant that was completed a year ago -- approximately a year ago. We have secured EUR 15 million investment commitment from EIC fund from which we have now utilized EUR 4.2 million. So over EUR 10 million still exist in that commitment. And we just announced EUR 8 million support for the Phase II trial. So we have been quite successful in achieving this validation. And I have to highlight that all of these financiers and the financing, it's like really competitive vehicles and opportunities. So we have been really happy that we -- our science and the commercial potential has been evaluated to be really strong among these organizations. So as a summary, we believe that HER-096 is a potentially game-changing therapy that could become the first disease-modifying treatment for Parkinson's disease. We have huge market opportunity. We are backed by a long research, robust external validation. And one thing that I didn't address yet is that the broad functionality of HER-096 in the basic biology of aging cells, improving the tolerance against different stress factors, may open wide therapeutic opportunities in other neurodegenerative disorders or even beyond CNS indications. By these words, I think we will end the business update, and we are ready to start the Q&A session. Tone Kvale: Yes. And we have received questions and you can just continue sending in questions via the webcast. The first one is, can you provide an update of your Phase II plans? And when do you expect to initiate it? Antti Vuolanto: Yes. So as I mentioned, we are currently in a way, finalizing the study design. So we are also, in addition to that, considering regulatory preparation, should we have regulatory discussions on the protocol. What we can say is that we are planning a double-blind, placebo-controlled, randomized efficacy and safety trial in early-stage Parkinson's patients. And we are engaged with several European really top-notch investigators, also within that EU consortium that won the grant. And also, of course, the recent fundraise, EUR 4 million helps us to prepare for the Phase II and also gives us the freedom to really find out the right financial ways of resourcing the Phase II. And as mentioned, the trial will be most likely conducted within Europe if we run that ourselves. However, we are making sure that we are also open regulatory wise to be able to open trial sites elsewhere, for example, in the U.S., if there is a need, for example, if there is a partner or there is an investor who would have an incentive to open up a site also elsewhere than in Europe. Tone Kvale: Good. Next one is regarding the Horizon grant and congratulations with that. How will this impact the company on a strategic point of view and also from a financial point of view? Antti Vuolanto: Yes, of course, EUR 8 million for conduct of Phase II. It decreases the capital need for running the Phase II with full amount. It is, of course, also very beneficial for our shareholders as that's non-dilutive. So I think that's great. But in addition to that, of course, Horizon EU grants, they are really competitive grants vehicles and being selected for the grant shows that, first of all, we have great science, but we also have great commercial opportunities there. And that, in a way, brings a quality stamp as we were winning this grant. Tone Kvale: Good. Next one is based on your current cash position and the benefit from the grant, what additional capital do you need and will be required to be able to start the Phase II trial? And maybe I can just take that one. As you know, we raised EUR 4.2 million in February, and that will help us now kind of continuing the preparation for the Phase II. We got the Horizon grant of EUR 8 million, and that is earmarked the Phase II. So of course, that is helping us a lot for that one. But in addition, we think we need -- of course, we haven't -- the final design of the trial is not ready yet, but we think in the range between EUR 20 million and EUR 25 million is needed as an additional capital on top of this to fully fund the trial and also the ongoing operation during the trial period. Next one. Is the Phase Ib biomarker data good enough to secure a partnering agreement? Antti Vuolanto: Well, that's a very good question. Of course, the full Phase I like data package that we have, the safety data, the pharmacokinetic data and also the biomarker data, it's a great package. And when we have discussed this package within the partnering discussions or with other stakeholders like the patient organizations or informed investors, everybody congratulate that you could not get much more within a Phase I clinical program. However, it might not be appropriate to start speculating about exactly whether this could trigger a partnering agreement or not because there are many different kinds of pharmaceutical companies. They have different objectives and there might be different like deal structures that we investigate. So of course, we will inform the market as soon as there is something material. But before we have anything material, we can't speculate too much. Tone Kvale: Yes. Next question. Congratulations with the 2025 progress. The Phase Ib biomarker analysis showed modulation of various PD-related pathways. How will these biomarker findings inform endpoint selection and patient certification for the Phase II? Antti Vuolanto: Yes, of course, we are really happy that we have seen changes in the core pathways, including the proteostasis and mitochondrial function. Maybe for patient selection, the challenge is that how we can exploit that data when we are screening the patients. And we believe that we need to select early-stage patients. And in Phase II, we need to carefully design what is the primary endpoint and then select patients in such a way that they show characteristics that are measured by the primary endpoint. So that's the focus there. Tone Kvale: Good. I think there was no more questions. So maybe some closing remarks. I think just from my side, we see that we have a really strong external validation of our science during 2025. So I think the future looks good. What do you think? Antti Vuolanto: Yes, I fully agree. So I think 2025 was a very successful year. We were able to complete a fairly large clinical trial within the time and the budget, which is not for certain in clinical development. The data is great. We have a very good momentum. We have got really good feedback. And now we just need to go forward and beyond and ensure that we can run the Phase II clinical trial. And of course, within Phase II trial, providing the first efficacy signal. That's the trial where potentially the value creation is quickest among the, let's say, clinical studies. So we look really forward -- positively forward for this year and what this year will bring. And we hope to be able to update the market about the future development related to finalizing the Phase II clinical plan and then also how we resource the trial within due course. So thank you for joining us today. Thank you for submitting the questions. And I hope you will follow us intimately going forward. Thank you.
Dame Carolyn McCall: Good morning, everyone, and welcome to ITV's 2025 Full Year Results. As always, I'm here with Chris Kennedy, our CFO and COO. I'm going to start this morning with a brief summary of the 2025 highlights and then Chris will talk you through our financial and operating performance in a bit more detail. ITV delivered a good performance in 2025 outperforming market expectations despite the challenging market backdrop. We have transformed ITV and are demonstrably a much leaner and more agile business with a strong digital platform. We have capitalized on numerous growth opportunities as a result and are generating strong levels of cash. We've created 2 attractive and resilient businesses in ITV Studios and Media & Entertainment. We have successfully changed the shape of ITV and achieved a key strategic target. 2/3 of our total revenue now comes from Studios and M&E digital and that really demonstrates the scale of ITV's transformation. Before discussing our results, I wanted to mention the leak in November about potential transaction. As you know, we confirmed that we were in preliminary discussions with Sky regarding the possible sale of our M&E business. We are actively engaged with Sky and we will provide an update to you when we can. The effectiveness of our strategy to diversify ITV's revenue streams is clear in our results with the growth in ITV Studios and our digital M&E business combined with our disciplined cost management largely offsetting a difficult linear advertising segment. In line with our dividend policy, the Board has proposed a final dividend of 3.3p giving an unchanged full year dividend of 5p, a total payment of around GBP 190 million. I'll now hand over to Chris to go through the numbers in more detail. Chris Kennedy: Thank you, Carolyn. Good morning, everyone. ITV Studios continues to demonstrate strong momentum with total revenue climbing 5% to GBP 2.13 billion. This performance highlights our ability to consistently outperform the broader market. Notably, external revenue rose by 10% reflecting our successful move toward global streaming partners and the rapid scaling of our digital distribution via Zoo 55. The U.S. unscripted business had a good year with a strong slate of deliveries. Love Island U.S. was the most watched streaming TV original season of 2025 in America, greatly increasing the value of the format. Overall performance in the U.S. was down year-on-year due to the phasing of deliveries and some short-term market softness. We're already seeing good momentum in 2026 and are confident that this year will be much stronger. Our U.K. and international arms saw 14% revenue growth driven by high demand from both streamers and broadcasters. Adjusted EBITA for Studios was GBP 297 million and EBITA margin was 13.9%. The year-on-year change in the margin reflects a lower proportion of catalog sales in our revenue mix as we previously guided. We remain highly efficient. We delivered GBP 31 million in cost savings this year and continue to leverage our world-class talent and unique IP to drive recurring value. Turning to Media & Entertainment. The highlight is the continued evolution of our digital business. Digital advertising revenue grew 12% to GBP 540 million and total digital revenues were up 10% to GBP 614 million. This strong trajectory is a testament to the success of ITVX, Planet V and our data-driven ad products. Total advertising revenue fell 5%, better than guidance with our digital growth providing an important and profitable hedge against double-digit linear advertising decline. We've been incredibly disciplined on costs within M&E. Content costs were down 5% reflecting an ever more optimized investment strategy. Noncontent costs fell by 6% with permanent cost savings of GBP 32 million and temporary savings of GBP 15 million. This ensured that our M&E adjusted EBITA margin remained steady at 11.8% despite the decline in advertising revenue. The balance sheet remains robust. We ended the year with net debt of GBP 566 million and a leverage ratio of 1x. Our cash generation remains good with a profit to cash conversion of 65% as expected and over the 3 years from 2023 to 2025, cash conversion averaged around 80%, in line with our target. This provides us with the flexibility to reinvest in our growth drivers and provide meaningful cash returns to shareholders. Our capital allocation is clear. We reinvest for profitable growth, maintain an investment-grade balance sheet and return surplus cash to shareholders. We've maintained an ordinary dividend of 5p and continue to keep our capital structure under review. A core pillar of our strategy is reshaping our cost base to better reflect viewer dynamics and enhance productivity and profitability. In 2025, we accelerated our efficiency efforts delivering GBP 63 million in permanent noncontent savings across the business. This brings our cumulative permanent savings since 2019 to GBP 253 million. Looking forward to 2026 taking the year as a whole, Studios will show good revenue growth with margin at the lower end of our target range. As is usual, revenue, profit and margin will be weighted to the second half with momentum continuing into 2027. In M&E, digital revenue is predicted to continue its strong trajectory in 2026. We anticipate Q1 TAR to be down around 2%, which is better than we expected. And looking forward to the rest of the year, we have a strong schedule of sports being the only commercial broadcaster of the expanded FIFA Men's Football World Cup and the new Men's Rugby Nations Championship, both of which will boost ad revenue from Q2 onwards. Finally, you can find detailed planning assumptions in the appendices in the slide deck. Thank you. Carolyn, back to you. Dame Carolyn McCall: Thank you, Chris. As you know, our strategic vision is to be a leader in U.K. advertiser-funded streaming and a diversified and expanding global force in content. Our strategy is familiar to you. Just to summarize it in 3 key pillars: expanding Studios, supercharging streaming and optimizing broadcast. So let's turn first to expanding Studios. ITV Studios has built a unique and leading position in the global content market. It has 3 core competitive advantages and value drivers. Its world-class talent who are producing some of the most successful shows around the world; second, its global scale and diversification are creating a strong platform for further growth; and three, its unique and valuable IP library, which combined with Zoo 55, its digital studio, maximizes the monetization of our IP globally and this is underpinned by a culture of cost discipline. All of this ensures the business is well positioned to continue to grow ahead of the market and drive attractive margins. So let's take these value drivers in turn. First, ITV Studios culture. It's entrepreneurial and offers creative autonomy and it's backed by global distribution and resource and that attracts and retains industry-leading talent. This is a position we continue to enhance through strategic acquisitions, talent deals and partnerships and that delivers both creative scale and revenue synergies. Most recently in 2025, we acquired Moonage Pictures in the U.K. They're the producers of The Gentleman for Netflix and also Plano a Plano in Spain, the producers of Suspicious Minds for Disney+. So the success of this strategy is really clear I think from the creative output and other recently acquired labels also demonstrate the success of this strategy. So Rivals by Happy Prince for Disney+ is returning for a Season 2. Skyscraper Live for Netflix by Plimsoll, which saw Alex Honnold's free solo quite terrifying ascent of one of the world's largest tallest skyscrapers in Taipei. Our track record on retention is really, really strong. In the U.K. where we do the majority of talent deals, about 75% of our label MDs and creative leaders stay with the business post earn-out. ITV Studios also has a formidable portfolio of world-leading brands and formats through our established scripted and unscripted labels. Love Island is now in 28 markets. It continues to expand with successful spinoffs such as Love Island Games and Beyond the Villa. Squid Game: The Challenge was Netflix's biggest reality competition and has been recommissioned for a third series. ITV Studios is constantly refreshing its portfolio with new formats like Nobody s Fool and Celebrity Sabotage, both of which launched on ITV this year and have already started to sell really well internationally. They're original shows. ITV Studios also has a strong slate of high quality returnable scripted brands that demonstrate incredible longevity. Line of Duty is an example, Gomorrah is another example and there are newer brands like Ludwig and Vigil, which have all been recommissioned. So the global content market remains large and attractive. It's expected to grow about 1.5% to 2% this year. ITV's resilience though comes from having a diversified portfolio by geography with 59% of revenue generated internationally, by genre with 32% of revenue from the scripted and by customer with 28% of revenue from the growing streamers where we have a proven track record of success now. We have deep strategic relationships with every major global content buyer, which combined with a very strong pipeline of new and returning hits, ensures that we capture further share of the key growth areas, which are scripted and unscripted commissions for streamers and IP distribution. Now a significant driver of our long-term value is our unique IP library, which now exceeds 100,000 hours of content. ITV Studios adds thousands of hours of content every single year and licenses this to over 350 customers globally. That scale allows ITV Studios to maximize the monetization of its IP and we already generate GBP 400 million of high margin revenue through our global partnerships business. Most recently this is through Zoo 55, a key area of incremental growth. Zoo 55 distributes ITV Studios IP across 3 areas. Social video where we had over 24 billion views across 200-plus social channels globally last year; FAST enabled platforms where we have partnerships with multiple partners such as Samsung, Tubi, Xumo and viewing here has been up 28% year-on-year; and the third is games and gaming where we've got 40 games live at the moment across 19 of our brands and that is going to continue to expand. And some of the key brands we distribute include Hell's Kitchen, River Monsters, the Graham Norton Show, Come Dine With Me, Love Island and there are hundreds more. So as you'd expect, we are leveraging AI to deliver content more effectively and efficiently. For example using it for subtitling, content selection and curation. Overall in 2025, Zoo 55 generated over 47 billion global views, which was up over 30% year-on-year and that drives double-digit revenue growth. ITV Studios is on track to achieve GBP 120 million of high-margin digital revenue from Zoo 55 by the end of 2027. So the combination -- this particular combination of talent, scale and quality IP ensures that ITV Studios remains a very attractive and resilient business and it delivers high quality earnings. As a creator, owner, producer and distributor of IP; ITV Studios captures the full value of its world-class content from initial idea to global delivery. Around 60% of its revenues are recurring. This is coupled with Studios diversified revenue streams and low-risk production model, remember, where we only produce programs once they have actually been commissioned. Together, this ensures ITV Studios drives growth ahead of the market at attractive margins and delivers strong cash flow. I'm now going to turn to Media & Entertainment, which includes our pillars of Supercharge Streaming and Optimise Broadcast. We have completely transformed M&E into a strong and resilient streamer and broadcaster with a very disciplined cost base, well positioned to deliver profitable digital revenue growth and strong cash generation. It leverages its compelling position and value drivers, which include wide reach in the U.K., leading platforms in ITVX and Planet V, an extensive first-party data set and deep and established relationships with advertisers and commercial partners. We are really pleased with the success of ITVX and Planet V. Since its launch in 2022, ITVX has built incredible momentum delivering 25% CAGR in total streaming hours and 16% CAGR in digital advertising revenues. Planet V, our first-class addressable advertising platform, allows brands to target audiences by leveraging an extensive first-party data set of over 40 million registered users. Now that can be augmented of course with third-party data from our partners like Tesco and Mastercard for really granular targeting. It is a powerful engine for growth bringing in over 1,500 new advertisers to ITV since its launch. Digital advertising now represents 31% of our total advertising revenues. With this momentum, digital advertising revenue is outperforming our original plan when we launched ITVX, which is fantastic news. And given the strong performance of ad-funded streaming and our focus on profitable growth, we have, as you know, pivoted our digital strategy by doubling down on AVOD and deprioritizing subscription video on demand. Therefore, it's going to take slightly longer than initially anticipated to reach the overall GBP 750 million digital revenue target. Importantly, this has saved significant incremental content and marketing spend. As a result, as this slide shows, we reached breakeven 2 years earlier than planned recouping our entire investment in ITVX 4 years earlier than projected. In doing so, we've created a profitable ITVX platform with attractive growth prospects. So building on the foundations of our strategic investments in ITVX and Planet V, we are now competing effectively for a greater share of the GBP 9.5 billion online video advertising segment and attracting new ITV advertisers. We're expanding our digital reach through strategic partnerships, the SME strategy and through commercial innovations. Our YouTube partnership for example is successfully extending reach with over 40% of ITV's content viewed on the platform coming from under 35s. Our YouTube sales team continues to grow from partnering with 8 brands at launch to 800 today. We've recently agreed a major deal with Banijay to sell all their advertising around their YouTube content. We've also added new partnerships with TikTok and expanded our relationship with Disney+ to include their content on ITV1's peak schedule. With our SME strategy, we're removing barriers to entry for TV advertising, simplifying the buying process and leveraging AI to produce cost-effective advertising. We're making good progress towards the launch of our self-serve advertising platform in collaboration with Sky, Channel 4 and Comcast's Universal Ads, which we will be testing later this year. And in a first of its kind in the U.K., we launched picture-in-picture adds, which you might have seen in the 6 Nations. This drives incremental reach and value with sensitivity to the viewer experience. We're also increasing our inventory and can now do targeted advertising on our linear channels on the Sky and Freely platforms. And if that weren't enough, in addition, we're leveraging our brand, IP and first-party data to drive profitable non-advertising digital revenue. We've just launched the Birthday Draw. You might have heard the ads for that all across Global Radio and it's a partnership with Global for GBP 1 million cash price. We're also evolving ITV Win into a premium destination, bringing scaled competitions to audiences with new games. So it's early days for both of those, but we expect these 2 initiatives to drive double-digit growth in interactive revenues. Now finally, to our third pillar, which is Optimise Broadcast. We continue to demonstrate our strength and resilience in delivering mass audiences. In 2025, ITV delivered 91% of the Top 1,000 commercial audiences. To reinforce this value, we're collaborating with Channel 4 and Sky on Lantern, an outcomes program to clearly measure the effectiveness of TV advertising. We have a fantastic slate for the year focusing on drama, entertainment, reality and sport and we optimize our spend and deliver the most valuable audiences for advertisers. We're significantly increasing live sports. We are the only commercial broadcaster with the rights to the Men's Football World Cup, as Chris said, which includes 19 more matches on ITV, a 60% increase. In addition, we have the rights to all England Men's rugby games this year. In summary, we're really confident we will continue to create value for shareholders. With the profitable growth of ITV Studios and the M&E digital business underpinned by strong cash generation, we will continue to deliver attractive returns to shareholders. None of this of course would be possible without ITV's unique blend of creativity and commercialism, which is fueled by the talent and commitment of our people. And I just want to take a minute to say how proud we all are of what we do, the work that's done in ITV, but especially how proud we are of our colleagues and we're incredibly grateful to them for their hard work and achievements. Thank you. We're now ready to take your questions. Operator: [Operator Instructions] The first question today comes from Annick Maas of Bernstein. Annick Maas: The first one is on the advertising market. I mean your Q4 was better than anticipated. Your guide for Q1 is better. Can you tell us a bit more what the sentiment is in the ad market? Is this coming from across the board? Is it just certain campaigns or advertisers? That's the first one. The second one is on programming costs, which I guess also the guide is better than what was expected despite owning actually the World Cup rights. So is there something in there that is AI cost savings or what is really explaining the program cost savings? Just thinking also ahead how we should therefore think about program costs going forward? And same question for Studios. You're guiding to the bottom end of your margin guide because of the revenue mix. I thought production would probably be within your whole industry, the 1 segment where you can put through AI savings the quickest. So is that so or if not, why not? And then maybe just 1 last one, which is on studio growth more generally. If you look to the midterm, I guess some of your competitors have been saying that the sort of growth level that you've seen for the last 5 years or so in the production world are slightly coming down. Is this something you are seeing or is it that you are taking share of the others and therefore, you can consistently grow better? Dame Carolyn McCall: Okay. On the ad market, I think Q4 was largely down as a result of a pause by advertisers while they waited to see what the budget was going to be and so it was down year-on-year and we had expected it not to be like that. So that was the story behind Q4. Q1 is definitely trading better than we thought because the run rate from Q4 feeds into Q1 if that makes sense. Thus, February was really improved on January and March has improved further not just on February, but on March. So you're right, it's definitely better. I think that the fact that we have the World Cup in Q2 and Q3 means that we're having very, very active conversations with many, many advertisers. So I mean just to give you an example of that. We have more inventory because we've got 19 more matches, that's 60% more than we had at the World Cup in Qatar. We're talking to about 100 advertisers at the moment and that is spanning 20 different categories. So we're very actively engaged with a huge number really of advertisers. And where we would say the trend really was, the Q4 was down on virtually all categories except 1 or 2. Q1, you'd have seen supermarkets doing well. You'd have seen travel was actually doing very well, let's wait and see on that one. But there's no discernible trend on categories in Q4 and Q1 whereas I think now with Q2 and Q3, the range of advertisers we're talking to would kind of indicate that all categories should be quite active in those quarters. So that is very good news. And I think the other really interesting thing is we're getting a lot more interest in the World Cup from very big global brands and they're looking really to create high quality content and very bespoke creative advertising around kind of high-end content. So using players, using teams, et cetera. That's all brilliant for TV because it's the thing TV does best. You can't really do that in any other medium. So that's I think really good and we've agreed to sponsor and that will be announced. So I think the advertising market certainly, because the World Cup will lift it, should be a strong year for us. Your second question was costs I think. Chris Kennedy: I think specifically content costs. So you're right. Last year we didn't have one of the big mens events and we've obviously got the FIFA World Cup, as Carolyn said, and we've also got the new Rugby Nations Championship as well, which runs Q3 and then into Q4. So really a strong slate of sport all the way through from Q2 to Q4 and we have managed that within the overall envelope of content and that happens in several ways. There's some self-help in there. We did a reorganization of daytime soaps, which completed at the end of the year. The new schedule started 1st of January. That saved us some money on those shows while maintaining exactly the viewer experience as we had before. In fact with the power hour in the soaps, that was viewer led. People were saying we don't want to watch an hour of the same soap, we'd like 2 half hour episodes and that's worked really, really successfully. So we've saved some money there and that's enabled us to reinvest elsewhere in the schedule as well as affording the World Cup. And longer term, the team have just got -- they get better and better and better every year using the really granular viewer data that we've got through ITVX now to inform windowing decisions, acquisition decisions, commissions, we can see how a show grows and also making the marketing a lot more effective as well. So all of that means that -- I think you asked about where do we think that content cost will go longer term. We're really pleased that we've held it at plus or minus the same level ever since the launch of ITVX. Dame Carolyn McCall: Yes, because we've absorbed a lot of inflation in that. Chris Kennedy: Yes, exactly. And so that's what we're looking to do going forward whilst continuing to grow that viewing on ITVX. Dame Carolyn McCall: And then on your Studios question, I'm just going to -- we'll take it in 3 parts because you asked a margin question, you asked AI question, you asked a growth question. Let me kick off on the AI question because I think you're right. I think AI obviously lends itself very well to Studios. And I think the first thing to say is our fundamental belief is that we use AI on creativity only to enhance and augment it, but we then use it in a very, very strategic way where we integrate it in everything we do end-to-end. So it's a very integrated way of working in Studios. And we've had quite a lot of experience already now because we've been doing this probably for the last 18 months to 2 years where we started with having what we call the Skunk Works and now actually it's kind of embedded in all the labels. So whether that is tools for R&D, research and development or preproduction or postproduction or editing or production planning and indeed marketing, we're kind of using it for the whole end-to-end process in Studios. And what we try and do there is that of course there's efficiency gains, we use that to offset inflation and then try and bank some of that. And then we use productivity gains to get people to do more interesting things for instance in development to try and get more shows in. So the more resource we free up, we actually reuse that in a higher value kind of function if that makes sense. So that's what we're doing on AI. Chris Kennedy: And then Studios, you talked about the margin guidance and we've guided for bottom end. Our Studios business has industry-leading margins. We are the best in the business and the team have to work really hard at that. Last year they made GBP 31 million of cost savings. That came from some quite difficult decisions around label reorganizations in some geographies. At the same time, we're refilling the pipe. So we've made 4 bolt-on acquisitions and those take some time to integrate the back office. So the whole strategy is around maintaining the margin within that 13% to 15% range. It will go up and down depending on the mix of business we do in the year and where we are in the cycle, but very pleased with the level they're at. And the whole point about Studios is we want profitable growth and that means maintain the margins within that range. Dame Carolyn McCall: And in terms of growth, we see the market growing. So it's a very big market, it's GBP 230 billion market. It's growing at about 1.5% to 2.5% according to Ampere. And our goal really is to be ahead of market growth and to take share. So that continues. That continues to be part of our strategy. Chris Kennedy: And you'll have seen that we've done that consistently over the last 8 years, consistent growth. And from a compound average basis over the course of that period, we've outgrown the market and we'll continue to take share. Operator: Our last question today comes from Julien Roch of Barclays. Julien Roch: My first question is on the World Cup. Based on previous additions, can you give us an indication of the impact either millions of pounds or percentage? Second question is impact of AI on a cost basis, I know it's early days. But Stroer who reported this morning said that within 5 years they thought they could save EUR 50 million thanks to AI, which is about 3.5% of their operating cost. So any indication there? And then the last question is on your linear inventory, where are you in terms of that inventory being sold digitally or programmatically so it can be included in the kind of new AI platform that all the agencies are developing? Chris Kennedy: Okay. So on the World Cup, we don't guide for the uplift for individual tournaments. But you'll have seen performance on '25 versus '24 where we had the FIFA Men's World Cup. You can see the categories that outperformed when we have those. So as Carolyn said, we're really looking forward to the rest of the year with sport. It should give us an uplift and it should bring the whole advertising market in the U.K. up with it. But we don't give the exact tournament by tournament guide on that. Dame Carolyn McCall: No. I mean just as a little fact on sports. The reason we really focused on live sport is in '25 when there wasn't a Euros or a World Cup, our reach of sport on ITV1 was 46.2 million people, which is fantastic and we would expect to exceed that in terms of our reach obviously this year because of the rugby and the football. We've got all the racing. It's an unprecedented year for sport for us. Chris Kennedy: And then, Julien, on the AI question, could you repeat it? I didn't quite pick up what the question was there. Julien Roch: So everybody is saying that AI is going to transform our lives. Every company is going to generate more revenue and they're also going to save a lot of cost. And Stroer who reported this morning said that in their view, AI would allow them to save EUR 50 million within 5 years, which is 3.5% of their operating cost. So I was wondering whether you already have sized the potential efficiency gain from all those wonderful AI things we're all going to do all the time. Chris Kennedy: The way we look at AI is exactly how you described it, where can we use it to augment creativity? Where can we use it to increase revenue and create new revenue streams? And on the flip side, how can we use it to create efficiency so that same number of people can do more with the AI tools? On the efficiency side, it absolutely fits into our long-term cost saving program. We've demonstrated that we are relentless about the efficiency within the organization. We've taken out a huge amount of cost over the last 6 years. We'll continue to do that. It's a multiyear program and within that, AI will obviously help with the next leg of that program. Dame Carolyn McCall: Because we integrate it. We build it into the continuous cost improvement program. So it's something that we task ourselves with, but it's not always about -- there's a net cost saving, but then there's also an offset against inflation. There's an offset against other costs because cost of production is going up. So we just look at it in a much more integrated way than that. And I missed the company actually, Julien. Did you hear who the company was? No. Who was saying that they would do the EUR 50 million, it's just interesting for us. Julien Roch: Stroer, the German outdoor company. Dame Carolyn McCall: I mean there will be significant savings. But in Studios in particular, we're very focused on how we can release resource to do more stuff that will generate more hits. I mean that's the kind of philosophy in Studios, which is why we will gain efficiencies and we will net off inflation, but we also want to reinvest in, say, making sure development is stronger. Chris Kennedy: Yes. I mean I think it really is -- I hate to use the phrase, but it really is in the DNA of ITV, this everyday efficiency. If you look at M&E, noncontent costs were down 5% last year and that is a lot of hard work by a lot of people across a whole range of initiatives. There aren't big set piece efficiency programs. It's baked into people's every day. Dame Carolyn McCall: I think the third question was linear inventory. Chris Kennedy: Yes. So last year we finished the year, 30% of the linear inventory could be -- was capable of having a targeted ad within it. By the end of '26, we're looking to bring that up to 50%. Obviously we will not be using anywhere near 50% for the targeted industry -- targeted advertising because we can now make the choice both for advertisers and for ITV about what is the best use of that inventory? Is it better to use it for a targeted ad or is it better in a mass reach campaign. One of the reasons we've doubled down on sport is that those big live audiences are more valuable than ever. So we would not be doing a targeted ad in the World Cup because that is the only place an advertiser can get the huge audiences that we attract. So over the course of this coming year, you will see coming out of ITV commercial a few more ad products where they will be -- they've already developed them in conjunction with advertisers and they're releasing those to do that targeted advertising in the live streams. Julien Roch: My question was not about targeted advertising. It's more being able to buy linear advertising on a digital platform, right? Because all the agencies are developing those AI platforms that they're going to give to their clients where clients can buy across media at a click of a button. And so if TV is not on those platforms, some clients will be lazy and maybe deemphasize TV. So it's more on whether you can buy digitally the linear advertising. Chris Kennedy: Yes. Understood. And absolutely, the commercial teams are really engaged with the agencies both on the buy side in terms of buying linear inventory, but also doing the outcomes work, launching Lantern in conjunction with Sky and Channel 4 to give measurability. All of the work we're doing to demonstrate the value of TV because if those models are rational, TV should benefit because we have the highest ROI of any media. So absolutely, we're working with them. Dame Carolyn McCall: Is that what you meant, Julien? Julien Roch: Yes. But only working with agencies, you can have many reasons. You can do both at a click of a button on those platform alongside Hugo and Meta and not only ITVX or targeted, the whole inventory. Dame Carolyn McCall: So I suppose that goes to the distribution strategy and our distribution strategy is to be in as many places. I mean I think we've got something like 98% coverage now of all platforms with ITVX and then a bit lower than that for channels. But our strategy is to be in as many places as possible on the right commercial terms, which then allows us to benefit from their reach and our inventory. Operator: We have no further questions at this time. So I'd like to hand back to Carolyn for closing remarks. Dame Carolyn McCall: Just want to say thanks very much for joining us today. We know it's a very busy day out there so thanks for your time. Bye for now.
