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Amelia Lee: Good morning, everyone. Thank you for joining us at Seatrium's Full Year 2025 Results Briefing. My name is Amelia, and I take care of Investor Relations for Seatrium. This morning, we have with us our CEO, Mr. Chris Ong; CFO, Dr. Stephen Lu. Chris and Stephen will bring us through a short presentation before we open the floor to questions. Chris, please? Leng Yeow Ong: Thank you, Amelia. Good morning, and thank you for joining us today at Seatrium's Full Year 2025 Results Briefing. Before I start, I'd like to wish everybody a very happy and a healthy Lunar New Year, good year ahead. I'm pleased to report a strong set of results in our second full year since merger with robust revenue growth driven by strong project progress and doubled the net profit that is an undeniable reflection of our laser-sharp focus on driving margin efficiencies and execution. For the first time, we have recorded a positive 1-year total shareholder return of 5.2% as we strive to continue driving lasting value for all shareholders on strengthened fundamentals. Our strong performance also comes on the back of heightened geopolitical and macroeconomic uncertainties that companies around the world had to grapple with. Despite some delays in investment decisions in several markets in the first half of 2025, we still secured over $4 billion of new orders in FY 2025. This replenished our net order book that stands strongly at $17.8 billion as at 31st of December 2025. Meanwhile, we are actively pursuing more than $32 billion in pipeline deals, which reflects sustained investments by our customers to meet growing energy demand that is fueled by technological advancements, including AI. Third, we are today stronger and leaner than before. We have spent the last few years transforming our business and cost model, the way we work and the way we do business. 95% of our net order book today is made up of Series-Build projects that offer lower execution risk for both ourselves and our customers. Non-FPSO legacy projects, which are relatively lower margin and higher risk compared to post-merger contracts now constitute just over 1% of our net order book. We have also achieved our synergy and cost saving targets, accelerated noncore divestment to reduce overheads and importantly, brought closure to Operation Car Wash in FY 2025. This allowed us to move forward with greater clarity and step forward with larger strides as we leave legacy issues behind us. Today, these achievements reflect the merits of our strategy and that we are ready to build real sustainable momentum for the future. Turning to our financial performance. We delivered a second consecutive year of strong top line growth with revenue growing 24% to $11.5 billion from $9.2 billion a year ago. This reflects the strength of our order book and the disciplined execution that continues to drive reliable delivery to our customers. Net profit came in at $324 million, more than double of $157 million in FY 2024, outpacing revenue growth and underscoring the strong progress that we are making in expanding margins, which Stephen will talk about in greater detail. Our progress is best reflected in how we execute for our customers. Let me now highlight 2 projects that showcase the power of our One Seatrium global delivery model. First, FPSO P-78. We have achieved first oil in record time on 31st of December 2025, and first gas is expected in first Q 2026. Being built across our yards in Brazil, China and integrated in Singapore, this accelerated progress is a strong testament of our One Seatrium global delivery model and also showcases the expansion of our end-to-end delivery capabilities from engineering to offshore commissioning. P-78 is the first of 6 advanced greener P-Series FPSOs and it sets a strong benchmark for subsequent units. Next, on Empire Wind. The project is now over 97% complete and is situated on site in U.S., on track for delivery this year. Once operational, it will deliver 810 megawatts of clean energy to New York, enough power to power more than 500,000 homes. Both the topsides and jacket were built across our Singapore and Batam yards, demonstrating our integrated delivery capability. The remaining exposure in our net order book to the U.S. offshore wind has reduced to less than $10 million with Empire Wind and offshore substation for [indiscernible] very close to completion. The WTIV for Maersk Offshore targeted to complete end of the month. In fact, we are in discussion to deliver her within the next few days. Our future is taking shape with clarity, strong order book today for near-term earnings visibility and a resilient pipeline that sets us up for sustained growth tomorrow. We have been disciplined in ensuring we win high-quality contracts with world-class customers, with mid-teens risk-adjusted project margins and progressive milestone payments. Our ability to win these projects reflect the strong trust customers place in us across conventional energy and renewables. Amidst a tough macro environment, we secured over $4 billion of new orders, supported by returning customers and new partnerships. This include our first collaboration with Penta Ocean Construction, marking our entry into Japanese offshore wind market and DolWin 5, our fourth 2-gigawatt HVDC project with TenneT and our first for Germany under the 2-gigawatt program. Next, our net order book of over $17 billion is equivalent to over 1.5x of our very strong FY 2025 revenue. 6 P-Series FPSOs, 3 U.S.-bound FPUs and major HVDC and HVAC platforms are all progressing well, demonstrating the strength and depth of global delivery model. We have been transparent about the challenges we face from non-FPSO legacy projects, which now constitute just over 1% of our net order book. In the same spirit of transparency, we also like to share that the delivery of Naval project NApAnt has been delayed to 2027 instead of the original 2026 schedule. We are working closely with the customer to navigate this specialized shipbuilding project to manage execution risk. With a declining proportion of lower-margin non-FPSO legacy projects, we expect an improving mix of higher-margin post-merger contracts and a reducing trend of provisions moving ahead. Moving ahead, we still see ample market opportunities as we actively pursue $32 billion in the pipeline deals. Despite the lower oil price environment, it is widely established that the breakeven price of deepwater fields remain well below prevailing oil prices. Alongside strong demand for energy, the ongoing energy transition and the need for energy security, especially in Europe, where we are seeing some favorable wind developments for offshore wind, this gives us a long runway to capture high-value work across the full energy spectrum. We have been asked how are we positioned competitively to capture a good share of these pipeline opportunities. Despite being just formed 3 years ago during the merger, we have under our belt 60 years of proven track record and a unique ability to deliver projects with consistent safety standards and quality across a large global manufacturing footprint that presents scalability, geopolitical diversity and some cost arbitrage opportunities. These are not competitive levers that many players around the world have, but we do not ever stop evolving. We have been in business for over 60 years. We are not new to change. We are still standing strong today because we have successfully evolved alongside the industry, which is essentially critical now as the whole world is in transition towards cleaner energy sources. This is only possible with robust capabilities in technology development, where we take a practical market-led approach to innovation, to stay ahead and maintain our long-term competitive edge. Today, we own proprietary designs such as FlexHull that we are already using in active FPSO tenders to sharpen our competitive edge where proposed designs are evaluated as part of the bid. We also developed our own designs for FLNG and offshore substation, which has recently attained AIP. Longer term, we are also developing solutions for floating wind and other emerging energies to ensure we remain ahead of the curve. Our Series-Build approach, design once do many reduces execution risk, short-term schedules and improve margins, ensuring projects are delivered safely, on time, on quality and within budget. Today, about 95% of our net order book comprises Series-Build projects, underscoring the strength and scalability of this approach. On top of the existing franchises in gray, where we established the Series-Build strategy, we're expanding this to powerships where we see strong potential as well as applying the same principle to FSU FSRU conversion, especially since we already done 90% of the world's FSU FSRU conversion, which is an unparalleled track record worldwide. Last August, we signed an LOI with a long-term partner, Karpowership for the integration of 4 new generation powerships plus the option for 2 more, a strong endorsement of our capability and scalability in this adjacent segment. Integration works will start 1Q 2027. The LOI also includes conversion, life extension and repairs of 3 LNG carriers into FSRUs. These are examples of higher value work that we are refocusing our repair and upgrade business on. These capabilities and high-value franchises will position us well for the next wave of opportunities. Our $32 billion opportunity pipeline over the next 24 months is diversified across segments, geography and asset types, some of which offer distinct market cycles for business resilience. Many of these opportunities are also aligned to our Series-Build franchises. Over the next 24 months, we are pursuing $23 billion in oil and gas opportunities, driven mainly by Americas region. We still see strong opportunities in Brazil where our long-term customer has disclosed its pipeline for the next 5 years. This is also where we have strong leadership for local content through our 3 established yards. We are also well positioned in Guyana for high-value integration work and topside fabrication, where we have participated in all of the FPSO work for the Stabroek Block so far. Apart from the usual opportunities that the market expects, we are also pursuing opportunities in FLNGs and fixed platform in the Middle East and Africa region, and to a smaller extent in Europe and Asia Pacific. For offshore wind, Europe remains the largest and the most developed market, driven by its energy security needs. TenneT continues to be an important customer for us as we pursue opportunities in both Netherlands and Germany. With the award of DolWin 5, it demonstrates TenneT's confidence in our ability to deliver, and we are ready to scale up and take on more HVDC projects when the opportunity arises. Meanwhile, we will also continue to pursue opportunities from other European TSOs as well as HVAC deals in Asia. We have also identified $2 billion in conversion opportunities such as those with Karpowership that I mentioned earlier. All in all, we are well positioned and confident in our ability to capture a healthy share of these pipeline opportunities that will fuel our ability to deliver consistent performance. I shall now hand over to Stephen to bring you through the financial review. Hsueh-Jeng Lu: Thanks, Chris. Next, I will dive deeper into our financial performance for FY 2025 and highlight the progress that we have made to shape a stronger, leaner and more competitive Seatrium. We delivered a set of solid numbers for 2025. The 25% rise in revenue was driven by a steadfast execution of a healthy, well-diversified order book, which provides strong visibility and resilience amid the evolving market conditions. Our gross margin, which I think is a reflection of the true operational performance has more than doubled to 7.4% in FY 2025 from 3.1% last year. We've continued to make significant progress in streamlining G&A expenses and lowering finance costs. As a result, net profit has also doubled to $324 million in FY 2025, up from $157 million in FY 2024. We also saw operating cash flow grow by about 4.5x to $440 million from $97 million, excluding one-off payments relating to legacy issues. And on the same basis, FCF doubled to $443 million. After taking into account these one-off payments, we still generated almost 46% more cash from operations year-on-year of $142 million from $97 million a year ago. We have also taken decisive steps to streamline our asset base by divesting noncore assets. This disciplined approach sharpens our focus, enhances operational and cost efficiencies. Diving straight into the key revenue growth drivers. The 24% growth year-on-year was mainly driven by a strong progress registered by both the offshore wind -- the oil and gas and offshore wind segments. Revenue from Oil & Gas Solutions grew 24% to $8.1 billion, underpinned by steady execution, progressive revenue recognition of the 6 new build Petrobras FPSOs. Notably, P-84 and P-85, which commenced work in the second half of '24. Offshore Wind Solutions also increased its revenue to $2.1 billion, driven by our 3 TenneT 2-gigawatt HVDC platform projects. The repairs and upgrade business registered lower volume and revenue due mainly to trade-related uncertainties and weaknesses in the LNGC market. We are, however, continuing to focus the business towards higher value projects, such as FSRU conversions and the integration of powerships that Chris mentioned earlier. In the meantime, our 23 long-standing strategic partnerships with large global customers continue to provide a steady baseload revenue of a more recurring nature. In the other segments, increased contributions from specialized shipbuilding, chartering as well as rig kit sales and MRO projects delivered through Seatrium offshore technology or SOT led to a 55% jump in revenue. While this business is small today, SOT capitalizes on our unparalleled track record and rigs expertise to monetize proven design IPs. It delivers a healthy margin, and we see growth potential ahead. Next, let's take a look at gross margin. Year-on-year, gross profit increased to $848 million in FY 2025 from $291 million, and gross margin increased sharply by 430 bps to 7.4%, driven by an improved mix of higher-margin projects, higher asset utilization, improved productivity as well as cost discipline. This was partially offset by provisions to the U.S. projects, where the final project was delivered subsequent to year-end and a little bit from a NApAnt, which Chris mentioned earlier. Other operating income was lower in FY 2025, mainly due to a one-off provision relating to the Admiralty Yard restoration before its return to authorities in 2028, net FX movement, lower scrap sales and a nonrecurring settlement gains that was recognized in 2024. G&A expenses as a percentage of revenue declined by 50 basis points to 3% compared to 3.5% in FY 2024 as we benefited from the continued cost optimization activities. Net finance costs also dropped by 18%, driven by debt repayment and lower financing costs, offset by a decreased interest and dividend income from equity investments such as the Golar Hilli, which we divested in 2024. Overall, net profit more than doubled to $324 million in FY 2025 from $157 million in FY 2024, underscoring the significant uplift in our core performance powered by revenue growth, stronger margins, sustained cost optimization and disciplined execution. As mentioned, we also reported much stronger cash flows in FY 2025, which is the reflection of the discipline that goes into ensuring that all our projects on our progressive milestone payment terms and robust project cash flow management throughout each project. Consequently, operating cash flow increased to $142 million in FY 2025 from $97 million. Excluding the effect of one-off legacy payments, operating cash flow rose 4.5x to $440 million, reflecting the level of cash generation that we expect moving forward. Investing cash flow was largely neutral with $122 million of project and safety-related CapEx, such as that for Batam yard to prepare for the 2-gigawatt HVDC projects, balanced by asset divestment proceeds. We will continue to be measured in our capital expenditure, which is mostly focused on investments that will enable growth. All in all, we generated $443 million in free cash flow excluding one-off legacy payments. This is more than double that of FY 2024. And we are confident in the execution and the cash flow of our post-merger contracts. Moving on to capital structure. We continue to adopt a prudent and disciplined approach to enhance resilience and afford us the financial agility to position for growth. Our gross debt decreased 5% year-on-year to $2.5 billion as at end December 2025. And through active refinancing, our cost of debt has declined from 4.9% at end December 2024 to 3.4% at end December 2025, driven both by lower base rates and tighter margins. We continue to broaden our funding sources and leverage our improved credit profile to secure favorable refinancing outcomes. Our liquidity position remains strong with $3.1 billion in cash and undrawn committed facilities, giving us ample headroom to support operations, pursue growth opportunities and other capital allocation requirements. In summary, our balance sheet remains robust with a low net leverage ratio of 0.8x and a net gearing of 0.1x as at 31st December 2025. With the FY 2025 performance covered, I'd like to touch on the efforts that we've been taking to transform our cost and margin profiles that will have lasting impact into the future. If we take a step back in FY 2023, when both companies first came together, Seatrium have focused on integration and harmonization. And so the new company can start on a clean slate. In FY 2024, our full financial year since merger, we quantified the benefits and scale of coming together, providing market guidance on 2 targets, $300 million on synergies, on cost savings and $200 million in procurement savings. These targets reflect the efforts that started from the moment the 2 companies came together. We looked at our cost items line by line removing what we didn't need and leveraging our combined scale for economic benefits. These changes have fundamentally reduced our cost levels and will continue to have a lasting impact moving forward. We are today in year 3, and we are pleased to share that we have exceeded those targets and the proof is in the numbers. Gross margins has turned from negative 2.9% at FY 2023 to 7.4% in FY 2025, alongside an improved mix of higher-margin Series-Build projects. G&A expenses as a percentage of revenue has also declined from 5% in FY 2023 to 3% in FY 2025. And as mentioned earlier, the cost of debt has also significantly declined from 5.7% to 3.4%. And we are not done yet. Initiatives implemented late last year have not seen its benefits fully baked into our financial numbers yet, and we also continue to drive greater cost discipline and internal efficiencies by embedding digitalization, AI and machine learning meaningfully into the way we work across our global business. We believe this will greatly improve visibility, control, risk management and operational efficiencies that will reflect in our margins and financial performance in the time to come. As I've alluded earlier, gross margin is an indication of our operational performance. And we are starting to see the fruits of our labor in FY 2025, and our reported gross margin of 7.4% is a vast improvement from where we started. But it is a reflection of what Seatrium is capable of. We are just getting started. As we continue to streamline operations and tighten overheads, we see accelerated pathways to further expansion through our ongoing divestments of noncore assets. This is an important lever to really reshape our cost structure to unlock efficiencies that will strengthen our long-term resilience and competitiveness. Since 2023, we started divesting assets on our books that are not really required for our global operations. And these assets are broadly categorized into yards and other assets such as vessels and floating cranes. We've accelerated the pace of these divestments in FY 2025, including Amfels and Karimun yards, GNL, our PSV vessel fleet of tugboats, floating docks and the Crescent yard that is expected to complete very soon. The sale of the Amfels yard and GNL vessels have already been completed and the rest are expected to complete by first half 2026. These transactions will deliver more than $50 million in annualized cost savings. These assets would have otherwise laid idle on our books are also expected to unlock more than $230 million in gross gains and over $330 million in cash proceeds, of which $110 million was received in FY 2025. We plan to do more, having identified more than $200 million additional noncore assets to divest by 2028, alongside the scheduled return of Admiralty Yard. Together, the transactions already -- with the transactions already announced, we expected the cumulative to generate cost savings over $100 million by FY 2028. As our business needs evolve, we will continue to review and evaluate opportunities to drive greater efficiencies. These structural improvements will enable us to reduce overheads and drive operating efficiencies, which will, in turn, bring us closer to our target margins, enhancing our business resilience and offering stronger fundamentals, which will deliver sustainable long-term returns. With that, let me now pass back the time back to Chris. Leng Yeow Ong: Thanks, Stephen. To reiterate, Seatrium is at an inflection point today, and we are now