Luc Van Ravenstein: All right. Good morning, everyone, and welcome to the Elementis 2025 Results Presentation, and thank you for joining us. Great to see you. In terms of agenda, I'll begin with our highlights for the year and Kath, our new CFO, will then run you through our financial performance. Then I'll take you through our strategic progress over the past year and finally, to our outlook for 2026. And we'll then open for questions. It has been quite the year. Looking back 10 months into the job, I'm really proud of everything we've achieved together. We delivered strong profit growth and margin expansion despite soft demand environment, and that's a clear proof of the quality and resilience of our business. From a strategic perspective, the sale of the Talc business and launching our Elevate Elementis strategy were more than milestones. They set the foundation for this company can achieve when we focus and move forward as one team. And we're making solid progress across all of our strategic priorities, such as innovation sales up to a record of 16.4% and 0 lost time accidents. So lots of positive momentum. You might remember a version of this slide from our last half year result presentations. Our portfolio has fundamentally transformed over the past years. We've reshaped Elementis into a pure-play specialty chemicals business, focused on our 2 segments, Personal Care and Coatings. Selling Talc was a major step in making this happen, and it was my first priority when I started as CEO. And with Chromium sold in 2023, we exited these commoditized capital-intensive businesses, and it was absolutely the right decision. It allows us to focus on our core strengths and capabilities. As you will have seen this morning, I'm pleased to share that we've agreed to sell our pharmaceutical business to ABF, and this sale is in line with our strategy as well, further sharpens our focus. More on this on the next slide. In November, we added Alchemy to the portfolio, a fantastic bolt-on right in our personal care sweet spot. It's a fast-growing, high-margin business that strengthens our position in skin care and cosmetics. So this is the new Elementis. We're a company with a unique position built on 3 real differentiators: hectorite, rheology and formulation solutions. And we're really pleased with the shape of the portfolio, and we're well positioned for growth. So we announced today that we reached an agreement to sell our noncore pharmaceutical manufacturing business to ABF. Last year, the business made $35 million in revenue. Our pharmaceutical business was originally acquired as a part of SummitReheis in 2017. It manufactures antacids and pharmaceutical excipients from our Ludwigshafen site in Germany. And while the business has performed well, it's clear that it no longer fits with our strategic focus. And because of that, the sale we announced today is the best outcome for both the Pharma business and for Elementis. It's a straightforward, clean transaction. It will reduce our capital intensity and on a pro forma basis, will deliver an uplift to 2025 group operating margins. We're working towards the completion in Q2. With the Talc business sold, we accelerated the delivery of all of our 2026 financial targets by 1 full year, which is a fantastic result. And with Elevate Elementis, we shared our new targets, mid-single-digit revenue growth, operating margins of more than 23% and 3-year operating cash conversion to be above 90%, ROCE, excluding goodwill, of more than 30%. And our proven track record gives us the confidence that we can meet these targets and be among the top of our peer group. Moving to sustainability. Next slide. Starting with safety, which is fundamental to how we operate. Last year, we achieved our first 0 lost time accidents since 2019. That's a big milestone. On the environment, we continue to make good progress. The divestments of Talc and Chromium have significantly reduced our carbon footprint, which is now nearly 80% lower than 2019. And we continue to transition to a more sustainable and responsible business. For example, at our hectorite mine, we moved to almost entirely renewable energy from a 0% base last year. Finally, on people, we've made a lot of changes in the organization with Fit for the Future, which was a big reorganization for us. And the engagement scores actually improved with voluntary attrition down by 40%. We're well below industry average now. But for me, even more importantly, I see it when I visit our sites, how proud the team is when I visit the Newberry, which is where we have our hectorite site or when I visit the new Porto team. And with that, I'm delighted to hand you over to Kath, our new CFO, to cover our financial performance. Katharina Helen Kearney-Croft: Thank you, Luca, and good morning, everybody. Before I begin, I'd just like to share some initial reflections of my first few months in Elementis. I've been here for 4 months now and 2 months as the CFO, and I've been genuinely impressed and frankly, relieved by what I've seen. I've had a really warm welcome with lots of people taking time out of their busy schedules to help me on-board. And it's clear, everyone is working with real commitment to unlock the full potential of Elementis. I've had the opportunity to visit locations in the U.K., Europe and U.S.A., and I really enjoyed learning about the business. There's nothing quite like the manufacturing environment, seeing products being made and looking to see what we're talking about in the meetings. And the real highlights for me have been hands-on in the Alchemy lab and visiting the hectorite mine. What has really stood out is the passion, dedication, commitment and pride of our people. They care deeply about the company and rightly so. And I'm confident that we can continue to build on these strong foundations, demonstrating that we have opportunities to grow revenue and profit and continue to generate strong cash and returns. When I look at the macro backdrop for 2025, we could be standing here looking at a very different set of results, and I'm definitely glad that I don't have to present that. Despite the challenging market, we have made good progress in 2025, and the team have done a fantastic job. And it's in this context, I'd like to cover the results for the prior year. Following the sale of Talc, the 2024 P&L and cash flow figures have been restated for continuing operations and used for comparison purposes. I wanted to show a brief overview of the metrics for 2025. Most of these will cover in the following slides, so we won't go into detail here other than highlighting. Despite a small decline in group revenues, we delivered strong growth in adjusted operating profit and a 150 basis point improvement in margins. In combination with lower net finance costs and a lower number of shares following the buyback, adjusted earnings per share was up 14.2% to $0.137, an outstanding performance considering the challenging operating environment that Luc referenced earlier. And as we turn to look at group revenue, you'll see that despite the backdrop, we delivered a resilient performance with overall revenue down 1% on a reported basis and 1.9% on a constant currency basis to $597.5 million. Bridging from 2024, we had a favorable FX tailwind of approximately $5.2 million. Volumes were down $5.6 million due to the weak demand environment in Coatings, resulting in a reduction of $14.1 million, and this was partially offset by volume growth in Personal Care of $8.5 million. On pricing, we delivered $7.8 million across both businesses, a testament to the specialty nature of our portfolio. Of note, a combination of proactive pricing, procurement agility and supply chain optimization actions helped us to fully offset the direct impact of tariffs in the year. And we believe the latest news on this topic, at least of Saturday, 21st of February, will continue to leave us in a neutral position. Turning lastly to mix. This was down $13.7 million, primarily due to a combination of one-off sales in Coatings of $3.4 million in 2024, not repeated in 2025, along with the continued softness in industrial coatings and decorative end markets. And AP actives saw strong growth in lower-priced but margin-accretive products as well as a consumer-driven shift from aerosol to roll-on formats in LatAm. As we turn our eyes to adjusted operating profit, we delivered strong growth, which increased 4.6% to $126.7 million. Within this, we benefited from favorable FX of $1.9 million. Lower volumes had an adverse impact of $1.9 million and the net price impact after offsetting inflation was $10.5 million. These headwinds were mitigated by the ongoing delivery of our self-help initiatives, which led to $18 million of total cost savings in the year and more to come on this shortly. As noted earlier, our strong profit performance helped drive higher margins, increasing 150 basis points to 21.2%, so let's take a look deeper into the reporting segments. Starting with Personal Care. Revenue was up 2.4% to $224.5 million with strong growth in skin care and cosmetics, offsetting a slight decline in AP actives. Looking at the regional performance, we saw higher revenues in EMEA and Americas with Asia flat compared to last year. Adjusted operating profit was up strongly at $72.8 million or 16.9% and importantly, brings the absolute profitability of the Personal Care segment in line with the Coatings segment. This improved profitability was driven by improved volumes and pricing alongside cost savings. The higher profits in turn helped to drive higher margin, which is up 410 basis points to 32.4%, including the benefit of one-off volume and cost savings in H1 previously noted at the half year. And lastly, on this slide, I wanted to highlight that our results in 2025 included the pro rata contribution from the recent acquisition of Alchemy, a small quantum for the year given the late acquisition timing, but meaningful strategically. And now moving on to the Coatings segment. We delivered a resilient performance with revenue of $373 million compared to $386.4 million last year, with a decline in Coatings partially offset by strong performance from our Energy business. The year-on-year decline was impacted by the benefit of high-margin one-off sales in Q4 2024. The drop-through from the lower revenue led to a lower adjusted operating profit of $70.4 million. However, the combination of higher pricing and our self-help actions supported the operating margins, finishing the year at 18.9% compared to 20.3% in the year before. You will recall at H1, we highlighted some operational challenges at St. Louis that were holding back our Coatings performance. Whilst there's still progress to be made, I wanted to share positive news that the debottlenecking program at St. Louis is progressing well and leading to improved performance, which Luc will cover more fully later. Last year, we successfully completed the balance of our 2-year $30 million cost savings program by delivering $12 million via our Fit for the Future restructuring and supply chain initiatives. In addition to this, we announced in July a further $10 million in savings that we were aiming to deliver over the remainder of 2025 and 2026. These are net of planned additional R&D spend, which will increase our total spend from 2% of revenue to 3% over the next 2 years. As we announced this morning, we have delivered $6 million of savings already, and we will deliver the balance of $4 million by the end of 2026. Our cost saving programs have reduced complexity and improved operational efficiency. We will continue to proactively identify opportunities to streamline our cost base and capture further efficiencies as we deliver on our growth agenda and become a simpler and leaner company. Now taking a look at free cash flow. A key feature of this business is its strong cash flow generation. And I'm pleased to report that we generated good free cash flow of $41 million in 2025 compared to $51 million in the prior year. Looking at the key components, higher adjusted EBITDA was more than offset by the working capital outflow in the year, driven by higher receivables due to lower debt factoring and strategic inventory build. We also had higher CapEx as we increased our investment to support adjacent market growth and capital investment in support of the St. Louis improvement program. As a result of these movements, our adjusted operating cash flow was $104.7 million compared to $123.2 million in the prior year. As we move down the cash flow statement, it's worth calling out 2 items. Firstly, our cash taxes were lower by $4.4 million, primarily due to an IRS refund received relating to a 2024 claim to utilize net operating losses for prior periods. And also adjusting items were $6.7 million lower as the Fit for the Future program finished during the year. Our balance sheet remains robust. And whilst leverage ticked up to 1.3x, this was after acquiring Alchemy and returning cash to shareholders. Looking at the key movements from left to right, we started the year with a net debt balance of $157.2 million, adding back the free cash flow of $41 million as well as the proceeds from the Talc sale of $52.5 million, we had an increase in cash available for distribution of $93.5 million. Of this amount, we returned $79.1 million through our first buyback program and the 2024 final dividend and the 2025 interim dividend. The share buyback program led to the purchase and cancellation of approximately 4% of our issued share capital. In October, we completed the disposal of the disused Eaglescliffe site for a negative cash consideration of $11.1 million. I would like to specifically note the strategic divestment of both Talc and the Eaglescliffe site have enabled us to significantly reduce our environmental liabilities and provisions. In November, we completed the acquisition of Alchemy for a total upfront consideration of $20.1 million. Taking off the FX of $11.4 million, we ended the year with a net debt balance of $185.4 million and a net debt-to-EBITDA ratio of 1.3x. Our aim is to maximize return on invested capital while maintaining a strong balance sheet and strategic optionality. In relation to investments, our CapEx program will be focusing on investing in growth and productivity. We will also invest in R&D and have plans to increase total spend here from 2% to 3% of revenue. To complement these organic growth investments and as we demonstrated with the acquisition of Alchemy, we will selectively pursue bolt-on acquisitions whilst maintaining a strong balance sheet. On dividends, our policy is for a payout ratio of around 30% of adjusted earnings. And as we announced this morning, the Board has recommended a final dividend of $0.03, taking the full year dividend for 2025 to $0.043, up 7.5% from last year and represents a 31% payout ratio. In considering future additional returns, we will assess several factors, including prevailing market conditions, our existing progressive dividend policy, the investment requirements of the business and our desire to maintain a leverage around 1x net debt to EBITDA over time, which we anticipate we will achieve on an organic basis in 2026. In light of the announcement of the pharmaceutical manufacturing business disposal, our expectation is to distribute the net proceeds to shareholders following completion. and we will provide a further update upon closing. And lastly, for your reference, we've included some technical guidance for 2026 on Slide 19. So with that, I'll now hand over to Luc, who will take you through our strategic progress over the last 12 months and the outlook for the year. Thank you. Luc Van Ravenstein: Thank you, Kath. For those less familiar with Elevate Elementis, this is our new strategy. We presented that in July. The plan is simple. We have 3 strategic priorities. First, top line growth, and this is about focusing on what we do best in the areas that make Elementis unique without the distractions of Talc and Chromium. Our objective is to grow revenue by mid-single digit over the medium term. And in the next slides, I'll share a view of our growth opportunities and our progress in 2025. The second priority is about service delivery. Our ambition is to be best-in-class and the first choice for our customers. We've made some great progress, and I will show that later. Third, simplification and agility. We're building a simpler and leaner Elementis that empowers colleagues, makes us more agile and allows us to execute at pace. Delivering against these 3 priorities is what will drive value creation and will help us to deliver the new medium-term targets. So looking at our first priority. For us to grow and unlock our full potential, it is important to focus on what makes Elementis unique and what will allow us to win. We call these our winning differentiators, and let me briefly touch upon them. Hectorite, this is a very special asset. It's a white mineral that comes from our mine with long-term reserves. It has really unique properties because of its chemical composition and its platelet structure. We don't just sell hectorite. We modify it, add value to it, for example, by making preformulated gels for cosmetics, and our customers love its efficiency. You only need a tiny amount to get a big effect. It's natural, and it delivers the kind of premium skin feel that consumers are looking for. Rheology, this is the science of flow. It's what's needed to stabilize ingredients in a paint can. It's also what makes sunscreen spread evenly on a skin. And here, Elementis is the global leader. Formulation Solutions, this is our expertise built up over the years of our customers' formulations. It's how our people work together with our customers to improve the performance of a paint or a skin care product day in, day out. And our colleagues in the labs have worked at AkzoNobel or Estee Lauder. They talk our customers' language, and that's a huge benefit. Now we operate in big attractive markets, as you can see here. Our focus, though, is to target these niche areas where our winning differentiators set us apart. And we work together with our customers to improve their products. For example, in skin care, we're replacing synthetic additives by hectorite, giving a more premium texture. And in industrial coatings, we help the transition from solvent-borne to high-performance water-based formulas. I'm not going to go into the detail of all of these here, but the point is we are using our expertise and our unique portfolio to help our customers make better and more sustainable products. So lots to go for in our current markets. And outside of our existing markets, there is a large new adjacent space for us that we're tapping into as well. We're using the same model, and we have entered areas that we're going to scale. One example is hectorite for geothermal energy. And here, because the wells are extremely deep, you're facing ultra-high temperatures at which hectorite is stable. We're using our formulation knowledge and existing customer relationships to grow with this market. We had our first sales in 2025 and have a number of field trials planned for this year in the U.S. and Germany. So lots of exciting opportunities and potential for growth. So we're focusing on the right areas, building on our winning differentiators, but what levers are we pulling to now bring in this growth? First, we're investing more in R&D, 50% more. For example, in application knowledge to support customers, and we're building a hectorite center of excellence. We're already seeing the benefits. Last year, innovation sales reached a record of 16.4%. That has doubled in the last 5 years. We launched 19 new products, of which we sent more than 1,500 samples to our customers. Some of the innovation highlights from last year on the right-hand box. We launched DEOLUXE, our patent-pending non-metal-based active, and this is looking quite promising. Several large customers are testing, and we expect the first sales in the second half of this year. We also launched a number of new hectorite products, BENTONE ULTIMATE, also patent pending. It's a highly active hectorite technology that delivers exceptional skin feel, mostly for lipstick and mascara. And in coatings, we launched THIXATROL 5050W for metallic pigment orientation and waterborne automotive coatings. So lots of excitement around innovation. And next, we're covering more customers directly, also local and regional accounts. We want to understand firsthand about their needs. And we've made good progress last year. We now service about 67% of our customers directly. We're also building a local-for-local footprint, and this reduces cost and increases reliability. More and more customers are demanding local supply, particularly in China. So this is how we're going to look at growing organically. To complement our organic growth, we're looking at bolt-on acquisitions, but in a very disciplined way and only when it fits our strategy, which does not depend on M&A. But the acquisition of Alchemy is a great example. In November last year, we announced the acquisition of Alchemy right in our Personal Care sweet spot. And Alchemy develops innovative rheology modifiers for personal care. They are fully natural and can fully replace synthetic raw materials in cosmetics. And the business has done really well in recent years, delivering double-digit revenue growth and operating margins in line with our Personal Care business. And we're bringing on a team with incredible expertise in this market. We're already working together on new products, including with hectorite, quite a nice synergy. The point is, with Elementis behind it, Alchemy can scale faster, leveraging our global sales network as well as our application capabilities. It's a great example of how bolt-ons can strengthen our core and accelerate growth. To make the most of this growth agenda, we need to be the best supplier to our customers. An important measure is On-Time-In-Full. And in July, we shared our target to deliver a 20% uplift over the medium term. And I'm pleased to share that we're now already halfway, and we'll stay focused on this. Second, we talked about St. Louis in July, one of our largest sites, and we have been dealing with some backlogs there. We had a big opportunity, 30% by unlocking capacity. I've made some leadership changes there, brought some experienced people back, and we're seeing the results, a 20% improvement since the first half of 2025. That puts us 2/3 the way there. At the end of the day, all of this comes down to customer focus and mindset, whether you work in sales, R&D or in the plant. And with some of the changes we've made, we have a new top-notch customer service center in Porto, we've seen a 50% reduction in customer response times. We've also received external recognition that you can see on the screen, which is a great acknowledgment for the team. We're building a simpler, leaner Elementis. And to us, this means driving agility, faster execution and responsiveness, so we can scale and deliver more value to our customers. And we've made good progress. We've streamlined our organization and leadership team. We've eliminated the stranded costs related to Talc. And some of these things were low-hanging fruit like reducing office spaces that we didn't really need. And some things took more coordinated effort like qualifying 50 new suppliers that led to quite significant procurement savings. Looking ahead of 2026, we're not done here. There'll be more procurement savings to come. We're making our supply chain more efficient, and we'll continue to move towards a local-for-local model. This is a continuous journey. All right. On to our last slide, outlook. While we remain mindful of the recent geopolitical uncertainty, we're confident in another year of progress. We're seeing great momentum and excitement building in the business. And I'm pleased that we've made a solid start to 2026 and our priorities for the year are clear: deliver organic growth through R&D and customer intimacy, achieve best-in-class customer service levels; and lastly, drive operational efficiency and continue to deliver cost savings. And the team and I are fully focused on delivering this plan. Thank you very much. And with that, let's move to Q&A, please. Everybody could please say their name, speak to the microphone, so that folks on the call know who you are. Thank you. Vanessa Jeffriess: Vanessa Jeffriess from Jefferies. Just wondering if you could speak first about how the first quarter has started given weather in the U.S. and improving beauty markets and how you think about seasonality for the year given coatings is normally stronger in the first half, but we're probably not going to see much improvement soon. Luc Van Ravenstein: Hi Vanessa Jeffriess from Jefferies, thank you for that question. We had a solid start of the year which is encouraging -- Q4 was relatively soft. So solid start in coatings as well, which particularly was softer in Q4. And the seasonality is -- we expect it to be quite typical, 52-48 balance. So yes, encouraging start. Vanessa Jeffriess: And then just on your new growth areas, great that you were able to execute on Alchemy. But how do you think about the mix between achieving that growth from bolt-on M&A and not diluting margins, given I can't imagine there's much out there making the margins you are. Luc Van Ravenstein: Yes. Absolutely. Look, this is an organic-led strategy. So we're really focusing on organic growth, which there are great opportunities in our existing segments, as we say, Personal Care and Coatings as well as these new areas that we talked about. It really is organic-led. Look, we work with many, many companies out there, such as Alchemy. We knew that for a long time, this company -- those could be nice new arrows to our bow. But again, it's really organic-led. You're right, our margins are in a nice spot. We're driving them up further. And it's difficult to find companies that are actually accretive to our margins. Alchemy was one of those, by the way. So we're very happy to use them to grow faster. Vanessa Jeffriess: And then just on pharma. I know that you didn't give profit, but based on past commentary, I would guess that, that's making probably 10% margins. So it seems like you sold at a multiple similar to your own group multiple, which is interesting. I think since your undervaluation, but what else is left in the group do you think that is making similar margins and could be sold? Luc Van Ravenstein: I think you're absolutely spot on in terms of your analysis around the margins and what we did there with pharma. So for us, this was a really good step from a margin and a CapEx perspective, but also from a strategic perspective, most importantly. Pharma was really an activity that it's a really great piece of business, but it doesn't fit with us. Looking at the rest of the portfolio now, we're really pleased with the portfolio we have. We don't have any other business in this kind of margin area. So yes, right now, it's about growth really. That's what we're focused on. We're pleased with the portfolio. Kevin Fogarty: Kevin Fogarty from Deutsche Numis. If I could kick off firstly on innovation. So you called out some several examples of progress, I guess, in new rheology markets. It feels like you're making sort of more progress there perhaps rather than the current ones. It's obviously sort of quite a different sale in terms of new markets rather than the current. I just wondered if you could sort of talk a little bit about that process. And sort of I guess, culturally, how is that different in terms of what you're trying to do there relative to what Elementis has done in the past? You're at 16% in terms of innovation sales. Just thoughts on the 20% target you've got out there? And just secondly, if we can think about Personal Care, just if you could frame the benefits from cost savings perhaps during the year. Any thoughts on Personal Care Asia and dynamics there during the year would be quite useful and just sort of confidence on retaining the margin, which is clearly at a significantly higher level than in the past? Luc Van Ravenstein: Yes. Thank you, Kevin, for those questions. Perhaps I can take the first couple and then Kath, you can help me on the third, if you don't mind. Thank you. So in terms of the new markets, so indeed, look, we have a large market in Personal Care and Coatings where we have great opportunities for growth. We talked in July, for example, about replacing some of the synthetic additives in sun care. That's our existing markets, huge opportunities. And if I look at our growth going forward, probably the largest piece of growth is actually going to come from those existing markets. We have exciting opportunities in new markets for sure as well, where, frankly, we've started to look into only relatively recently. Some of these opportunities, we will actually be able to address and bring in with our current sales force, application knowledge, et cetera. I gave a little example of geothermal. So geothermal drilling is actually -- is happening a lot with our existing customer base already, the Schlumberger of this world. So we have the access to customers. We have the knowledge of deepwater drilling through our oil and gas business. So that's an opportunity we'll bring in with our existing setup. Other opportunities, for example, we've identified a new opportunity for hectorite to remove PFAS out of wastewater. That's really interesting, but we're not going to build a whole sales force and application knowledge to -- for wastewater removal. So there, we might work with a partner, right? So I think for these new opportunities, very large, some of them will bring in with our existing knowledge. Some we will build, some knowledge we'll build, for example, in the construction market. And some we'll just have to partner up with other people. So that's the way I look at that, but a lot of innovation coming from our existing markets. Your second question was around innovation and about our path towards the 20%. Absolutely key indeed, because if you think about everything we do in innovation, innovation sales typically generate 5% to 10% higher margins than the rest of our sales. So it's really important. It also helps us to -- in our relationship with our customers and our relevance to our customers. So we've made great steps last year, 200 basis points up to 16.4%. We foresee to further progress that with all the activities that are ongoing towards indeed our medium-term target of 20%, but we're making some good progress and the investment in R&D, which sometimes is also simply about bringing that application knowledge in is going to help. Your third question was around Personal Care, particularly Personal Care Asia. For us, Personal Care in Asia is still a relatively smaller business compared to the European and the U.S. Personal Care business. We had some movements in Personal Care in the first half last year, Korea, color cosmetic market is a big one for us, and there was some order timing for which H1 was relatively softer. We had a better second half of the year. So we continue to see good momentum. What I would say is in the fourth quarter, we did see in antiperspirant some softness, particularly from some format changes in Latin America, as I think Kath referred to. So aerosols moving to roll-ons. That's for the antiperspirant business. But in general, we see good momentum. We're very happy with the margins. As said, Alchemy is accretive there or it is actually in line with our Personal Care markets margins. I don't know, Kath, if you want to add anything on the margin point that Kevin was asking about. Katharina Helen Kearney-Croft: So I think last year, we made good progress with the Fit for the Future finalization and the start of the new cost savings. Personal Care specifically also benefited from the closure of the Middletown site. So that is directly related to Personal Care. But from the other perspective, a lot of it ends up being in allocations because we've got joint plants and back office, which ends up being allocated. Angelina Glazova: Angelina Glazova from JPMorgan. I have 2 questions. First, I wanted to ask about the midterm targets on margins for 23%. You have already talked us through some drivers for growth that you see in the midterm. How should we think about Elementis bridging the gap in operating margins from current level to target of 23% plus? And do you see any particular drivers as more important relative to others? And then there is also clearly a difference in margin profiles between the 2 divisions. So how do you see that developing? And is there anything maybe for the Coatings business where you see those actions that could help lift the margins? And then secondly, looking at 2026, are there any particular items in terms of cash flow generation, net debt development that we should be mindful of? Luc Van Ravenstein: I'll kick-off with the first question and then if you don't mind, to complement and go on to the second question. So in terms of the margin development, look, we made a nice step in the right direction. Actually, selling the pharma business is going to help us, like Vanessa just said, a little bit more. Look, this is really about growth. And as we just discussed, we're growing in areas that are actually margin accretive. Hectorite, we're actually looking to selling more hectorite and growing that double digit. So that's going to help the mix. That's going to help our margin development. Obviously, we're taking some more cost out this year, but there is a limit to that at a certain point. We're really -- the big reorganizations are behind us. We have Fit for the Future behind us. So this is about high-margin growth. Obviously, we continue to look at how we can do things more efficiently. We'll always think about how we can do things at a lower cost and having Kath come in with a fresh pair of eyes a couple of months ago has also really helped in that respect. But it is about growth and about high-margin growth, and that's the way we're going to really get to that 23% plus level. Kath, anything to add? Or you want to go to the second part? Katharina Helen Kearney-Croft: Well, I think it's also related to the profiles in Personal Care. It has got higher margins and higher growth, and therefore, that would naturally generate some accretive margin. Luc Van Ravenstein: Yes, good point. Katharina Helen Kearney-Croft: With respect to cash flow and net debt, so Page 19 has some technical guidance. We're flagging CapEx will be between 4% to 5% in 2026. We will also expect a small working capital outflow in the year. I referenced in my script that we still had some factoring at the end of 2025, we will not be factoring in 2026. And so that will naturally unwind. And then with the sales increase that we're expecting, we will need to fund that. I think from a sort of just big picture, we are expecting to be circa 1x leverage on an organic basis by the end of 2026. And when I say organic, I'm ignoring the sale of the pharma business because as we said, we expect to give the net proceeds back. Unknown Analyst: This is Madhumanti Sanyal from CaixaBank. So I want to know if there is -- if you think there is a strong synergy between the Coatings and the Personal Care business, like if Coatings continues to show lower-than-expected performance, would you consider a sale of the Coatings business without affecting the performance of the Personal Care business? Luc Van Ravenstein: Thank you for the question. Look, Coatings and Personal Care are different markets, right? So our customers in Coatings are Sherwin-Williams and PPG and AkzoNobel and in Personal Care, you talk to L'Oreal and Estee Lauder. So the markets are different. But in terms of how we operate at Elementis, there's a lot of synergies. So most of our manufacturing plants are actually multipurpose and multi-market plants. So they service both markets, so both Coatings and Personal Care. Our plant in Livingston in Scotland and the U.K. is about half-half Personal Care, Coatings. So in that respect, there's a lot of synergies. Also, if you look at the products that we manufacture and the knowledge that we have in our laboratories, we talked about rheology, we talked about hectorite, all of that ends up in both Coatings and Personal Care. So the product knowledge, the manufacturing footprint synergy, these businesses are intertwined. So no. But I would add to that as well is that we're actually quite pleased with the performance of Coatings. If you look back at Coatings, where we were 7, 8 years ago, the margins of the Coatings business were in a bad year, 10 percentage points around that. In a good year, it was 14%, 15%. Right now, in a low demand environment, we're at 18.9%. So we're actually quite pleased with the Coatings performance, and we're excited about the opportunities ahead. Operator: I've got some questions from Sebastian Bray at Berenberg. Has there been any change in the energy business that led to the strong performance as you've highlighted, despite the oil price decline? One. Second question, what are management's thoughts on additional buyback after receiving proceeds from the sale of the pharma business? And thirdly, are there any signs of the recovery in hectorite sales in Personal Care? Did these grow in 2025? And if not, why this was the case? Luc Van Ravenstein: Shall I take 1 and 3 and you do 2? Katharina Helen Kearney-Croft: Sounds good. Luc Van Ravenstein: All right. Let's do it. So Energy business, we're actually very pleased with the performance of the Energy business. And it is a relatively small business, give or take, $40 million, but it did very, very well last year. One thing that Sebastian might remember, we closed our Charleston site in the U.S. back in 2019 or early 2020, and that was at the time a purely energy-focused business, or plant, I should say. We moved the manufacturing of those products to St. Louis. So that helped us in terms of margins. That's one thing that helped us. I would also say that by doing so, we really transformed the energy business, which if I look --when I joined Elementis 14 years ago, it was a much larger business. But now we really focus this business, one on manufacturing only from St. Louis, focus on hectorite. Why on hectorite? Because we really have a unique winning differentiator with hectorite because it works very well for deepwater drilling. So if you go very deep, you have to drill at temperatures of 250, 280 degrees Celsius and hectorite is stable at those temperatures. So we refocused the team. We have a smaller portfolio. And actually looking at last year, we've had a lot of success indeed in difficult conditions for drilling such as deepwater. We talked about the geothermal energy opportunity. So that's what we're doing here. Smaller business, relatively small team, close the plant down to do cost out and focus on the areas that make Elementis unique. And we'll continue to do that actually. The third question was around Personal Care and hectorite. Yes, we have grown. Obviously, last year, with the markets being a little bit soft, also the Personal Care growth was low single digits also in hectorite. But if I look at Personal Care, again, I'm turning the clock back 14, 15 years ago when I joined, this was a $30-or-so million business. We actually reported it at a certain point under oil and gas, you wouldn't believe that. But that was a purely hectorite business. And we understood where else we could sell hectorite in Personal Care in adjacent areas. So looking at the last 5, 10, 14 years, hectorite in Personal Care has grown really, really nicely. Last year was relatively lower growth, but still growth. But looking at the opportunities ahead in Personal Care as well, replacing synthetics, which continues to be very, very exciting opportunity, entering skin care, which is a $20 million or so business for us now, we're going to scale that, lots of exciting opportunities. Katharina Helen Kearney-Croft: So I think with respect to the question on share buybacks. So as we said this morning, following the sale of the pharma manufacturing business, upon closing, we expect to distribute those funds to shareholders. We also have the target of net debt to EBITDA of about 1x, we expect to be there by the end of 2026. So that will give you a signal of what we're expecting in this year. And then as we look forward, we'll continue to take into consideration where we are on leverage and expectations. Operator: Sorry, I've got to pretend to be Anil now. Anil Shenoy from Barclays has sent 2 questions as well. We didn't see any guidance on 2026. So are you happy with where the consensus is at for adjusted EBIT? And if so, could you help to bridge the gap between 2025 EBIT to 2026 consensus EBIT. What are you assuming in terms of growth? And what are you assuming in terms of savings? Luc Van Ravenstein: Shall I do the first part and you the second? Katharina Helen Kearney-Croft: Okay. Luc Van Ravenstein: All right. Thank you, Anil, for those questions. Look, we had a solid start of the year, like we just mentioned. So we're quite happy with that. And therefore, comfortable with the consensus. In terms of the bridge EBIT '25, '26, I mean, Kath, do you want to add on that? Katharina Helen Kearney-Croft: So as I mentioned, we expect the incremental $4 million in savings to come through. We do expect volume growth, so we'll get some natural leverage and some margin accretion continue to drop through, and that's how we're moving from 2025 to 2026. So sort of steady as she goes with the additional cost savings. Operator: And just some last questions from Chetan Udeshi from JPMorgan. Are you expecting Q1 sales to be up compared to last year? And secondly, we didn't see volume growth this year. What are your expectations for volume growth for '26? Luc Van Ravenstein: I think for Q1, as I said, we made a solid start. I think the most important is that if you look at where we -- the exit rate of Q4 last year was relatively softer. So we're happy to see good progression after that. For the full year, again, back to the previous questions from Anil, we're comfortable with where consensus is. We are looking at a typical balance between H1, H2, which I think also can help Chetan in terms of his modeling. Anything to add, Kath? Katharina Helen Kearney-Croft: [indiscernible] but I would just note the geopolitical situation has weakened. So we have an expectation, and we hope we will deliver that, but some things are out of our hands. But we will maintain our focus on our strategic targets. Luc Van Ravenstein: Yes, we're 2 months in. It's early days. Good point. Unknown Analyst: [Technical Difficulty] Luc Van Ravenstein: Not so much anymore, actually. When we own Talc, I had the Dutch gas price on my phone here. I was tracking it every half an hour, and I didn't get a lot of sleep. Luckily, we don't have that business anymore. And we are in specialty chemicals. So if you look at how we generate our margins, it's about adding value to our customers' formulations rather than trying to squeeze out a cent on our costs. So very much a different situation than where we were a year ago. Good question. Thank you. And we'll continue to monitor. I mean, I think perhaps one of the things to add, we continue to monitor the situation, the situation that Kath mentioned, obviously, that the recent occurrence in the Middle East. And if our input costs go up, we typically look to price to compensate for that input cost increase, definitely. Thank you. Good question. No more questions? Katharina Helen Kearney-Croft: Can we just get a mic to you? Vanessa Jeffriess: Sorry, just to clarify what you just said that you're happy with consensus sales and EBIT, but you've got the loss of Pharma business, which is $35 million sales and $3.5 million EBIT, right? Katharina Helen Kearney-Croft: So that's on a pre-adjustment for pharma, but I do suggest that people wait until it actually closes before adjusting numbers. Operator: I am seeing no questions on the conference line. So with that, thank you very much. Luc Van Ravenstein: Thank you, everybody. Katharina Helen Kearney-Croft: Thank you.
Operator: Hello, and welcome to the Rentokil Full Year Results 2025. My name is Carla, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Andy Ransom, Chief Executive, to begin. Please go ahead when you're ready. Andrew Ransom: Good morning, everyone, and welcome to our full year results presentation for 2025. After my opening remarks, Paul will provide a review of our financial performance. I will then focus on the execution of our plan in North America as well as providing a brief update on our International region, our categories and our adoption of AI. We'll then open the floor for your questions. And as usual, details of how to ask a question can be found on the web portal. 2025 has been a year of encouraging progress with group revenues increasing by 3.8% and with organic revenue growth of 2.6%. Our H2 performance was particularly encouraging with group revenues increasing by 4.5% and with organic revenue growth being 3.5%. My main focus for today, however, will be on North America, looking at our performance in 2025 and how we're building on that platform in 2026. This time last year, we set out our plan for growth in North America, and it has been a year of encouraging progress with our performance, particularly in the second half, improving significantly. Whilst we're not there yet where we want to be, organic growth reached 2.6% in the fourth quarter. This was underpinned by strong execution, rolling out our new marketing plan, investing in our regional brands, opening 150 small local branches through our satellite program and delivering $25 million of in-year cost savings through our efficiency program. Our International business also saw improving organic revenue growth of 3.4% in the second half. This combination of improved growth and cost efficiencies delivered adjusted operating profit growth of 5.4% and positions us well to deliver our plans for 20% net operating margins in North America next year. Now looking to 2026, we have clear plans in place to build on the progress made last year. Our focus continues to be on growth, where we plan to expand our multi-brand strategy, deploying around 30 regional and local brands instead of the 9 we had previously indicated, and we'll continue to increase our local presence, taking our network of small local branches to around 220. As I'll explain in a little more detail later on, the team in North America has also used the pause in integration to develop a simpler plan for the creation of a single unified field operation. On systems, we've developed a new branch data portal, meaning we can maintain our existing systems for longer. And on pay plans, we're taking a more simplified approach to harmonizing pay policy where, in essence, service colleagues joining us next year will join our new plan, whereas existing colleagues will be given the choice of the new plan or to be grandfathered in their existing plan. So this combination of maintaining more brands and their branches, continuing to use our existing branch systems, whilst also simplifying the pay plan process means less change at the front line and more focus on the customer and indeed on growth. Fueling this growth and supporting our 2027 financial targets is our efficiency program, and Paul will now take you through this in more detail along with the rest of the financials. Paul Edgecliffe-Johnson: Thank you, Andy, and good morning, everyone. I will now walk you through our key financial highlights for 2025 and look at our regional performance in more detail before closing on cash flow and capital allocation. As a reminder, unless I state otherwise, all numbers are on a continuing operations basis following the sale of our France Workwear business, and any comparative performance is on a constant currency basis. Revenue was up 3.8% to $6.9 billion with organic revenue growth of 2.6%. Adjusted operating profit increased by 5.4% to just over $1 billion. This resulted in a group adjusted operating profit margin of 15.5%, a 30 basis point increase year-on-year. After an adjusted interest charge of $204 million, up $29 million due to the cost of additional bond debt issued in the year and an adjusted effective tax rate of 25.3%, adjusted basic EPS increased 2.4% to $0.2591. I have spoken previously about our focus on maximizing cash, and I'm particularly pleased with our free cash flow performance with 24.5% growth to $615 million and free cash flow conversion of 98%. This reflects disciplined working capital management and also some one-off benefits, including real estate sales. With the growth in profits and free cash flow and the proceeds from the sale of France Workwear, partly offset by an adverse foreign exchange impact of $181 million on year-end net debt, our leverage ratio improved to 2.6x, down from 2.9x a year ago and close to our target range of 2 to 2.5x. Reflecting this performance, the Board is recommending a full year dividend of $0.1239 per share, an increase of 3%, in line with our progressive dividend policy. Turning to North America. Revenue grew 3.2% to $4.3 billion with organic growth of 2.3%. Pest Control Services was up 1.1%, while Business Services grew 8.9%. I'll come back to talk about these performances in more detail shortly. Adjusted operating profit for the region was $749 million, up 5.1%, bringing our adjusted operating profit margin to 17.4%. This improvement reflects the early benefits of our cost efficiency program, which delivered $25 million of savings in the year. Operationally, we are seeing our strategic initiatives strengthen key KPIs with colleague retention up 2.8 percentage points to 82.2% and customer retention increasing to 80.5%. We also completed 12 bolt-on acquisitions in the region with combined revenues of approximately $27 million in the year prior to purchase. Looking at our performance in North America in more detail. Fourth quarter organic revenue growth in Pest Control Services improved to 2.6% from 1.8% in the third quarter and 0.1% in the first half. This sequential improvement demonstrates the results we're seeing from the strategic initiatives we put in place at the start of this year. Lead flow, a key metric to indicate future growth in our contract portfolio, grew over 7% across the second half of the year, driven by our revised sales and marketing strategy. This has included a shift towards a more targeted digital marketing approach with a bigger focus on driving organic leads and also increased investment in our regional brands to boost lead generation and brand awareness. The ongoing rollout of smaller local branches through the satellite program to bolster customer proximity and local presence is proving successful with branches with one of these localized hubs attached to it, generating more than double the lead flow of those without. We've also improved our execution by moving sales accountability directly back into the branches. In addition to winning new customers, we have retained more through a relentless focus on customer service, and we've been able to sustain strong pricing discipline through the year. Andy will talk more about these initiatives shortly and how we will continue to build into 2026. Turning to Business Services. We were pleased with fourth quarter organic growth of 7.8% against a strong prior year comparative, which included $6 million of emergency vector control revenue, which did not repeat in 2025. Across the year, Business Services organic revenue growth of almost 9% was supported by double-digit growth in both our distribution business and our brand standards business, with the latter benefiting from significant new business wins. Throughout the year, we have been executing against our plans to simplify the North American business, improving the efficiency of our cost base and creating fuel for growth. We are increasing discipline in our day-to-day operations with improvements in organizational design and simplification of processes. The streamlining of operations led to headcount reductions of over 500 roles by the end of 2025. We are also reducing cost in the business through outsourcing and moving non-core functions to lower-cost locations. This has allowed us to scale our back office operations more effectively while reducing our fixed cost base. To date, around 430 roles have successfully been offshored. We're using technology to automate manual processes and improve our overall efficiency while better leveraging the benefits of our purchasing scale through managing our third-party spend and consolidating spend with suppliers. As well as reducing costs, we continue to drive improvements in how we invest our sales and marketing spend to optimize ROI and have reallocated some $20 million of marketing spend away from suboptimal paid lead activity to higher efficiency channels and campaigns. We rapidly mobilized to deliver $25 million of savings in 2025, targeting the cost areas that were easiest to impact quickly. There remains very significant opportunities for us to create efficiency in our cost base. As we drive up efficiency in the business, we are also investing back in a targeted way to drive organic growth. In 2025, this has included incremental marketing investment and strategic initiatives such as the rollout of smaller local branches and enhancing our capabilities in areas from pricing to data insight. This is helping us to identify the levers to elevate performance and amplify the benefits of our strategic initiatives. Improving our data has been and will continue to be fundamental to our ability to optimize our marketing budgets to maximize our reach into available customer demand. We have already delivered a double-digit reduction in our cost per lead, and there is more to do. Balancing driving cost out with funding investments behind sustainable improvements in organic growth has been key to improving both top line growth and profit margin, and we will continue to balance this carefully as we progress towards our North America margin target of over 20% in 2027. Moving to our International business, which encompasses all regions outside North America. Revenue grew 4.8% to $2.6 billion with organic revenue up 3%. Organic revenue growth improved in the second half, up 3.4% compared to 2.6% in the first half. We saw our strongest performance in Europe, driven by healthy demand and solid pricing in Southern Europe, while growth in Asia was supported by the fast-growing economies of India and Indonesia. Adjusted operating profit increased 5.7% to $518 million, with margins increasing 20 basis points to 19.8%. The U.K. and Sub-Sahara Africa delivered double-digit growth, reflecting a strong revenue performance. Asia and MENAT also displayed margin resilience despite a backdrop of high wage inflation. Customer retention remained strong at 85.7%, and excellent colleague retention was seen throughout the year at 90.3%. We also completed 24 acquisitions in the region with combined annualized revenues of approximately $36 million. Turning now to central costs, which in the year were $191 million, up almost 7% and up 9% at actual rates with some 85% of our central costs in sterling. In addition to underlying inflation, this growth represents multiyear ongoing investments in proprietary technology, digital applications and AI capabilities to support colleague efficiency, customer satisfaction and to generate revenue. In 2026, we expect continued above inflation rates of growth in addition to an FX headwind. One-off and adjusting items, excluding termites, were $92 million in 2025, primarily incurred in North America as part of the overall cost efficiency program. Looking forward to 2026, we are expecting a similar level of spend. Moving now to the termite provision, which, across the year, we have increased by $201 million with an additional $122 million in the second half after the $79 million in half 1. The trends that we saw in the first half of the year have continued. These included an increase in the number of complex residential and commercial litigation claims compared to 2024, albeit at a lower level than at the time of acquisition. More detail on this is included in a slide in the appendix, and a continued increase in cost per claim as our proactive strategy to solve customer problems and reduce litigation continues. In addition, during the second half, we have resolved numerous large commercial legacy claims at a cost ahead of the historic average and increased the long-term inflation assumption in our provision model from 2% to 3.2% as a result of persistently high inflation in legal defense, housing and building materials costs. The cash cost of settling claims in 2025 was $95 million, and we expect a similar level of cash payments in 2026. Turning now to cash flow. We generated free cash flow from continuing operations of $615 million, representing an adjusted free cash flow conversion of 98%. This was ahead of our guidance of 80% and a further improvement from the half year. We reduced the working capital outflow by $67 million to an outflow of $59 million through our disciplined focus on debtor management and supplier harmonization, moving to more consistent credit terms across our supplier base. Although some of this improvement was one-off in nature, the underlying discipline remains, and we are focused on continuing to improve in this important area. Our overall free cash flow conversion also benefited from $20 million of real estate sales. Our gross CapEx of $196 million was in line with guidance, and we would expect a similar level of spend in 2026. Cash interest increased by $41 million to $222 million following our refinancing activities earlier in the year. Cash tax was $7 million lower at $100 million, mainly due to legislative changes in the U.S. Looking ahead, we continue to target a free cash flow conversion above 80%. Our strong operational cash generation, combined with strategic divestments, has allowed us to make progress in strengthening the balance sheet. Net debt at the end of the year was $3.65 billion compared to $4 billion at the start of the period. The key cash inflows in the year were $636 million of free cash flow and $391 million in net proceeds from the sale of our France Workwear business, which completed on the 30th of September 2025. Beyond the immediate cash influx, this disposal has simplified our International business, reduced our ongoing capital expenditure requirements and structurally improved our group cash conversion. We reinvested $121 million of cash in bolt-on M&A, which remains core to our growth strategy. This was less than originally planned with some slippage of deals into 2026. Our pipeline for 2026 remains strong, and we're targeting spend of around $200 million. The cash impact from one-off and adjusting items amounted to $100 million for the year. These costs were largely attributable to transformation costs in North America, which, combined with other cash one-off items, will be a further outflow of around $80 million to $85 million in 2026. Our closing net debt was impacted by $181 million adverse FX translation movement. Nonetheless, we are pleased to see progressive strengthening in our balance sheet with our net debt to adjusted EBITDA ratio reducing from 2.9x to 2.6x, bringing us close to our target range of 2 to 2.5x. Turning now to capital allocation, where our framework is built around 5 key priorities designed to balance growth, shareholder returns and financial resilience. Our primary focus is on organic investment as it drives the best ROI, deploying capital to support the long-term growth of our business. We will also continue to pursue targeted inorganic growth through bolt-on M&A. We have a strong track record of successfully integrating acquisitions to drive value creation, and we will remain selective and strategic in identifying opportunities that complement our existing portfolio, strengthen our market position and deliver long-term shareholder value. We remain committed to a progressive dividend policy, ensuring that dividends grow over time. Our approach reflects confidence in the underlying strength of our business and our ability to generate consistent cash flows while maintaining financial flexibility. We recognize the importance of returning excess capital to shareholders at the appropriate time. When we do have surplus capital beyond our reinvestment needs, we will evaluate opportunities to return it, always ensuring that such actions align with our broader financial strategy. Finally, we remain focused on maintaining a strong and resilient balance sheet. Overall, our capital allocation strategy is designed to strike the right balance between investing for the future, delivering long-term value to shareholders and maintaining financial strength. So in summary, we have delivered an in-line performance in 2025. We are encouraged by the clear signs that our revised North America strategy is working and the improvement in growth in the second half from our International businesses. Our focus on cash is improving our operational cash conversion and reducing leverage towards our target range. As we balance investing in sustainable organic growth and driving up the efficiency of the business, we remain firmly on track to achieve our $100 million cost reduction target and our goal of a North America margin above 20% in 2027. Although the first month of 2026 in the U.S. has seen some disruption from extreme weather, as we look forward, we have confidence in delivering in line with market expectations. Thank you. I will now hand you back to Andy. Andrew Ransom: Thank you, Paul. So over the next few minutes, I'm going to start by highlighting the strength of the pest control market, both in the U.S. and globally before diving into North America's performance. I'll then finish with brief updates on our international growth and emerging markets, on our 2 categories and on the good progress we are making with the use of generative AI across the business. As you can see, the global pest control market has demonstrated consistent, resilient growth, expanding from $15.4 billion a decade ago to an estimated $29 billion in 2025. This represents a robust 6.6% compound annual growth rate over the last 10 years. Looking ahead, the market forecast for growth in the pest control industry remains very healthy with a projected 6.2% CAGR through to 2035. This growth is driven by multiple consistent factors, including increasing urbanization and growing middle classes, which drive demand for professional pest services. Heightened demand for higher hygiene standards across all sectors and as you would expect, climate change are also contributing to a rise in pest activity, all combining to create a sustained need for our services. In Hygiene & Wellbeing, which accounted for 17% of group revenues in 2025, we are the leaders in an attractive global market, which is expected to grow at around 4% annually through to 2030. This is being driven by an aging global population and their increasing hygiene needs, social and demographic trends such as urbanization and increasing middle classes, so similar to pest control, a heightened focus on hygiene standards post the pandemic and greater environmental and regulatory compliance requirements. So we're operating in 2 very healthy global markets. Let's now get into the main focus of today's presentation, that's our plan for North America, where we're continuing on our journey to create an undisputed powerhouse in pest control. This is founded on a number of key themes. First, as I've just shown, we operate in an attractive noncyclical growth market with the U.S. accounting for approximately 50% of the world's pest control market and where we are now a leader for commercial, residential and termite services. Second, we are laser-focused on scale and on density. And this is not just about size. It's a fundamental understanding of how density unlocks significant economies of scale and efficiency opportunities. Third, we are building power brands like Terminix and other well-known regional brands such as Western Exterminator and Florida Pest Control, giving us strong brand equity in every city in the United States and, in turn, supporting other parts of the business' need for local digital leads, local sales, local pricing and recruitment. And finally, everything is powered by our proven, repeatable low-cost operating model, centered on being an employer of choice and maintaining an unwavering focus on customer service. Importantly, as you know, we are primarily a contract-based portfolio business with around 75% of Pest Control revenues in the U.S. being under contract. Now looking back, the integration of Terminix required 2 main thrusts: Firstly, to create a unified enterprise in the U.S.; and secondly, to create a single unified field operation. To date, at an enterprise level, we've successfully established a single leadership structure. We've completed the complex legal merger. We've aligned on our core back-office stack of systems, for example, for people management. We've introduced a single approach to procurement, and we've harmonized our management salary and benefit structure. Crucially, we've also made investments that will drive future performance. We've launched our first U.S. Pest Innovation Center, which is focused on residential pest control, termite and mosquitoes. We've placed an intense focus on being an employer of choice, making excellent progress in turning around colleague retention, particularly within Terminix. And we've also invested in new data and pricing capabilities. These are all important steps in unlocking the true long-term potential of the combined business. Now as you know, in 2024, we began pilot migrations to create a single unified field operation. And while these were very successful at delivering the expected cost synergies, and they did not negatively impact on the retention of our field-based colleagues, we did, however, experience a negative impact on our growth. The combination of fewer locations and a complex change agenda saw lower levels of inbound leads and some customers reacting negatively to the change in their technicians, eventually leading to lower customer retention in the migrated branches. Therefore, we made a decision to pause the full-scale migration throughout last year and to focus on returning the business to growth. This time last year, we outlined a new growth plan to address the root causes of the lead flow and customer retention reductions. And as you know, we saw encouraging signs of progress at the half year and again at Q3. And pleasingly, this has continued into the fourth quarter. The detailed plan that we set out in 2025 extended across a number of key areas, but was essentially focused on operational execution. For leads, we revised the marketing plan to add greater emphasis on organic leads on more local web content and on beginning to leverage AI optimization for local search. For 2025, we focused on 9 core regional brands alongside the Terminix brand, and a key part of the plan was to roll out our small branches under the satellite program to give us greater customer proximity. For sales, we moved ownership of field operations back into the branches, making the branch managers fully accountable for their local sales performance. This was coupled with a dedicated door-to-door pilot over the summer in around 25 territories. And as Paul has already highlighted, we also began driving business simplification, including the outsourcing of a number of key functional activities. Whilst this was all underway, our North America team has been working on plans to build on the successes of 2025 and to introduce a much simpler approach to branches, brands, systems and to pay. So let me provide a brief update. Our people, of course, are our greatest asset and our commitment to being an employer of choice is yielding excellent results. We've seen a 19% improvement in Terminix technician retention since the acquisition. And in 2025, North America colleague retention was up a further 2.8% to 82.2%. This is absolutely foundational to our future success. On the customer front, we delivered very encouraging improvements in customer satisfaction ratings, and we've continued our focus on the end-to-end customer experience, delivering a 0.4 percentage increase in customer retention now at 80.5%. And this will continue to be an area of maximum focus going forward. Our marketing focus shifted in 2025 to generate more organic leads through local brands and local content, where we optimize the content of around 1,200 individual web pages. And while only a very small part of the overall impact last year, we've also begun to leverage AI to optimize our local search presence so that when customers need pest control, Terminix is increasingly the AI cited domain to be shown in the search results. Critically, the successful rollout of our local network of new small branches under the successful satellite program brings us much closer to the neighborhoods where our target customers are living. By the end of last year, we had around 150 of these small branches open. In addition, our successful toe in the water with a dedicated door-to-door sales program in 25 territories last year will be expanded to around 40 territories this year. This local approach was reinforced with our focus on 9 regional and local brands alongside Terminix, which together drove a turnaround in residential lead flow, which was up 7.1% in the second half against the same period last year. As you've already heard from Paul, in addition to growth, efficiency was a big theme for 2025 and will continue to be so in 2026. Clearly, improving our marketing, our lead generation and our sales execution only matters if we're efficiently installing and subsequently billing our new customers. We continue to focus on increasing our speed to install rate. And in 2025, we introduced new KPIs to track the percentage of installs within 24 and 48 hours of signing. Overall, performance was good in '25, but this is another area where there is room for further improvement this year. By improving these operational