ready to commit to creating tangible lasting value for our customers, shareholders and other stakeholders. This year, we are proposing to double the dividend to $0.03 per share, in line with doubling of our net profit in FY 2025. We also plan to continue our share buyback under our existing $100 million program, reflecting our confidence in the business and in the momentum ahead. You can clearly see the fruits of our labor. Total shareholder returns have turned positive at 5.2% and ROE has nearly doubled to 4.9% in FY 2025. These are early signs of the value we are unlocking as our strategy takes hold and we believe that there's further room for growth. Most importantly, we are balancing reinvestment for growth with consistent capital returns. This is how we will drive long-term durable value creation for our shareholders. Let me close by bringing this all together. Our strategy has always been clear and consistent from driving organic growth to executing strongly and transforming our cost structure for margin expansion, ongoing financial discipline and allocating capital prudently to enable sustainable long-term returns. Our value creation framework captures all of this, aligning everything we do from the way we deliver projects for our customers to how we manage costs to how we plan to deploy capital for sustainable return. On capital allocation, our priorities are disciplined and focused, investing for growth in areas where we have clear competitive advantage, optimizing our balance sheet, ensuring the right debt structure to support long-term value creation, returning capital through dividends on share buyback as we grow and exploring strategic M&As that strengthen our long-term position and business resilience. This framework keeps us focused with clear progression towards our FY 2028 steady-state financial targets, we are on the right trajectory to building a stronger Seatrium designed to outperform for the longer term. Thank you. Amelia Lee: Thank you, Chris. We'll now open the floor to questions. For those of you in the room with us, please raise your hand to ask a question. Zhiwei please. Zhiwei Foo: Zhiwei from Macquarie. Congrats on a wonderful set of results. Two questions from me. The first one is regarding your order book, right? I think you're roughly about $17 billion of order book and you have a revenue run rate of about $11 billion this year. So how do we think about your revenue run rate and your order replacement rate? Because from the looks of it you'll run down this by if you don't have a similar amount of order intake? The second question is more on your margins. Now your gross margin is what -- I think you reported 7.4%. And then if you were to just look at second half and net out the provision on onerous contracts to get to about 9%. Then assuming you execute on all your cost savings, that's another $100 million. And then if I'm generous, that adds another 1% of gross margin, which takes us to 10%. So assuming that your cost saving programs work through, you don't -- have no recurrence of provisions. Does that mean that we can start to anchor our thinking of 10% gross margins going forward? Leng Yeow Ong: I think I'll take the order book question. I think you asked the same question the last half, I remember. And I think that the key thing is about getting close to the customers and home running the opportunities that are out there. This is order book business. And the key thing is about how do we take a look at getting quality -- balance between quality projects that we can get and get it in. The $11 billion, I will say that it will roughly be around there moving forward. This shows that the capacity -- our capacity management has been very sharp because I believe that about 2 years ago, the question from all of you was that, are you sure you can consistently produce $10 billion. So that's out of question. But it will basically hover around there. We think that the capacity would allow us to do that. And if you look at the burn rate, it's not linear. The $17 billion doesn't burn down just like that. So technically, it's also a mix of building up to the order book. And as mentioned last year, even as a very challenging year, we're almost half a year or more than that, that are quiet because of obvious reasons. We still manage the home run quite a bit towards the end of the year. So technically, there are good pipelines in the market. And again, I always said I can't control the FID timing. But we are quite confident that based on the diverse product line that we have now and the franchises that we have seen, we will continue to be the go-to person for some of these more complex projects. So it is a zero-sum game. You have mentioned that we are confident that we are able to maintain that resilience when the projects -- I guess the real answer is that when the projects come into the order book. Hsueh-Jeng Lu: So on the second question, let me take this. I think if you look at FY 2025, your calculation is correct, right? But I think the bigger picture is this. There are a few factors that we are -- that move in our favor, right? One is you would have seen the legacy projects, the proportion of that is coming down. The contracts that we secured post merger with risk-adjusted mid-teen returns are becoming more important, two. Three, the cost and productivity measures, I think you talked about with the divestment of the yards and all that, that will take out costs directly from overheads. I think the other factor that you have to consider is as projects move along. I think we mentioned this before, when you hit critical milestones, the contingencies that we -- which are costs that we've set aside for certain risks that we anticipated, if they don't materialize, then that will also be released. So I think the margins will continue to improve from where we have achieved today. I think it will -- we've guided towards a project margin of mid-teens. But as you know, there are some overheads in production side, which is related to basically underutilized capacity. So there will -- the number will move towards 15%, but it won't hit 15%. So I think that's the -- that's where we're looking at right now. Leng Yeow Ong: And just to touch -- come back to the point on order book. At $17 billion, if we've taken a look back in history, it is still one of the highest for the last 10 to 12 years, both combined. But what is different today is that I think you all will appreciate that it's not based on one product. And it is based on milestone payment that it basically is a high-quality order book right now for us to execute. The other thing -- the other point is that we have also been sharing that getting on to the franchise when we signed the very first or the second FPSO or HVDC, there were also a lot of doubts and question whether is it -- are we capable to build on that? I think today, that should put it to rest. What we are -- what I hope everybody sees that the ability to actually deliver a very complex product straight to Brazil field and start operating in 2 months, that actually builds on the reputation and our ability to get the customers on the table in a very short time. Zhiwei Foo: If I have 2 follow-up questions. You mentioned the contingencies. I understand that they are significant. Could you share some color about how big it may be so that we can appreciate what that actual underlying margin is? Otherwise, the second question is, what would your underlying gross margin be if we were to just look at your project and take out all your other inefficiencies right now? Hsueh-Jeng Lu: Contingency is commercially sensitive, because -- but there are risks. So each contingency item is tagged to amount, right? And so when the risk goes away, it will be released. Amelia Lee: Next question from Mayank, please. Mayank Maheshwari: Yes. Chris, a question -- more subjective question here. There has been a lot of commentary by your largest customer around how they are tightening their screws at their end. Like in terms of conversations you had and considering you were showing the order book being a large part still sitting in LatAm. How do you think about the path going forward? And what are the kind of conversations you're having with them around their objectives and how you are aligning to it? So that was the first question. And the second one, to the CFO, I think congratulations on reducing the interest cost quite a bit. But if you think about it, your interest cost and the finance cost still has a reasonable gap. I think there are lease liabilities and a few other things in there, which are still quite chunky. Can you just give us a bit of an outlook of how you're kind of tightening your screws there? Leng Yeow Ong: I will take the part on customer conversations. I think tightening of screw whether it is a challenging environment, my customers always tell them that their screws are very tight with us. The key thing is about how then do we sit across the table and determine the work value because it's a balance for them also. There's no lack of competitors and especially after we have proven that our formula worked and we are able to deliver a functioning FPSO directly to the field and startup, and that's a very powerful signal. If you talk about LatAm, obviously, you're talking about mainly Brazil. Of course, they have various different formula now. One is the build, operate and transfer. And it is now mixed with eventual EPC projects coming online. The key thing is about it has different risks, it has different approach. But the fundamental is the ability to execute because all these projects takes many years to execute. And you can see that from their ambition, they have printed out the 5 years of ambition. To be very honest, one of the biggest questions that they had to ask themselves is that can I expect the FPSO to arrive because right now, especially so when you talked about the challenges of the market is very unpredictable and oil prices it can fluctuate and volatility is quite high. But they have their investment case all set up. So I think that you will come online. But the key question is that when will the cash flow be realized, and that is really around the assets that's going to flow there. So I think we have proven ourselves that we are able to execute right on time and able to deliver compared to our competitors deliver something that operates directly with them. The key right now is of course strategy around who we partner up for BOT, the strategy around how can we also make sure that it's seamless. And then for EPC, of course, it's all about cost and price. So I think that, that part itself, I'm happy that we are not starting from ground zero. I think that we have now a very clear database and the organization is very clear on how to execute these type projects. So that is the type of conversations. And even with or out of LatAm, it's the same conversation with majors like Exxon, for Guyana, even new prospects in Africa is basically down to certainty, the ability to provide solution because mega projects, you will have excitement of technology hiccups and all this, how do you then help them to overcome that and still be able to maintain the predictability at the end of the day. That, I think, is a huge value. Hsueh-Jeng Lu: Mayank, on the second question, look, I think if you look at our finance costs, the largest component is still interest costs, right, to banks and et cetera. I think the key focus for us here is actually around deleveraging. I think we've done a substantial amount of refinancing with the support of our banking partners, but we have to delever. I think you would have seen the operating cash flow significantly improve so then we had to think about where we can allocate capital. Do we use that for growth because we're returning capital to shareholders, but it's also important to delever over time because I think the leverage on a gross level is still relatively high. Amelia Lee: Next question from Pei Hwa. Pei Hwa Ho: This is Pei Hwa from DBS. Congrats on the strong results. Just 2 questions from me. One is for Stephen, it's on the provision for your onerous contracts, this is amounted to $96.5 million. Could you give us a bit more color on the breakdown of all this, especially for legacy contracts, it was so close to completion that we didn't expect to have this much. I think second is on the project pipeline, especially from Petrobras and TenneT. Maybe you could give us a bit more color and how based on a conversation with our customer is TenneT on track? Or they still as per plan, will continue to award some contract this year? And also maybe some -- also, I mean, in general, how we think about your order pipeline and the conversion from the $32 billion pipeline to this year? Hsueh-Jeng Lu: Chris, maybe I'll take the first question first. I think the provisions of our $96 million that relates principally to 3 projects. That's the 2 U.S. projects, which we have since delivered. So you can think of that risk as have gone away, right? I think the reason for additional provisions is because the project took a little bit longer than we wanted, and so there were additional costs associated with that. On the third project, which I mentioned in my speech earlier, was around NApAnt, which was a legacy specialized ship building project that we're delivering in Brazil. And so there were -- the project has delayed and so there are some provisions relating to that. But it's a relatively small project. I think its our initial contract value was about $200 million. And so we're working very closely with the customer to sort of manage that risk going forward. Pei Hwa Ho: When is this project going to be delivered? Hsueh-Jeng Lu: 2027. So initially, it was supposed to be end 2026. Now it looks like 2027. Leng Yeow Ong: I guess for Petrobras, TenneT, and you mentioned about conversion pipeline I wouldn't repeat what I said for Petrobras. I think that's very clear on their development plan and what's going to come online. For TenneT, your question was around whether they are still on track. And the short answer is that as far as we know, yes, because as promised they have gone through the same allocation and competition end of last year. We're quite happy that we are able to land DolWin 5 for -- that's the first Germany unit that we are getting. So that also sets up our potential and production line for both the Netherlands projects and the Germany projects. This year, if my memory serves me correct, and please check and don't quote me because there will be projects coming online for tender in Germany and also followed by Netherlands. When they were FID that when they will start engaging us, that depends on when they are ready. But those projects are real through our conversation. Now on conversion pipeline. As mentioned, the team has worked very hard to deliver value to the customer. We have proven that when we said that we will deliver this way and when we have proven to the customer as One Seatrium, we are able to do that. Customers are also seeing that they are able to assess the different capabilities of different facilities and different teams within the group. So in a very short time within 3 years, we have come together and delivered very differentiating value in terms of being able to provide solutions to the customer. And that's not all talk, and we have delivered that to them. The key thing around conversion of cost is also the -- because of this ability to prove that we are able to do this. There are many people that are trying to come online as competition. So that segment actually is -- but as mentioned in my speech, there are certain segments that we have a very commanding track record. Again, there's no difference from the new build because it's complex, because it requires capability, it requires safety, basically practices within and quality, ability to deliver quality products. We think that this is an exciting area every year. As mentioned, Powership, if you take a look at this segment, why we highlight that, if we believe that the world is starved of power and also digital, AI, the growth of it, I think the floating assets is something that is very sound. The concept is sound. We just have to make sure that our customers are able to take a look at the financial ability around the economics around that. There's also a floating data center. There's many things that in the market that may be too premature for us to say. But all this $2 billion of conversion prospects, I think it ties into the whole energy type of products. And why conversion is because the speed to market is very important. So again, the ability to execute, the ability to engineer on the go and deliver them safely with quality is our hallmark and customers know why they come to Seatrium and why we're able to build on that will be then a track record in the convergence space. Amelia Lee: Thanks, Chris. Pei Hwa, I hope that answers your question. Next, we will take a question from online. Luis from Citi. Luis Hilado: Congrats on the good set of results. I just had -- most of everything has been asked. Just 2 housekeeping questions, please. Just to clarify on the $50 million annualized cost savings. Since most of the -- it will conclude in the first half. So it's essentially $25 million savings in the second half. So -- at least in the second half. Is that the way to look at it? And the second question is just I know it's difficult to discuss arbitration cases in terms of timing, but we have a feel for amongst those, which ones can resolve sooner, not when, but which would resolve sooner? And are your legal fees material at all on an annual basis? Hsueh-Jeng Lu: Luis, you had 2 questions, right? Okay. On the first question on -- sorry, what was that? Leng Yeow Ong: $50 million. Hsueh-Jeng Lu: $50 million. Yes, $50 million. A part of that divestments were completed towards the end of '25, right? So that -- a portion of that will be fully baked in from the 1st of January. The MFLs you would have seen we completed in January, and so that will be another component. So I think if you're looking at it over the full year period, it's probably -- if we can complete everything this month, it will be closer to the $50 million than the $25 million. Leng Yeow Ong: Arbitration, depends, but if you want to ask for which one would probably be settled first. It is all basically time based, right? P-52 will probably be the first one. that will be settled, and we hope that we will have a conclusion this year. You asked whether the legal fees is material? It depends on material against what. But it's never -- of course, that's not always the first avenue that we will go for. But I just want to impress upon that. Actually, arbitration is a professional way of basically settling differences. And usually in this industry, we are able to differentiate what we need to settle while we professionally advance on our both interests on ongoing projects. So yes, P-52 will probably be the first one that we are targeting. Amelia Lee: Thanks, Luis. Next question, also online from Amanda. Amanda Battersby: Yes, I'm here. Great. Amanda Battersby from Upstream. Thank you very much for the frank results, statements and sharing as always, Chris and Stephen. A couple of questions, if I may, please. You mentioned that the potential for BOT FPSO contracts, specifically in Latin America and one would think with Petrobras. Are you actively bidding for any BOT work for floaters? And if so, would you be looking for a partner on a project-by-project basis or perhaps a more formal arrangement to allow you to tender to go forwards, please? And the other 2 shorter questions, if I may, do you foresee any more sort of legacy arbitration contracts lurking in the wood work after sometimes more than a decade? And thirdly, please any more plans to rightsize the headcount as some of your projects come to completion? Leng Yeow Ong: Well, I'll take those questions. Thanks, Amanda. We are missing you here. Well, for BOT contracts, we will definitely need to have a partner and bidding strategy. Whether you'll be project-by-project basis or whether there is a long-term type of tie-up, we have both strategies in place. And it depends on time and space also, right? We have to look at -- I guess the fundamental is that we are in for the bid, and our focus is to win. So it's likewise for partners. Our operating partner would also have the same driver. So it will depend because timing of the tender and potential on both sides on the tender really decides how we choose our partners. Whether we will partner somebody for long term and across all projects, it depends whether the interests align at a point where we are signing up. So I can't have a clear answer, but we are in on the BOT bid for the BOT projects and definitely with an operating partner. On arbitration legacy, I think what I can promise you is transparency. As of now, as mentioned, we do not see that there are any that are lurking. But like what we mentioned, when there are any disagreement that we need to settle is always professionally been elevated to settle an arbitration if we cannot come to terms. So it's very hard for us to actually forecast. But all I can say is as of now, we don't see any. Now about rightsizing I would actually approach the rightsizing question as less of a manpower issue than I think more on the operational excellence angle. I think we have always mentioned about what is our strategy going forward. And I remember 3 years ago, when we talked about integration topic and we talked about how we optimize and during the first year, we did not even remove any headcount. And I