performance areas, we have, in turn, improved our financial performance. Organic growth for Pest Control Services increased through the year, achieving 2.2% in H2 compared to 0.1% in the first half. This culminated in a strong fourth quarter, delivering organic growth of 2.6%. And importantly, the progress on contract revenue was particularly pleasing, up by 2.4% in Q4, alongside a healthy 5.6% increase in jobs. So an encouraging 2025 and one on which to build in 2026. Our brand strategy is a core lever for growth and the original plan focused primarily on both the core Terminix and Rentokil brands. The new plan outlined last year saw us add investment and focus on 9 highly recognized regional and local brands, which included the relaunch of their stand-alone websites and which delivered an encouraging increase in our inbound lead flow. And going forward, we will now invest in around 30 brands and support each of them with our best practice digital and marketing approaches. We'll have the Terminix brand as our national flagship, the 9 brands that we supported last year and a further 20 local and regional brands in key cities where their local brand equity is strong. Next, our focus is on the local branch network. And I've already highlighted the impact of the 2024 pilots and our pivot this time last year to focus on more branches. We've now added 150 small local branches, and the path forward is to continue that rollout, where we will open an additional 70 in 2026, taking our local network of branches to around 800 by the end of this year. This combination of keeping more local brands and their branches and by expanding our network of small branches as part of the satellite program gives us greater customer proximity and a stronger local brand presence. The most significant recent refinement to our plan involves our approach to data and branch systems harmonization. Our updated approach provides us with the immediate benefits of operational harmonization. We're launching Branch 360, which is a unified reporting and insight solution. It's been designed to provide a single pane of glass for our field leadership and our sales and marketing teams. By integrating data across our current branch infrastructure, this system-agnostic platform delivers consistent KPIs and daily accountability without being dependent on a single fully integrated back-end system. This ensures a standardized management experience across the entire organization regardless of the legacy platforms in place at the local level. Going forward, every branch manager will utilize a standardized performance interface that displays critical financial, operational, leads and sales metrics. Rather than requiring managers to manually extract and interpret data, Branch 360 will push actionable insights and reports directly to them on a daily basis. Finally, the team in North America has also developed a new approach for pay plans. The original plan required a branch-by-branch system harmonization to have been implemented before we could change the pay plans. Our new approach is to decouple pay plan implementation from systems harmonization. This year, we will harmonize branch manager pay, and then we'll focus on sales team pay in commercial pest control. This removes complexity and frustration of the different plans, and it's something that we expect to be well received. Finally, for our largest population, the technicians, we're taking a very pragmatic approach. New colleagues will be onboarded directly onto the new plan from 2027. However, we will give our current colleagues the choice to either opt into the new plan or to be grandfathered in their existing plan with no obligation to change. To conclude our dive into North America, we've continued to make good progress on employer of choice and on customer service. We've increased residential lead flow, underpinned by the rollout of 150 small local branches and our additional brands. This execution has led to an improved organic growth performance, which was particularly encouraging in the fourth quarter. Going forward, we're building on this growth platform with a focus on 30 brands and increasing the number of small local branches, which will continue to roll out at pace this year. And we now have a new simpler approach for branch data and systems and for pay plans. There is still a lot of work to be done, but clearly, we are seeing encouraging progress. So before we conclude and take any questions, a brief look at International and our categories as well as at generative AI, which I know will be of interest to you. As you saw earlier, our International businesses continue to operate in strong and resilient growth markets, with revenue in Pest Control up 5.4% in 2025 and increasing by 4% in Hygiene & Wellbeing. International growth markets delivered a solid financial performance with our revenue up 4.4% and profit up by 4.7%. Here, technology and innovation are our core competitive advantages. Our PestConnect deployment continues to progress well with around 100,000 additional devices installed in 2025, bringing our total to over 600,000. And in the Netherlands, for example, over 50% of our commercial pest control portfolio is now connected through technology. Our emerging markets continue to perform well, posting revenue growth of 6.2% and profit growth of 10.8%. And here, we are continuing to execute our cities of the future M&A strategy to capitalize on the development of the mega cities, which has resulted in 24 deals over the last 3 years and has secured leading market positions in key growth markets, including India and Indonesia, and this will be an outstanding platform for future long-term growth. I won't go into this slide in detail, but it's a summary of our overall Pest Control category performance globally and where organic revenue growth increased from 1.8% in the first half to 3.4% in the second. And similarly, in Hygiene & Wellbeing, which increased organic growth from 0.9% in the first half to 3.6% in the second and, as you can see, has delivered consistent revenue growth post pandemic. So this is my 50th and my last presentation to you. And looking ahead, if there's just one area in particular that I will be very excited to see develop, it's how the business adopts generative AI to enhance its productivity and efficiency as well as providing further service differentiation to our increasingly digital savvy customer base. Although clearly, it's still early days, we're making good progress. In 2025, we successfully launched Google Gemini AI to all 60,000 plus of our colleagues, and we had over 1 million users in just the first 6 months alone. On the service side, our innovations like PestConnect Optix, which was launched last year, uses AI to identify individual rodents from images sent from the field. And we've created our own in-house AI portal, lovingly named Rat-GPT, where over 100 dedicated AI agents are already in use or in development. The power of this focus on AI is perhaps best demonstrated by just a couple of brief examples of our Agentic AI solutions currently being piloted. Our prospect prioritization solution is a fully developed system, which uses multiple AI agents to analyze the wide range of leads that we receive. We receive Internet leads. We receive telephone leads, field-based leads, small leads, national account leads, jobs leads, contract leads, leads in high and low-density areas. And what this new agent will do is score each lead based on conversion likelihood, sales value and a range of other metrics, and then will nudge the salesperson to prioritize the best of the leads. Equally impactful is our on-the-go technician assistant. So if you can imagine a technician walking towards a customer site, this GenAI-powered tool will be speaking to the technician, giving them vital information; information about the site's history, the last infestation details, what the open recommendations are, what the bill payment status is and other important practical information. These are just 2 ways in which we are taking the power of AI and deploying it across the company. Clearly, there are many significant opportunities ahead of us, and we're really only just starting. So to wrap up, for the final time, I've included our RIGHT WAY scorecard in the appendix for you to read. But in short, as I prepare to hand over the baton to Mike, I personally feel very encouraged by the group's performance in 2025. Clearly, there is still much more to be done, but I'm very pleased to see our progress in North America, and I'm highly optimistic about the long-term prospects for the company where I will be cheering on from the sidelines in the future. Thank you very much. Paul and I will now be very happy to take your questions, and there will be a brief pause for the operator to line up any questions. Thank you. Operator: [Operator Instructions] And our first question comes from Andy Grobler with BNP Paribas. Andrew Grobler: Just a couple from me, if I may. Firstly, in America and operationally, as the strategy moves to kind of more branches, more systems, more brands and so forth, how would you balance the cost of doing that against and the visibility that you need from a central perspective. Is there a risk that some of these branches become somewhat independent through that process? And then secondly, just in terms of cash costs with termite costs going up in '25 and looking to '26, what are your expectations going in the longer term for those -- both for those termite costs and for the one-off integration costs over the next 2, 3, 4 years? Andrew Ransom: Thanks, Andy. I'll take the first one and hand it to Paul for the second. Look, I don't think so is the answer to your question in terms of risk either on the cost side or indeed on the risk of loss of control of lots and lots of small branches. If I take the second limb of that first. The Branch 360 single pane of glass, in particular, is going to give us the best visibility that we've ever had at branch level. At the moment, if you're a branch manager, across our suite of branches, you've got to have about 42 different tabs if you want to complete the full suite of KPI metrics and measures. And going forward, every single branch is going to have the same desktop open with the same KPIs, metrics, measures, dashboards and push reports going to them centrally. So I actually think we're going to have better control, visibility and consistency across our branches than we've ever had. And many of the smaller branches opened under the satellite program are really an extension of the larger local branch. So they're run by the same branch managers. So I don't think there's any risk there at all of loss of control, quite the opposite, I think. In terms of cost, the smaller branches are relatively cheap, if I can use that word, relatively inexpensive. The costs have been included in our plans, in our budgets, in our forward look on our numbers. So not a significant increase. And the majority of the increased investment on the brand side is actually on organic search. So it's not so much on the paid search, which is quite expensive. It's on organic, supporting their independent websites, web pages, et cetera. So I think the increased cost is modest. It's all factored into our forward-looking numbers. And I think it's going to give us great, great transparency and consistency on the branch level. So Paul? Paul Edgecliffe-Johnson: Look, on the cash side, I think the first thing that we should all remember is this is a very cash-generative business, and we've proven that in 2025. So we brought the leverage down. Cash conversion was at 98%, and we're going to keep pushing really hard on this. The working capital outflows were significantly lower in '25 than they were in 2024. In terms of the sort of one-off areas, the cost of the termite provision, $95 million in 2025 cash cost. We expect it will be about the same in 2026. Our strategy is to try and close off claims as quickly as we can, whether that's litigated claims or non-litigated claims. It's good to push them through, get them to resolution, and that's our plan so that we can put this behind us as quickly as possible. I can't tell you really exactly what the cash is going to be in '27 and 2028, how that will track down. Expectation is that it will track down because we are dealing with large complex claims now. That's what's put up the provision in the second half. And so we will see it ameliorating over time, but I can't tell you exactly the trajectory on that. In terms of the costs related to the transformation plan, the cost-out plan, we will continue to see those costs in 2026. I'm really pleased with how the plan has gone in 2025, how quickly we've managed to get cost out, but there's a lot more to do. The returns on this, obviously, though, are very, very good. So where we see an opportunity to take cost out of the business, yes, it will have a onetime cost for redundancies or restructuring, but we'll continue to pursue those. Thanks, Andy. Andrew Grobler: And just one further thing. Andy, thank you for however many years it's now been, and best of luck with whatever the future brings. Andrew Ransom: Appreciate it, Andy. Operator: The next question comes from Suhasini Varanasi with Goldman Sachs. Suhasini Varanasi: A couple for me, please. I just want to get some more color on the door-to-door pilot that you implemented in 2025. In the places where you implemented it, is it possible to understand the proportion of new sales that came from this new channel versus your traditional or digital channels? That's the first one. And the second one, I think Business Services has been delivering very strong growth despite the headwinds in vector control services in 4Q. Just wanted to understand the drivers behind this and your expectations for 2026. Andrew Ransom: Thanks, Suhasini. The door-to-door program, we're pleased with it. It did not make a major contribution to the revenue performance, relatively modest, but we were pleased with it. It's our first toe in the water for door-to-door. And as I've said before, it's become a big channel. I still think we're learning on the job with this. And I'm on the record of saying in the past, I've always had a slight concern about door-to-door that the customer retention rate on door-to-door isn't as strong as it is where a customer has reached out to find us. And that's proven to be the case. So retention rates have been lower in the door-to-door business, but absolutely in line with what we modeled. So we put a big tick against the program in 2025 as a success, but as a pilot. And we've included, I'd say, a relatively modest ambition in 2026. We're moving up from 25 territories to about 40 territories. If it continues to go well, and I don't see why it wouldn't, in '26. It will obviously be up to Mike and the team, but I wouldn't be surprised to see that getting potentially materially bigger in '27. So not a big contributor. We don't break it out separately. More to come for in '26. Let's see how we get on. If it continues to go well, I think that could be a much more material potential opportunity in the future. Business Services, yes, it's had a really good year actually off a less good year in '24. So you've got a little bit of comp benefit, I would say, '25 on '24. Just a reminder what's in Business Services, half of Business Services or just over half of Business Services is our distribution business, our products distribution business, which is really quite different from everything else. Everything else is a contract portfolio services business. The products business is selling pest products and turf and ornamental products to the industry and to individual consumers. That is a very lumpy business. It can go in waves, and we've had a very strong finish to the year in that business. But it's a good business. It's a good, well-run, solid business. So I don't see -- I'd be surprised if it grows as strongly in '26 as it did in '25, but I would say it's a good performing business, and it's going nicely. The other businesses are contract portfolio businesses. They are Business Service operations. So we have brand standards, which looks after franchise properties and goes and checks if they are living up to the standards that the franchise owner has set. That's a good business, running very nicely. We've won some big new recent accounts. So I would expect that business to perform pretty well in '26. We've got our plants business, Ambius, which is a nice business, doesn't grow at the sort of rates that Pest Control does. So that's a slower growth business, and I'd expect that to be similar in '26. So look, I think it's had a great year, slightly flattered by a poor year in '24, but solid businesses, well run, and I don't see why they shouldn't make a decent contribution in '26, but perhaps not at the stellar growth rates we've seen in '25 would be my best view. Operator: And the next question comes from Annelies Vermeulen with Morgan Stanley. Annelies Vermeulen: I had two questions, please. So firstly, on the rebranding of the retiring brands, I think you said a lot of those are one-branch businesses. So how many branches or brands does that involve? And what was the criteria for the decision on that segment specifically? Were there certain things that you look for in terms of signing those off? And then secondly, on the pay plans for the technicians, have you collected feedback on this from your existing technicians? And what was that based on? And if so, do you expect it to meaningfully continue to contribute to improving retention from here? And are there any additional costs associated with having to run 2 pay plans? Andrew Ransom: Thanks, Annelies. On the rebranding, those who've got a good and long memory will remember that we've got about 80 brands, give or take. So we're going to keep 30. So that means there's 50 -- I unfairly call them 1 horse towns. There are 50 brands. They're almost exclusively single city or single town brands. It doesn't mean to say we don't love them and like them, but it doesn't make economic sense to support those 50 individuals. So they are the 50 smallest. In aggregate, those 50 brands don't even represent 10% of the total revenues. So they will be retired quietly, slowly, gently over the next couple of years. And the criteria really was just based on scale. It's the ones that have got the least footprint, the smallest brands in small towns and smaller cities. And we tested brand equity as well. So we actually tried to work out how strong are these brands in the market. And the ones where we've got strong brand equity, we've retained and the ones where the brand equity is weak, we've taken a decision that it's better to migrate those to a strong brand equity local brand, whether that's Terminix or it might be one of the other 30. On the pay plans, no, look, there's not additional costs. There's the absence of some savings, but it's not material. And again, it's all fully costed in the plan. But as I said in the remarks, it's a very pragmatic decision. As I've explained several times over the last 2 or 3 years, we do have quite a distribution on a bell curve of pay for technicians and some have got legacy pay plans that look quite generous compared to the pay plans we've been operating across the business for some time now. And we've just taken a pragmatic decision that we will grandfather those. So if you want to stay on the pay plan that you're on because you like it, because you think it's generous, because you've worked out how to maximize your income, you can stay on it. So for the pay plan that we're moving to for the new people that joined from '27 onwards, we're essentially taking an existing pay plan that works quite well. We've modified it slightly. So there's absolutely no reason to believe it will be anything other than business as usual and a successful new pay plan. But it does mean we're running more than one pay plan for longer than we originally wanted. So there was some modest cost improvement originally planned to move to a single pay plan. We've foregone that saving. But as I say, relatively modest and included in our forward-looking plans. Annelies Vermeulen: Great. Thank you for the engagement, Andy. Best of luck. Andrew Ransom: Thank you. Cheers. Pleasure. . Operator: And the next question comes from Bill Kirkness with Bernstein Societe Generale Group. William Kirkness: I have two questions, please. Firstly, as organic growth rehabilitates, I assume there's some market share gains happening. And if so, can you just talk about where you see those? Are they quite broad-based? Or are they sort of focused with the smaller peers or larger operators? And then secondly, you mentioned the weather impact in Jan. I just wonder if that's so material as to disrupt this sort of improving momentum we're seeing in North America pest or whether actually you've got enough self-help to drive ongoing improvements regardless of the adverse weather? Andrew Ransom: Thanks, Bill. Look, market share in pest control is a notoriously difficult endeavor, there's about 18,000 to 19,000 pest control companies in the United States, and we're operating across hundreds of cities. So in any particular town, any particular city, customers have got massive choice. Typically, they've got a choice of 10 to 20 local players. And so trying to work out when we improve where the share improvement is coming from and vice versa is really, really difficult. You can only really see in a live dynamic way, whether you're winning or losing share on the big national account piece. And that isn't really what's driving our improvement in organic growth. I'd say it's broad-based, and it's coming essentially from improvement in our operations in residential and termite, and it's across multiple towns and cities. So really difficult to say where we're winning or where we're winning from. But most of it, I would say, is local movement as such. On the weather, look, the way it works in our North American business, the way the entire industry works in North America is you only get paid and you only recognize revenue once you have done the work. So if you get a weather event, as we saw for a few days in January and you can't get your colleagues out on the road to do their routines. If you're not visiting that customer, then you're not billing that customer and that revenue doesn't happen. But that doesn't mean that revenue has gone. What that means is you work like crazy in the month of February to catch up the visits that you missed in the month of January. And clearly, that's what we will have been doing in February to try and catch up that work as much as possible. February weather, we thought was going to be a bit wobbly as well. At one point, there was a couple of snow days. But in actual fact, the weather in Feb turned out fine in the end. So we draw attention to it simply because it happened. It was material. It wasn't just one day. It was a few days down the Eastern Seaboard. But we will be working very hard to catch it up through February and into March. So we're not flagging a major issue, but clearly some softness in the month of January. Operator: The next question comes from Nicole Manion with UBS. Nicole Manion: One on the price and volume split in North America piece. There are a few mentions in the release about the robust pricing environment. I think that's actually sort of fairly consistent with what you said earlier in the year. But is there anything to call out here in terms of the pricing piece still accelerating or just holding at a similar level? And then secondly, sorry if I've missed this, I think you can sort of back it out from the numbers on branches that you have given in the release and the presentation. But could you sort of just confirm the total sort of branch base number as of the end of 2025 in North America? Paul Edgecliffe-Johnson: Thanks, Nicole. So in terms of price and volume, we're still very encouraged by what we're seeing on price. We do manage to get inflation plus, which we've seen through the year. And as you've seen, the organic growth has been ticking up quarter by quarter. So we are continuing at a similar level on price and clearly doing better on volume. We're still losing a bit of volume if you look at that number that we printed in the fourth quarter, but it's improving sequentially. And in terms of the number of branches, well, we said that by the end of this year, we expect to get up to approximately 800, and that's going to include 220 of these sort of small local branches or satellite branches, which we're at 150 on. So the 70 delta is the change from 730-ish at the end of this year to 800-ish at the end of 2026. Nicole Manion: Got it. All the best, Andy. Andrew Ransom: Appreciate it. Cheers, Nicole. Thanks. Operator: And the next question comes from Jane Sparrow with JPMorgan. Jane Sparrow: Two questions, please. Just on the regional brands and the Terminix brand, it sounds like the improvement in lead generation is largely being driven by the reinvigorated regional brands. Can you perhaps comment on the main Terminix brand and how that is performing? And then secondly, of those branches where there's a high proportion of people sticking on the old plan, is there any noticeable divergence on KPIs on your new one pay scorecard versus the other branches where more people are on the new plan, please? Andrew Ransom: Jane. Yes. Look, the Terminix brand is doing well, but you're correct in your deduction that the regional brands must have done really well. They did do really well. Super pleased with the performance of quite a number of the 9 regional brands. And as I said in an earlier answer, a lot of that has come through really focusing on organic search performance, and that's what's given us the encouragement in part to go with the 30 brands. So that's excellent. But the big, big battleship brand, Terminix, is going well and has performed very nicely. We haven't seen as big percentage increases, but it is performing nicely. And there, we do things like market testing for brand recognition, unaided brand recognition. Can you name a pest control company in the United States? Can you name a pest control company that you would consider using if you had a pest control problem. And we've had a recent survey on that, and the data has come out very, very strong. It's a powerhouse brand, and it's got fantastic brand recognition. And so it's performing well, but we do support Terminix significantly with paid search as well as organic search. And over time, what we'll be looking to do, particularly as we get more into the AI generative search, we'll be looking to move further down the organic search for Terminix as well. So it's performing well, but a big part of the rebound in lead performance has come from those regional brands and the reason why we're supporting the 30 going forward. In the second question, that's way too early to say what that looks like in terms of branches with a high proportion of people on old pay plan, which is largely heritage Terminix brands and then performance of branches with people on newer pay plans. So it's too early to call that. What we have been doing, and Paul has made this observation a few times, we've been much more into the data than we've been before. We've got a Head of Data and Data Science. We've got a small data science team, actually not so small these days, analyzing data from branches and really trying to work out, well, where we've got fantastic performing branches versus poor performing branches, what are the factors that are contributing? Is it tenure? Is it pay? Is it geography? Is it commercial versus residential, all of those factors. And we're getting more insight into that, not ready to call it on that, but pay plan might be one element out of about a dozen, but there is no binary read across between old pay plan equals great performance, new pay plan doesn't. That doesn't exist. But the point of the question, what drives different branch level performances and what are those factors, that's really why we're super excited about the 360 single pane of glass. Mike and the team are going to have much better data over the next few years than we've certainly had for the last 2 or 3 years. But no correlation at this point to call out, Jane. Jane Sparrow: Okay. All the best for the future apart from the obvious foot front. Andrew Ransom: Yes. Well, I would say the same to you, Jane. I would say I hope Spurs don't get relegated, but I would be lying if I said that. So good luck, Jane. Operator: [Operator Instructions] And our next question comes from Allen Wells with Jefferies. Allen Wells: Most have been answered, but just two quick ones. Firstly, Paul, just on the $100 million cost saving plan. Obviously, we've had lots of moving parts over the last 12 to 18 months with the change in brand strategy, less closures, more satellites, changing brands, changing remunerations. As we sit here today, could you maybe take a step back and simplify down how we should think about the maiden building blocks of the $100 million and what will be delivered in 2026? That's the first question. And then maybe just secondly, just following up on the remuneration plan and the allowing of grandfathering, et cetera. Obviously, we're a couple of years into this process now. And what drove the need to change that at this stage? What have you seen? What were staff telling you? And why now? That would be my question. Paul Edgecliffe-Johnson: Thanks, Allen. So in terms of the cost plan, I'll happily take a step back and many of you will remember that we had our integration cost savings back in the day. That got a little bit difficult to track through. So when I came in, I said, take the 2024 cost base, there will still be inflation on that cost base, but we will take $100 million of that. And that's what we are tracking well against. So I've said that we've taken $25 million out of the cost base in 2025. We came sort of at that from a cold start. So most of the savings were manifested in the second half. So if you think about that, that means that on a run rate, it's more than double that, that we're achieving, we are investing back into the business. So whether it's the new capabilities we've talked about in pricing, in data, in many other areas of the business or the additional resources we're making available for marketing and for our additional branch network, that's all being funded. So it's a fuel for growth strategy, and we'll continue to do that. So we will tackle back-office costs, we'll tackle inefficiencies, we'll tackle spans and layers, all the normal opportunities that you would see in a very large-scale business to take cost out. There is significant opportunity. What we are doing is going after the right cost at the right time. Some we will leave a little because they might be a bit more disruptive to the business. So the focus at the moment has been on that back office cost, cost of finance of accounts payable, et cetera, et cetera, removing roles, offshoring roles, et cetera. But still lots to do, and we will get that $100 million out by the time we're reporting the 2027 results and to get the margin up to 20% plus. And look, in terms of the pay plans, the whole plan that we're coming up with in terms of how we simplify the go-forward integration is not to cause disruption. It's to settle people down. If there was some anxiety in technicians that perhaps they wouldn't like the new plan as much as their current plan, fine. They can just grandfather on to their current plan. We want people to get focused on doing their jobs well. We are an employer of choice in the industry, and that's the most important thing to make people go out and delight customers every day. And if there's something getting in the way of that, then we've removed that. So yes, that's our thinking. Operator: And the next question comes from James Beard with Deutsche Bank. James Beard: I've got two, please. Firstly, you noted the improvement in residential leads in the second half. I was wondering if you could talk through the time that you expect those to convert over and how that improvement in resi leads is splits between contract and jobbing. And then secondly, going back on to pay plans, again, you said no change to residential sales staff pay plans in '26. When should we expect any sort of change to residential sales staff pay plans, please? Andrew Ransom: Thanks, James. '27 is the answer to the second question. Sorry, I should have said that. In terms of the time it takes from lead into sale into install is a really good question. I mean, that's a proper pest control question, James, that's really down in the weeds, but it's really, really important. Because if it's residential, if you've got a mouse running around your kitchen, when do you want that solved? You want it solved immediately. So the speed from which we can take a residential lead, and the same is true of termite. You've just discovered termites munching away in your basement or your cellar, you want that sorted quickly. And what we've seen is why I mentioned the new KPIs, operational KPIs in terms of how quickly are we getting from the lead to the sale to the install and it only becomes revenue when you do the install. We've got to get faster and we've got to get more consistent at that. So we are now getting a good proportion of the leads converted, sold and installed within 24 to 48 hours. And that's the sort of time window we are giving ourselves because if customers are having to wait 3 days for their mouse running around the kitchen to be dealt with or for the worry of the fact that termites are in their house, for many customers, that's too long. On the commercial side, time is much less critical. Commercial customers, that's fine. You can come next week, you can come next month unless they've got an emergency. So yes, look, it's a really, really key part of the business. And if we look through 2025, what we saw, particularly in the second half was a -- if you go at the top of the funnel and come down, really good improvements in the leads coming into the business. So MQLs, which we track on a daily basis. We look forward to that. At 4:00 every afternoon, we get a daily report on MQLs. Really good progress on SQLs. So what percentage of MQLs turn into sales-qualified leads. So that's gone really, really well. Really good progress on sales. So the marketing leads are good leads. They're turning into sales leads. The sales colleagues are selling and then it gets less good in terms of how many of those sales actually get converted into revenue. So that's the critical thing that the team are now working on is the next challenge as they work from the top of the funnel and they're working through down into the middle and into the bottom of the funnel. So that's why these KPIs of what percentage of sales are getting turned into activity with the customer is super critical. So good, good progress, and I think that's where Mike will have the team focused this year is improving the conversion of actual sales into -- turning into revenue. In terms of the split between contract and jobs, I have explained many, many times, we're a portfolio business, portfolio, meaning a book of contract revenues, roughly 75% of the U.S. For group level, we're more about 80-20. But at North America, U.S. pest, it's 75% contract portfolio, 25% jobs. Really good performance on jobs, over 5% organic growth in jobs in the fourth quarter and improving performance on contract portfolio. But it's that contract portfolio that we've got to get into consistent, healthy positive quarter-on-quarter improvement. We've seen some of that now, but we've got to build on that. It's only when we get that and back to the question we had a while ago about price versus volume. We've got to get that volume growth consistently back into the portfolio. It feels like it's coming. It feels like it's building, but that's where we need to push on in 2026 and into 2027. Only when we get that plus the jobs, will we get the business back into industry levels of growth and beyond. But I'm really confident the team are all over this. But good performance on jobs and an improving performance on contracts as well. James Beard: And all the best in the future, Andy. Andrew Ransom: Appreciate it. Cheers. Thank you. Operator: [Operator Instructions] And our next question comes from James Rose with Barclays. James Rosenthal: I've got a few on commercial, please. In the release, this has been flagged as a particular growth area. I wonder can you expand on your growth plans there? Secondly, is it right that commercial branches will be running on new systems, so slightly different ones to resi and termite branches? And then finally, how progressed are you in bringing some of the innovations and technology you have in the international and European business into the U.S. And what's the opportunity there? Andrew Ransom: Thanks, James. Yes, look, good question. Rentokil is the undisputed global leader in commercial pest control. The Terminix acquisition brought with it a big business in residential and termite. But Rentokil, which operates in, what, 88, 89 countries is globally renowned for its commercial pest control business. So we should be punching above our weight in commercial in the United States. And we're not yet where we need to be in commercial. I think in part because we've had so much focus on getting the resi business right and getting the termite business right. We've recently taken the decision to give independent leadership of the commercial business to one person. We've got an individual who probably knows more about commercial pest control than just about anyone on the planet. He's an export from the United Kingdom. So we've given it dedicated leadership. In terms of the plan for the business, improving customer retention has to be at the first part of that plan. We still don't have retention where it should be. Customer retention in commercial should be very high typically. It needs to be higher. It is going to be -- the commercial business will all be on PestPac, which is the core system that Rentokil has been using for 3 or 4 years now in the United States. So there won't be any great surprises or drama there. So that should be relatively straightforward. And you're absolutely right to raise the question of innovation. I was chatting to Mike the other day, and he's been introduced to some of the really cool innovations that we've got in pest control and commercial pest control, in particular. And we've got some really interesting ones coming in the pipeline over the next year or 2. But we have manifestly been weakest at deployment of commercial pest control innovation, in particular, our connected solutions in the United States. And we're going to fix that. That needs to be a key priority for 2026. We need to see the U.S. really starting to adopt and drive innovation. That's why the individual that's in charge of the business has been chosen in part because he's got great experience with that innovation. So look, I think it's an area we should be punching above our weight given our global position. The systems are relatively straightforward in the innovation agenda. It just needs execution now. We've got the products. We've got the services. We've got the technology. We just have to execute. And it's easy for me to say, particularly as I'm about to walk out the door and say, over to you, Mike. It is easy to say, but that's what we do around the world. So I'm confident we will do that in the United States. Super. Thank you very much, James. I'm looking at Heather across the table here. Are we done with the questions? No more questions. Unbelievable. Thank you all very much. I can't believe that is it. As I said earlier, that was my 50th set of results, and I think quite a good one to sign off on. It has been an immense privilege to be CEO of this company for the last few years. We've gone from a reasonably unstructured conglomerate to a pretty focused world #1 in our chosen industries, which is a pretty cool thing, I feel. And it's been, as I say, a great privilege to be here, but the success we've made in the last decade or so is absolutely down to the people in the organization. I've always said if we get the colleague strategy right in Rentokil Initial, everything else follows. And I think we have got a wonderful culture in this company. So I do want to pay tribute to the 60-odd thousand colleagues and all the ones that went before them in creating the brilliant company that it is. And believe it or not, I do want to thank you a lot. It's been great dealing with you for such a long time, doing my best to answer your questions. Will I miss it? I think I probably will a little bit, but I'll get over it. So thank you all for your interest in the company. It's been great getting to know many of you. And for the next few weeks, I really look forward to handing over to Mike. We're having a great transition. He's having a lot of fun getting to know all the people around the business, and I'm sure he's going to be a great success. And personally, I think the company is set fair for long-term value creation, which is, at the end of the day, what it's all about. So thank you all for your support of the company, your questions and in many cases, your friendship as well. So thank you all very much indeed.