think that all of that has basically actually worked out. Our first stance is always to make sure that we take care of our people. When projects are completed or when we get more efficient and our processes get more efficient, retraining has always been the first one, all right? So we are not approaching from a headcount and hire fire approach. But of course, when we look at our yards and our future footprint, which we have always been very transparent in sharing, that is strategic, right? That's strategic. And it's about trimming down the noncore, building on the core and, of course, have an eye of capability building, depending on what products that we are looking at. As we have mentioned, we further invested in the Batam yard to make sure that we have lines ready for offloading -- building and offloading 30,000 tonnes of topsides, which is mainly our HVDC today. We expect to eagerly contest to build a more stronger pipeline behind each of them. So there are a lot of ways that we are looking at rightsizing. The other thing is that one of the actions that we are taking, of course, is in the national news that Admiralty Yard is going to be redeveloped. And we knew that even way before Seatrium was formed. So we are taking that proactive step to actually rechannel resources. And that's the strength of the One Seatrium delivery model. We actually rechannel resources not only to Tuas Boulevard, but also a lot of our high ports and young managers are now in Batam, helping to build up the capabilities over there. So there's many dimensions to that. But I guess the main driver of this question is, I guess, about cost efficiency. And I think that has been the top line strategy that we have always said. We are very sensitive to cost but we are also very sensitive to capabilities, retaining capabilities, retraining capabilities and getting ahead of the curve to be able to service our customers. I think that will differentiate us very strongly. Amelia Lee: Next question, Siew Khee, please? Lim Siew Khee: Can I just follow up on the onerous contracts? So given that the U.S. projects have been delivered, can we expect a significant drop in the overall provision for onerous contract? Hsueh-Jeng Lu: Yes. Lim Siew Khee: Will it be lower than 2024 because 2023 was high and in 2024, it was not? Hsueh-Jeng Lu: As I explained earlier, I think there were 3 projects, right? So the remaining risk around NApAnt, but as far as we can see today, there is no need for additional provisions. Lim Siew Khee: Okay. So within your order book, there's nothing that is looking that you think could delay? So therefore, that would actually help to pave the way for better margins as you execute. Leng Yeow Ong: Yes. So as I explained earlier, right, I think the key risk was always around the premerger contracts, I think that portion has come down significantly. Lim Siew Khee: Okay. And just wanted to just check, you mentioned that you hope to all settle the arbitration. Is there a need for any provisions if it's concluded this year? Leng Yeow Ong: No. Lim Siew Khee: Is there any need for provisions for any other litigation that you might see be in negotiation? Leng Yeow Ong: No. Usually, when we talk about provisions, it's about legal opinion on the chances, right? So as of now, whatever that we reported that there's no need for further provision. Lim Siew Khee: And then just on your order pipeline target. Why did you raise from $30 billion to $32 billion so specific? What's that $2 billion? Leng Yeow Ong: Well, the other pipeline depends on what projects come into the market. We didn't raise it. It's a customer wanting in the market to basically look at development. These are real projects that are out there. Lim Siew Khee: Is there anything significantly different or new from compared to when you told us vessels of $30 billion now arriving to $32 billion. So what is the optimism coming from? Hsueh-Jeng Lu: Maybe I'll take that. So in that... Leng Yeow Ong: Hang on. It's not optimism. Again, I say that it is the projects that are out there and the real targets that we are going after. So when you talk about what are there any difference, of course, there is no secret that there are a lot more production assets, contracts that are foreseeable in the market and that is basically public. The other point that we are trying to make is, of course, there are also conversion projects. As we mentioned, they are out there in the market. So as we get knowledge and those are the projects that we are going after, we actually actively put it in the pipeline and say that, okay, these are all the go get, but that's to convert into order book. Hsueh-Jeng Lu: If I may add, the number there is we have an internal pipeline that we track and our commercial teams update very regularly. And so we just summed up that total and then gave that to the market. So these are all actual projects that we are chasing, right? So I think if you were talking about the change, I think, between the $30 billion and the $32 billion, there were some projects that we won, DolWin and then the BP project. And then those were replaced by other projects that customers have now inquired with us on, we want you to submit a bid or we're in bilateral negotiations with them. So it's our actual projects that we are chasing and not managed up, that's what we were trying to say earlier. Lim Siew Khee: Okay. Just last 2 questions, just on housekeeping wise. So the $50 million cost savings you mentioned, where can we actually see it more significantly, in G&A or of sales? Hsueh-Jeng Lu: It is in a different -- some of it will be in cost of sales, some of it will be in G&A and some of it will be other operating income. So it's actually in different areas. Lim Siew Khee: Is there any -- is there one that is like maybe higher, perhaps in cost of sales? Hsueh-Jeng Lu: It's mostly in the cost of sales because if it's relating to the yard, all of that goes into the COGS line. Lim Siew Khee: And my last question is, so the divestment gain that you actually guided. $160 million, if it is completed in 2026 will be recognized in 2026, is that right? Hsueh-Jeng Lu: $150 million. Lim Siew Khee: $150 milliion will be recognized in 2026. Hsueh-Jeng Lu: Yes. So $70 million was recognized in FY 2025, another 50 -- and $150 million in 2026. Amelia Lee: Thanks, Siew Khee. With that, we've come to the end of the briefing. Unfortunately, we've run out of time. For the 2 questions that we received online, we will reach out to you directly on e-mail. For further questions, if you require any further clarifications, please feel free to contact us at our Investor Relations e-mail address. Thank you very much for joining us this morning, and we wish you a very pleasant day ahead. Thank you. Bye.
Operator: Greetings, and welcome to the Zevia PBC Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jean Fontana, Investor Relations. Thank you. You may begin. Jean Fontana: Thank you, and welcome to Zevia's Fourth Quarter and Full Year 2025 Earnings Conference Call. On today's call are Amy Taylor, President and Chief Executive Officer; and Girish Satya, Chief Financial Officer and Principal Accounting Officer. By now, everyone should have access to the company's fourth quarter 2025 earnings press release, and investor presentation made available this afternoon. This information is available on the Investor Relations section of Zevia's website at investors.zevia.com. Before we begin, please note that all financial information presented on today's call is unaudited. Certain comments made on this call include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings as well as the earnings press release, presentation slides that accompany today's comments and reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures are all available on our website at investors.zevia.com. And now I'd like to turn the call over to Amy Taylor. Amy Taylor: Thank you, Jean. Good afternoon, everyone, and thank you for joining our fourth quarter and full year 2025 earnings conference call. We are proud of the transformation progress we delivered in 2025. Through a series of high-impact initiatives spanning product innovation, marketing, distribution and supply chain, we not only significantly improved our financial performance, but also strengthened Zevia's competitive positioning within the better-for-you soda category. But before I speak to strategy, I'll briefly highlight our performance. For 2025, we delivered net sales growth of 4% and improved adjusted EBITDA threefold to negative $4.7 million. For the fourth quarter, net sales decreased 4% to $37.9 million as we lapped the pipeline fill to Walmart from last November and December. Net sales for the quarter were impacted by a shift of our Costco rotation into January. Importantly, this program was a national one with premium in-store positioning reaching beyond our regional footprint and driving trial and awareness in underdeveloped and fast-growing markets. Adjusted EBITDA for the fourth quarter reached breakeven and was ahead of our expectations. So turning to the 3 strategic pillars that enabled this progress. I'll start with amplified marketing. Our improved performance for the year was supported by powerful marketing that clearly differentiated Zevia as the antidote to the artificial, and as a product with no fake ingredients and no fake claims. Key campaigns showcase Zevia's use of creative culturally relevant content and high-profile brand fans to boost brand awareness, reinforce our positioning and appeal to consumers that are just trying to do a little bit better with healthier choices. For our second growth pillar, product innovation, 2025 was a breakthrough year. We introduced on-trend fruity flavors such as Strawberry Lemon Burst and retailer exclusive Orange Creamsicle, both of which strongly resonated with consumers. We also began to elevate taste for select classic flavors, the impact of which will carry into 2026 in parallel with our package design evolution. Our marketing and product initiatives helped to propel distribution, our third growth pillar, the historical peak levels in 2025. including a nationwide presence in Walmart as we are an anchor brand within that retailer's modern soda set and at Albertsons, where we increased our shelf space and gained eye-level placement with a vertical brand block within their next-gen beverage set. Through these initiatives, we've strengthened our foundation for growth with brand, product innovation and distribution working together to capitalize on favorable category and consumer trends that create strong tailwinds. Now in 2026, we are building on this momentum with a focus on expanding reach and driving trial to expand the user base and ultimately to accelerate growth. So first, let's walk through our marketing initiatives. Stevia is resonating with the consumer more than ever as we continue to show up as the antidote to the artificial. We kicked off this year with a playful campaign inviting consumers to join a ZTOX, so a detox from artificial soda with one simple swap, choose zero artificial better-for-you soda instead. This month-long campaign featured influencer partnerships, an immersive activation at world-renowned DJ Diplo's Run Club, sampling at Life Time Fitness' Miami Marathon and a bold out-of-home takeover across Atlanta. Early reads of editorial and social outcomes revealed that the campaign punched above its weight. The next brand campaign in March will continue to reinforce Zevia's unique position in personality in a digital campaign also activated at retail. And during our next call, I'm excited to update you on summer brand campaigns bolstered by new and familiar high-reach brand ambassadors, our most significant investment in reach and cultural relevance to date. More to come on this, as this and other initiatives will run in parallel with our spring and summer rollout of our dynamic new package design and will be supported by retail-driven trial driving programs focused on expanding the user base. So next, let's talk about the portfolio and 2026 product innovation. While trust and affordability remain core differentiators for Zevia, we are winning where it matters most in the category, which is taste, unlocking a broader consumer base and strengthening long-term brand relevance. We know that new products are outperforming legacy items in velocity, creating a halo effect that boosts legacy items as well. With that distinction, combined with brand and accessible price points, we are in a strong position to expand our consumer base and continue to drive strong repeat rates. Orange Creamsickle was a huge hit as the #1 six-pack at Sprouts immediately following its initial launch and is now being rolled out as a hero flavor of 2026. Fruit Punch and Peaches and Cream, which also saw successes in variety packs and as a limited time offer, respectively, are now rolling out nationally. And finally, after proving to be a hit and the top Zevia SKU at Walmart, the new fruity variety pack can be found across retail starting in spring resets. We are bullish on this robust innovation pipeline overall and specifically as a complement to the legacy soda portfolio, enabling Zevia to super serve old-school soda fans and engage new modern soda consumers with a light and fruity palette. This strong portfolio with improved packaging and taste across the board should be a key driver of both new users and increased consumption this year. Now building on the successes in our product innovation and in marketing, let's move on to our third growth pillar, distribution. We continue to make meaningful progress through our key distribution channels and step-by-step in new channels. In club, we are focused on building consumer acquisition through trial and thus volume. Earlier successes this year include a new Costco front-of-store national rotation that represents a meaningful opportunity to drive trial with new consumers in underdeveloped and fast-growing markets. In the mass channel, we're growing our Canadian Walmart business to just over half of those stores, and our largest single retail opportunity in the U.S. is to win distribution at Walmart's top competitor. In grocery, we're leveraging the success story of Albertsons, where expanded space and eye-level placement through a vertical brand lock have yielded growth and in recent months, share gains. We believe this performance plus the new packaging, new items and improved taste will yield more retailers to follow Walmart and Albertsons lead, though several spring sets are still forthcoming. And in e-commerce, we continue to see accelerated growth in our business overall and through subscriptions, plus the introduction of our smaller count option across flavors in this channel will continue to drive sales. In the medium term, we see meaningful opportunity to drive new distribution across all club operators, value and dollar channels and in mass. And long term, as is true for the whole category, convenience and food service remain a big opportunity both for trial and for continued growth. As the only zero sugar clean label offering at an accessible price point, we are uniquely positioned to stand apart from a crowded competitive set in better-for-you soda in each of these key channels. One quick note before handing it over to Girish, we are pleased to announce the appointment of Andy Rubin as Chair of the Zevia Board. Andy has made valuable contributions over the past 5 years, most recently as our Lead Independent Director. I look forward to further leveraging his strong background, including being the founder of Trove Recommerce, a practiced ECG consultant and a 10-year Walmart veteran, where he served as VP of Corporate Strategy and as Chief Sustainability Officer. Paddy Spence will remain on the Board, and we are grateful for his ongoing support. And then finally, we're pleased to welcome Suzanne Ginestro as a Director, as previously announced. She's a seasoned marketing executive with over 25 years of experience in brand building and consumer growth. Her background and track record of success will further strengthen our Board capabilities. In closing, I'm energized by what our team has accomplished and even more so for the future as our strategic initiatives bear fruit and accelerate momentum. While we still have a lot of work to do, we are focused on the long term, and we believe we are well positioned to capitalize on the strong better-for-you beverage tailwinds well into the future. With that, I'll turn it over to Girish. Girish Satya: Thank you, Amy. Good afternoon, everyone, and thanks for joining our call today. 2025 marked a year of transformation for Zevia. The strategic initiatives we deployed across the business enabled us to return to growth and vastly improve our financial profile. Beyond the strengthening of our financial position, we've also elevated our competitive positioning, which sets the foundation to drive future growth and profitability. Turning to our results. Net sales in the fourth quarter decreased 4% to $37.9 million. The decrease versus the prior year was primarily due to lapping of the expanded distribution at Walmart in Q4 2024 as well as a reduction in promotional activity versus the prior year. Also, as Amy noted, our fourth quarter was impacted by the trade-up of our existing regional Costco rotation to a new national rotation program launched in January. This new program entails front of store placement, raising visibility for the brand as our new 30k variety pack becomes available nationwide. Gross margin was 47.7%, a 150 basis points decline from 49.2% in the fourth quarter of last year, reflecting channel mix associated with the return to the club channel and higher tariff costs, which was offset by lower promotional activity. Selling and marketing expenses were $11 million or 29.1% of net sales in the fourth quarter of 2025 compared to $16.5 million or 41.7% of net sales in the fourth quarter of 2024. Breaking it down, selling expense was $7.4 million or 19.5% of net sales in the fourth quarter of 2025 compared to $10 million or 25.3% of net sales in the fourth quarter of 2024. The improvement was largely a result of lower warehousing and freight transfer costs as we continue to benefit from our productivity initiatives. Marketing expense was $3.6 million or 9.6% of net sales in the fourth quarter of 2025 compared to $6.5 million or 16.5% of net sales in the fourth quarter of 2024. The decrease was primarily due to the timing of marketing spend as we lapped a significant investment in our holiday campaign last year. We continue to balance brand and performance marketing with the objective of driving more awareness for Zevia. General and administrative expenses were $7.3 million or 19.3% of net sales in the fourth quarter of 2025 compared to $6.8 million or 17.3% of net sales in the fourth quarter of 2024. The increase was primarily driven by higher accrued variable compensation expense. As a result of the aforementioned factors, net loss significantly improved to $1.3 million from $6.8 million from the prior year. Adjusted EBITDA was approximately $50,000 compared to an adjusted EBITDA loss of $3.9 million in the prior year period. Turning to our balance sheet. We ended the quarter with approximately $25.4 million in cash and cash equivalents and have an undrawn revolving credit line of $20 million. Moving to our full year results. For the full year 2025, Zevia achieved net sales of $161.3 million, an increase of 4%. The increase was primarily driven by higher volumes associated with the distribution expansion at Walmart. We expanded gross margins to 48% versus 46.4% in 2024 due to better product costing and more effective inventory management. Net loss more than halved to $11.1 million as compared to a net loss of $23.8 million in 2024 and adjusted EBITDA loss vastly improved to $4.7 million for the year compared to an adjusted EBITDA loss of $15.2 million for the full year of 2024. Now turning to our outlook. In 2026, we plan to build on our momentum, leveraging our growth initiatives to broaden our consumer base through amplified marketing, sharpened product innovation and expanded distribution presence. We are supporting these initiatives with strategic investments enabled by our improved cost structure and healthy balance sheet. For the full year 2026, we estimate net sales in the range of $169 million to $173 million or 6% growth at the midpoint of the range versus 2025. Net sales expectations reflect the planned discontinuation of our tea line, which we expect to impact growth by 1 to 1.5 points. Looking at cadence, I would note that the quarterly net sales volumes are expected to shift from previous years with higher volumes anticipated in the first and third quarters. There are several factors impacting this cadence, which are as follows: the Costco national program launched in the first quarter, which benefits net sales growth while having a dilutive impact on gross margin. The second quarter is expected to be impacted by the planned discontinuation of our tea offering, the lapping of sell-ins to Walgreens and Albertsons in the second quarter of last year as well as a shift in marketing and promotional dollars spent from Q2 to Q3. This shift is to better align with our new packaging rollout. We expect to realize the impact of planned price increases beginning in Q2. Turning to profitability. We are expecting a full year adjusted EBITDA range from a loss of $1 million to positive $0.5 million, which incorporates an incremental $5 million in tariff-related aluminum costs beginning in Q2 as well as continued reinvestment in our business. Our