David Paja: Okay. Good morning, everybody. I'm delighted to welcome you to today's presentation covering our financial year 2025. Let's move to the first slide. This is today's agenda. First, I'm going to take you through the highlights of the year. Hannah will then present our financial performance. And after that, I will give a strategic update, including our new divisional structure, our growth drivers and our updated medium-term targets. After the summary and outlook, we'll take your questions. So let's start with the highlights of the year. 2025 has been my first full year as Chief Executive of the group, and it has been a year of significant evolution for the business with 2 significant M&A transactions, resilient trading in a challenging market and great progress in our growth initiatives. As a result, today, we announced renewed and more ambitious medium-term targets. In 2025, we have acquired OrthoLite and divested our U.S. Yarns business. We have demonstrated once more our ability to gain market share, reflecting the benefits of differentiators that our competitors cannot match. And our new target, organic adjacencies have added 1 percentage point to growth at group level. Finally, we have delivered a record level of free cash flow of $160 million. For reference, this is more than the free cash flow that we have delivered in the past 10 years combined, and it reflects the new and improved cash generation profile of the group following the end of U.K. pension contributions and the end of large restructuring activities. With that, I will hand over to Hannah to take you through our financial performance. Hannah Nichols: Thank you, David, and good morning, everyone. Now before I start, it's worth noting that the Americas Yarns business has been treated as a discontinued operation and is therefore excluded from the numbers presented here. I'm pleased to report that the group has delivered a resilient performance in 2025 set against a backdrop of macroeconomic and tariff uncertainty from the second quarter onwards. Revenue was $1.46 billion, flat on an organic constant exchange rate basis, comfortably outperforming our core apparel and footwear end markets, which we estimate were down low to mid-single digit for the full year. EBIT was $290 million, in line with expectations, and up 3% on an organic CER basis. Pleasingly, group operating margin increased by 80 basis points to 19.8%. And in the second half, we matched our strong first half performance organically despite challenging markets, showcasing the resilience of the group. Earnings per share was in line with expectations at $0.093 with higher EBIT offset by higher pension-related interest charges and the timing of the share placing in July 2025. The group generated $160 million of free cash flow pre-dividends, reflecting the powerful dynamics of high margins and low capital intensity and timing benefits from the OrthoLite acquisition. In line with our guidance, year-end leverage increased to 2.2x following the OrthoLite acquisition, and we expect leverage to fall below 2x by the end of 2026, underpinned by the cash-generative characteristics of the enlarged group. So turning to our margin performance. The group delivered strong margin expansion in 2025 with EBIT margin increasing by 80 basis points to 19.8%. As you can see from the chart on this slide, the margin improvement reflects pricing discipline as we successfully managed pricing pressures during the year and mix benefits with a focus on premium and sustainable product lines. In addition, our teams continue to focus on driving productivity, including procurement savings and operational improvement actions. Margins also benefited from strategic project savings, including the footwear division manufacturing site consolidation and the move of operations to Indonesia. In line with expectations, OrthoLite contributed to $11 million of operating profit in the last 2 months of the year. If we now turn to the divisional performance, starting with the Apparel division. At $769 million, revenue was up 1% on a CER basis. This was a strong performance in a year that started with market growth momentum but softened following the U.S. tariff changes in April with market conditions remaining challenging through the rest of the year. The division continued to gain market share, outperforming the core apparel threads markets, which we estimate were down around 3% in the year. This was achieved through a focus on delivery and service and supported by our flexible global manufacturing capabilities. The division benefited from favorable mix with year-on-year growth in premium thread sales and recycled thread products. In addition, there was good growth in the China domestic market, which requires high levels of operational agility to meet demanding customer lead times. EBIT increased by 4% on a CER basis to $156 million and EBIT margin increased by 60 basis points to 20.2%. The margin expansion reflects the benefits of the favorable product mix and pricing discipline alongside prudent cost control and an ongoing focus on productivity gains. If we turn to Footwear, at $440 million, revenue was 2% lower than 2025 on an organic CER basis. This reflected a period of growth until the end of April, followed by customers taking a cautious approach to ordering. And in the last few months of the year, we saw brands managing down inventory further in response to the uncertain 2026 outlook. As such, we estimate our core footwear end markets were down around 4% to 5% for the full year. Despite this challenging backdrop, the division outperformed with estimated organic market share growing to around 30%. The division also successfully maintained pricing despite downward pressures. EBIT was $105 million, flat on an organic CER basis compared to the prior year. The division delivered a strong EBIT margin of 23.9%, an increase of 40 basis points, reflecting pricing strategy and prudent cost control measures alongside operational actions taken in the past year, including footprint consolidation in Europe and the rebalancing of the division's manufacturing towards Indonesia. The acquisition of OrthoLite was completed at the end of October 2025, and 2 months trading are included in the 2025 divisional results. The 2025 full year profit performance for OrthoLite was in line with our expectations with above-market revenue growth and high levels of cash generation. Turning to Performance Materials. Now this is the last time that we will talk about Performance Materials in this format given the move to the 2 divisional structure. However, we are pleased with the improvements made in 2025. Revenue in the year was $256 million, flat on an organic CER basis, reflecting a return to growth in the second half of the year of 2%. Industrial revenue was 1% lower than prior year, with share gains in automotive thread, partly offsetting softness in other industrial end markets. The division also saw strong demand in 2 organic adjacency target areas: Safety Fabrics, which delivered 40% revenue growth in the year; and composite tapes for the energy market, which grew 21% in the full year after a particularly strong performance in the second half. As expected, EBIT was $29 million, an increase of 10% on an organic basis, with margin increasing to 11.3%. The organic margin improvement reflects the benefits of operational actions and the stronger second half trading with Q4 exit rate margins at 11.8%, approaching the bottom end of the medium-term targets set out in March 2025. In the second quarter, we exited from the noncore U.S. Yarns business, improving the quality of the portfolio with the divisional margin increasing 390 basis points, including Americas Yarns results in the 2024 comparator. In addition, the small acquisition of VizLite was completed in October 2025, accelerating our Safety Fabrics growth strategy. If we turn to the income statement, there are certain areas worth highlighting. At $2 million, exceptional items significantly reduced from 2024 with previous strategic projects now complete. Acquisition-related items included $27 million for the amortization of acquisition intangibles and $20 million for acquisition transaction costs, mainly relating to the OrthoLite acquisition. Finance costs were $41 million, higher year-on-year due to the impact of the 2024 U.K. pension buy-in payment and including $3 million of exceptional charges associated with acquisition loan financing. At 29%, the full year effective tax rate remains well controlled and in line with expectations. As a result, 2025 adjusted earnings per share was $0.093. The higher EBIT was offset by higher finance costs given the 2024 pension buy-in and the increased number of shares in issuance following the successful capital raise that took place in July 2025 to part fund the OrthoLite acquisition. And finally, given the full year performance and our confidence in the group outlook, we're pleased to propose a final dividend of $0.0228, resulting in a full year dividend of $0.0328, up 5% year-on-year. If we now turn to look at cash flow and leverage. The group delivered strong cash performance in 2025, generating $160 million of free cash flow. This reflects the low capital intensity of the group, a lower level of exceptional cash flows and the positive contribution from OrthoLite. As you can see from the chart, the working capital inflow in the year was $13 million, reflecting disciplined working capital management and a timing benefit from OrthoLite. Working capital as a percentage of sales was 11% in 2025. In 2026, we expect this ratio to return to a more typical level of around 12%. Capital expenditure was $32 million as we maintained a disciplined approach to investing in growth opportunities. We expect capital expenditure to increase to the $40 million to $45 million range, including the OrthoLite business, as we continue to allocate cash in support of our organic growth strategy. The exceptionals cash flow of $24 million included cash outflows related to strategic projects, which are now complete, and was significantly lower than 2024, which included $128 million of cash outflow associated with the U.K. pension scheme. Acquisition-related cash flows of $793 million, mainly relate to the completion of OrthoLite transaction at the end of October 2025. And as a result, net debt, excluding lease liabilities, was $815 million at the end of the year, representing a pro forma leverage of 2.2x, in line with our previous guidance. And given the cash generative characteristics of the enlarged group, we continue to expect leverage to fall below 2x by the end of 2026. And finally, moving on to modeling guidance for 2026 and beyond. Now I won't run through all the details on this slide. However, the main focus is to provide you with more color around the building blocks for the group cash flow in 2026 and the medium term. I've already touched on some of the guidance areas, including working capital and capital expenditure. In terms of the other areas to draw your attention to, it's worth calling out that we expect the effective tax rate to reduce slightly over the medium term given the benefits of the OrthoLite acquisition. In terms of OrthoLite cost synergies and integration costs, we're maintaining the guidance we provided at the time of the acquisition announcement, and we will provide you with progress updates as the integration progresses. In addition, in the appendices to this deck, we set out some indicative 2025 numbers under the new 2 divisional structure to assist you with your modeling going forward. So in summary, we've delivered a resilient performance in 2025 with strong cash generation, which sets us up well for 2026. I will now pass back to David to provide a strategic update. Thank you. David Paja: Thank you, Hannah. As I said earlier, I cannot understate the strategic progress that we've made during the year with substantial improvements and positive momentum. The reshaping of our portfolio has included the divestment of our U.S. Yarns business in June 2025, following the closure of the Toluca, Mexico facility in December 2024. These actions have removed slower growth and lower margin business from the portfolio. Notably, this action has enhanced group margins by 100 basis points, and it has enabled us to focus our investment on other businesses in the portfolio. In October, we completed the acquisition of OrthoLite for an enterprise value of $770 million, which has accelerated our strategy to create a leading Tier 2 supplier in footwear components by adding an exciting, high-growth and high-margin business to our portfolio. OrthoLite brings with it compelling revenue and cost synergy opportunities. I will share more on OrthoLite later. These significant changes have facilitated the streamlining of the group into 2 divisions, Apparel and Footwear, enabling us to reduce internal complexity and better align our underlying technologies. We have continued to take share. We delivered flat organic revenue during 2025, a year in which we estimate our markets declined by a low to mid-single-digit percentage. This proves again the resilience of our business model and our ability to grow faster than the market in all conditions. Our target adjacencies have delivered quickly, contributing 1 percentage point to group revenue growth overall, in line with our guidance. Especially pleasing this year was the growth from our Safety Fabrics, which I will come back to later, and energy tapes. We expect our revenue in these target adjacencies to continue to scale up over time as we expand the customer base and introduce new products. We have consolidated our divisional structure into 2 divisions. The former Performance Materials businesses of Personal Protection and Industrials, which accounted for 80% of PM sales, have been incorporated under Apparel. And the Telecom & Energy business, 20% of PM sales, under Footwear. We now have 2 divisions with technology cohesion, scale and strong operating margins. The Apparel division is predominantly focused on textile engineering with thread as the main product category and 2 exciting growth opportunities in Safety Fabrics and Coats Digital. The Footwear division is predominantly focused on polymer science with a more diverse product portfolio and OrthoLite as its largest business. This change provides increased focus and operational simplicity. Coats has a number of levers to generate organic growth in excess of 5% per annum on average through the cycle. We estimate that our underlying markets can grow on average 3% through the cycle. We will continue to outpace our markets by 100 to 200 basis points as the industry consolidates around fewer, stronger players. We have consistently gained share over the past few years. And in 2025, we have done it again in a difficult market context. Last year, we launched the initiative to grow in target organic adjacencies, and this strategy has already delivered 1% of group growth in 2025, which will continue as we scale up. Set together, this is how we will deliver more than 5% growth, 200 basis points ahead of the underlying market on average through the cycle over the medium term. Additionally, our strong cash generation provides us as we deliver with optionality to enter attractive inorganic adjacent markets as we did with OrthoLite. We continue to monitor companies with differentiated positions, a sustainability focus, cross-selling and cost synergy opportunities. This slide summarizes our key differentiators on one page. These differentiators are the drivers of our share gains. The Apparel and Footwear supply chains are very fragmented, but they are consolidating to cope with increase in product complexity, the increase in sustainability requirements and the changes in sourcing countries. Coats is in an enviable position to gain market share because we have the scale and capabilities to support our customers where it matters to them. At the bottom of this chart, you will see that the strength of our customer relationships is underpinned by our people and our culture of customer centricity. We have built deep trust with our customers through a track record of delivery over the years in any market conditions. Service is king for our customers, and this translates into the operational and commercial excellence focus at Coats. Customers value our high product quality and our ability to deliver it consistently from all our manufacturing sites, including accurate color matching, which is a key differentiator. And our investments in operational agility are paying off as orders are becoming more fragmented. Our service is also reflected in the way that our commercial and technical teams support our brand customers and manufacturers every day around the world to make the right product choices and improve their manufacturing productivity. At the top of the house, you can see our 3 key growth enablers. Our scale and financial strength allow us to invest more than other companies in sustainability in both products and operations, innovative new solutions and digital systems that make customer interactions more efficient and enhance supply chain transparency. This is how we win in the marketplace. Sustainability is at the heart of both Coats' and OrthoLite's strategies. Our sustainable thread portfolio grew 43% in 2025 and contributed to our share gains in the year. But we also drive sustainability in how we run our operations. In 2022, we set ambitious 2026 targets, and we are well advanced in many areas. Since 2022, we have achieved a 30% reduction in our Scope 1 and 2 emissions, ahead of our 2026 target of 22%. We have also achieved zero waste to landfill a year early. And women now occupy 33% of our top 150 leadership roles, ahead of our 30% target for 2026, a significant improvement as we continue to ensure equality for all employees. OrthoLite shares the same sustainability DNA with a similar focus on increasing recycled material content, developing breakthrough innovations like Cirql or making operations more sustainable. Our target organic adjacencies represent an addressable market of approximately $2 billion, growing at more than 5% per annum. We have increased the size of this addressable market from $1.3 billion to $2 billion since last year because we have added a new product category, high-visibility trims within Safety Fabrics. All these initiatives represent opportunities to offer new differentiated product categories to our existing customers, building on our expertise in textile, engineering and polymer science. In Safety Fabrics, we are bringing innovative protective materials to workers in hazardous jobs, combining premium protection with comfort and lightweight. In energy, we're expanding our range of highly engineered tape products that protects critical on and offshore pipeline applications. In Coats Digital, we provide to our apparel customers software products that optimize their production planning and costs. In Footwear, our woven upper technology, ProWeave, delivers increased performance and more design freedom with lighter weight. In lifestyle, we are extending our structural components offering from luxury to premium handbag customers. These 5 adjacencies, combined accounted for $45 million sales in 2025 with great momentum going into 2026. Let me give you more color on our Safety Fabrics initiative, which grew strongly in 2025. Safety regulation continues to tighten globally, and customers are demanding products that are not only protective, but also comfortable to wear. We already sell thread for safety applications, and we are now using those existing customer relationships to offer highly engineered fabrics and high visibility trims, leveraging our core know-how in textile engineering and polymer science and our cost-competitive supply chain in Asia. In the second half of 2025, we brought to market our latest innovation in protective clothing, FlamePro ARC, which offers superior protection against electric arc hazards. What sets this technology apart is that protection comes together with extreme lightweight and comfort, allowing workers the enhanced mobility and comfort needed to perform their roles. We also have a portfolio of high visibility trims, which can be paired with our safety fabrics, bringing life-saving identification characteristics in all types of ambient light, including no light. In the second half of 2025, we acquired VizLite, a small company with a lot of potential, whose glow-in-the-dark technology is already enhancing our portfolio. We combine it with our existing retro-reflective, fluorescent trims to create 3 layers of visibility in environments with reduced or no light. This technology has been specified for U.K. firefighters and has significant potential for growth in other parts of the world and other applications. The acquisition of OrthoLite is an excellent example of our strategy of making inorganic investments into adjacent markets. This high-quality business improves the quality of the group in terms of growth and profitability potential. OrthoLite is highly complementary to our existing Footwear business, creating a leading Tier 2 supplier of footwear components. In 2025, OrthoLite delivered full year profit in line with our expectations. So a good start. The complementary nature of these footwear businesses gives us the opportunity to create additional value from the acquisition in 2 significant ways. Firstly, we have identified $20 million of joint cost synergies, which we expect to deliver by 2028 through savings in joint footprint optimization with significant overlap in operational footprint and from strategic procurement initiatives, operational excellence and systems implementation. In 2026, we expect to deliver $5 million of these savings. In addition, there is significant overlap in our respective customer portfolios, route to market and leadership in sustainability. These commonalities present opportunities to accelerate growth through cross-selling as well as the development of joint innovation initiatives. This builds on our recent track record from the multiyear integration of the Texon and Rhenoflex footwear acquisitions in 2022. Innovation is at the core of OrthoLite. The adoption of open-cell foam technology will continue to increase in the core footwear market as well as positive mix given the shift towards molded insoles. But new OrthoLite products will also create additional opportunities in 3 adjacencies not served by OrthoLite until now, expanding our addressable market in insoles. In 2026, we plan to launch the first insoles made of open-cell foam technology with electrostatic discharge protection targeted at safety shoes. OrthoLite's technology will provide both comfort and protection in one insole. A leading European brand is currently testing the product with positive results. Within the core premium footwear market, we are also entering 2 new product categories. Using the Cirql technology, we have developed our first supercritical foam insoles, a solution that addresses requests from brands for a lower density, high rebound insole. These are aimed at the trail and road running markets and are also currently being tested by 2 leading brands. In parallel, we continue to assess the commercial potential and go-to-market strategy for the Cirql technology in midsoles, which we expect to complete in the first half. The third adjacency is very exciting as it perfectly shows how we can leverage the combined technology capabilities of Coats and OrthoLite to make technological breakthroughs. We have integrated in one product the comfort of OrthoLite's insoles with the performance of Coats' carbon plates, and we are aiming to launch this product starting in the aftermarket. This is just the beginning of the collaboration between our innovation teams, and we are excited at the many opportunities this may create. With the significant changes to the portfolio in 2025, we have looked again at our medium-term targets to ensure they remain appropriate. Based on this exercise, we have upgraded and simplified parts of our medium-term framework. We have maintained our above 5% revenue CAGR target through the cycle, expecting that the portfolio quality we have now will support a more consistent delivery ahead of the market. Our growth will be a combination of market growth of 3%, and our ability to continue to deliver growth ahead of the market through market share gains and target organic adjacencies. With the acquisition of the margin-accretive OrthoLite business and the associated synergies and with increased confidence in our business potential following the 2025 margin performance of 19.8%, we have increased our group margin target range by 200 basis points to 21% to 23%. Reflecting the contribution of OrthoLite, we have also increased our cumulative free cash flow target over the next 5 years from $750 million to $1 billion. This major step-up reflects the highly cash-generative nature of the group, including OrthoLite. We have also improved the quality of our measure of free cash flow, which is now defined as after exceptionals. This underlines how determined we are as a management team to drive cash generation for the benefit of shareholders. Finally, we have maintained our target of a strong double-digit EPS CAGR post M&A or share buybacks over a medium-term time frame. Our capital allocation strategy remains consistent. Our target debt leverage range is 1 to 2x EBITDA. We intend to allocate capital to support our organic growth, continue to deliver a progressive dividend and pursue disciplined M&A or share buybacks. With circa $1 billion of free cash flow generation over the next 5 years, we're excited about our future prospects, and committed to delivering EPS growth in excess of 10%. So to conclude, 2025 was a year of strong strategic progress with a resilient operating performance and where we outgrew our markets. While we expect our Apparel and Footwear markets to remain uncertain in 2026, we anticipate delivering organic revenue growth with easier comparatives as we move through the year. Our growth will be underpinned by our ability to outgrow the market. That said, we are mindful of the potential impact on demand and supply chains as a result of the conflict in the Middle East, which we are assessing. However, it is too early to provide an update. If conditions do prove more challenging, then the example of the past few years highlights our ability to adapt and the resilience of the group's trading. Importantly, we also expect OrthoLite to significantly outperform the underlying footwear market as its technology differentiation enables it to win new customers and share. We expect to deliver further adjusted EBIT margin expansion in the year from a full year OrthoLite contribution as well as from the modest organic margin improvement. Consistent with our enhanced ability to generate cash, we will have another year of strong free cash flow generation. We go into 2026 with upgraded medium-term targets, reflecting our enhanced portfolio of businesses and optimism about the future of the business. Thank you very much for listening. We're happy to take your questions now. Charles Hall: Charles Hall from Peel Hunt. David, could you just talk a little bit more about the adjacencies, that $2 billion total addressable market. What do you see as a realistic share of that, say, on a 5-year view? How much of that would be organic? How much of that would be M&A? And how do you see the margin profile of sales in that area? David Paja: Thank you, Charles, for the question. So we're pretty excited about the opportunity of growing into that $2 billion market. Obviously, our starting revenue last year was $45 million, with a good growth from the year before. But we see this driving at least 1% of organic growth at the group level going forward. This is based on just organic moves. I mean most of those efforts are organic. They are obviously built into our framework. And we believe that those adjacencies can deliver margin rates in line with our group medium-term targets. So obviously, there's going to be a scaling-up effect over maybe the first few years, but we see the margin potential there to reach that group level ambition. So look, overall, probably we always look at -- also check M&A opportunities. And obviously, we're exploring these spaces, but most of our focus is on organic work right now. Charles Hall: Got it. And then on the tariff situation. Obviously, we're in a year in now to tariffs. Has everything settled down in terms of supply chains? And do you see any changes as a result of the sort of recent tariff changes? David Paja: I think the direction of travel is quite clear. It was already kind of clear at the mid of last year. And it's fairly settled right now. So we don't think there's going to be a huge change in terms of where things are going relative to where they stand now. Obviously, we are monitoring the situation in the Middle East, but that's going to create probably more disruption in the near term. That disruption will require operational agility, which is one of our strengths. So we're ready to handle that as we've done in the past few years. And there might be a little bit of, again, shift of volumes temporarily maybe away from the Middle East as well, going back maybe into other locations. But strategically, in terms of overall market direction, we think it's quite settled and the near term, it will just require agility, which we are ready for. Mark Fielding: Mark Fielding from RBC. I've got 3 questions, but I'm going to ask the first 2 together and then I'll come to the other one because they're sort of linked. Firstly, can we talk a little bit more about OrthoLite's performance so far? I mean, obviously, you said it was performing ahead of the market. But I mean, the implication of your sort of 5% decline in Footwear in the second half as the market is down high single digits. So I'm just -- a bit more clarity on whether OrthoLite is stable, growing or still actually down a bit with the market, just better than that market and how we think about that evolving this year? And the reason that ties to my second one was, I mean, quite sensibly, your medium-term targets, you've sort of dropped the divisional part. But historically, you were targeting 3% to 4% growth in Apparel and 7% to 8% in Footwear. So do we still think about that as the sort of medium-term split? Or is there any changes because you've slightly rejigged the divisions, et cetera? David Paja: Yes. So I'll start with OrthoLite. OrthoLite substantially outperformed the market, the underlying footwear market and also outperformed our own Footwear business last year. And if you recall, that's because they have a couple of growth levers that we don't have in the rest of our business. One is technology penetration. Open-cell foam insoles are increasing in adoption within the footwear market. And the other driver is their shift from flat insoles to molded insoles, which raises their average selling price. So these 2 drivers are helping them deliver substantial growth ahead of the underlying market. Having said this, they also saw a sequential impact from the market decline that happened in the back end of the year. As Hannah mentioned, we saw some destocking in the footwear market in the last couple of months of the year. OrthoLite felt the same trend. But we see, as we are now obviously in Q1, we start to see kind of a sequential -- some level of sequential recovery from what happened at the end of Q4. And we expect OrthoLite to deliver strong growth ahead of market this year as well. Maybe to your second question, over the medium term, we still expect Footwear to be a higher growth division than Apparel. We think the fundamentals in there support a higher underlying market plus with the addition of OrthoLite, we think that, that's going to act as another incremental, I would say, accelerator to our performance within that market. So we see that medium term still the trend. Mark Fielding: Okay. And then