guidance also assumes gross margins in the high 40% range starting in Q2, barring further increases in aluminum costs. We also expect to start realizing the last tranche of $5 million in savings from our productivity initiative towards the end of Q2. For the first quarter of 2026, we expect net sales of between $40 million to $42 million. This guidance reflects volume gains associated with our national Costco program that began in January. While the Costco program yields lower gross margins, we believe an investment in the club channel will support growth in trial and drive awareness. We expect an adjusted EBITDA loss of between $1.6 million and $1.9 million, reflecting a mid-40s gross margin range. In closing, the progress we've made has positioned us to move confidently into the next phase of our strategic plan. With mid-single-digit household penetration and strong tailwinds in the broader better-for-you soda space, we believe we have ample runway for growth and improved profitability over the long term. I will now turn it over to the operator to begin Q&A. Operator? Operator: [Operator Instructions] Our first question comes from Sarang Vora with Telsey Advisory Group. Sarang Vora: I wanted to start with the Costco rotation program. It's great to see that you guys are nationally up from regionally before. So how does the program work? Can you help us understand, is it nationally, but it is still rotational or you guys -- Zevia will be at Costco all through the year? Any color on the Costco program would be helpful. Amy Taylor: Sure. No problem. Yes, we're excited about the fact that we are able to kick off nationally at Costco through what is a rotation that took place at the beginning of the year, stronger visibility for the brand and almost most importantly, penetration into regions where we haven't had Costco distribution before. So what we expect going forward is in a couple of regions, if you think Texas and some across the South, the Southwest, there's a number of regions where they've never carry Zevia before. We saw very strong velocities, and we expect to continue in those regions, whether through additional regional rotations or hopefully as a new permanent item, which is the case in a few other regions. And then the other opportunity is to reengage with Costco based on the success of the program to look at incremental national rotations in the future. So there's a couple of different ways forward, Song. We could gain new regions permanently or we could gain incremental rotations either regionally or nationally based on what appears to be very strong performance out of the gates in the January program. Sarang Vora: Okay. That's great. And then second question I had was about the tariffs. Can you talk a little bit about exposure to tariff? I know you called it out about $5 million, but how are you mitigating that in some ways? It seems like there's a price increase coming up or trying to offset that. There's also some COGS initiatives you have. So walk us through how are you mitigating that tariff exposure and how long it should last in the P&L? I know we started lapping it this year, so that would be helpful. Girish Satya: Sure. So what we'll see in the P&L, of course, is increased exposure to increased aluminum costs, which is reflected in our guide. There's 2 things that we are doing to mitigate it. One, of course, as you mentioned, is the price increase, which we have taken and we will begin to see or have communicated rather, and we'll begin to see the impact of it in Q2. Secondly, we have the incremental $5 million, which is the last tranche of the savings from the productivity initiative, which again will also start hitting the P&L in Q2 as well. And so those 2 items, price and incremental costs are the main factors that we are leveraging to mitigate the increased aluminum exposure. Operator: Our next question comes from Jim Salera with Stephens. James Salera: To start off, maybe just a quick housekeeping on food. Is the $1 million or so that you guys came up short of the 4Q top line guide that you provided in 3Q, is that just by virtue of the Costco timing shift? Or is there anything else in there that we should be aware of? Girish Satya: It's primarily due to the Costco timing shift where we had planned -- we had planned regional rotations in Q4. We moved those into a broader national rotation in Q1. So the volume shifted from Q4 to Q1. James Salera: Got it. And then on the -- as we think about better visibility, obviously, more locations in Costco and some other retailers, when is all of the new packaging going to be in market? And do you guys have any marketing programs kind of around having the kind of fully implemented new packaging to help drive some visibility and maybe call attention to that? Amy Taylor: Absolutely. Thanks, Jim. So first of all, the packaging is starting to show up on shelf now, and it looks amazing. It really pops. It looks delicious. It screens the specific reasons to believe in Zevia. And I think that is tremendous support for our positioning in the market, especially given the advantage that we offer versus our competition, especially against which we are shelves now on a regular basis, given the way that the category has developed. So it looks great on shelf where you'll see it flow through because we are doing what we call a rolling launch is largely into Q2. And I mentioned in prepared remarks that we have a heavily digital campaign, some of which will be showing up at retail in March kind of at a brand level. But more specifically in parallel to the packaging rollout, our improved taste will be rolling out at the same time across legacy -- some of our classic flavors. And we have a spring/summer marketing campaign, which I'm going to speak about a little bit more on the next call, which will engage some pretty familiar faces and high-impact reach personalities that love Zevia. And it's just a great opportunity to drive reach, awareness, trial and then given the fantastic new taste and the rate of innovation that we've been driving lately also repeat. So we are bullish on the summer. That will start really hitting the shelves and hitting the market late Q2 and support the business through the back half of the year and going forward. James Salera: Great. And if I can just sneak one in real quick. I think you guys finished with marketing spend for 2025 at like $20 million, maybe a little shy of that. Can you just give us a sense for what overall marketing spending looks like in 2026 as we think about kind of the balance between flowing through some of the cost savings versus reinvesting in visibility for the brand? Girish Satya: Yes. Thanks, Jim. We will continue to increase investment in marketing. And as a percentage of revenue, it will range between, let's call it, 12% and 13% of revenue in 2026. So a slight increase over 2025 as a percentage of revenue. Operator: Our next question comes from Eric Des Lauriers with Craig-Hallum. Eric Des Lauriers: First one for me, another follow-up on Costco. So wondering how many of these regions are new? And are any of these regions -- are you also underpenetrated in other channels in these regions? Or is it sort of just club or just Costco where you've been relatively underpenetrated here? Amy Taylor: Sure, Eric. So about a little bit of each. So the regions that have never carried Zevia before, are about 35%, 40% of the regions that we showed have been in this national program. So that's net new, and that's exciting to us from a trial driving perspective, especially when you think about the fact that it's a variety pack and everybody can kind of find their favorite flavor, that trial driving mechanism often supports growth across channels and brings people into the franchise for the first time. A lot of incrementality in the club business. And then to answer the second part of your question, yes, a region like Texas, where we see accelerated velocities in the national program is exciting to think about how our business could grow across channels. If you think about Texas and go East, we have lower market penetration on the East Coast than we do, let's say, in the Midwest and across the West Coast. So these step changes really help us to expand reach and help to be a catalyst for other channels as well and other specific geographies. So excited about the Southeast, Texas and the East Coast in general as benefiting from this national program. Eric Des Lauriers: That's great to hear. And do any of the flavors in that variety pack contain either any of your new flavors or the new improved formulation? Amy Taylor: New flavors as of now, yes, new as of 2025 and new taste profile for the classic flavors, not yet. And so think about the pack design, the increase in marketing spend sort of seasonally and the improved taste profile, all ramping up during peak beverage season, so late spring. Eric Des Lauriers: That's great to hear. And then just last one for me. Just wondering if you could expand a bit on the DSD market, Pacific Northwest, and I believe it was Arizona, just how the trends there continue. Amy Taylor: Sure. So we are learning that time in market with a DSD operator yields some stronger results, meaning we are really starting to crack through distribution of display in grocery from our DSD partners. And so we see grocery in our DSD markets outperforming rest of market. And very new news, we're starting to see some of our singles programs perform better than they have in the past because of what we're able to execute, again, in grocery with our DSD partners help. And so we're leveraging some of those insights when we think about how do we drive trial and specifically how do we drive singles success through the spring and summer with the marketing and packaging rollout that you and I were just discussing. Convenience is more of a long-term opportunity. I believe that, that's true for the category in general as we think about the fit of the shopper in the convenience environment to the category and its promise. It will just take a little more time. But our DSD partners are able to help us to test and learn in some regional pilots, and we continue to do that with a few success stories that help us to learn what exactly sets the brand up for success at these early stages in the channel. Operator: Our next question comes from Andrew Strelzik with BMO Capital Markets. Andrew Strelzik: My first one, I think I caught this right. You made a comment about Albertsons and some of the successes there and kind of insinuated that other retailers may follow suit. Can you just maybe elaborate a little on what you were talking about there? And is the implication that there are some potential sales opportunities out there that aren't at this point included in your guidance because you don't have full visibility to them? Amy Taylor: Let me start with your second question, then I'll go backwards into the grocery channel dynamics and specifically Albertsons. Our guide does consider in some part that we have yet to receive final spring set communication from several retailers. And this is not atypical, right? February, the resets are March, April or May, depending on the retailer. So there could be some improvements in set. And of course, we guide just thoughtfully thinking about what we know and what we don't know, AKA, just visibility into the channel. The comment on Albertsons is really a significant learning for us around assortment, planograms and innovation. And the reason I say that is in Albertsons in the spring of last year, we increased our space by 30% by way of expansion of the category and by way of exciting new flavors. Albertsons took the majority of our flavors and most importantly, built out a brand block for Zevia, which was vertical, taking our brand to eye level. And with that, we saw accelerating growth over the last 6 months close to -- over the last 6 months, we grew faster than the category, AKA grew share in our performance over the last 6 months. And that continues to accelerate in the last couple of 4-week reads where we were close to doubling the growth of the rest of the category. And I say that just to go back to when the product is properly placed on shelf, when it features all of our innovation and when we have the right assortment, we have a very strong case study to then take to other retailers and continue to expand on it. Now these big national grocery chains move slowly, but our expectation is that over time, we're able to move more national and regional grocers in the direction that Walmart and Albertsons are going, which is now 6-plus months after the resets really bearing fruit. Andrew Strelzik: Got it. Okay. That was very clear. And then you gave some good color on some of the puts and takes through the year on the sales growth side. And so I was wondering about gross margins through the year, what you can share on that or how we should think about gross margins for the year, it sounds like maybe 1Q is the low point with Costco and then the pricing coming through in 2Q, but any color on that would be helpful. Girish Satya: Sure, Andrew. So as you noted, in Q1, we'll see a bit of a downtick from Q4 in terms of gross margin, particularly related to this national rotational program at Costco. Beginning in Q2, you'll begin to see the impact not only of the price increase, but some of the incremental mitigation factors around mitigating aluminum tariffs. And so we expect to see both of those things again, starting in Q2. So we expect in Q2 and thereafter, margins to return back to the upper 40s range. Operator: Our next question comes from Eric Serotta with Morgan Stanley. Eric Serotta: So a quick one for Girish in terms of the price increase. Can you give us some idea of the magnitude we're talking here, low single digits, mid-single digits? Okay. That's great. And then what are you assuming in terms of elasticity impact? It seems a little different than in the past when everyone is taking pricing at the same time. Some of the CSD players have moved already, moved late last year. So just wondering your thoughts on elasticity and then a question for Amy. Girish Satya: Yes. As a reminder, we did not take price last year. And so we are taking price this year beginning in Q2. Elasticity, I think, generally speaking, we've evaluated at around 1.1 or so, which is what we've seen historically, and that's kind of what's baked into our guidance. Amy Taylor: Yes. And I think one of the most important things on the price increase and on the elasticity question is that we have been a fast follower on price, which I think is appropriate for our brand and its size. We do have room on price over the next few years as we continue to build brand. And we have been, I think, most importantly, successful in projecting the impact of price increases, AKA, our elasticity assumptions have been correct. So we feel pretty confident in our ability to implement price increase as planned and largely predict its impact on the business. That, in this case, to be a very positive one. Eric Serotta: Great. And then, Amy, we're probably, what, 15 months or so into Walmart implementing the modern soda set, I guess, it was late 2024, if I remember correctly. How are you seeing that set evolve in the -- how have you seen it evolve in the interim? How are you expecting or seeing it evolve this year heading into and coming out of the spring resets? Is the overall space for modern soda increasing? And how is your space within that set trending? Amy Taylor: Sure. So just to start with, I think it was pretty cool to see the world's largest retailer be a first mover and calling the set modern soda, which I think is very strong positioning and others follow food or slowly are doing so, and they are pleased with the performance of the set, not only in its literal performance from a velocity and incrementality perspective, but also in the shopper that it attracts. It's a very attractive shopper. It's a younger shopper. It's generally a higher income shopper. Now speaking to Zevia specific, we remain an anchor brand in that set. And I say that because we are the multipack player in the set. We are the take home, the stock-up brand, and we are at a more accessible price point significantly to the rest of the set. So we play a unique role. We brought some innovation to the table in July of last year, and we're seeing strong growth from those SKUs, and we're pleased with the mix. And we've grown as much from optimizing assortment, so right packs, right flavors as we have from space. Our space has, despite tremendous pressure from competition, we've held our space, and we've made that space more productive in the form of a variety pack and bringing innovation to Walmart a little bit early. So we're bullish on Walmart even as we lap the pipeline fill, and we continue to grow there, and we've seen strong market share implications within the customer itself given our expansion through last year and our accelerating velocities. Operator: We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Amy for closing comments. Amy Taylor: Thanks. Just briefly, I would just say that in 2025, we returned to growth. We cut adjusted EBITDA losses in half. We improved our gross margins even in the midst of a challenging macro, and we gained distribution. So we are proud of the foundation that we've set. But almost more importantly, we have in our pipeline powerful packaging changes, an accelerating pace of strong innovation and improved taste across much of our portfolio. And all of this is supported by a sharper brand, which is really resonating with the consumer. So our position as a clean label, clear liquid zero sugar affordable option that also tastes great and increasingly tastes the best among better-for-you sodas is more relevant than ever. The fundamental changes and increased investments that we're making in the business set us up for the long term. So thanks for joining us today, and we look forward to speaking to you again next quarter. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Thank you for standing by, and welcome to the Aurelia Metals Limited FY '26 Half-Year Financial Results Call. [Operator Instructions] I would now like to hand the conference over to Mr. Bryan Quinn, Managing Director and Chief Executive Officer. Please go ahead. Bryan Quinn: Thank you for joining us to hear about the Aurelia Metals FY '26 Half Year Results. I am joined by Chief Financial Officer, Martin Cummings, today. And obviously, I'll pass over to Martin in certain sections of the presentation. While I'm on to Slide 1, this has been another great half-year, both operationally and financially, for Aurelia Metals. Our strong delivery on metal production and project delivery, supported by obviously strong commodity prices, has delivered a robust balance sheet and strong operating cash flow for the period. We continue to deliver strong results against our strategy, and we can see the benefits of this strategy playing out already. We are delivering consistent metal results from more reliable operations, but we've also have our mills working at new capacity at the current nameplate capacity, which has been a clear strategic deliverable over the past couple of years. During this period, we've also rolled out our mine operating system, our MOS, to really ensure that we're focusing on delivering our plan with the commitments of the team on a daily, shiftly, weekly, monthly basis, which is important for our future sustainability of the business. This has been a deliberate approach to ramping up Federation Mine at the right mining rate and long-term value of getting our ore from Peak mine over this period of time that delivers our 40,000 copper equivalent tonnes in FY '28. And our focus on our strategy is really about delivering superior value to our shareholders through a combination of future copper at 50% and future lead zinc at 50% coming out of the Great Cobar mines and the Federation mine in the coming years. This is going to continue to position Aurelia really well as we utilize the gold prices of today to invest in our business to achieve much higher prices in the future, hopefully, from copper and other commodities. In the meantime, we'll also be focusing on exploration team on looking to build our strong pipeline of options organically for both copper, base metals, and precious metals while expanding our Peak facility in the future. In today's results, Martin and myself will share how we're setting up Aurelia to continue to deliver value for our shareholders through our operations performance, while we continue to derisk our balance sheet and create significant cash much quicker than our peers into the future. Just refer to Slide 2, which is our forward-looking statement. On Slide 3, our operations have continued to deliver strong financial returns against, again, raising the bar from previous halves and results with underlying EBITDA up 41% and our underlying NPAT up 60%. There's still a lot more to come as we ramp up our high-grade Federation mine and complete expanding our processing capacity from the 800,000 tonnes capacity to 1.1 million to 1.2 million tonnes in the near future. We'll talk about that in a few slides. The great news for Aurelia is at the current nameplate capacity prior to expansion, and we are actually really focusing on building stocks in front of the mill coming up in the several couple of months. And I'd like to call out we've achieved record recoveries for some of our commodities as we've been ramping up these tonnes from our processing plant, which is a great result. The Federation ore body and the mine has been ramping up in line with our plan, actually a bit ahead of our plan for the year, and has been providing very encouraging grades, and the high-quality ore remains well on track to improve month-on-month as we go forward. We have our Great Cobar project, which will be accessing the future high-grade copper and gold deposits for FY '28 and beyond. And that's on track and on schedule at the moment, with our development is progressing quite well. And many of the other aspects of the project are delivering in line with the infrastructure works, the pipelines, and also the surface facilities that are being set up, ready for execution over the coming 12 months. So the project is in really good shape, and we're really happy how it's progressing. In line with our other projects, we have -- and we'll talk in more detail soon, other growth projects around the expansion of our plant. They're all on schedule at the moment, and we'll see some results of those coming up in the coming quarter, quarter 4, and obviously, quarter 1 of FY '27, which is exciting. It will deliver some really strong cash flows going into FY '27 with this expansion of our plant and business. And importantly, we actually have been able to really maintain a robust balance sheet, which is funding all of our growth from our balance sheet, which is something we're really proud of and setting us up for success also. And lastly, from our results in the half, it's important to call out the MREL results. We achieved a significant uplift to resources by 12% and reserve by 17%. This continues to show our ability to really find, explore, and actually develop our businesses into the future with this strong organic pipeline we've actually developed and will continue to develop. Importantly, during the half, we had several of our workforce did suffer hand and slip trip injuries across the business. As a result, our leadership have introduced behavioral-based safety programs and tightened up our induction and training programs on-site to really ensure that our people, when they come to work, wherever they're working, they just really think about hazards, use the tools and process we have, and ensure that they go home safely at the end of every day. That's an improvement we're working on every day to ensure that people all go home safely, and that's for the benefit of everyone. I'm just going to pass on to Martin now to talk around the highlights and the balance sheet. Over to you, Martin. Martin Cummings: Thanks, Bryan. So just moving on to Slide 4, and I'll just take you through some of the highlights. But obviously, in the Appendix 2, you'll find more detail on the financial results. I'll just point out when we're comparing on this slide, we're comparing to the first half of financial year '25. So starting with revenue, which was up 27%, and that was driven both by our strong production performance in the first half, but undoubtedly also from strong commodity prices. We did have significantly more zinc production and revenue in this quarter as volumes from Federation ramping up, but gold revenue did remain our dominant source, with around 53% of revenue coming from gold, about another 2% from silver. Our underlying EBITDA also benefited from the strong revenue, and we expect this to improve in the periods to come with the ramp-up of Federation. So as you know, this half, we booked the first commercial production from Federation, so commencing 1 July. And that production did come at a lower EBITDA margin initially. And as volumes ramp up, that EBITDA margin will expand. So as we increase our volumes into the second half and beyond, we expect our EBITDA margin to trend up accordingly. Our NPAT has been consistently growing, and we did again this year, underlying NPAT up 60% on that comparison period. Just within the NPAT, just some comments on depreciation. So that was slightly higher for the period, and that's driven by the first depreciation recognized from Federation. The prior period did have a little bit of depreciation in it relating to the last production from Dargues. So that depreciation will ramp up with the majority of the Federation assets depreciated on a unit of use basis. As those volumes ramp up, we expect the depreciation to tick up a bit as well. I'll just -- obviously, we're calling out operating cash on that slide, but I'll flip over to Slide 5 with the balance sheet. And what we're showing here is our regular chart for the 6-month period. And that operating cash flow from the Cobar region really is the standout with $51.2 million. That was up 37% on the prior period. Importantly, though, that does include all of the sustaining capital for both Peak and Federation. So that is a real cash flow generation before growth capital. Federation, as I said, is in that number. And as those volumes ramp up, that number is expected to increase with a higher contribution from Federation. I talked a bit about growth capital in the December quarterly call. We spent $21.4 million on growth capital for the half, and I do expect to see that increase in the second half. Within that, the plant expansion capital was only $4.3 million. So as we move further towards commissioning in those projects, the spend will ramp up. The Great Cobar spend of $11.2 million for the first half is largely in line with the ranges that we gave for FY '26 for Great Cobar. And there was a bit of spend for decline investment at Federation. I also talked in December about the tax bill. So we finalized our tax return and made a final tax payment for FY '25 of $12.2 million, and that's shown in the waterfall. But I guess the change I'm showing on this slide relates to restricted cash. So I just want to give you an update on where we're at with the refinance. Progress is -- the process is progressing really well. We are on track to agree to terms in this quarter. And I am targeting a financial close either within this quarter or early in the next quarter. Just to recap on what I'm looking for in the refinance is primarily an upsized performance bond facility. As you've been following, we've been cash backing bonds over and above the existing facility that we have, and we have $27.8 million at December sitting in restricted cash. That number is a bit higher today, we've announced that we had due in February. And really, the key there is to refinance that facility and add that cash back to the balance sheet. So I'm just showing you on that chart what cash could have looked like or will look like once that refinance is complete. So all in all, I'll leave it there, but it's another great half delivered by our ops team and really has meant that our balance sheet remains strong and able to fund all of our growth comfortably. So I'd just like to call out our Aurelia and Ernst & Young teams; some are on the call today just for their efforts in getting these releases finalized. It's been another smooth process. So thank you from me. And I'll just hand it back to you now, Bryan. Bryan Quinn: Thanks, Martin. Yes, some excellent results financially, and the balance sheet really supporting the business going forward, which is exciting for the team, a lot of good efforts going into that. If I could just move on to Slide 6. We're very happy how Federation is contributing to the bottom line now. It's ramping up very much in line with our plan. In fact, we do see it continuing to ramp up into the second half of this year, very much ahead of the plan, actually. So very exciting. What's been pleasing is the grade reconciling in line with our plan. And in fact, gold has been slightly better. But if you can sort of see between quarter 1 and quarter 2, some of those uplifts in our grades have been pretty much in line with what we explained to shareholders in the past that we see as we get deeper into some of these more sort of substantial ore bodies, we will definitely get the upside on the ore body grades, and we're seeing that coming through now as we have committed to do so. So that's good news for the ore body. In terms of Federation itself, the mine, look, we are continuing to advance the decline as we discussed in the quarterly. We are continuing to infill drilling as we push the decline down to really build confidence and get high confidence in our stope designs and our execution of our plans. That's giving us obviously pretty much upside to our business in terms of we can potentially bring extra tonnes out from our existing plan when we need to. All the infrastructure is in place now, all of the -- basically the infrastructure around the workshops, the site is just now operating as a mine and bringing tonnes out safely, putting them in the trucks and trucking them to the peak processing facility. And that's going to continue to ramp up as we build the mine and as we continue to build the expansion of the processing plant. It's worthwhile calling out we are continuing to drill the Federation West deposit, which is actually from underground towards Federation West to understand that deposit more as well, and that will be work that we'll continue to provide the market updates as we get the results from those areas. But overall, it's a well-executed project and ramping up really nicely in line with the commitments we made to the market. And this deposit continues to be one of the highest grade base metal mines, and we will continue to unlock future value for shareholders as we continue to mine -- as we continue to push the decline down and unpack the resource. So moving on to Slide 7. I just want to talk about the expansion and how we're tracking against the expansion for the Peak processing facility. It's important to reinforce that Federation is ramping up, as we just talked about. And we're currently just about nameplate capacity at the Peak plant. So the expansion coming on at this point in time is always about the timing to have the Tailington process water management in place in Q4 for this financial year, and then have the tertiary ball mill in place and commission in Q1 FY '27. And that lines up very well with the Federation ore ramping up as well and also delivery of ore out of both the Peak new Cobar side and the South Mine. So we'll be basically targeting the 800,000 tonne nameplate capacity we have now moving to the 1.1 million to 1.2 million tonne capacity. All of this is being self-funded, and that's a really important call out for investors. We're not seeking funding to do this, and the capital is very reasonable considering the upside in the potential cash that's going to come from this business as we build this. So we're well and truly on track for these projects. As you can sort of see in the photo of the slide, that's the ball mill that's come from Dargues. We repurposed that mill, have dismantled it, pulled it apart and have put it on truck, and brought it up to the Peak site. And very much -- it's now waiting for the construction work to happen to be able to place the ball mill in place. But -- and the substation or the power station substation that's come with it from Dargues has actually already been placed in place on its steel trusses and obviously the electrical work will commence very soon for that particular part of the project. In terms of the tailings and water management, that project is progressing well. And like I said, we are well and truly on track for Q4 for the project going forward. I will just move on to Slide 8, which is the growth in mineral resources and ore reserves. Look, this is really about our future, where the business goes, what we're extracting now, what we're going to extract in the future. But if you look at our pipeline between the Cobar at the top left-hand side of the plan to the Federation Mine at the bottom, we have a large set of tenements in dark gray, which we are actively exploring. And if you look at the sort of the portfolio of opportunities -- pipeline of opportunities on the right-hand side from peak copper, peak zinc lead, the mingy copper and the Federation, we have a large set of opportunities that we are working on in our long process going forward, obviously, to build our portfolio and optionality for maximum value. But right now, the real callout for us is the AMI was done in this half of FY '26 and 29 million tonnes, up 12% and obviously, our ore reserves are up 17% which is a testament to our exploration teams really looking hard at where we're discovering, working on the resource and obviously, how we can convert that into a development opportunity for ourselves in the current mines. So some really nice grades, really good resources, some good reserves all in France's business, and really, it's a great opportunity for really to enterprise that going forward. If I just move on to the next slide, which is Great Cobar. So as you're aware, obviously, the project was approved last year, and we kicked it off in July 1. It's progressing very, very well. It's -- basically, the development is a key priority right now, as is doing infrastructure work on the surface, getting ready for the shaft sinking at the back end of this calendar year. At the moment, development is pretty much on schedule. All the infrastructure works are on schedule. And like I said, it's sort of moving down the right direction to get towards that deposit. What is a really important call out, this investment case is materially higher at the current prices than we obviously put to the market last year. It's well worth running those through your models to see this potential uplift in value of the company. And like I said, this is going to be in production to commence within the next 2 years, which is exciting for the company. There is significant value upside potential that we know is under the current study and the current project deliverables we have. So if you look at the plan where the yellow line is sort of around the bottom of the stopping area, that 31, 31C, 31D holes, we do know what's there. And obviously, it's in our prioritization process now to develop the mine and the declines down to the top of the ore body, put some drilling platforms in place and basically work on infill drilling and also to drill under the current ore body as we know it, under the ore resource we know it and actually unpack what the potential is because we know the ore body is open at depth and in all directions actually. So this is materially a significantly good investment with the current prices. And also, like I said earlier, it's got value upside just in the resource, as we know, based on what we put in the feasibility study and the project execution plan versus what we know from the drill holes that have been done in the past in 2021. So a very exciting project for the business, and this will obviously provide a large proportion of the copper future that A really actually has as a company going forward. I'll just move on to the next slide, which is on the Nymagee slide, Slide 10. What's the next catalyst that we've been working on in H1 FY '26 is really the Nymagee exploration opportunity for future organic copper growth for our business. We had a massive uplift in resources that we reported in the MR in H1 of this year. Drilling is continuing over this calendar year to really look at growing this resource and understand what the potential is. It's really a suitable ore body for both the Hera and the Peak plant. And it's really important to understand the proximity of where this plant -- where this is relative to the Hera plant. It's all within 5 kilometers of the Hera plant. It's within close proximity to the camp and infrastructure we have for the Hera Federation group. And basically, it's all on sealed roads in that area. So realistically, it's a very nice location to have a catalyst for future pipeline of opportunities, which is all within stone business of your infrastructure that Aurelia actually own. And so one of the key focus points for us is obviously to continue to drill this work at the current present work that's being done. This deposit is not very deep. It's a couple of hundred meters deep and open at depth beyond 700 meters, as well as far as the work the team have actually done. So a very exciting opportunity. And obviously, it will be work in progress over the coming period beyond into H2 and into FY '27. Look, I just want to wrap up in terms of where we are against half 1 and what does it mean for us. We are building all the elements to deliver the growth and heading towards our 40,000 copper equivalent tonnes, as we've said, as part of our strategy for FY '28. We are building profitability as our production grows. And as you've sort of seen through the presentation, our volumes have increased and will continue to increase. We're putting the infrastructure in place to enable that, and the mines will continue to ramp up to support that. So we expect some really good results. At current NPAT up 60% in EBITDA -- underlying EBITDA at 41%. We can expect some really good results as we continue to build our business and the growth that goes behind that. We have a strong cash balance, and we haven't drawn down debt, as Martin talked about. So we feel like we're in a really strong position, especially relative to our peers. And we have been self-funding all of our work and all of our growth, which is obviously a testament to the hard work of the team and the results we've been delivering. Importantly, our execution of that Great Cobar is well and truly underway on schedule. Like I said earlier, it's really taking up nice shape, and we are prioritizing our drilling program from that Great Cobar decline work to ensure we unpack the potential future of what could be an amazing, even better deposit than we have in our resource base now. Our processing capacity available to mine -- to take all the mine ore. Our expansion, as I talked about, our first part of the expansion will be finished in quarter 4 FY '26. And then we'll be basically completing the second part of the expansion, which is the ball mill and the power unit that will be in FY '27. And really, we'll be in the 1.1 million to 1.2 million tonne capacity, and then the mines will be challenged to basically ensure that we're filling the mill again. We also have the Hera plant available for future options as we unpack our resources in the region, as I've just discussed around some of these catalyst opportunities we have. Importantly, as I said, we have 29 million tonnes of group mineral resource, and that's -- obviously, we have a proven track record to discover and to develop these ore bodies at a very, very good cost per tonne. And we've actually got a new highly experienced Chair has been appointed and has been involved in the first Board meeting, and very excited that Graham Hunt has joined the team and is going to provide very good direction and guidance to the Board and obviously to management as well. So all in all, we're in good shape, and we're heading in the right direction in line with our strategy. So with that presentation, I'll hand it over to Rocco to maybe take any questions we may have from the group who's dialed in today. Operator: [Operator Instructions] And today's first question comes from Daniel Roden at Jefferies. Daniel Roden: Good set of clean numbers. I probably got a few ones for you, to be honest. But I just thought if you could quickly just clarify the difference between the $9.1 million financing cost in the P&L versus the $2.7 million expense. How should we think about the, I guess, the assumed noncash differentials there? Is that rehab amortization style costs that are being thrown into that? And how do we think about that going into future periods? Bryan Quinn: Yes, it's about rehab unwind and also about amortization of borrowing costs incurred in previous periods. So that's -- they're the main items that sit in the noncash portion of that. Daniel Roden: And another boring one. D&A, I know we've spoken about it in previous periods, but just trying to get a sense of where D&A is going to fall kind of in second half FY '26 and FY '27, acknowledging it's pretty difficult with the change in operations. But yes, it's probably the only material change to expectations, I think, in the period. So just trying to get a sense of how that's going to balance out. Bryan Quinn: Yes. No. So let me just split the $23 million up for the first half. So roughly that was $15 million of Peak and around $8 million for just under $8 million, and there's a bit of corporate. So the $15 million is pretty solid for Peak. But as we reinvest in the plant and then start operating at the higher throughput, I expect that number to tick up a little bit. For Federation, as I say, around $8 million for the first half. I've got it at around $20 million for this year. So that will be the tick up in the second half. So group depreciation should land around sort of $50 million to $55 million for the year, and then be a bit higher next year as we're getting into those higher volumes out of Federation, primarily, you see it sort of step up a bit again. Daniel Roden: And just confirming the tax shield is largely exhausted, so you're now going to be a taxpayer going forward? Bryan Quinn: Yes, we are a taxpayer. You might recall back during COVID, we were taking advantage of those loss carryback provisions. So we were getting cash back through those '22, '23 period. So we effectively exhausted our tax shield in that way. All of the Dargues closure from FY '24 has been pushed through the FY '25 tax return. So now we're pretty clean, yes. Daniel Roden: Yes. And I'm sure I know the answer here, but I'd be remiss if I didn't ask it anyway. But -- just going to ask about the, I guess, the Aleris transaction. How do you -- do you see yourselves