just my third question, the high visibility trims business, just so I understand that a little bit. I'm assuming the market structure is relatively similar to others as in that you sell to a garment manufacturer who then includes it in the garments. And then I suppose I'm just checking, what does it mean that you are specified for U.K. firefighters? Does that mean they all have to have it? Or it's just something that could be used? David Paja: Yes. So the high visibility trims is a product that makes a lot of sense for us. And actually, for those who haven't noticed, [ Chris ] is wearing one of our products. So typically, you have -- in that particular product, that's our fabric. So it's a protective fabric. It has our thread and it has the high visibility trims. So that shows how you can go for that particular application with very complementary offerings. And by the way, as I said in my remarks, it just builds on our capabilities in textile engineering and polymer science. So it's at the core of what we know how to do. With regards to the question on VizLite, in particular, it's now specified on all U.K. firefighter applications. So that's a technology, a fluorescent technology that glows in the dark. So in a pitch dark room or when there's heavy smoke and you can see anything, this technology will glow by itself without the need for any light input. So it's a very interesting IP. That's what attracted -- what made it very attractive to us. There's about -- even though we specified it as a technology, there's only about 30% of U.K. firefighters that have already started tendering it because the other specification for the other 70% is more recent. But we expect that other 70% to start tendering this technology relatively soon and then kind of ramp up progressively over the next 5 years. So we're excited about that. We're also excited about the opportunity of this glow-in-the-dark technology to expand into other firefighter applications globally outside of the U.K. And as well as we see that as a technology that can be applied to other end markets even in the core Footwear and Apparel businesses. So we look at it as an IP acquisition. It's a relatively small company now, but we think very complementary and differentiated and it helps us scale up in a direction that makes a lot of sense to us. David Richard Farrell: David Farrell from Jefferies. I've got a couple of questions. I'll take them one at a time. 2026 is a World Cup year in North America. If I remember back to the 2022 Capital Markets Day, there was some excitement about kind of ProWeave. Is there anything in your forecast for higher sales as a relation to the Soccer World Cup? And if so, would that come in '26 or at the back end of '25? David Paja: So I think there's a couple of questions there. I'll take it as one in general on the Olympics and then the other one is more about ProWeave in particular. So on the Olympics, look, we have not planned for a bump or a significant one-off benefit of -- in our sales from the Olympics. So it's not something that we are accounting for. And there's a lot of discussion out there on how much of a bump these type of events generate in reality. Yes, with regards to ProWeave, it's one of the adjacencies obviously, that we're doing. It's a relatively niche technology that basically applies only to kind of relatively high-end applications. We already deployed it across almost 10 different shoes. So it's already being sold on 10 different shoe models for different brands. But we continue to drive with the help of OrthoLite, actually, that's one of the cross-selling areas we're working together to increase penetration in some of the major brands. But it will always be -- I mean, we know that is a little bit limited for its kind of high-end characteristics. I think I mentioned last year, the interest of ProWeave goes a little bit beyond in terms of longer term, how we see the upper space as an interesting space. And we see this as kind of the entry point with a very kind of high-end type of technology. David Richard Farrell: One for Hannah. If I look at the capital allocation slide, there's nothing in there for net debt reduction. Obviously, you're coming at that from going into '26 for the next 5 years at 2.2x leverage. Should actually some of that capital allocation be thought about? Or is the reduction in the leverage coming just from the EBITDA? Hannah Nichols: No, absolutely. Our focus is, on '26 is on reducing the net debt. We see it in terms of capital allocation actually as an output of allocating capital to support organic growth. It's sort of a natural outcome, which is why it's not explicitly referenced on the slide. But absolutely, our priority is on deleveraging. And we've talked about the cash generation of the group. You've seen that evidence in 2025. And with OrthoLite as well, that sort of clearly enhances the cash generation. So short answer is yes. David Richard Farrell: And final question, kind of EcoVerde. I guess over the last few years, the kind of higher selling point of that has been a real benefit of driving Apparel organic revenue growth above the market. How much is left to go from that as a tailwind as you look out over the next kind of 5 years? And can you just talk about kind of new customer bases versus kind of a replacement of existing customers? David Paja: Yes. So our 100% recycled thread product, EcoVerde, the EcoVerde brand is I think has been a phenomenal success for the group. I mean, literally 5 years ago, there was no sales. And last year, it was $550 million, which is about half of all the thread that we make. So it's been an impressive ramp-up that has required a substantial effort to develop a new supply chain, adapt our manufacturing processes, requalify all our color recipes. So we see that as something that is very difficult to replicate. Now from here, where do we go? We are at about 52% now with -- in terms of penetration. We think it can go -- it can keep going still. But obviously, as you increase towards 60% or beyond 60%, you're going to the very, very price sensitive pieces of the market. So we see that as a substantial differentiator, difficult to replicate with some room to grow. But in terms of sustainability, what we're doing now is we are continuing to drive recycled penetration, so kind of continue to push that, but it will moderate in terms of growth rate. You won't see the 50% kind of ranges that we've seen this year. And at the same time, we've launched a big initiative on supplier decarbonization, which will complement our efforts to get to our Scope 3 targets. So now when we go to brands, we have both the big push we have on recycled. And on top of that, supplier decarbonization as another big kind of driver for their sustainability -- to achieve their sustainability goals. James Bayliss: James Bayliss from Berenberg. Two, if I may. On Footwear customers, you noted they were managing down their inventory levels in the last few months of 2025. Can you just give us a sense of where that trend is for the first few months of 2026? Do you feel that levels are steady and in the right place now, absent any further shocks or Middle Eastern ramifications? And then my second question on market share. Your ambition seems to be to continue to grow for 1% to 2% per year over the medium term, but you're coming from quite a high base already. Are there any regulatory considerations in local markets or any territories where growth will be naturally more limited than others that we should be aware of? David Paja: Yes. So I'll start with the latter question. So on market share, yes, we're at close to 30%, right, on both divisions. We still see this as a number that continues to increase and going to continue to increase. The reason is, I mean, it may look like a big number, but when you look at manufacturer by manufacturer, in general, they like to concentrate thereby on fewer, stronger players, and it's not unusual to have manufacturers, so Tier 1s that buy 60%, 70% from us. So at a manufacturer level, they don't have an issue. They actually typically want to have kind of a core supplier that is at that high level, and brands also are trying to consolidate the number of Tier 1s. So we think those 2 trends, the fact that the Tier 1s are not necessarily trying to kind of limit the share they give to their largest supplier, and the fact that brands are trying to reduce the number of Tier 1s, I think, continue to play in our favor going forward. And sorry, remind me the first question was on -- yes, the sequential for Footwear. So I mentioned a little bit earlier, we saw the last 2 months were a little bit tough. We're obviously focused on delivering our profit and cash commitments, which we did. But we saw a substantial slowdown in the last 2 months of the year in Footwear in particular. But we've seen a sequential improvement in Q1. So it's not back to where it should be, but we've seen a sequential improvement that makes us think that, that kind of destocking that was done towards the back end of the year was already completed. Andrew Ford: Quick question. Andrew from Peel Hunt. I wondered if within that sort of market data information that you provided, whether there was anything, more detail you could bring out of that because I could see that -- sorry, I've lost the train of thought. I'll move on to the next one. So the other one is around competition on sustainability. Obviously, 5 years ago, EcoVerde, it was quite sort of a greenfield area for you. Just wondering where -- what the competition is currently within that area? I'll come back to the other one as I remember it. David Paja: So on sustainable threads, we see ourselves as by far the leading provider. As I mentioned before, it's actually not easy to transition to recycled polyester. It's a completely different supply chain. You need to develop suppliers that basically recycled PET bottles, so plastic bottles. And the quality requirements are very sensitive to our manufacturing process. So you need to kind of make sure that you define very clear requirements. Otherwise, your productivity goes down quite substantially. And on top of that, you need to redo all your color recipes for all the -- I mean, on average, on a given year, we delivered 200,000 different sets of color. And doing that is a gigantic piece of work. We have systems that allow us to do that very, very efficiently. But we find it like a very substantial differentiator when you combine all those things for people to replicate to the scale that we've done. And obviously, with scale comes also negotiation ability in terms of pricing and everything. So overall, we think we've built something that is very substantial in terms of scale and difficulty to replicate, and we don't see any competitor anywhere near that. Andrew Ford: Great. I'll try again with the other one. So I was just wondering about whether that was a broad-based sort of market decline? Or was it sort of within more sort of specific niches that either hindered you more than the market or was actually helpful sort of your relative -- I guess, the granular detail of that market movement, if you like? David Paja: Yes. The bigger -- so at the back end of the year, the bigger drop was in Footwear. Footwear is always more volatile. If you go over time just because of the average price of one of these athletic shoes is typically higher than a typical apparel garment. And for the second reason, there's fewer larger brands. So it's more concentrated around a few big brands like Nike, adidas, et cetera. So typically, you see a little bit of more kind of volatility when they decide to either destock or restock. So that's something we've seen in the past. We don't -- we haven't seen it in a particular OEM or a particular part of the market is being quite broad-based, but that's also because we are -- in Footwear, in particular, we have a higher percentage of exposure to those brands relative to Apparel. Hannah Nichols: I was just going to say, I think if you look at Apparel and the markets decline there, we really play to our strengths in Apparel in terms of our global footprint, our agility. And actually, when we look at our sort of the trends within the market share gains, a lot of those came after the tariff announcements because of our ability to react to the shifts and the agility. So it's really played to our strength, I think, is what I'd say about the Apparel piece. Mark Fielding: Sorry, Mark Fielding again. Just a couple of follow-ups on those questions. I mean, firstly, in terms of the recycled thread, I mean, there was conversation in the past about future sort of natural biodegradable threads, et cetera. I'm just curious how you think about the next generation in that? And then also possibly linked but more immediate. In terms of in Hannah's presentation, you talked about the price mix benefit. And then in Apparel, you talked specifically about mix, whereas it was price strategy in Footwear. Maybe a bit more elaboration on that. And just a reminder, I mean, is my impression that EcoVerde is slightly higher revenues, not higher margins? So it's not a mix benefit, but I'm just double checking that. David Paja: So I'll let Hannah comment on the second one. With regards to the next step in terms of recycled product, the big focus is going from PET bottle recycling to textile recycling, what is called textile to textile. So instead of just taking plastic bottles and recycling them into polyester, you would recycle garments. And starting with waste from manufacturing processes, there's a lot of waste generated by the Tier 1s in the manufacturing process. So we're very actively working in that space. This year, we've launched our first textile to textile recycled products. Today, it's a more expensive technology than the PET bottle recycling. But like we did a few years ago, as we led in the industry PET bottle recycling, we are now leading as well in textile to textile, it's now in the market. So we're selling -- it's still small volumes because it's higher priced. But we're doing a lot of work through our sustainability innovation center in India with all the supply chain that is developing the capabilities and the scale to make this happen. So we also have innovation in that same hub around all the type of products like you're saying, biodegradable or natural origin, not oil-based at all. But those, we see them as more at this stage probably those would be a further step away. So I would say the next step will be going more to textile to textile. And there's quite a lot of, I would say, interest from the brands. The leading brands in sustainability, they are already starting to at least look at that textile to textile as the next step. Hannah Nichols: And I think your question was about Apparel mix and what's driving that. So it's actually a combination of both premium products, but with premium products, they are more likely demand recycled product offerings. So it's a combination of the 2, which is where Apparel have benefited. So the correlation with the margins of recycled thread because they're going into premium products that they are typically higher margin, if that makes sense. David Paja: Okay. So if there's no other question, well, you see, basically, we delivered strong 2025, and we entered '26 with good momentum. Thank you very much for joining us today. We wrap up the call here. Hannah Nichols: Thank you.
Operator: Good day, and thank you for standing by. Welcome to the Scandinavian Tobacco Group Full Year 2025 Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Torben Sand. Please go ahead. Torben Sand: Thank you, and good morning, and welcome to Scandinavian Tobacco Group's webcast for the Full Year and Fourth Quarter 2025 results. My name is, as said, Torben Sand, and I'm Director of Investor Relations and External Communications. And I am today, as usual, joined by our CEO, Niels Frederiksen; and our CFO, Marianne Rorslev Bock. Please turn to the next slide for today's webcast agenda. Niels will start the presentation by giving you a brief overview of the highlights, including a snapshot of the key financial data. Niels will also summarize a few of the highlights from our new strategy that we launched last year, Focus2030. Then Niels will move on to share more details on the performance of our product categories before Marianne takes over and give you an update on the financial performance in our 3 reporting divisions. Marianne will also give more details about the financial performance, including comments on cash flow, leverage and capital allocation. Niels will conclude the call by giving some insights into the expectations for the full year 2026. After the pre-prepared presentation, we will conduct a Q&A session where we will be pleased to take any questions you might have. Before we start, I ask you to pay special attention to our disclaimer on forward-looking statements, which can be found on Page #3 in this slide deck. Now please turn to Slide #5, and I leave the word to our CEO, Niels Frederiksen. Niels Frederiksen: Thank you, Torben, and welcome to the call. 2025 became a challenging year for Scandinavian Tobacco Group with a combination of external disruptions and internal operational issues. Tariffs and lower consumer sentiment in the U.S. directly impacted our handmade cigar business and the category experienced fierce price competition, both in retail and in the online distribution channels. Our machine-rolled cigar business continued to be under pressure, while our investment in our nicotine pouch business delivered good contributions to the group's financial performance. Throughout the year, we have concentrated our efforts on protecting our market positions, integrating Mac Baren and growing our handmade and nicotine pouch businesses. And given the difficult circumstances, I am satisfied with our results for the year despite having to reduce our full year expectations in May as a consequence of the increased tariffs. 2025 was a year where we launched our new strategy, Focus2030, and we released new financial ambitions, and we adapted a new more flexible shareholder return policy. At our Capital Markets Day on November 20 last year, we unfolded the new strategy but today, we will also provide a few highlights on this later in the call. We expect 2026 to be a year where geopolitical uncertainty will remain a market condition and economic growth will be challenging. For Scandinavian Tobacco Group, this means that our main priorities in the year will be to stabilize earnings in our machine-rolled cigar and smoking tobacco business and inject new energy and growth into our strong handmade cigar business. We will also continue to grow our promising nicotine pouch business. Now please turn to Slide #6. Let me now share a few financial highlights for the year. Marianne will give more details about the financial performance and the quarterly development later in the presentation. But reported net sales were DKK 9.36 billion compared with our guidance of DKK 9.1 billion to DKK 9.2 billion, and the EBITDA margin before special items was 19.8% compared with our guidance of 19.5% to 20.5%. Overall, this results in an EBITDA before special items in line with our expectations. The free cash flow before acquisition came in more than DKK 200 million below our guidance due to a delay in the collection of certain receivables due to the SAP implementation in Europe. The issue has been solved and as the deviation is a phasing issue, the free cash flow will be equally positively impacting 2026. Marianne will give you more details in her part of the call. Adjusted earnings per share were DKK 10.8, in line with our guidance of DKK 10 to DKK 12 per share. Please turn to Slide #7. On 20th November, we launched our new 5-year strategy in connection with the Capital Markets Day, and you can find a recorded version of the event on our website. The purpose of Focus2030 is not only to create value by executing the strategy but also to develop a company that is even better positioned to deliver value beyond 2030 and we are confident that we can do so. We've defined 3 strategic priorities, each important for us to deliver on the ambitions for Focus2030. Firstly, to create a sustainable and stable machine-rolled cigar and smoking tobacco business, primarily focused on Europe. Secondly, to grow our attractive handmade cigar business anchored in the U.S. but with a stronger global footprint. And thirdly, to build a larger nicotine pouch business with even more upside in an attractive category. And in the process, we intend to turn the declining earnings trend around and we have -- sorry, in the process, we intend to turn the declining earnings trend around that we've seen over the past 3 years and create value for consumers, employees and shareholders. The new strategy is anchored in our strong brands and strong market positions across our diversified portfolio. However, the market conditions and the strategy call for us to allocate resources differently going forward to ensure that we focus on and capture what we see as the largest growth opportunities. And our power brands strategy is tailored to facilitate this. The strategy addresses the areas that we need to fix because they are not performing up to expectations, but also the areas where we do well and where we need to push further to deliver even better results, all with a combined ambition to build a sustainable and growing company with more potential beyond 2030. We also introduced new financial ambitions, which are to significantly improve the return on invested capital from about 7.9% in 2025 to more than 11% in 2030, to deliver an incremental increase in EBIT and a free cash flow generation exceeding DKK 1.2 billion in 2030. Acquisitions as well as divestments of less core assets will continuously be evaluated, assuming these potential transactions support our strategy as well as our financial ambitions. The shareholder return policy has been adapted to be more -- to a more flexible dividend payout ratio policy based on 40% to 60% payout ratio against adjusted earnings per share, supplemented by share repurchases when the projected leverage ratio allows. Please now turn slide to Slide #8. To meet our financial ambition and the objectives in Focus2030, we need to deliver on 3 strategic priorities. Growing handmade cigars will be defined as growing net sales as well as delivering incremental profit growth to the group. The key growth drivers are expected to -- the key growth drivers are expected to be delivered by a combination of increasing our market share of own brands in the U.S. from approximately 13% to more than 15% in 2030 as well as through an expansion in our retail network. This expansion will be driven by our power brands, which in 2025 have 5% overall market share. Stabilizing the machine-rolled cigar business requires a focus on protecting profits and cash flow. The path to success is offsetting the structural volume decline in the categories through price management and market share gains. Mitigating structural market trends through intensified market share focus is reflected in the ambition to increase volume market share in key European markets from 26.8% in 2025 to more than 29% in 2030. And a key component to the profit growth will also be through simplification of our portfolio by almost 50%. Finally, accelerating our nicotine pouch business is expected to deliver important contributions to the group's growth in net sales and profits in Europe. We expect to build on existing market share positions in Sweden and in the U.K. but also in other markets where our capabilities within distribution and access to the market provide us with an advantage. Now let's turn 2 slides -- to Slide #10. Machine-rolled cigars and smoking tobacco comprised 50% of group net sales in 2025 with handmade 35%, nicotine pouches at 5% and others at 10%. Others include accessories and bar sales, amongst others. For the full year, organic net sales growth was minus 3%, where handmade cigars delivered flat organic net sales, machine-rolled cigars and smoking tobacco minus 1% and nicotine pouches a negative 17% growth. However, the organic growth for nicotine pouches does not reflect the underlying progress of our power brand, XQS, which delivered a high double-digit organic growth. The negative growth for the category was significantly impacted by the discontinued online distribution of ZYN from the second half of 2024. For the first time, we are giving details on the gross margin structure for our product categories. For the group, the gross margin before special items was 44% for the full year of 2025. The product category machine-rolled cigars and smoking tobacco delivered a 51% margin, handmade cigars, 41% and our nicotine pouch business, 36%. Going forward, we intend to share these details in order for you to get a sense of the progress we make in our strategic priorities. Now let's move on to each of the categories, and please turn to Slide #11. The market for handmade cigars in the U.S. continued to contract in 2025 by an estimated mid-single-digit percentage. For 2026, we expect a 4% total market volume decline rate. We still estimate the underlying longer-term decline rate to be a lower single-digit number. For the full year 2025, reported net sales decreased by 4% for the category with organic net sales being broadly unchanged. Reported growth was impacted by the development in currencies. Increasing organic net sales in retail and pricing were offset by underlying volume declines in the U.S. market and by international sales. Gross margin before special items have been on a declining trend for the past 2 years. For 2025, the margin was 41.4%, with the main drivers for the decline being fierce competition in our online distribution channel, and negative impact from increasing tariffs and consumers trading down. The data illustrated in the chart show the development in the last 12 months data, not the specific quarterly data. For the fourth quarter, our category performance was 1% organic net sales growth and was positively impacted by business-to-business sales in the U.S. and continued growth in our retail stores. The sales of handmade cigars to U.S. wholesalers and distributors, the business-to-business market continued to recover in the fourth quarter and delivered a 6% increase following a low single-digit growth in the third quarter. Sales in our retail stores continued to increase, driven by new store openings, although the same-store sales were slightly down due to a temporary rebuild of our largest store in Dallas, Texas. And finally, our online sales of handmade cigars were broadly unchanged, where sales to our international markets decreased during the quarter. Now please turn to Slide #12, and we'll talk about machine-rolled cigars and smoking tobacco. For machine-rolled cigars and smoking tobacco reported growth in net sales was 2% for the full year. The growth was impacted by the acquisition of Mac Baren from the second half of 2024, while organic growth in net sales was slightly negative by 0.5%. The gross margin before special items was 50.8%, broadly in line with the full year of 2024. But as the graph also indicates the last 12 months margin declined -- sorry, the last 12 months margin declined significantly throughout 2024, primarily as a result of the high volume decline rates we experienced in machine-rolled cigars throughout 2024. In that context, the stabilization of the category margin is encouraging, although still not satisfactory. The current margin level remains negatively impacted by changes in product and market mix as well as disruptions caused by our SAP rollout in Europe. With the financial ambitions we have communicated, we need to protect and improve the margin, not only for machine-rolled cigars but also for smoking tobacco. For the fourth quarter, organic net sales for the category were unchanged, comprised by a low single-digit growth in machine-rolled cigars and a low single-digit decline in smoking tobacco. Now let me give you an update on the market share development in our machine-rolled cigars. The total market for machine-rolled cigars in Europe is estimated to have declined by 1.2% in the full year of 2025 based on preliminary data for our 7 key markets and with the decline rate for the fourth quarter estimated to be 2.8%. The data can deviate somewhat quarter-by-quarter and year-by-year from the underlying trends, and we don't regard 2025 market development as an indication of a sustainable improvement. Our base scenario of 2% to 3% structural decline rate is maintained, and for 2026, we expect a 3% market decline in Europe. Measured by our market share, we experienced a stabilization in the fourth quarter compared with the third quarter. The market share index was 26.3% for the fourth quarter and 26.8% for the full year of 2025. As mentioned with the Focus2030 strategy, we will invest in strengthening our positions as stronger market share positions are crucial to deliver long-term value in the category. With this, please turn to the next slide. So moving on to next-generation products, which comprises our nicotine pouch business and currently accounts for 5% of group net sales and slightly less of gross profits. For the full year 2025, reported net sales growth was 2% and organic growth was minus 17%. However, these data points do not give the full picture of the positive development we experienced for the category. The full year growth was significantly impacted by the discontinued distribution of ZYN in the U.S. but the reported growth rates were also impacted by the nicotine pouch portfolio we acquired from Mac Baren in the middle of 2024 and the ongoing streamlining of the brands, ACE and GRITT now being sold in fewer markets. Importantly, our brand XQS delivered 55% organic net sales growth and the market share in Sweden increased from 7.8% in 2024 to 12.3% in 2025. And by the end of 2025, the market share was above 13%. Our market share in the U.K. also improved during the year, although it is still only close to 1%. The category gross margin before special items was broadly unchanged at the level of 35% for the full year 2025 compared to 2024. As a result of the continued expansion of XQS to new markets and with investments to increase market positions, the EBITDA margin was only slightly positive for the year. During the fourth quarter, our nicotine pouch business delivered 42% reported net sales growth and 37% organic net sales growth. XQS -- the XQS brand delivering 87% organic growth, driven by a strong performance in the U.K. and Sweden. With this, I will now leave the word to Marianne for more details on the financial performance, please turn 2 slides to Slide #15. Marianne Bock: Thank you, Niels. In 2025, the commercial division Europe Branded comprised 36% of group net sales, North America Branded & Rest of the World, 33% and North America Online & Retail 31%. For the full year, organic net sales growth for the group was minus 3%. Europe Branded delivered minus 1%; North America Branded & Rest of the World, minus 5%; and Online & Retail, minus 4%. For Online & Retail, growth was impacted by the discontinued distribution of ZYN from the second half of 2024. In the table, we have shared an overview of the margin structure for each of the divisions measured by gross margin before special items as well as EBITDA before special items. For Europe Branded, the gross margin before special items was 48%. North America Branded & Rest of the World delivered 46% and Online & Retail, 38%. These differences in margin by division reflect product and market mix and for Online & Retail business being a direct-to-consumer business, whereas the 2 other divisions are business to business. The group margin was, as already mentioned, at 44%. Measured by EBITDA, the margin differences are even wider with Online & Retail delivering the lowest margins, while North America Branded & Rest of the World delivered the highest margin, primarily as these markets do not have own sales organizations. We'll now move to each of the divisions. So please turn to Slide #16. I will begin with Europe Branded. For the full year, reported net sales grew by 6%, largely due to the acquisition of Mac Baren in the third quarter of 2024. Organic net sales growth was slightly negative as increased sales of nicotine pouches were offset by declines in machine-rolled cigars and smoking tobacco. During the year, our gross margin before special items decreased from nearly 49% in '24 to 48% in '25. The decline was driven by changes in product mix with a strong growth in net sales of our nicotine pouch brand, XQS and lower sales of smoking tobacco. The same factors contributed to a decrease in the EBITDA margin, which fell from 21% in '24 to 19.8% in '25. Overall, profit margins for Europe Branded are affected by shifts in product and market mix as well as disruption in product availability. Reported and organic net sales growth for the fourth quarter was 6%, driven by both nicotine pouches and machine-rolled cigars. However, declines in both gross margin and EBITDA margin were due to the rapid growth of nicotine pouches compared to other product categories. Now please turn to Slide #17. For the full year, reported net sales decreased by 4% and organic growth declined by 5%. The acquisition of Mac Baren contributed positively to reported growth, while the weakening of U.S. dollar against the Danish krone has a nearly equal negative impact. The full year gross margin before special items decreased from almost 51% in '24 to 46% in '25, primarily due to changes in product and market mix. This was most notably affected by lower sales of high-margin machine-rolled cigars and smoking tobacco products. For the fourth quarter, reported net sales for North America Branded & Rest of the World fell by 12%. Organic growth was negative by 7% as growth in handmade cigars could not offset a high single-digit decline in machine-rolled cigars and smoking tobacco. The category other, which includes sales of accessories and similar items, also experienced negative growth during the quarter. The decline in the gross margin during the fourth quarter was even steeper compared to the full year decrease as the quarter was compared to a particularly strong fourth quarter in 2024. Additionally, lower sales of machine-rolled cigars were primarily driven by reduced sales in our high-margin markets in Australia and Canada. These dynamics were also the main factor behind the significantly lower EBITDA margin before special items during the fourth quarter, impacting not only North America Branded division but also the group margin for the period. Now please turn to Slide #18. For the full year, North America Online & Retail reported growth in net sales decreased by 8%. Organic growth was down 4% but excluding the discontinued distribution was slightly positive. Underlying organic growth included gains in our retail stores, while our online business experienced a slight decrease. In retail, we are seeing the benefits of opening new stores over the past year. However, same-store sales were marginally lower due to a renovation of our largest store in Fort Worth, Texas, as Niels mentioned earlier. Competitive pressure remains strong in the online channel but our pricing strategies are gradually improving our market share. Throughout the year, both gross margin and EBITDA margin were affected by the intensified promotional activities aimed at expanding our market position. For the fourth quarter, reported net sales decreased by 8.6%, primarily due to currency fluctuation. Organic growth was down 0.5%, with retail achieving 7% growth and online business showing a slight decline. Gross margin and EBITDA margin before special items in the fourth quarter were impacted by the high level of promotional activities, which have continued into 2026. I'll now move to an update on group financial performance. Please turn 2 slides to Slide #20. Throughout the presentation, details regarding developments in net sales, gross margin, EBITDA margin have already been given. Now I would like to provide a few additional comments on select financial details and key metrics. In 2025, special items amounted to negative DKK 200 million compared to DKK 279 million in '24. These costs can be divided into DKK 130 million for the SAP implementation and DKK 70 million for reorganizations and the integration of Mac Baren. We expect special costs in '26 will total approximately DKK 275 million before gradually tapering off in '27. Higher net financial costs were driven by both increased net debt and the refinancing of our corporate bond, which took place in September '24. We