playing a role inside of that, given that the -- some of the key assets obviously have quite strong synergies potentially with your portfolio. Is that something that you're looking at or just happy to look at it from the sidelines? Martin Cummings: Look, I'll take that one. I think at this point in time, we're always looking at where the best growth options are for ourselves to fill our mill or mills. And we always look for what the best value is for our business in terms of what our shareholders would expect us to do. So we will continue to look at that. As we sort of said, we have a really good catalyst already. We have a great Cobar deposit, which is still lots of potential that we can drill, potentially unpack, and grow our business from. We have Nymagee, and we have lots of other sort of greenfield opportunities we're looking at as also. They will always be assessed against what other options are in the region that makes sense to us. And whatever the most value accretive is for the business, we will look at. So we won't give a definitive answer on anything we're looking at, but it's always about value. So if we have it in our pipeline and we have -- and we've got a pretty strong portfolio of resources ahead of ourselves that we'd have to pay additional for. So realistically, our mills are currently full with a nameplate capacity of 800,000. We're going to fill them again with our Federation and our ore bodies coming out of the Peak South mine, new Cobar and Great Cobar. And obviously, we're looking at, well, what do we -- when do we look at Hera and how we use Hera. But if we have the resource ourselves and we have it at a good price ourselves, we'll continue to look at that. But it's always about value, what's the best value for us. And we look at both organic and inorganic at the right time or based on what's going to shareholder outcomes. Operator: And our next question today comes from Paul Kaner at Ord Minnett. Paul Kaner: Just a couple of questions, if I may. Just firstly, on your balance sheet and growth projects, I guess you've sort of got $86 million of cash. You're about to refinance that facility and get that restricted cash as well. I mean, taking all of this into account, along with your outlook for cash flows, is there any sort of potential to fast-track some of your growth projects at this time? Bryan Quinn: Look, in terms of our growth projects, Great Cobar is on schedule at the moment. And you got a bunch of declines heading down to the project. We also have sufficient copper gold ore in Chesney, New Cobar, and Jubilee. So in terms of the mill, our focus is on drilling the mill and keeping the mill full, and as it expands, giving the mill full again. And then really, the acceleration will come from drilling programs, and we are funding the drilling programs a lot more in FY '26 than we have in FY '25 and '24, et cetera. So to be honest, if you look at the growth and acceleration, it's really about getting Federation ramped up, and it's going well, and getting Great Cobar developed and getting it drilled for further information, Lim drill for further information. So they're all progressing quite well. But at the end of the day, it's about what mill we want to fill the mill, give it mill full, and that's our focus right now because that will generate the most value for shareholders in the short and medium term, both at the Peak mill and obviously, options for the Hera mill. So as we continue to deliver, obviously, good cash flow and a very strong balance sheet, we'll continue looking at options to accelerate, and the Board will continue to challenge us on those acceleration options as well. And that will happen generically as we go forward. Paul Kaner: And then just secondly, just following on from Dan's question and I guess, looking at the organic versus inorganic approach and taking into account Nymagee there on Slide 10, sorry. You talked about sort of potentially processing Nymagee through both Hera or Peak. I guess what comes into consideration for this decision? Do you need more material to justify Hera restart? And I guess, how much CapEx would be required to restart the Hera mill to turn that back into, I guess, a copper con -- bulk copper con type processing plant? Bryan Quinn: Yes. Look, that's a good question. So we are looking holistically at -- obviously, Hera Mill is available. It's off the grid plant. And we're looking at -- well, with the combination of what we already have with Great Cobar, the New Cobar, the South Mine and Federation, what's the right configuration to maximize value with obviously commodity prices as they are today and where they will be in the future, what is that right combination. So as we get more information, we do want more resource information out of Nymagee before we make any decision, obviously, that's what the drilling program is all about. Once we have that information, we'll look at the trade-off of, well, where is the best position to go versus where is the best position for Federation to go versus where is the best position for the ores out of South Mine and North Great Cobar to go using the infrastructure we actually have. It's important to understand that we send trucks from Federation, they drive past full of ore, they drive past Hera, and they had their 9500 to Peak plant. That truck then turns around and comes back empty back towards past Nymagee, past Hera, back to Federation. So we actually have like a logistics chain already in place that can actually optimize on sealed roads, the access to those ore deposits, both at Great Cobar, the Peak South mine, Nymagee exploration area, Hera plant, and also Federation. It's one direct road basically, which is all sealed, which is in excellent condition. So it's all about optionality for us, and just thinking once we get the extra information on the resource, Nymagee, we'll then look at what does that mean. We'll get extra information out of Great Cobar in the next couple of years as well to see what that means. And we'll be continuing to drill in Peak South and Chesy areas as well. So it's about getting the options and optimizing them all with what you have. That's the organic side. And during that period, you'll also be looking at what's the inorganic options as well, which one of the things with inorganic options is they do cost you more money. You really don't know what some of the wood so you have a look. So I guess you've got to weigh up those sort of options all the time and see where you best to put your money for shareholder value. Paul Kaner: Yes, that's clear, Bryan. So I guess down the track, it's first and foremost, keeping that mill full there at peak, but then, I guess, any excess material down there, you could put back on the truck to come back up to Federation should you wish to restart the Hera mill and maybe combine that with Nymagee. Bryan Quinn: And then yes, and then the cost of what you put into the Hera mill will all be dependent on what ore source you put through there. Effectively, it depends on the ore, it depends on the actual -- the feed type we decide, which is best to go through Hera. That will obviously decide what the cost of capital will be to do that mill. In the past, we've sort of said $20 million to $30 million to restart Hera. That will all depend on the ore type we put through. And I'd say that you have to do a reassessment of that again, and I wouldn't definitely use those numbers in that assessment. I would think about what that looks like when we come up with the ore source feed for that. In the meantime, it's really important we do keep the mill full with the expanded numbers, 1.1 to 1.2 is going to be very, very good value and good cash flows for our shareholders. Operator: [Operator Instructions] There are no further questions at this time. I'll now hand back to Mr. Quinn for closing remarks. Bryan Quinn: Yes. Thanks very much, Rocco. Look, just to start with, I want to obviously thank the shareholders for continuing to support us and follow our strategy execution. We've talked about definitely all of our management and our people who are working every day to deliver the results, and the associated content partners and the strategic partners we have to support us as well. I'm really excited for where Aurelia is going. We are building the business step by step to get to this sort of larger volume in a very sequential way, funding our way to get there through our delivery, putting the systems in place behind us. We've got some great talent involved in our organization that is supporting this business going forward. And like I said, we have a very clear path to get there. You will see the profitability at the current prices will only get better as our production grows, as we expand. That balance sheet, as a result, will get strong, and there's lots of upside to the business in terms of where we're going with both the copper growth and also with the resource base we're looking at using as well going into the future. So thanks, everyone, for joining us. Really appreciate it, and we look forward to speaking to you at the next quarterly update. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Hello, and welcome to the Magnite Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Nick Kormeluk of Investor Relations. Please go ahead. Nick Kormeluk: Thank you, operator, and good afternoon, everyone. Welcome to Magnite's Fourth Quarter 2025 Earnings Conference Call. As a reminder, this conference call is being recorded. Joining me on the call today are Michael Barrett, CEO; and David Day, our CFO. I would like to point out that we have posted financial highlight slides on our Investor Relations website to accompany today's presentation. Before we get started, I will remind you that our prepared remarks and answers to questions will include information that might be considered to be forward-looking statements, including, but not limited to, statements concerning our anticipated financial performance and strategic objectives, including the potential impacts of macroeconomic factors on our business. These statements are not guarantees of future performance. They reflect our current views with respect to future events and are based on assumptions and estimates and subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements. A discussion of these and other risks, uncertainties and assumptions is set forth in the company's periodic reports filed with the SEC, including our quarterly reports on Form 10-Q and our 2025 annual report on Form 10-K. We undertake no obligation to update forward-looking statements or relevant risks. Our commentary today will include non-GAAP financial measures, including contribution ex-TAC or less traffic acquisition costs, adjusted EBITDA and non-GAAP income per share. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings press release and the financial highlights deck that is posted on our Investor Relations website. At times, in response to your questions, we may offer additional metrics to provide greater insights into the dynamics of our business. Please be advised that this additional detail may be onetime in nature, and we may or may not provide an update on the future of these metrics. I encourage you to visit our Investor Relations website to access our press release, financial highlights deck, periodic SEC reports and the webcast replay of today's call to learn more about Magnite. I will now turn the call over to Michael. Please go ahead, Michael. Michael Barrett: Thank you, Nick, and what an end to 2025. We exceeded consensus expectations for both the quarter and the full year. In a mixed macro environment, our results reflect the durability of our model and the accelerating shift towards streaming. In Q4, CTV contribution ex-TAC grew 32% ex political, meaningfully above our guide. That acceleration began in Q3 and strengthened into year-end. As we enter 2026, CTV is now larger than DV+ making streaming the majority of our business. That is a defining moment for Magnite. The long anticipated ramp of programmatic CTV is no longer emerging. It is underway at scale. Adoption is broad-based across media owners, agencies and DSPs. We saw strong growth from many of the largest players in the industry, including LG Ads, Netflix, Paramount, Roku, VIZIO, Walmart and Warner Bros. Discovery. TV OEMs are leaning aggressively into programmatic across home screens, pause ads, data enablement and marketplaces. Programmatic enablement in live sports continues to expand across the largest global streamers. On the demand side, the largest global agencies are now driving meaningful volume through buyer marketplaces and DSP-agnostic pipes powered by Magnite. ClearLine activation continues to gain momentum as buyers increasingly seek direct, transparent and efficient access to premium streaming supply. Stepping back, the industry trajectory is unmistakable. Consumers have moved to streaming. Time spent has already shifted. Advertisers are following and dollars are now catching up. CTV combines the brand impact of television with the precision and measurability of digital. As inventory has scaled and pricing has normalized, CTV has become accessible to a broader range of advertisers from global brands to performance marketers to SMBs. For Magnite, this shift is structurally advantageous. In DV+, we operate in a highly competitive market where we hold mid-single-digit share. In CTV, our share is multiple times better. As dollars migrate into streaming, they moved into a segment where we have deeper integrations, stronger publisher relationships and differentiated infrastructure. Now turning to DV+. DV+ grew 4% ex-political in Q4, modestly below expectations, and that pressure has increased in Q1. We observed accelerated budget reallocation from DV+ into CTV across agencies, DSPs and brands. This trend has intensified in Q1. This makes sense as CTV becomes more measurable and performance-driven and inventory scales, dollars are naturally consolidating into streaming environments. Within DV+, there are encouraging signs. Our mobile in-app business remains healthy. Commerce Media partnerships are gaining momentum with more than 15 partners announced, 11 of which are deployed and ramping, including United Airlines, PayPal, Pinterest and Best Buy. These partnerships combined owned inventory with first-party data layered through ClearLine curation. We do not believe that the decline in search referral traffic is impacting our DV+ business. Our footprint remains diversified across open web, mobile app, online video, audio and digital out-of-home. In fact, our DV+ supply continues to expand with ad requests growing over 30% year-over-year in Q4 and at similar rates in Q1. Our DV+ business has never been supply constrained. Now turning to AI. There has been speculation that generative AI and agent-based buying could disintermediate infrastructure platforms. We believe what is actually unfolding reinforces the importance of scaled sell-side infrastructure. In Q4, we embedded an advertising context protocol or AdCP based seller agent directly into SpringServe and executed what we believe was the industry's first agent-to-agent campaign. Scope3 served as the buyer agent on behalf of MiQ with media running across LG and Warner Bros. Discovery inventory. While still early, this marks an important milestone. It represents the first step toward a future where buyer and seller agents can interpret campaign briefs, intelligently match inventory with audiences and ultimately transact media in a more automated and efficient fashion. Magnite is uniquely positioned on the sell side. We believe we will be long-term winners in digital advertising, given our differentiated access to supply, scaled and interoperable data assets and ability to apply AI across the end-to-end workflow. Layering AI into that ecosystem modernizes the buying experience, streamlining historically manual insertion order processes, matching briefs with audiences and inventory at scale and enhancing traditional programmatic execution. Even in a world of autonomous agents, infrastructure becomes more critical, not less. Agents may interpret intent, but they still rely on scaled marketplaces to clear transactions, enforce auction mechanics, ensure compliance, manage fraud prevention and handle financial settlements. As the ecosystem evolves toward potentially thousands of buyer and seller agents, aggregation and interoperability become essential. You cannot have a market where every agent negotiates bilaterally with every other agent. Standards-based scaled platforms are required to make that system function. That is the role Magnite plays. In Q1, we are continuing to run test campaigns and refine the AdCP framework. It's early, but we are encouraged by the progress and view this as a meaningful step toward a more intelligent and efficient advertising marketplace. AI is not displacing our infrastructure. It is increasing throughput across it. Lastly, on DV+, we continue to await the court's final order in the Google AdTech remedies phase. We believe remedies could create meaningful share reallocation opportunities. As we have stated, every 1% of market share gained could represent approximately $50 million of incremental contribution ex-TAC annually at very high incremental margins. We remain prepared. To conclude, we are in the early innings of a multiyear replatforming of television and video advertising. Streaming is now the dominant form of video consumption. CTV represents the majority of digital video time spent, yet ad dollars still lag engagement. Industry forecasts call for sustained double-digit CTV advertising growth for years to come with tens of billions of dollars expected to shift from linear television and fragmented digital channels into streaming environments. Magnite sits at the center of that shift. CTV is now the majority of our business. We are deeply integrated with the largest streaming publishers and OEMs in the world. We operate in premium, largely logged-in environments that are inherently more defensible and more measurable. And as dollars consolidate into CTV, they move into a segment where our market share is meaningfully higher and our infrastructure is embedded. At the same time, automation and AI are increasing efficiency across the ecosystem, expanding working media and driving more volume through scaled platforms like ours. Secular CTV growth, expanding total addressable market, increasing automation, strong share position. Those forces are durable. We believe Magnite is fundamentally -- we believe Magnite is foundational to how the next era of advertising will transact, and we have never been more confident in our strategic position. With that, I'll turn the call over to David for more detail on the financials. David? David Day: Thanks, Michael. As Michael mentioned, we had a strong Q4 and finish to the year with a great performance in CTV, achieving 20% contribution ex-TAC growth or 32% excluding political, significantly exceeding our expectations. CTV reached 48% of our total contribution ex-TAC for Q4. DV+ came in below expectations, declining 1% and up 4%, excluding political. Adjusted EBITDA grew 9% to $84 million, resulting in a 43% margin. We're pleased with the results, particularly the continued acceleration in CTV growth we saw in Q4. For the full year, contribution ex-TAC totaled $670 million, a year-over-year increase of 10% or 14%, excluding the impact of political. For CTV in 2025, we achieved contribution ex-TAC of $304 million, an increase of 17% or 22% excluding political. And for DV+, we reported $365 million for the year, growth of 5% or 8% ex political. We processed total ad spend approaching $7 billion. Adjusted EBITDA for the full year 2025 was $232 million, an increase of 18% from 2024, resulting in an adjusted EBITDA margin for the year of 34.7%. Total revenue for Q4 was $205 million, up 6% from Q4 2024. Contribution ex-TAC was $195 million, up 8%, within our guidance range and up 16%, excluding political. CTV contribution ex-TAC was $94 million, up 20% year-over-year or 32% excluding political, significantly exceeding the top end of our guidance range. DV+ contribution ex-TAC was $101 million, a decrease of 1% or an increase of 4%, excluding political from the fourth quarter last year. This result was below our guidance range. As Michael noted, we saw a growing spend shift from DV+ to CTV. Our contribution ex-TAC mix for Q4 was 48% CTV, 37% mobile and 15% desktop. From a vertical perspective, retail, health and fitness and financial were the strongest performing categories, while automotive was again one of our weakest performing categories. In DV+, we saw additional weakness in technology and food and beverage. Total operating expenses, which includes cost of revenue, were $153 million, a slight decrease from $154 million for the same period last year. Adjusted EBITDA operating expense for the fourth quarter was $111 million, $1 million better than the low end of our guidance range and an increase from $104 million in the same period last year. The increase was primarily driven by higher cloud and data center costs and higher personnel-related expenses supporting the growth of our CTV business and investment in CTV-related features and functionality and was better than expected due to lower personnel expenses, including slower-than-anticipated hiring. Our net income was $123 million for the quarter compared to net income of $36 million for the fourth quarter of 2024. This was driven by a $90 million onetime tax benefit resulting from the release of the valuation allowance on our deferred tax assets. As background to the release, we met the specific accounting criteria of 12 quarters of cumulative positive pretax income and the necessary expectations for future profitability. Adjusted EBITDA grew 9% year-over-year to $84 million, reflecting a margin of 43%. As a reminder, we calculate adjusted EBITDA margin as a percentage of contribution ex-TAC. GAAP earnings per diluted share were $0.80 for the fourth quarter of 2025 compared to $0.24 for the fourth quarter of 2024. Non-GAAP earnings per share for the fourth quarter of 2025 was $0.34 compared to $0.34 last year. Reconciliations to non-GAAP income and non-GAAP earnings per share are included with our Q4 results press release. Our cash balance at the end of Q4 was $553 million, an increase from $482 million at the end of the third quarter. Operating cash flow, which we define as adjusted EBITDA less CapEx, was $61 million. Capital expenditures, including both purchases of property and equipment and capitalized internal use software development costs were $23 million, consistent with the expectations we discussed last quarter. Debt interest expense for the quarter was $4 million. Net leverage for the quarter was 0, down from 0.3x at the end of Q3. As a reminder, the remaining $205 million principal balance of our convertible notes is a current liability on the balance sheet as the notes mature this quarter. We plan to pay off the converts at maturity with cash on hand next month. As you know, $400 million in converts were part of our original financing for the SpotX acquisition and when all is said and done, provided capital at an extremely favorable rate. During 2025, we repurchased or withheld over 5.2 million shares for approximately $79 million. We're also announcing a new 2-year share repurchase plan today, which authorizes the repurchase of common stock with a value up to $200 million. Following the repayment of our convert, we plan to be more aggressive with share repurchases given our future expected significant and consistent free cash flow generation. Our capital allocation strategy will target approximately 50% of free cash flow generation to be returned to shareholders via share repurchases over time, provided our share price provides a reasonable return compared to our estimated intrinsic value. Note also that M&A opportunities may arise in the future that might change our perspective. I will now share our expectations for the first quarter of 2026 and our current thoughts for the full year. For the first quarter, we expect contribution ex-TAC to be in the range of $157 million to $161 million, which represents growth of 8% to 10%. Contribution ex-TAC attributable to CTV to be in the range of $81 million to $83 million, which represents growth of 28% to 31%, surpassing 50% of total contribution ex-TAC for the first time. DV+ contribution ex-TAC to be in the range of $76 million to $78 million, which represents a decline of 6% to 8%. We anticipate adjusted EBITDA operating expenses to be approximately $122 million, which implies adjusted EBITDA margin of over 23%. As a reminder, the first quarter is always seasonally our lowest margin quarter. For the full year 2026, we anticipate total contribution ex-TAC growth to be at least 11%, adjusted EBITDA percentage growth in the mid-teens, adjusted EBITDA margin greater than 35% free cash flow growth greater than 30% and CapEx of approximately $60 million, a reduction from prior year. I want to point out that our estimates do not include any potential market share gains as a result of remedies from the Google AdTech trial. And finally, regarding our tax position, we would not expect to have any significant increases in cash taxes for the next few years. We are proud of our team's execution and our resulting fourth quarter and full year results. We believe we are very well positioned to continue winning and thriving with the changes that are taking place in the programmatic ecosystem. We continue testing and implementing the right AI capabilities to build on Magnite's industry-leading platform and making strategic investments to improve our efficiencies. With that, let's open the line for Q&A. Operator: [Operator Instructions] Our first question comes from Laura Martin of Needham. Laura Martin: Congratulations, good numbers. I wanted to talk about the breadth of CTV and how much of that is sustainable. So ex political, CTV up 32% in growth. Can you break down how much of that is SMBs? How much is by vertical? You named a lot of really big studio companies that are growing. I'm really interested in what's growing and whether you see that continuing? That's my first question. Michael Barrett: Yes. Laura, great question. I'll handle it first and maybe David will dive in with some specifics. We really haven't gotten into breaking it out. Lord knows we have hard enough time figuring out TV and CTV buckets, let alone getting a little bit more specific on the CTV. I will say, and you did see the announcement from MNTN recently about their direct connection into us as their first platform to do so. So that's a very encouraging sign of a high-growth area of performance-oriented SMBs. But we are seeing just across the board. You don't grow at 32% and not have everything firing at all cylinders. So big branded advertisers that used to advertise in TV, we had cited a big shift from performance advertisers that were digital online video, digital display shifting into CTV throughout all of our channel checks, the same note was sung by every major agency brand, marketer, the appeal of CTV, the pricing, the performance metrics of it, it's really just increasing in velocity of appeal. So we're just seeing it across the board, Laura. Laura Martin: Okay. Great. And then my second question is about risk. It feels like, Michael, you're moving more towards an infrastructure. You have a lot of really specific deep infrastructure integrations into some of these large CTV performers. Do you get the sense that elongating your client relationship time, increasing your lifetime value and lowering the risk of investing in Magnite as a stock? Michael Barrett: Well, no question. You hit the nail on the head, and I think we tried to harp on that in the call in the script. We look so different in CTV than we do perhaps even in DV+ and display. We are highly differentiated. We have a leading programmatic ad server that's coupled with the leading SSP platform. We're building more and more tools. We have a buying tool, ClearLine that's integrated across the board. So we look quite different and unique and with an enjoyable moat that we built in CTV, which is, as you know, the fastest-growing segment in the digital advertising sector. Operator: Our next question comes from Dan Kurnos of Benchmark StoneX. Daniel Kurnos: Michael, let me just stick with the CTV question for a second. Is there any way to kind of parse out the mix shift to CTV versus your organic partner growth like what you had before? Because there's a clear acceleration, I think, on both fronts. And how much of that is coming from live events? Michael Barrett: Yes. So live is an increasing contributor each quarter. So that's definitely a good guide for us. As it relates to parsing it out. David, do you want to say -- kind of the dollar shift that we saw from DV+ into CTV and that to give you some idea of the baseline growth level versus the accelerated? David Day: Yes. I guess -- I mean, if you just look at the expectations versus consensus for like Q1, for example, you've got DV+ $8 million or $9 million lower and CTV higher by that same amount. But I'm not sure you can differentiate spend shift versus organic because the spend shift is rolling into our organic numbers and is rolling through all of those same -- obviously, all of those same partners. But it is a very dramatic shift, right? Go ahead. Michael Barrett: Yes. No. So I was saying if you looked at it -- let's just say if the expected performance is 20% and it winds up being 32%, it's pretty easy to parse it out as to what the accelerant was from a spend shift from platform to platform. Daniel Kurnos: Yes. No, that's helpful color. I mean I'm just trying to make sure to flag, I guess, the underlying is still growing ex the shift. So I just want to [indiscernible]. Michael Barrett: Very much so. Yes, very much so. Just think a little bit -- the thing here from a larger perspective from what we talk about is those very marketers that are making up a number, say someone spends $100 less, they're just spending it differently, allocating it differently. And good news for us are allocating into the faster-growing platform that you certainly look ahead 3 to 5 years from a CAGR standpoint, it's going to be super impressive. So number one, the allocation is happening on our platform. So we're catching dollar for dollar, and we're still having that organic growth on the CTV side that's far exceeding the marketplace. So both very positives for us. David Day: Yes. And just to layer on I say layer on to Laura's point, it's derisking. So $1 of CTV revenue and growth is more protectable and sustainable in some ways than DV+, which just can be a little bit more volatile. And so we love where this is heading ultimately. Daniel Kurnos: And not to add, David, I mean, I guess the next question I'd ask is like, I mean, margins are still improving, but there's always been a question around take rate and economics and you're still driving margins higher. So some of that's been your cost to take out, cost to serve initiatives, but just maybe any comments you guys have on that would be great. David Day: Yes. And in fact, and we talked about this a little bit last -- I think, the last quarter or 2, because of the opportunity that we have in CTV, we've actually made some additional internal investments into CTV, so into engineering, into accelerating some of our feature and functionality in the CTV business. And so all things being equal, our margin expansion could have been even greater in 2026. But with the -- so we'll still expand margins. But with this opportunity in CTV, it's sort of a little bit of a onetime shot on the headcount and continuing to make the improvements on our tech stack infrastructure, as you mentioned, getting better leverage out of that to really set us up for more rapidly expanding margin in future years. Operator: Our next question comes from Shyam Patil of Susquehanna. Shyam Patil: I had a couple of questions. I guess, maybe following along the lines of the previous 2 as well. What do you guys think is the right way to think about CTV growth and then DV+ growth kind of going forward? I know you gave kind of 1Q outlook and kind of high level for the year for overall. But what's -- if we kind of look at the 2 businesses, like what's the right way to think about the growth rate kind of going forward on a sustainable basis? I know, Michael, you said CTV is a double-digit grower. And obviously, we've seen that strong growth rate. And then just a follow-up just on OpenPath, can you just maybe talk about that a little bit, just kind of the impact that you had seen? It seems like that situation might be behind us now. Maybe if you could just talk about that and if you think that, that's been resolved and kind of behind us or if there's potentially anything to be aware of on that front? Michael Barrett: Yes, sure. Great questions, and I'll let David jump in on some of it. Yes, certainly, if you look at CTV, the market from an estimate standpoint has always been probably lagging the actual growth rates. But I think some of the latest numbers out there are in the mid- to low teens and certainly at 32%, that's far exceeding market growth. And that's where we expect to be given our market position. So I think a growth rate in the high teens, 20s is very sustainable given the secular shift that's going on. And as it relates to DV+, I think it's fair to remind everyone the diverse portfolio that DV+ is. Certainly, there's desktop and mobile web, and that is definitely under pressure. You have all sorts of things happening there and the big budget shifts that we talked about that we caught on the CTV side were essentially coming from that bucket. But you also have emerging categories like audio, digital out-of-home, mobile app, which you look at the numbers at levels putting up mobile app for a long time was kind of out of our reach because the brand advertising that we source really couldn't compete with the app install. And now it's much -- it's been on a better level playing field than it ever has. And so we view that as a big opportunity for us. We're deploying our SDK. We're partnering with AppLovin. We're partnering with Unity. We're partnering with all the big players, and we think that, that's a big growth area for us. So where does that net out? It's hard to say. But I think the encouraging thing is from a growth profile for Magnite, any weakness that we are seeing in DV+ is manifesting itself in the CTV bucket. So again, if the budget is $100, we're catching the $100. It's just being allocated differently by the marketer. So it's a little hard to put a growth rate on DV+. But if you parse it all out, there's going to be growers like mobile app that's going to be in the teens, and there's going to be desktop mobile web that's probably flattish to slightly down, if that's helpful. And you would also ask about OpenPath. Yes, as you noted, OpenPath has been around for years. The reason why it became a subject of focus last quarter was the Kokai deployment and OpenPath being a default we have painfully walked through in the Q&As in the script about our efforts to turn that around with our biggest buyers. By most degrees, we've been successful in that. And the longer tail of OpenPath users, those smaller advertisers, smaller agencies, we had always said that, that was going to be more of a street fight. So OpenPath has played out exactly as we thought it would. It's a modest impact in terms of the DV+ performance has no impact on the CTV performance. And everything that we said we were going to do, we did. And I think OpenPath has been with us for years and will continue to be with us for years. I think if anything, we've proven that it's not an existential threat to the business that we have embedded ourselves with our largest buyers to the degree that we become invaluable to them to execute their programmatic businesses. Operator: Our next question comes from Jason Kreyer of Craig-Hallum. Jason Kreyer: So Michael, you talked about running volumes through AdCP. Just curious what you think the evolution is on that front? And what is the client interest in running volumes through AI agents? Michael Barrett: Yes. So interest is very high. Reality, very little and budgets are being allocated to it. I think to frame it correctly is think of this as a massive remodeling of your house, but we're not knocking it down and building a brand-new house. So I think that it's all going to sit on top of the existing infrastructure in the industry. Hundreds of millions of dollars have been invested by Magnite alone to make programmatic work. And what AI agents are going to do is make it work better. It's going to alleviate menial tasks from the traders, the planners, the ops people, and it's going to put more working dollars to play, which is awesome. And we feel it's all going to flow through our pipes. And so I think we're doing the exact appropriate amount of investment in it and we are ready to catch the dollars when they come scaled, but that is not going to happen any coming quarter. So interest high, execution actually putting your money where your mouth is, is not high, but we believe we're in a great position technically and from a market position to take advantage of this next wave of innovation. Jason Kreyer: Is that more likely to occur on the DV+ side or on the CTV side? Michael Barrett: Well, I think across the board, I mean, the world I described, there's a lot of heavy lifting that goes on in terms of planning campaigns, introducing opportunities for publishers, publishers, introducing opportunities for buyers, making sure it works. Line item broken here, this deal doesn't work here, why doesn't it work? 20 hours of troubleshooting to figure out and then half the budget is already not been spent and you're wasting time. And so I think there's all sorts of efficiencies that are in play across both platforms with an agentic approach as the UI level and then the plumbing and the infrastructure powered the way it used to be, the way Magnite does it. Jason Kreyer: A quick follow-up for David. The EBITDA OpEx is a pretty big jump from Q4 to Q1. Just curious if you can maybe talk about what investments are embedded in there? David Day: Yes. And if you recall, we kind of have that jump literally every year. You have personnel raises effective January 1 that kick into place. You also have employer taxes that kick into place and some of those are attached to some annual grant vesting in that Q1. We have an off-site that occurs in the first quarter of the year. Certain years, it's full company and certain years, it's the commercial team. And so you just got a number of those things. And then the other component there would be some of the investment that I mentioned earlier, which is engineering and product talent for supporting the pace of development and velocity in our CTV business. And so those kind of make up that increase. Operator: Our next question comes from Shweta Khajuria of Wolfe Research. Shweta Khajuria: Okay. Let me try 2, please. I have a follow-up on the prior one. So Michael, if you could please explain the context protocol, like how it works, what the real value proposition is and what your differentiated advantage is there? And as it relates to CloudX, is that a competitive product? Is that even related? How should we think about how all this evolves in an agentic world? And what the impact will eventually be? Is it that you're going to get greater share of ad dollars? Is it that the TAM will expand? Like how should we think about the impact and how it works? And then the second question I have is just on the AdTech case, you touched on it in your prepared remarks. What is the base case expectation at this point? What should investors be expecting in terms of a realistic outcome? And if you have any sense on the time line, that would be great, too. Michael Barrett: Yes, sure, Shweta. So yes, so AdCP is kind of -- it's a protocol that allows agents to talk to agents. And so there's nothing particularly -- there's nothing particularly unique about that. It's making sure your program can be agentic. It's making sure your platform can have agents talk to each other. So I think that what we were -- we -- given the size of our platform and the appeal of the types of publishers we have, we are approached by Scope3 first to execute that. So I think it's illustrative of the fact that we're prepared for -- to move beyond the API world and get into the MCP, AdCP world where agents are talking to agents and need a point of connection as opposed to APIs where it was more people connecting to machines. So I think that we feel very good about that. Where I think our point of differentiation will lie not just in our readiness, but I think in this the vast amount of data that we sit on in the years and years of the data that we have, when we can help our publishers and help our buyers from an inventory discovery, price discovery to maximize yield for publishers from mediation, I think that, that's where the magic really happens. So anyone can build an agent, the question is what data is that agent working on. And I think we feel that we sit on this repository of data across tens of thousands of publishers, many, many years of data worth to be able to inform decisions. We've also organized the taxonomy of all the publishers on our platform so that if someone is looking for sports enthusiasts or auto enthusiasts that the same protocol exists across all publishers, so we can scale these what would be very niche buys across agents. So feeling very good about that. You also asked about CloudX. Obviously, that's more germane in the mobile area, but we're integrated into CloudX right now, which is a newer mediation platform for mobile app. So we're excited. We know the guys well. I think it's just another opportunity to gain access to a super fast-growing area of the DV+ business, which is app, and we are working closely with them. So it's a good thing for us, not kind of a disintermediation by any stretch. And lastly, in the AdTech case, very hard to pick timing. The expectation is it's any week now, but that could be delayed a little bit longer as it relates to predicted outcome. Again, that's a little difficult. I think given the types of conversations that were had in the final prejudgment hearing between Google and the DOJ, it certainly seemed that given the questions from Judge Brinkema that structural was probably not going to be the likely outcome that behavioral remedies were. I think some people misinterpret that as that's not a good guy for Magnite or their peers, which we couldn't disagree with more violently. We were always expecting behavioral, and we thought that as long as through behavioral or structural, it really didn't matter to us as long as the playing field was more level that we would be a huge beneficiary of that, and we still believe that to this day. Operator: Our next question comes from Matt Swanson of RBC Capital Markets. Simran Biswal: This is Simran on for Matt Swanson. Congrats on the quarter. It seems like you guys have hit this tipping point in CTV, which has been great to see. What would you think from an