refinanced our existing EUR 300 million bond, which matured in '24 with a new facility of similar DKK 300 million. However, the new bonds were issued with a coupon interest that was almost 3.5 percentage points higher, reflecting the prevailing market rates at that time. Financial costs, including exchange losses, increased by nearly DKK 100 million compared to 2024. We have already addressed the effect of the discontinued distribution of the ZYN nicotine pouch product, which negatively impacted group organic net sales by 1.3%. This implies that the underlying decline for the year was 1.8%. Finally, I'd like to address the decline in return on invested capital, which is a key KPI for us as we strive to meet our new financial ambition. Return on invested capital decreased to 7.9% from 9.4% in '24, while our ambition is to achieve a return on invested capital above 11% in 2030. Excluding the impact of special items, which are included in the calculation, return on invested capital was 9.3% in 2025, almost similar to '24. The decline in return on invested capital for the year was primarily due to lower EBIT as invested capital remained broadly unchanged at DKK 14.5 billion. Please turn to Slide #21. Niels mentioned in his opening remarks, the free cash flow before acquisitions was approximately DKK 200 million below our guidance. The free cash flow was DKK 595 million compared to DKK 931 million in '24, and our guidance range was DKK 800 million to DKK 1 billion. In the fourth quarter, free cash flow before acquisitions was DKK 147 million compared to DKK 604 million in the fourth quarter of '24. The lower cash flow during the quarter relative to our expectation was due to delays in collecting of receivables associated with our ERP implementation in Europe. This issue has now been resolved. Payments are beginning to be recovered, and we anticipate working capital will return to normal levels during the coming months. The delayed payments are expected to have a positive effect on cash flow during the first half of 2026. The effect on working capital during the fourth quarter resulted in an unusually negative contribution from changes in working capital with a reduction of DKK 17 million in the quarter, which was DKK 180 million lower than the positive contribution during the fourth quarter of '24. Typically, working capital changes are positive in the fourth quarter of the financial year. Other factors contributing to the lower cash flow in the fourth quarter included a reduced EBITDA and higher taxes paid, which in the illustration is included in investments and other. Now please turn one slide to Slide #22. In the fourth quarter, the leverage ratio increased from 2.9x by the end of third quarter to 3x by the end of 2025. The increase is due to a decline in EBITDA before special items compared to the fourth quarter of last year. Compared to '24, the leverage increased from 2.6x. Throughout '26, we remain fully committed to lowering the leverage ratio and working towards our target ratio of 2.5x. This is a top priority for us this year, and if our earnings come under greater pressure than anticipated, we will take necessary steps to ensure the leverage ratio is reduced. Now please turn to Slide #23. In November, we announced our capital -- new capital allocation policy, which is guided by a leverage target of 2.5x. This target determines the level of investments and shareholder payout, giving us the financial flexibility to pursue growth opportunities while delivering shareholder returns. It also emphasizes our commitment to maintaining an investment-grade credit rating. We transitioned to a payout ratio-based dividend policy, ensuring dividend distributions are closely aligned with our underlying financial performance. The dividend payout ratio is set between 40% to 60% of adjusted earnings per share. This approach will take effect with dividend allocation related to the '25 financial results and will impact the dividend proposal for the upcoming Annual General Meeting in April. Since our listing in 2016, we have consistently delivered on our shareholder returns and intend to continue doing so. Given the current leverage ratio, we believe it is prudent to propose a dividend payment of 2025 in the low end of the payout range. The Board of Directors plan to propose a dividend payout per share of DKK 4.5 corresponding to a payout ratio of 42%. As we normalize our leverage in the coming years, we intend to create greater capacity for share buybacks, which continue to be an essential component in our overall capital allocation policy. With this, I will now hand the presentation back to Niels. Please turn 2 slides to Slide #25. Niels Frederiksen: Thank you, Marianne. For 2026, we expect the consumer trends to be unchanged for most of our product categories and markets and broadly similar to historic trends. We do appreciate that uncertainties are elevated and the risk for external disruptions remain high. However, we believe we have established good control of our internal processes and operations following the implementation of the SAP solution throughout Europe, and we are now well prepared to execute on our new strategy. For 2026, we expect group net sales growth at constant currencies to be in the range of minus 2% to plus 2%. The expectation reflects that total market volumes for machine-rolled cigars in Europe will decline by 3% and consumption of handmade cigars in the U.S. will decline by 4%. Improving our market shares, growing our U.S. retail and nicotine pouch businesses are expected to offset the volume declines in our core combustible categories. For 2026, we expect the EBIT margin before special items to be in the range of 13% to 14.5% compared with the 14.9% in 2025. The expectation reflects that 2026 will be a year of stabilization and where we will continue investing to facilitate our long-term ambitions in Focus2030. Pricing is not expected to fully offset the impact from cost increases, changes in product and market mix as well as our increased promotional activities to protect and improve our market share positions. On a more technical note, an increase in the amortization of trademarks of approximately 1 percentage point on the EBIT margin before special items is expected to be largely offset by an expected higher income from certain duty refunds. The increase in amortization reflects the group's new strategic direction with stronger focus on power brands, implying that brands outside the scope of power brands going forward are classified with a finite useful lifetime. For 2026, the free cash flow before acquisitions is expected in the range of DKK 950 million to DKK 1.2 billion, reflecting the expectations for net sales and margins as well as the delayed payments from trade receivables, which Marianne talked to, impacting cash flow positively in 2026 with an expected effect on cash flow during the first half of this year. Now this concludes our presentation for today's call. I'll now hand the word back to the operator, and we are ready to take questions. Thank you. Operator: [Operator Instructions] And now we're going to take our first question over the audio lines. And the question comes from the line of Niklas Ekman from DNB Carnegie. Niklas Ekman: First question is regarding the guidance for 2026 because at the Capital Markets Day in late November, you talked about an ambition for a low single-digit growth of EBIT. And it looks now like even the upper end of the full year guidance suggests a decline and the low end, a quite significant decline. So can you elaborate a little bit on this? Is there anything that has worsened since the Capital Markets Day in November? Marianne Bock: Thanks for the question. So when we talk about a low single-digit increase in EBITDA, it is over the strategy period. We are believing that 2026, which we also said at the Capital Markets Day is what we call a year of stabilization. We need not only to stabilize the internal disruption that we have seen in '25 but we also need to stabilize both our handmade cigar business and our machine-rolled cigar business. And that will entail investments into regaining market share but also in promotions. So we still believe that over the strategy period, we will see low single-digit growth in EBIT. But in '26, we could see a decline. Niklas Ekman: Can I also ask about your view on margins and potential cost reductions and particularly given the quite steep margin decline we've seen in recent years. You've now have margins that have dropped below pre-COVID levels and the guidance for '26 suggests a further decline. Are you in a stage now where you are looking more actively at your cost base again and maybe at initiating more significant cost reductions in order to curb the margin decline? Or what's your view on that? Marianne Bock: Yes. Thanks again, Niklas. So if we talk margins in '26, margins in '26 will also be impacted by mix, which means that our nicotine pouch business, we expect to grow but we are also seeing declines in our fine-cut business that has very high margins. When we talk about cost programs, we announced at the Capital Markets Day a cost program of DKK 200 million over the coming years. We are, as we speak, executing on these cost programs. We have full plans in place for those DKK 200 million, and we will see that coming in, during '26 and also '27. I would also say that if we see markets are worsening compared to our expectations, we will, of course, look at our cost levels. Niklas Ekman: Okay. Very clear. I'm also curious, when I look through the report, you used to talk a lot about the growth enablers. And now you talk more specifically about next-generation products and the retail stores. Is this a definition that you have removed? And is this because you don't -- you no longer see the international handmade business as a major growth driver? Niels Frederiksen: Yes, it's a good question, Niklas. I think that with the new strategy, you can say that retail expansion and nicotine pouches still play a central role. But the growth in international handmade cigars is still important to us, but we have prioritized doing well in handmade cigars in the U.S. more. So referring to the growth enablers as we originally defined them makes less sense. We now want to be more focused on stabilizing earnings in the machine-rolled cigars, smoking tobacco, growing the handmade with a focus on the U.S. and growing nicotine pouches. So we will try to articulate the degree to which we succeed with these things in a different way than referring to the growth enablers. Niklas Ekman: Very clear. And just a final question. Am I right to assume that buybacks are quite unlikely in '26. When I look at your leverage ratio and your aim to get net debt below 2.5x EBITDA, I guess the only way to get there is if you stick to dividends and not buybacks. So buybacks are unlikely in '26. Is that a right assumption? Marianne Bock: I think the short answer is yes. Operator: Now we are going take our next question, and the question comes from the line of Sebastian Grave from Nordea. Peter Grave: I apologize for those being broadly in the same line of Niklas. But I'll start off with a question on the margin here. So for the guidance of '26, you're guiding for quite steep margin declines compared to '25, even from a fairly low starting point in '25. And I know you talked about increased investments in market shares. But I mean, on the flip side, I would assume that you should see some tailwind from Mac Baren synergies. There should also be some SAP efficiencies and cost takeouts as highlighted in the Capital Markets Day. So at least in my view, it looks like underlying the margin pressure here is way more pronounced than what is -- we can see from the highlighted numbers here. So could you maybe help me understand how this works and how exactly this aligns with your articulated ambitions of protecting earnings in the short term? Marianne Bock: Yes. Yes. Let me start out, Sebastian. And first of all, thank you for asking questions, and then Niels can also elaborate. But if you look at our guidance range, both when we look at top line and also margins, it is quite wide ranges if you compare to our business. And it is a signal of uncertainty on our total markets, how they're going to develop but also uncertainties in the external world. So we are anticipating a slight decline in margins in '26 due to the reasons that I mentioned to Niklas. We are on track on the synergies for Mac Baren. You talk about SAP synergies. There will also come synergies in on the SAP implementation. But as we are still rolling out, we're focusing on that rather than executing on those synergies for now. Niels Frederiksen: Yes. I can add, Sebastian. I think when you look at Europe and machine-rolled cigars, you have the area where you have a lot of mix of product and market. The thing that is, let's say, not new but is more sustained and we can also see it continuing into 2026 is the promotion pressure applied across all sales channels in the U.S. So even though we take price increases and we continue to have a high focus on that, margins are under pressure simply to stay competitive, both on a, let's say, a brand level to regular retail and on an online level competing in the U.S. So these are some of the key dynamics that are in play and which we are obviously working very closely to improve but that is what is reflecting the margin pressure that Marianne also referred to. Peter Grave: Okay. So what I'm hearing you saying, Niels, is that you are in a difficult consumer environment in a structurally declining category with fierce competition. And hence, is there any reason to believe that invest in these currently elevated investments in market shares that they should taper off in the near term, i.e., in '27, '28? Niels Frederiksen: Yes. I think that the way to think about this is that market conditions have intensified, if I can put it like that. And our strategy aims at protecting and enhancing market shares, and that comes with a higher promotion pressure. Our job over time is to let's say, improve or lower that promotion pressure and still do well on market shares but it requires the market conditions to improve. So you can see the combination of total market declines and the -- let's call it, the fight for market share is what is putting the pressure on the market. And we have, of course, an expectation that over time, that will normalize. We've not seen promotion pressure like this and downtrading on this for some time. Peter Grave: Okay. That is fair. And my last question is going back to the ambitions of harvesting some DKK 200 million efficiency gains as you talked about in the I understand that some of these ambitions have already translated to initiatives but can you maybe help explaining how much of the DKK 200 million is already reflected in the '26 guidance and how much we should expect beyond that? Marianne Bock: Yes. So I would -- for the '26, I would think it in the level of around DKK 100 million. Peter Grave: Okay. Okay. So half of the efficiency gains... Marianne Bock: Sorry, Sebastian, then going into '27, we'll be closer to DKK 200 million but probably not fully, and we'll see the last part coming in, in '28. Operator: [Operator Instructions] And we're going to take our next question on the audio line. And it comes from the line of Damian McNeela from Deutsche Numis. Damian McNeela: The first one is on Canada and Australia because I think in the press release last night, you called out challenging conditions there and the impact that, that's had on the business. You did mention in the presentation. Can you talk a little bit about what's happening in those markets and what the outlook for this year is, please? That's my first question. Niels Frederiksen: Thank you, Damian. And if I start with Australia, for those that follow the industry closely, it's maybe no surprise that we have seen an explosion in illicit trade. So a lot of tobacco companies, including ours, have seen earnings decline by quite a bit in Australia. And this is, let's say, increased for us in the sense that we had because of regulatory changes, a relatively higher sales in 2024 than in 2025. So the net impact of Australia on our profitability is quite distinct. So Australia is very much about a total market that is going illicit. And we are not losing market share, but basically losing volume simply because the legitimate market is lower, and it's a high profit market as we debate that will be discussed. For Canada, the situation is a little different. Also here, our market share position is strong and broadly unchanged. But in Canada, there is a -- from time to time, a larger sales into the Indian districts and the government have restricted some of those licenses they issue for selling in Indian districts, and that has affected our sales in Canada in 2025. So those are the 2 main explanations around Canada and Australia and them being among our highest margin markets does affect the average margin and total costs. Damian McNeela: Yes. And just as a follow-up on that Canada point, that's likely to remain the case for the medium term, is it? Niels Frederiksen: It's been -- over the years, this has been an on and off issue. So there's nothing wrong with selling in the Indian districts but they need licenses and sometimes the government takes it away from them and then a period passes and they get reinstated. So we are still of the view that they may come back but there's no guarantees around it. Damian McNeela: Yes. And so the guidance assumes no return for those... Niels Frederiksen: Yes. Yes. Damian McNeela: Yes. Okay. And then in MRC Europe, it looks like margins have stabilized, but market share losses have continued. I was just wondering whether you could sort of call out some of the competitive dynamics in your -- a couple of the bigger markets that you operate in. Just to give us a sense of how the business is performing now that the sort of ERP system is up and running and fully implemented? Niels Frederiksen: Yes. Let me try to give a few examples. So 2 of the key markets in our strategy is France and Spain. And as we have been resolving the inventory availability issues up until the end of 2025, we are seeing that market share is responding positively into 2026 but it's also us recovering from a low level. So we are still saying we have to be patient around how fast we can regain market share into 2026. But at least in these 2 markets, you can say that we have inventory availability back to where we would like to have it. When you look at other key markets in Europe, the situation is a little different. We have markets like the U.K. where there is a higher decline rate of machine-rolled cigars, and there's also a shift from regular machine-rolled cigars where we are strong to increasingly small cigars where we are competing up against some of the larger tobacco companies. So even though those categories grow, the mix in margin become again a net negative. When you then look to the Central European markets of Benelux and Germany. Here, we are, again, still concentrating on getting customer service levels back to where they need to be. And also here, you have in certain markets, this new dynamic of consumers shifting between what we call mainstream small cigars and little cigars, which are also cigars but sold at a lower price and typically in 10-pack cigarette type packaging formats. So it's -- what I'm really saying is it's quite a complicated picture when you look across the markets. What's important to remember is we have really strong market positions in many of these places, France, Spain, Benelux, U.K., and that's what we're trying to leverage to get the market share back. Marianne Bock: And then you were also asking about the competitive situation. And here, we are seeing -- which we've also seen over the years that our competitors are reluctant to take the same level of price increases, which we think is necessary to cover both volume decline and cost increases. Damian McNeela: Okay. So that hasn't changed at all. Marianne Bock: No. Niels Frederiksen: No. Damian McNeela: No. Okay. And then just on -- I guess this is a slightly more philosophical one. You've changed guidance from EBITDA to EBIT margins. I was just wondering if there was anything behind that decision to do that. Torben Sand: Yes, maybe I can answer that. First of all, we believe also now where we have a more distinct and clear focus on return on invested capital, it goes more in line with giving a guidance on EBIT. Secondly, the EBIT level also includes what we have seen in the past few years, increased investments and therefore, depreciation in especially our retail business. And then we have also noticed from kind of studies we have made with the market that it's a more common practice to guide on the EBIT level. So that's the key reasons for us changing that. Damian McNeela: Yes. Okay. That's clear. And then perhaps if I may, one last one, just on the XQS brand. Can you just sort of give a sense of the areas of focus for growth? I mean, obviously, Sweden is pretty strong already. Do you see increased investment behind the brand through the course of '26? Niels Frederiksen: We are seeing increased investments behind the brand, Damian. If you look at the geography, we talk a lot about Sweden. We talk a lot about the U.K., which are 2 important markets for us but we also consider, let's say, Scandinavia at large, and we are opening a new subsidiary in Norway later in the year. They will, of course, also include nicotine pouches in their portfolio. Finland is also in the focus area and certain Eastern European countries. So we are focusing on the European geography to build momentum also outside of Sweden. Operator: Thank you. Dear speakers, I have no further questions. Please continue. Torben Sand: Okay. Yes. Thank you. And I was simply just going to close off the call now. Thank you for listening in. Thank you for the questions. And yes, we will meet again in May after our first quarter results. Thank you, and have a good day. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Operator: Ladies and gentlemen, welcome to the LEG Immobilien Full Year 2025 Conference Call and Live Webcast. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Frank Kopfinger, Head of Investor Relations. Please go ahead. Frank Kopfinger: Thank you, Valentina, and good morning, everyone, from Dusseldorf. Welcome to our call for our full year 2025 results, and thank you for your participation. We have in the call our entire management team with our CEO, Lars von Lackum; our CFO, Kathrin Kohling; as well as our COO, Volker Wiegel. You'll find the presentation document as well as the annual report and documents within the IR section of our homepage. Please note that, there is also a disclaimer, which you'll find on Page 2 of our presentation. And without further ado, I hand it over to you, Lars. Lars Von Lackum: Thank you, Frank. Good morning, everyone, and thank you for joining our analyst and investor call today. I am very proud to share that 2025 has been an outstanding year for us. We have delivered AFFO of EUR 220.5 million, marking a 10% increase, the highest level in our company's history. This performance is a clear reflection of our disciplined execution, our strong portfolio and our willingness to capture opportunities, like we did with BCP. Building on this success, we are proposing a dividend increase of 8% to EUR 2.92 per share. This reflects the full 100% payout of our AFFO, a strong signal of both cash generation as well as our financial health. We have also made solid progress on the balance sheet. Our loan-to-value ratio has improved to 46.8%, and we remain on track to reach 45% in 2026. This improvement was supported by a 3% positive valuation effect, which is backed by our own disposals and markets building higher confidence, although admittedly, markets remain at lower transaction volumes. On the portfolio side, we have completed or agreed on the sale of 3,100 units in 2025. These disposals further optimize our balance sheet and the efficiency of our portfolio. We are well on track with further disposals in 2026. The planned sale of the Glasmacher development plot in Dusseldorf has made significant progress. Renowned real estate developer, Hines signed a purchase option for the site with LEG just yesterday. We confirm our 2026 guidance with AFFO expected between EUR 220 million and EUR 240 million. We will grow cash generation also this year, while weathering higher interest costs as well as lower subsidies. Looking further ahead, I am equally excited about our midterm growth outlook. From 2028 to 2030, we see strong potential driven by a substantial part of units running off subsidization in 2028 and by the creation of a new operating model based on comprehensive digitalization across our business. These initiatives will not only strengthen our competitive position, but at the same time, create long-term value for all stakeholders. In summary, 2025 has been a year of achievement, strategic progress and measurable results. We have delivered growth, improved resilience and positioned ourselves for an even stronger future. Thank you to our teams for their dedication and to our investors for their trust. The foundation we have built today ensures that the years ahead will be just as successful. Let's now turn to Slide 6 and the 2025 financial highlights, a year that truly embodies our theme of promised and delivered. We entered 2025 with a clear set of targets, and I am proud to say we did not just meet them, we partially exceeded them. Starting with the net cold rent. We closed the year at EUR 919.9 million, representing a 7% increase year-over-year. This growth was supported by a healthy 3.5% like-for-like rent increase, but equally by the successful integration of BCP, which added 9,000 high-quality units to our portfolio. This integration was executed seamlessly and has already begun contributing to earnings as planned. On operating profitability, our adjusted EBITDA margin came in at 78.1%, well above our planned level of 76% and even above our improved guided level of roughly 77%. Those 110 basis points of outperformance reflect both our tight cost discipline and our continued success in driving efficiencies across operations. Moving to our earnings metrics. FFO I reached EUR 481.5 million, a 5.2% increase, lending right above the midpoint of our guidance range of EUR 470 million to EUR 490 million. Even more impressively, AFFO grew by a strong 10% to EUR 220.5 million, lending smoothly within our improved guidance range of EUR 215 million to EUR 225 million. This marks a record high for the company. And speaking of returns, our dividend proposal of EUR 2.92 per share reflect a 100% payout ratio of AFFO. Year-on-year, this is an increase of 8% and ensures that our investors benefit directly from these strong results. Let me now turn to one specific growth driver going forward, our subsidized units coming off restriction from 2028 onwards. Today, we have around 30,000 subsidized units that are still subject to rent regulation under the so-called cost rent regime. These units are currently rented out for about EUR 5.40 per square meter, which is significantly below market levels. By comparison, the relevant market rent for a similar mix of units is roughly EUR 9 per square meter. This means there exists a rent gap of more than 60%. As these units get off restriction, we can start closing that gap in a controlled and sustainable way like we have done with smaller numbers of subsidized units over the past years. In general, we will apply the 15% or 20% rent increase on all units getting off restriction depending on whether they are based in tense or non-tense markets. However, the cost rent adjustments executed in 2026 as well as the new lettings in 2026 and 2027 absorb parts of that maximum rent increase potential. As of today, we assume that this limits the rent increase potential to around 12% in 2028. On the portfolio level, that alone translates into about 1 percentage point to our overall rental growth in 2028. And importantly, the effects do not stop there. We expect spillover effects into 2029 and beyond as further adjustments and relettings will deliver further rent growth. This will become a recurring and predictable growth driver for our residential portfolio as it will take quite some time until we can close the gap towards market rent level. In short, as soon as these restrictions expire, we are going to not only unlock immediate rental uplift, but also secure a long-term structural growth contributor. That will support our earnings trajectory well beyond 2028 until the gap towards market level is fully closed. Let me now turn to our second midterm growth driver that will become equally important to LEG's value creation going forward, our technology and digitalization agenda. Our industry environment has changed fundamentally. The regulatory framework in the German residential real estate sector is becoming even more restrictive, whether in terms of rent regulation, energy efficiency requirements or tenant protection. The traditional levers for operational optimization are reaching their limits. This makes it even more important to identify new sources of efficiency and value creation. And we are firmly convinced that technology and digitalization represent the most significant untapped lever available to us today. We have made a very deliberate strategic choice in how we approach this. We are dedicated to building a completely new operating model by making the best use of technology and digitalization, not just implementing software, but truly embracing it and redefining the way we serve our tenants. We manage our buildings, we steer our contractors. Rather than diverting resources to building proprietary software, we pursue a disciplined Buy & Partner strategy. And we have chosen 2 world-class partners to execute on this vision. The first one is ServiceNow. With ServiceNow, we are building an end-to-end system architecture that spans our entire operative value chain from customer service to technical operations to administrative processes. This gives us the flexibility to deploy AI at every touch point along that chain rather than in isolated pockets and thus enables us to drive automation to unprecedented levels. We are, to our knowledge, among the first residential real estate platforms globally to adopt ServiceNow as a core platform, and we see this as a genuine competitive advantage. The second is SAP. We have made a consequent commitment to building on the most modern ERP system available in the market. In fact, we have been operating on the latest version of SAP since the end of 2024. This positions us ahead of many peers who are still facing complex migration journeys. Together, SAP and ServiceNow form our central tech backbone, enabling not only system consolidation and process standardization, but critically the systematic scaling of AI across our operations and administration. Our technology investments are designed to drive AFFO and FFO I optimization along 3 core value drivers: efficiency, top line and investment management. The first focus will be on efficiency, streamlining our customer-facing technical and administrative processes with best-in-class AI-powered solutions. Beyond that, we see meaningful opportunities to leverage technology for revenue growth and smarter capital allocation across our portfolio. We are investing meaningfully in this transformation with the bulk of spending concentrated in the near-term implementation phase. This is a conscious front-loading of investment. From 2028, we expect these initiatives to turn cash flow positive, building to a contribution of more than EUR 10 million in AFFO from 2030. In short, in an environment where traditional optimization levers are increasingly constrained, we are building the technological foundation that will make LEG a more efficient, more scalable and ultimately more profitable platform for the years to come. And with this, I hand it over to Volker for some insights into the operations. Volker Wiegel: Thank you, Lars, and good morning to everyone from the shiny AI future back to 2025 and specifically to our rent development. As we mentioned earlier in the year, rent growth followed a different quarterly trajectory compared to last year. After 9 months, we were at 3.1%, but I'm very pleased to report that, as promised, we delivered fully on our guidance range of 3.4% to 3.6%. We closed the year right at the midpoint of 3.5% like-for-like in-place rent growth. At year-end, the average in-place rent of our residential portfolio stood at EUR 7.04 per square meter on a like-for-like basis. This compares to EUR 6.81 in the previous year. The drivers behind this growth were well balanced. 2% came from rent table increases and another 1.5% from modernization and reletting activities. Looking across our market segments, stable markets showed the highest momentum with 3.8% like-for-like rent growth, while higher-yielding markets grew by 3.1%. Our free financed units specifically saw rent increases of 4%, which reflects the underlying strong momentum in the market. Specifically, we saw rent table publications in Hilden with 11%, Wilhelmshaven with 7% and Leverkusen with 5%. However, the growth momentum seems to have reached its maximum level, while years with higher rent growth are reflected in the published rent tables, lower growth rates will limit this development going forward. As expected, there was no effect yet from the cost rent adjustment for the subsidized portfolio in 2025. Importantly, this growth came with an ultra-low vacancy. Our like-for-like EPRA vacancy rate remained at 2.3%, virtually unchanged versus last year, confirming the strong demand we continue to see across our markets. Looking ahead, for the current fiscal year, our goal is to deliver 3.8% to 4% like-for-like rent growth as already indicated with our Q3 numbers. The cost rent adjustment should contribute around 40 to 50 basis points to that result. Moving on to our investments in 2025 on Slide 10. Our guidance for the year was to invest more than EUR 35 per square meter, and I'm pleased to confirm that we exceeded that target coming in at EUR 36.11 per square meter. In absolute terms, we invested slightly more than EUR 400 million into our portfolio, an increase of 10% year-on-year. This increase to the prior year was largely driven by the integration of the BCP portfolio where we had to accelerate necessary investment measures. Looking at the composition of investments in more detail. CapEx accounted for EUR 228 million or EUR 0.46 per square meter, while maintenance represented EUR 175 million or EUR 15.65 per square meter. Altogether, this brought the per square meter figure up by 6.2% versus last year. Our capitalization ratio remained broadly unchanged at 57%. With substantially lower new construction activity, recurring CapEx still increased by a moderate 2%, reaching EUR 261 million. Overall, 2025 was another year of disciplined and targeted portfolio investment. We delivered above guidance, managed the BCP integration successfully and continued to invest responsibly in the quality and long-term value of our housing stock. For 2026, we are guiding for investments of more than EUR 35 per square meter, which remains similar to the investment level of 2025. Let me now touch on one of our operational growth drivers, our value-add businesses. These operations are a key pillar of LEG's strategy and a reliable growth driver for the company. They allow us to generate additional earnings beyond pure rent growth, while at the same time, those improve service quality and efficiency for our tenants. I'm very pleased to report that in 2025, we achieved strong FFO I growth of around 20% in this segment, increasing from EUR 50 million in 2024 to around EUR 60 million in 2025. While others in the market are still talking about the value-add additions, we are delivering real results. The foundation of this success lies in our technician and craftsmen services, our project management and electrical service units and of course, our energy and heating business as well as the multimedia business. In particular, we are very optimistic about the continuing growth of our energy services, which benefit from the ongoing focus on energy efficiency and shift towards heat pumps as well as our small repairs and in-house maintenance business. Beyond these established value-add services, we are also building momentum in our Green Ventures. These include new climate-focused services such as RENOWATE for serial refurbishment; termios, with smart thermostats for hydraulic optimization and dekarbo for the installation and maintenance of heat pumps. It is important to note that the Green Ventures are not yet included in the financial numbers shown on this chart, but they will become a meaningful growth contributor over the next few years. Between 2024 and 2028, we strive to generate a cumulative contribution of around EUR 20 million from our Green Ventures. To sum up, our value-add business combines stable cash flows, operational synergies and sustainability, while our Green Ventures offer the chance to participate in one of the fastest-growing segments in our market, decarbonization of real estate. They significantly enhance the resilience and profitability of LEG's business model and will continue to be a strong source of earnings growth forward. Let's now take a look at our disposals in 2025 on Slide 12. In total, we completed or agreed on sales for around 3,100 units and a total of more than EUR 250 million. During the year, we sold 2,252 residential units for total proceeds of around EUR 190 million. After deducting financing redemption fees and taxes, net proceeds amounted to roughly EUR 100 million. The transaction market remained subdued throughout the year. Overall, investment volumes in the German residential sector declined by about 4%. Even more telling, the share of large-scale transactions above EUR 100 million fell sharply from 63% in 2024, down to just 34% in 2025. You find additional information for the transaction activity in the German market on Slide 29 in the appendix. Against this challenging backdrop and while maintaining our strict disposal discipline, we are very satisfied with the year's outcome. All in all, disposals were executed at or above book values, fully in line with our policy of value-preserving capital recycling. The chart on the slide shows the units that have been transferred in 2025, but there's more to come. Year-to-date, we had already signed additional sales contracts for roughly 950 units, representing around EUR 70 million in proceeds. These transactions will transfer in the first half of 2026, and we already issued a press release about the majority of them in early January. Within these transactions, we also made strong progress on the Glasmacher district development plot in Dusseldorf. This would certainly contribute to our deleveraging strategy. As already described by Lars, we were able to agree with Hines on an option to buy the plot. The next step will be an agreement between Hines and the city of Dusseldorf. In case that works well, we expect to sign the deal by end of September, the latest. However, please be aware that the sales proceeds will follow the progress made in the building permission process. Moreover, we continue to advance our broader disposal program of up to 5,000 units, including around 1,400 units in Eastern Germany. Overall, our selective approach, i.e., focusing on sales of smaller portfolios or even single multifamily houses in the current market environment clearly demonstrates our ability to deliver on disposals. We remain focused on execution, disciplined pricing and support to our balance sheet as well as improvement of the overall quality of our portfolio. And with this, I hand it over to Kathrin. Kathrin Köhling: Thanks, Volker, and good morning also from my side. Let us now look at Slide #13, which covers our most recent portfolio revaluation. The results clearly confirm that market conditions are stabilizing. They also reflect the upward trend seen in leading market indicators such as the VDP Property Index and the German Real Estate Index GREIX. While the VDP Index recorded an increase of around 5.3%, the GREIX showed an increase of 4.8% for 2025. Against this backdrop, our portfolio valuation result in the second half of 2025 posted a 1.8% uplift, which was even stronger than the 1.2% increase we saw in the first half of the year. Altogether, for the full financial year 2025, we saw a valuation result of 3%, demonstrating clear upward momentum. Further details can be found in the appendix on Slide 30, where we show valuation changes by market segment. Our gross yield now stands at 4.8%, which continues to offer a comfortable spread versus bond yields, an important buffer in a still cautious investment environment. On a net initial yield basis, excluding incidental acquisition costs, we stand at 4.3%. The average gross asset value per square meter amounts currently to EUR 1,710, ranging from about EUR 2,320 in high-growth markets to EUR 1,190 in higher-yielding markets. Overall, the valuation result confirms that the correction phase of the past 2 years is behind us. We remain confident that this recovery path will continue into 2026, driven by renewed investor interest, more stable financing conditions and the intrinsic strength of the German residential sector. The trend has turned positive and the positive outlook is being supported by the view of major real estate experts such as CBRE, JLL as well as Moody's. Let's turn to Slide #14 and take a closer look at the development of our AFFO in 2025. We ended the year with an AFFO of EUR 220.5 million, representing a 10% increase year-on-year or about EUR 20 million higher compared to the prior year's EUR 200.4 million. The main driver behind this growth was, as expected, higher net cold rent. Altogether, this contributed roughly EUR 60 million. From that, about EUR 28 million comes from organic rent growth and another EUR 49 million from the acquisition of BCP. These positive effects more than offset the EUR 17 million negative impact from disposals. Net cash interest rose by EUR 12 million, driven by the increase in debt due to BCP and by higher refinancing costs. Still, I would like to highlight that we were able to keep our average interest cost at a very competitive 1.66%, which is an excellent outcome given the current interest rate environment. In addition, our Green Ventures still in their early investment phase, had a temporary negative impact of EUR 4.2 million on AFFO in the reporting period. Maintenance and CapEx spending amounted to about EUR 13 million more after subsidies, reflecting the enlarged asset base. To sum up, 2025 was another solid year of strong growth and recurring cash flows, underlining both the resilience of our operating platform and the profitability contribution from the BCP integration. Finally, let's turn to Slide #15, which highlights LEG's financing structure and key figures, starting with our loan-to-value ratio. We closed 2025 at 46.8%, coming down by 110 basis points year-on-year. That puts us well on track to reach our target of 45% during 2026. This continued deleveraging is driven by our solid cash generation, disposal proceeds as well as valuation effects. In addition to LTV, another key indicator, especially with regard to our bond covenants is the interest coverage ratio or ICR. Our ICR stands at a very strong 4.3x, and also all other bond covenants have ample headroom. For those interested in more detail, we've provided the full overview in the appendix. Our average interest cost increased modestly by just 17 basis points to 1.66%, still a very low level in today's market environment. At the same time, the average debt maturity remains comfortable at 5.5 years. Our liquidity position remains very strong, with more than EUR 800 million available as of year-end 2025 and undrawn revolving credit facilities of EUR 750 million. As already discussed in the last earnings call, all debt maturities for 2026 are covered. At the beginning of this year, we redeemed our EUR 500 million bond, and we are now evaluating refinancing options for the 2027 maturities, including the next bond, which comes due only in November 2027. We'll continue to take an opportunistic and disciplined approach here, depending on market conditions. All in all, our balance sheet is resilient. Our maturity profile is well structured, and we are in a very strong financing position with ample flexibility going forward. And with this, I'll hand it back to Lars. Lars Von Lackum: Thanks, Kathrin. Let me conclude today's presentation, with a brief summary of our guidance for 2026, as shown on Slide 16. These targets were already introduced with our Q3 2025 results, and I'm happy to reconfirm today that our guidance remains fully in place. For 2026, we expect a further improvement in our cash generation with AFFO between EUR 220 million and EUR 240 million. That represents continued growth on top of the strong performance we delivered in 2025. In line with that, our FFO I is expected to come in between EUR 475 million and EUR 495 million, supported by an adjusted EBITDA margin of around 78%. On the operational side, we target like-for-like rent growth between 3.8% and 4%, driven by our solid rent dynamics, targeted modernizations and the cost rent adjustment for subsidized units. Our investment volume will again exceed EUR 35 per square meter, ensuring that we maintain the quality, energy efficiency and long-term attractiveness of our housing stock. On the balance sheet, we remain fully committed to further deleveraging. With our LTV expected at around 45% by year-end 2026, we are well on track to achieve this. As announced, we plan to distribute 100% of AFFO to our shareholders, reflecting both our strong cash flow generation and our disciplined capital allocation approach. We will propose a dividend of EUR 2.92 either in cash or shares, the latter depending on the market environment. Beyond the financials, we also continue to make measurable progress in sustainability. In 2026, we target a CO2 reduction of about 7,600 tonnes. And by 2029, we aim to lower our relative CO2 emission saving costs per ton by 20%. To sum it up, LEG remains on a clear and consistent path, generating reliable cash flow, maintaining financial discipline and building long-term value for our shareholders and tenants alike. As we've said before, cash flow remains king and the best metric to steer our business. Our 2026 guidance once again underlines the strength and resilience of our business model. And with this, I come to the end of our presentation, and we are now looking forward to answer your questions. Operator: [Operator Instructions] The first question comes from Marios Pastou from Bernstein. Marios Pastou: I've got 2 questions from my side. So firstly, on the 5,000 unit disposal pool. Can you provide an update here on the progress you're having with current discussions? I think on the last update call, you mentioned you were in exclusivity in East Germany. So any comments on the progress there would be helpful. And then secondly, on the slide with the 16,000 units coming off restriction in 2028. Based on your prior experience when adjusting the rents, do you foresee any vacancy risk here, the uplift being 15% or 20% depending on the cap level seems like quite a step change in one go. So any comments there will be helpful. Lars Von Lackum: Marios, thanks a lot for your questions. So with regards to the 5,000 units disposal portfolio we have on the market, around 1,400 units are in Eastern Germany. So for parts of it, we are in exclusivity. And unfortunately, still the transaction times are much longer than initially expected. This is partially due to the financing and the more stricter view of banks with regards to real estate. Those processes still take much longer than we had forecasted. So therefore, yes, there are still portfolios in exclusivity. And certainly, we hope that we can close those over the course of Q1 and Q2. With regards to the remaining 5,000 units, we are selling those in smaller portfolios as well as single multifamily houses exactly as Volker has laid out during his presentation. So it is unfortunately not the case that we see bigger investors or transaction liquidity to have increased since the beginning of the year. So let's wait how the discussions at MIPIM next year -- next week will look like. It might certainly be that this brings additional liquidity to the market. With regards to the subsidized units, which run off, you might have seen that most of those which are getting off restriction are those in the high-growth markets. So the non-tense markets account for around 2/3 of those units getting off restriction. So therefore, I have full confidence in Volker and his team that they will relet those very quickly and easily because the undersupply in those markets is quite strong. Volker Wiegel: And even to add up, we don't see the risk of higher -- significantly higher fluctuation. Of course, there will be some fluctuation, but not in a way that we will not be able to cover it. And on Slide 27 in the appendix, you see the spread to the market rent, and you see that it's hard to find a substitute which is at the previous cost. Operator: The next question comes from Veronique Meertens from Van Lanschot Kempen. Veronique Meertens: A few from my side. So first, on the Dusseldorf land plot, could you please elaborate what you exactly meant with the time line you see for the sales proceeds of this disposal because I didn't fully understand it. Lars Von Lackum: Veronique, thanks a lot for the question. So unfortunately, first of all, let me say that certainly, we have a U.S. investor on the other side. So confidentiality requirements are quite strict. I try to give you as much of an insight as possible as of today's stage. So we have signed a purchase option with Hines yesterday, and they can make use of that call option until the end of September. If they are agreeing to that call option, we have a fully laid out contract with regards to the acquisition of the plots. So that contract will then be signed immediately and all those terms and conditions are pre-agreed, certainly including the price and the payment pattern. The payment pattern then foresees that a certain part of the sales proceeds will be paid by year-end, and the remaining payments will depend on the progress of the building permission process. And that is what I can disclose as of today. Veronique Meertens: Okay. That's clear. And then maybe that also rolls into my next question. So your LTV target is still 45%. It sounds that you're not probably get all the proceeds of this disposal in '26. So how strict is that target? How do you expect to get there as in what have you assumed in terms of disposals and value gains? And also, are you willing to sell at a discount if that means that that's what's necessary to meet that target? Lars Von Lackum: Yes. So Veronique, as you know, we have currently 5,000 units in the market. We will strictly stick to the levels which we were sticking to for all the previous years, which means we are not willing to sell below book value. So that is what we have executed over the last -- much more difficult years, and we will also stick to that guidance for this year. In order to arrive at those 45%, certainly a contribution comes from the sales proceeds, and we are also seeing a positive development in the market. Let's wait whether that is consistent over the year. Certainly, we now have a big war in the Middle East. If that tends to be longer than initially assumed, that certainly might have an impact. As of today, and looking into whatever we heard at least, it might be not that, that war is extending for weeks. So therefore, if that's not going to happen, we are quite confident that we can reach our 45% target. And this is, as of today, what we are now striving for, and we are quite confident to reach that within 2026. Operator: The next question comes from Andres Toome from Green Street. Andres Toome: You have a pretty clear focus on disposals for the next 12 months or so, it seems. But I was just wondering on the other side of it, if large disposals in the market today require "portfolio discounts", then is there a case where you can see actually accretive acquisition opportunities yourself to be a buyer, which would be financed through an equity raise? And I guess I'm particularly thinking about some of these news flows around open-ended funds for German residential that need to fulfill their redemption needs. Lars Von Lackum: Yes, Andres. And thanks for your question. So with regards to our own acquisition activity, I think we have just acquired a big portfolio, BCP, 9,000 units, integrated that fully. Certainly, we are being offered bigger portfolios on a regular basis. I can tell you that we have not seen any of those willing sellers to give in on price. So therefore, there was nothing comparable with regards to any acquisition opportunity with regards to the quality and also the pricing of the BCP portfolio. Looking at our share price, I think it would be very, very difficult to identify anything which in the current market would then really end up with an accretive value for our shareholders, making the next acquisition. So therefore, our focus currently is strictly on deleveraging, reaching that 45% target, getting sales executed. Andres Toome: That's clear. And then maybe related to this, maybe not in terms of pure straight equity raise, but are you perhaps seeing any options where the seller would accept LEG shares as a buying consideration? I think we've seen some of these examples in other geographies in Europe, but I wonder if there's any discussions around that in Germany. Lars Von Lackum: So currently, we haven't had that discussion with any of the willing sellers. Andres Toome: Understood. And then my final question was just on the points you made around AI. And I think one of the points you highlighted was gaining also some revenue upside. I just wanted to understand how does that work in a regulated residential market? What are the levers you can pull beyond the regulatory constraints you already have in putting through in place rent increases? Lars Von Lackum: Yes. As you know, Andres, the number of criteria with regards to the rent tables can be up to 100 for a single rent table. So the qualitative criteria, which you need to take into consideration is quite a long list. Certainly, being more precise on those different criteria can certainly give you additional upside to just mention one of the examples with -- which certainly gives you an additional rental potential to be realized if you are using more AI. Operator: The next question comes from Thomas Neuhold from Kepler Cheuvreux. Thomas Neuhold: I have 2. The first one is a follow-up on the Gerresheimer project. I understand you're bound by NDA. But I was wondering, would you be able to sell the land plot at or above book value? Can you comment on that? Lars Von Lackum: Yes, so the book value is at around EUR 71 million, and we've been able to realize a substantial uplift on that if we get the sales contract signed end of September. Thomas Neuhold: Good. The second question is on the regulatory environment. I was wondering, if there have been any recent important news on the planned change to the rent regulation. Did you hear anything important? Lars Von Lackum: Yes. So if you look at the current discussion in Berlin, I think on a federal level, you might be aware that there are still discussions on how the regulation for refurbished apartments will look like, how index rents will be limited and also how those pure payments are being regulated. So those are the 3 big issues the Social Democrats are currently forcing through. And from our perspective, that is already a given and that's going to be agreed. With regard to the city of Berlin, there's certainly a lot of discussion and let's wait of what's going to happen now. As you know, we do not own a single unit in Berlin. So we will be not affected by whatever is being decided or at least being discussed in the upcoming election in Berlin. Operator: The next question comes from Kai Klose from Berenberg. Kai Klose: I've got 3 quick questions, if I may. The first one is on the -- actually, the first 2 are on the AFFO statement. Could you indicate or give more details on the increase for the nonrecurring special items from EUR 16 million to EUR 33.9 million and if there will be a similar level or similar increase in '26? Second question is on the green investments, which -- investment income from Green Ventures, where you mentioned that this will leave the investment phase in '26. So can you read that there will be a positive contribution to the AFFO in 2026? And the third question would be on maintenance. You mentioned there was an increase in '26 -- '25 because of the BCP portfolio. Has this been -- this increase only in '25? Or can we expect slightly higher levels because of ongoing work for BCP -- ex BCP assets in '26? Kathrin Köhling: Thanks, Kai, for your questions. With regard to the first one on the nonrecurring special items, this was a special case this year because of BCP. Obviously, we had some integration costs that took place this year, and that's why this number was higher than in the previous year. As long as we don't buy another BCP this year, this should be lower next year. Volker Wiegel: On the second question on Green Ventures, yes, we expect a positive result will not be record high. And of course, there's more risk in these ventures as it's new, but we expect a positive result and yes, expect breakeven. Lars Von Lackum: And to conclude the round here, so with regards to the maintenance expenditures we had in 2025, we do not expect an additional expenditure on the BCP portfolio within 2026. Operator: The next question comes from Paul May from Barclays. Paul May: Three, if I may, probably doing one at a time might be easier. Just following on from the question earlier around acquisitions out of the open-ended funds. I appreciate you said they're not willing to move on price, but there comes a point where they don't have a choice. They do need to meet those redemptions. So I assume that opportunity may still come. You mentioned it wouldn't be accretive for investors if you fund it with equity. Just wondering how you're viewing that, whether you're viewing that on a cash flow basis or whether you're viewing that on a kind of balance sheet made up value basis. That would be great. And then we live it next to separately. Lars Von Lackum: Yes, Paul, thanks for your question. So with regards to the acquisition opportunities out in the market, I think you rightly assume that certainly some of those open-ended funds will sell portfolios. What we still see in those discussions is that liquidity there does not seem to be so stretched that they are under pressure to do really fire sales. So therefore, currently, no indication for them really giving in on price. Certainly, and you might have seen that, we had 2 funds which have also stopped accepting redemptions. You can close down on the fund for 3 years. So that once again also might be a prolonged period where you are not seeing those funds to really do for selling. So therefore, that is what we've currently seen in the market with regards to those funds currently offering portfolios in the market. Secondly, with regards to how we view those acquisition opportunities, we certainly look at it from a cash flow basis, but also from an NTA perspective. And currently, we were not willing to really offer our shareholders any exposure towards those acquisitions. From our perspective, we are well advised to be strict on sales and do our deleveraging path in 2026, in order to arrive at that 45% LTV target. Paul May: Just sort of following on that, I guess, you mentioned the trend in the market, I think it was in Kathrin's commentary has turned positive. I mean, to some extent, the only thing that's positive is valuation prints. Transaction market is lower. Swap rates and bonds have moved higher now versus the average through 2025. So one might argue that the activity levels are lower and worse versus the valuation prints that have got better. Just wondering how you're reconciling those 2 things, which seem to be moving in opposite directions. Kathrin Köhling: Yes. So happy to take your question. When you just look at what is happening in the market with the undersupply that we continue to see, we still expect that rent growth will be a key driver for property values also this year. And yes, it is -- it has been a low year in terms of transaction volumes last year. But when we look at what the big valuators are expecting for this year, they are expecting at least transaction volumes, which are a little bit higher than last year. So we've seen around EUR 9 billion last year. We'll probably see around EUR 10 billion this year. So there are some positive signs. I mean, given currently the Iranian conflict, things look quite different these days, but we have to see what will happen ultimately over the next weeks. If we were to come back to a rather normal environment, which we've had like a week ago, then I'm quite positive that we will see what I just said. Paul May: I think the brokers were quite positive on improving last year as well and ended up being slightly worse, but just be interested to see how that comes out. And then I think again for you, Kathrin, just another one. So over the next 6 years, I think it is roughly, you've got about EUR 1 billion of debt maturing. I think it's just over EUR 1 billion of debt per annum with an average cost of about 1.3% at the moment. Obviously, the cost of that will likely go up by somewhere around 220, 230 basis points, which I think implies a financial headwind to FFO of about 28% versus 2025 FFO and about 63% headwind to AFFO based on FY '25 AFFO. I appreciate that we offset to some extent by rental growth. But just wondering your thoughts there, how you're going to manage that? And obviously, you mentioned disposals, but those in theory come at a higher EBIT yield than your financing costs. Otherwise, you're better off refinancing and holding on to those assets. So I just wonder how you're going to manage that sort of headwind to FFO and AFFO moving forwards over the next 6 years. Lars Von Lackum: Yes. Thanks a lot for your question, Paul. With regards to our midterm planning, our assumption currently is that we can realize, on average, a 5% growth of our key KPI, AFFO over the coming years despite the headwind from interest rates, which you have just mentioned. Certainly, exactly as you mentioned, we are expecting the core business to deliver strongly due to the undersupply in the market and the additional element, which we have disclosed hopefully, in a bit more detail as of today, the substantial number of subsidized units running out of those subsidization schemes and then being treated as free financed units. Secondly, you've seen what happened to the value-added businesses. We are quite confident that we can grow those value-added businesses going forward. That was certainly a very strong year, EUR 50 million to EUR 60 million. So please do not extrapolate that going forward. But that's certainly a contribution we are going to see. Green Ventures, you heard that. That was the last investment year. Last year, they are supposed to contribute substantially. Cumulatively, we strive for a profit of around EUR 20 million until 2028. That's an ambitious target. Certainly, as always, it's under risk if you are talking about start-ups, but the market certainly on the decarbonization side is huge. And finally, we will strive for a new digital operating model, and that certainly will give rise for efficiency gains, lower investments and certainly and most importantly, also additional top line. So with those elements, we feel comfortable to say over the next years, despite the headwind from interest rates, we can increase AFFO per year at around 5%. Paul May: Cool. Perfect. And just to check, the marginal financing costs you're assuming in that 5%, just so you got a sense. Lars Von Lackum: The marginal financing cost for a 10-year financing in the -- in the... Paul May: In your planning, you mentioned 5% per annum AFFO growth. So I just wondered, what is the assumed marginal financing cost? Lars Von Lackum: Yes. So what we do is that we certainly use the interest rate curve as of the time where we are preparing and finally deciding the midterm planning, which was October last year. So certainly, if that is going to change, that will have an impact. But believe me, everyone here in the management team and the full team is fully dedicated to deliver those returns going forward. Paul May: Okay. So we're about sort of 15-ish basis points higher on that versus October last year. Operator: The next question comes from Thomas Rothaeusler from Deutsche Bank. Thomas Rothaeusler: A couple of questions, I think 2 or 3. The first one is on subsidized rents and the adjustment potential, more looking at the long-term upside. I mean, should we expect a structurally higher rental growth rate from '28 considering the higher reversion potential? I mean, you can almost double the rents over time, as you've shown. Maybe you could provide a rough idea about the long-term impact on rental growth. Volker Wiegel: You will have significant impact on the next 3 years starting 2028. Thomas Rothaeusler: But I mean from there, like more the very long term, I mean, you can basically adjust by 12%, as I understand, in '28. But then from there, actually, there is much more adjustment potential, I think, given the low level where subsidized rents come from. Volker Wiegel: Yes, it's -- well, you see the spread to the market rent, and it will take time to adjust it until it's there. And market rent also develops. So this will -- there will be a significant gap that we need to close. And of course, we have the German rent regulation where we can adjust all 3 years then the rents. And we haven't simulated for the next 20 years, but it will have a structural impact over the next decade, I would say. Thomas Rothaeusler: Okay. And then on value-add services, I mean, which contributed a record EUR 60 million in '25. Just wondering what to expect in the coming years? Lars Von Lackum: Yes. So please do not expect that value-added services are now increasing on a regular basis by 20%. That would be highly unrealistic. So that we had -- that lower growth over the last 3 years was certainly very much driven by the energy crisis and the Ukraine war. So that was a strong impact on the Energy Services business. So from our perspective, for this year, assumes something in the growth range for the AFFO. So that will be growing pretty in line with AFFO for this year. Thomas Rothaeusler: Okay. Last one, yes, on property values. I'm just wondering if you could -- if you already got any indication from your appraisers for the first half? Kathrin Köhling: Yes, we just finished our last valuation. So as always, we will start with our new valuation with our cutoff date end of March. And then we'll have more insights once we meet again in May, and then we will give you an indication on H1 as we've always done. Operator: The next question comes from Neeraj Kumar from Barclays. Neeraj Kumar: I've seen a couple of questions on equity raise, so I'll probably not ask that. But on the other side, I would say that it's assuring that you see your values are strong and you don't look to sell below book values. But given your current share price, which seems to be pricing more than 50% discount to your NTA, do you see a potential in saying disposal of EUR 500 million assets of your least profitable assets at 10% discount to your book value and then using those proceeds to buy back shares? If yes, why you're not considering it? And if not, then how do you think about your share price here? Do you think it's fairly representing your property values? I'm just trying to understand if we should be believing your reported property values or your share price implied property values here. Lars Von Lackum: Yes. Thanks a lot, Neeraj, for the question. So it's always difficult with hypothetical questions. So we have not thought about doing that, and we will not do that. So from our perspective and looking at the value increases, especially with those with the lowest yields, those have grown substantially in value over the last 2 years. So therefore, from our perspective, that's nothing which we would -- we would look at. Neeraj Kumar: Okay. So if I understand correctly, like selling assets at 10% discount to book value is not accretive, if you were to use that to buy your shares at more than 50% discount to book value? Lars Von Lackum: This is not what I said, Neeraj. I said that we are not thinking about doing so because from our perspective, the highest value creation on those assets is still to come due to the strong undersupply in the especially high-growth markets. Neeraj Kumar: Got it. And last question. You seem to have been able to refinance your debt with good success with Baa2 rating. I was just trying to understand how critical the LTV target of 45% or a potential rating of Baa1 for you is? Or you think that is better in terms of running with high leverage and doing more share accretive stuff here? Kathrin Köhling: Yes. So of course, as I've always said, the 45% LTV is definitely something that would help to get an upgrade from Moody's on our rating. Although, as you know, it's not the only thing -- the only KPI and the only qualitative factor they look at. So obviously, we would love to have a better rating, but is it essential? Like do we need it to refinance? No. We have refinanced also in the past years. We have refinanced at very attractive levels. So it is not an absolute need that we get this rating upgrade. But however, it's still something nice to have. Operator: [Operator Instructions] The next question comes from Manuel Martin from ODDO BHF. Manuel Martin: Two questions from my side, please. One follow-up question on the units getting off restriction in 2028. Having looked from a political perspective, have you heard anything from the political players in the locations where the units will come off restrictions, i.e., could there be some headwinds to be expected? Maybe you can elaborate a bit on that and thereafter, will be my second question. Lars Von Lackum: Yes, Manuel, thanks a lot for the question. So we have not heard from any political resistance. If you look at the prices of those subsidized units, EUR 5.40 versus the market level EUR 9, that is the difference you're currently seeing in the market. We paid back the subsidized loans already in 2018. So there was a waiting period for another 10 years. So therefore, from our perspective, nothing to be expected on the political side, no political pushback also with regards to those units, which were getting off restriction over the past years. So also no political pushback to be expected from that bigger portfolio. Volker Wiegel: And maybe to add, we are in close contact with almost every mayor and every bigger location, and they understand what's going on and accept it. Manuel Martin: Okay. Perfect. Second question about project development, you're not actively doing that. Do you think this could become an option again for LEG to restart project development? It might be a bit too early, but maybe you can say a word on that, please. Lars Von Lackum: Yes. So very happy to do so, Manuel. We are still struggling to come up with a return worthwhile taking the additional risk on our balance sheet. It is still something which certainly we have explored with that big plot in Dusseldorf of 19 hectares. Finally, we were not making or coming up with a business plan, which will have at least brought about the return worthwhile spending additional money on that plot. So therefore, from our perspective, no, the current regulation is still very strict. The Bau-Turbo, so that's speeding up of building permission processes, we have not seen that really kicking in. We still wait for that building type E, which is assumed to reduce some of the requirements with regards to the building type and the building qualities. Also, those reductions are still not being decided or not in a way currently being discussed politically, which would come then finally to lower construction costs. So therefore, from our perspective, no, we currently do not see any real benefit of that for us to reenter the development market. So that is the current status there. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Frank Kopfinger for any closing remarks. Frank Kopfinger: Yes. Thank you, Valentina, and thanks for all your questions. And as always, should you have further questions, then please do not hesitate and contact us. Otherwise, please note that our next scheduled reporting event is on the 13th of May when we report our Q1 results. And with this, we close the call, and we wish you all the best and hope to see you soon on one of our upcoming roadshows and conferences. Thank you, and goodbye, everybody. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.