ecosystem standpoint has changed? And how much would you attribute to the secular market shift versus your growing company-specific moat? Michael Barrett: Yes. Thanks for the question. I think David touched upon that way, gave the specifics about -- perhaps it was -- the $9 million came from the DV+ platform, and that was placed on -- the expected $9 million that we thought were going to be spent on DV+ was now spent on CTV. But that's on top of an already high growing base of organic spend there. So I think no matter how you look at it, you take the $9 million off, you put it back on DV+, you're still looking at a 20-plus percent grower, which is significantly above market average. So I think that you're right about the tipping point. It's just -- it's being accelerated by a spend shift from one platform to the other, but it's inherently a much higher growing platform to begin with. And as we pointed out a couple of times, with a much, much bigger moat for us. It's an area where we're very differentiated, deep integrations with all the top streamers, ad server capabilities quite different from the DV+ market. Simran Biswal: Got it. That makes sense. And then on the progress with these partnerships and integrations, could you double-click on the ramp of some of these and maybe touch on Netflix specifically or any other partners that have progressed particularly well? Michael Barrett: Yes. So particularly in the streaming area, when we do our script and we talk about the largest -- the most impactful clients of that quarter, we talked LG Ads, Netflix, Paramount, Roku, VIZIO, Walmart, Warner Bros. Discovery. So really across the board, we're seeing. In terms of the commerce partner, in the DV+ part of the script that we talked about, you see United Airlines, which has taken a while to ramp, but it's now contributing well. PayPal, Pinterest, Best Buy has taken a while, but all these have different flavors of ramp to them. if someone is in the ad business to begin with, having them allow programmatic into their world that tends to impact the revenue line quicker than if, say, you're in United Airlines, you've never been in the advertising business and you're starting from scratch, that's a longer gestation period. So they each have their different flavors. But from time to time, we'll cite the ones that are active and contributing, and that was the list there. Operator: Our next question comes from Barton Crockett of Rosenblatt. Barton Crockett: I wanted to ask about your kind of view of the future with AI, given that that's what's really driving all the stocks. And I know there's been some questions on it, but I want to see if you can give us your view of how this evolves in this way, which is, do you see AI as a force for compression of take rates throughout the kind of ad tech sector generally? Do you see this evolving to a circumstance where perhaps LLMs are a front end for ad plans and then SSPs are kind of a processing agent, so maybe DSPs get squeezed. Or do you think that DSPs and SSPs are main kind of players and maybe the smaller competitors in both sectors get squeezed or any other kind of circumstance? How do you see this evolving in terms of players and take rates? Michael Barrett: Yes. That's a great question. I think that -- I think if you look at an agentic world and you see where the value is created, there's still a tremendous amount of value being created by Magnite, not just in the plumbing piece of it, but in educating these seller agents with the data that we have to make informed decisions on pricing to mediate the buyer agents that come in. I think what you really generally see, again, is a renovation of this house, not a leveling of it, and it's a much more efficient world where folks are being freed up to do much more sophisticated tasks as opposed to this back and forth of campaign management, fixing broken line items, all that kind of stuff. So I think that what you'll see is far more media going to work. I think you'll see certain people in between the agents become less valuable. But I think that if you look at the top DSPs and what they have built and the rails that they run on and the top SSPs like a Magnite and what we've built that the value creation is the same, if not greater. So I don't necessarily see a take rate impact in the future -- an agentic future for a Magnite. Barton Crockett: Okay. All right. Now the other topic I was curious about on antitrust there's been essentially an adoption of behavioral remedies in Europe with Google essentially just kind of moving to adopt some of the key things that could be coming here. Do you -- would you agree that that's kind of a fair description? And if so, are you seeing any impact in terms of share shift in Europe from what Google has been doing over there? Michael Barrett: Yes, great question. I don't know if that's -- it's astute observation, but I'm not so sure it's the exact remedies behaviorally that is being sought here in the states. So let's just say it's a portion of that package, the lowest hanging fruit of the package, and it's also the one that requires kind of the most lift on the publisher side. So what we have seen is the publishers that actually readjust the rankings of the exchanges and readjust the price floors that there is improvement, but that's a process, right? And this came down in Q4. So no one really starts to monkey with things during Q4, just given how important the quarter is. So we'll see that play out. But I think it's just kind of scratches the surface of what the DOJ is looking for here and what Judge Brinkema has been alluding to. So I think it's not apples-to-apples to compare Europe to the United States. Operator: [Operator Instructions] Our next question comes from Robert Coolbrith of Evercore ISI. Robert Coolbrith: Just to go back to the CTV strength. Any key unlocks, whether it's around demand partners, supply partners or maybe things that maybe had happened earlier in the year where the momentum just sort of built up in Q4 and surpassed your expectations. Just wondering if we could maybe take another crack at that. And then secondly, on the agentic piece, is there anything that can come into the market incrementally in terms of volumes that remain sort of offline negotiated, inserted via IO, whether that's through some sort of electronic data interchange or fax or whatever, things that can come into the market incrementally, the net new to programmatic from the sort of agentic shifts in the market? Michael Barrett: Great. Yes, I'll take the last first. Certainly, I think that, that is an area of hope, right? There is still a tremendous amount of dollars that are frozen in the linear world that are insanely rate sensitive. So it just -- it's more of an automation as opposed to agentic. But if you can build tools that allow at a very efficient pricing, allow those dollars to be transacted programmatically that is something we've been trying to affect clear line for a couple of years now. So I think if you can make it even easier and add an agentic piece to it, that could make it that much easier to have it talk directly to the ad server, have it inserted into the ad server. I think that, that's something that is of appeal that it's not just all biddable. It's not just programmatic that is taking insertion orders and just taking the people out of it and making it automated. So we have high hopes for that occurring, and I think it will be very beneficial to the Magnite platform. And I'm sorry, Robert, the first question again was? Robert Coolbrith: Just want to take another crack at the CTV question about the inflection point. Was there any demand partner unlock, supply partner unlock that drove the variance versus your expectations for the quarter? Anything that may have happened in prior quarters that in retrospect, when you look at it, you're like, okay, that unlocked in Q2, but it ramped in a big way in Q4 beyond our expectations. Just wanted to get a sense of unlock or anything that was sort of beyond [indiscernible]. Michael Barrett: I would say broad-based across the board. Obviously, certain DSPs have become stronger. You look at the strength of an Amazon in the space, that's been impressive. Certainly, MNTN, we've talked about them in the partnership that they've delivered. But I think across the board, you've seen strength in DSPs. I think one of the things that could be the unlock, Robert, is the upfront negotiations. So they went stronger than anticipated. But the big question mark was how much was streaming going to be a part of it because all these guys, the big ones still run linear businesses. And I think what we're finding out is streaming played a huge role in the upfront and you're starting to see that come to fruition because those dollars don't get spent until the second half of the year into the first quarter of the year. So I think that, combined with some of the strengths of particular partners has really led to outside growth in addition to the platform switch from the DV+ spending in the open web and now spending in CTV. You add those all together and you get turbocharged growth rates. Operator: Our next question comes from Eric Martinuzzi of Lake Street. Eric Martinuzzi: Regarding the CTV outperformance, I think your comment on verticals was that there was retail strength, health and fitness, financial. And then you talked about weakness in auto tech and I can't recall the third one. But there was -- just wondering if your -- the guide has any change in the assumptions for those verticals. Is it status quo maintained? Or is there an expectation of recovery in some of the weaker verticals? Michael Barrett: Yes. I think yes, I think status quo is sort of what we've been seeing. So I would say the trends that we saw latter half of November and December are kind of continuing across the board into this first quarter. So no significant changes on those trends. Operator: Our next question comes from Omar Dessouky of Bank of America. Omar Dessouky: So Netflix, I think, recently said that they expect their ad business to double in size in 2026. So I wanted to ask you how you're thinking about your contribution from Netflix as you progress through 2026 and how that might affect the overall take rate of your business? And then I have a follow-up. Michael Barrett: Sure. Yes. I think that Netflix has been a terrific partner. We anticipated them to exit this year as one of our top, if not top on a run rate basis partner, and that certainly has come to fruition. And so we are anticipating a bigger year for them this year given their aspirations in the space. And I don't -- from a concentration standpoint, the take rate varies, obviously, on the services that we provide. In some markets, we do more than others. And so therefore, I think from a blended standpoint, take rate isn't going to impact the overall up or down. Omar Dessouky: Okay. On Netflix in particular, so how do we think about CTV growth as we kind of progress through 2026, right? It looks like you had a nice acceleration for the last couple of quarters. Should we kind of think of an acceleration for the next few quarters as well as you try to upsell your products, as Netflix gets bigger? Is that kind of the outlook for how you expect the year to pan out? Michael Barrett: Do you want to grab that, David? David Day: Yes, sorry. Just clarify when you say CPV growth? Omar Dessouky: Yes. So year-on-year. So if you look at the year-on-year growth in... David Day: No, on CPV -- I mean, we have CPM's take rate. I just want to make sure we're talking the same language. Omar Dessouky: Growth in contribution ex-TAC. David Day: Okay. All right. Yes, I think -- I mean, I think we're still -- so there's -- so I think what you're getting at is sort of mix changes overall. And I think in our take rates. And so I think you're still -- I think our take rates on a blended mixed basis in CTV have shallowed out. So they're becoming fairly stable. But there still is a significant influx of what I would call premium inventory at our lower take rate tiers. And so I would expect -- and we're having the contribution ex-TAC growth rates that we are even at those lower levels. So I would expect that bottoming out to sort of -- I think that continues. And then I think just from a mix perspective, we have opportunity to grow those take rates in the coming time. I wouldn't see -- I don't see a huge inflection an increase in that average take rate in CTV in the near term, but we're building the foundation and the opportunity to provide those additional services on the demand side and so forth where we do make a slightly higher take rate as we go forward. Operator: Our next question comes from Zach Cummins of B. Riley Securities. Zach Cummins: I'll keep to one question just given the extent of the call. But David or maybe Michael could address on this. Just curious of the strength you've been seeing with agencies, particularly in agency marketplaces. Can you talk about the opportunity that you have there, specifically as maybe more ClearLine adoption with some of these key agency partners? Michael Barrett: Yes, Zach, we're very enthused by the adoption and the volume. These things take a while to get going. There's a bit of a sell-in process from agency to their clients. And so it's kind of a crawl walk run. And the ones that have been up the longest are at run right now and the others are in various stages. So I think that super encouraged by the model, super encouraged by the contribution for the company and I think the stickiness is what really matters that when they build their business with Magnite as the backbone of their programmatic marketplaces, we become more than just a vendor or a partner that can be put in competition every quarter. We become much more of a partner that's a much more strategic longer-term partner, which isn't the easiest thing to do, particularly in the DV+ world. So they've been essential to our growth and the success of ClearLine. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Michael Barrett for any closing remarks. Michael Barrett: Thank you, operator. Before we close, I want to thank our investors and our team. To our shareholders, thank you for your continued confidence and long-term partnership. We remain focused on disciplined execution and building durable value. To our employees around the world, thank you. CTV becoming the majority of our business, the acceleration across streaming and our early leadership in AI-driven transactions are direct results of your innovation and commitment. The shift towards streaming and automation is structural and still in its early innings as ad dollars move into CTV, they move into an environment where Magnite has scale, deep integrations and meaningful market share. We believe we are building foundational infrastructure for the next era of advertising, and we are confident of our best days are ahead. Thank you for joining us. We look forward to updating you next quarter. I'll turn it back over to Nick to cover our upcoming marketing events. I'll hand those to [indiscernible]. Nick Kormeluk: Thank you, Michael. Yes. Sorry. So upcoming schedules, we've got Susquehanna Conference now virtually tomorrow. We've got meetings in San Francisco with Needham on March 5, Sydney roadshow on March 11, meetings in Boston with Bank of America on March 17, an investor lunch with Susquehanna on March 19, Kansas City with RBC on March 24, Dallas and Houston with Stephens on the 25th and 26th of March and then San Diego and L.A. with Wolfe on the 30th and 31st. Thanks again all for joining. Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Ladies and gentlemen, welcome to the Erste Group Full Year 2025 Results Conference Call. I'm Sergen, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Thomas Sommerauer, Head of Group Investor Relations. Please go ahead, sir. Thomas Sommerauer: Thank you, Sergen, and also a very warm welcome to everybody who is listening in to our full year conference call 2025. We follow our usual procedure. That means that Peter Bosek, our Chief Executive Officer; Stefan Dorfler, our Chief Financial Officer; and Alexandra Habeler-Drabek, Chief Risk Officer of Erste Group, will lead you through a brief presentation, highlighting the main achievements, especially the financial achievements of 2025 and in particular, also of the fourth quarter of 2025. And before handing over to Peter, my usual reminder on the disclaimer of forward-looking statements, of which there will be quite a few as usual. And with this, I hand over to Peter for the presentation. Thank you. Peter Bosek: Good morning, ladies and gentlemen. Welcome again to our full year 2025 results and at the same time, fourth quarter 2025 conference call. I'm on Page 4 now. 2025 was an exceptionally successful year for Erste Group. A lot of good things happen to the bank and a lot of good things happen to shareholders of Erste Group. But allow me to briefly dive back to a year ago, the discussion back then and to a certain extent still today were all about share buybacks and dividends and somewhat subdued business outlook for 2025 on the back of rate cuts in the Euro zone and a mixed macro-outlook for Europe. What a difference the year makes. We at Erste found a better way to solve the excess capital challenge. We invested in growth, in Polish growth. And with this, we have substantially expanded our growth footprint in the fastest-growing region of Europe. In the meantime, the acquisition of a 49% controlling stake in what soon will become Erste Bank Polska has closed on time and from the first quarter of 2026 will be fully consolidated in our accounts. But this is just half of the story. The other half is about our strong performance in 2025. Quarter-by-quarter, growth momentum improved. This enabled us to repeatedly upgrade our financial outlook and, in the end, even outperformed our upgraded guidance. We are particularly pleased with revenue momentum, not only in terms of quantity, but more importantly, in terms of quality because quality brings it with sustainability. Translated into numbers, this means we posted record revenues in 2025, driven by our core income lines, net interest income and net fee income, and we closed the year in style with another set of quarterly records for these items. We are also on track in terms of costs. We were running somewhat above our 5% target in the first 3 quarters, but thanks to the cooling of cost inflation and adjusted for the booking of some integration costs for our Polish acquisition in the final quarter of the year, we managed to deliver on our guidance. Risk costs were only marginally higher in 2025 than in the previous year, but fully in line with our upgraded guidance with CEE shining again in terms of asset quality. Clearly, other result was special in 2025 as well as in the fourth quarter, flattering our reported net profit despite hefty banking taxes included in this line item. To be concrete, other result in 2025 benefited from net positive one-offs in the amount of about EUR 270 million pretax and some EUR 250 million post-tax. Stefan will give you the details later. Accordingly, underlying net profit would have been more in the order of EUR 3.3 billion rather than reported EUR 3.5 billion. Other way, no bad figures and comfortably historical records. And clearly very helpful in delivering capital gen beyond anybody's expectation, including our own. With a CET1 of 19.3% at year-end 2025, we are well positioned for first-time consolidation of Erste Bank Polska and arguably beyond. I therefore think it's not over to say that we got most of the decisions right last year and at the same time, set a clear ambition for 2026. It's our firm intention to stay focused and do the same in 2026. Ladies and gentlemen, throughout this presentation, we will make reference to our expectations for the business of Erste Group, including Erste Bank Polska in order to give you the best possible idea of our new Erste will look like. We will also detail already on the extraordinary items that come with first-time consolidation to almost all of which tax and minority fits fully. And in order to allow for a better like-for-like comparison, we will provide an outlook for Erste excluding Erste Bank Polska profit guidance for 2026 that we already repeatedly communicated, we hereby confirm that's a return on tangible equity of about 19% and a year-on-year increase in earnings per share more than 20%, taking our adjusted 2025 net profit of EUR 3.3 billion as a starting base and adjusting expected 2026 net profit for extraordinary items. This should translate into a net profit of somewhat above EUR 4 billion on a clean basis in 2026 as opposed to somewhat below EUR 4 billion on a reported basis. With this, let's now move to Page 5 of our key P&L performance benchmarks. Obviously, this very much reflects what I just talked about with a stable margin backdrop contributed quarterly NII record would have been difficult to achieve. And without improving cost dynamics, it would not have been possible to report a cost-income ratio of below 48%. We delivered on both fronts. Strong margins were not only supported by good balance in loan growth and healthy competitive environment, but importantly, by strong deposit pricing power, particularly in Austria and improving deposit mix overall. Risk costs at 21 basis points were in line with our improved full year guidance, as already mentioned. Trends very pretty much unchanged in this respect with continued low risk cost in the CEE region, while Austria saw most of the allocations in the final quarter of the year at a slightly lower level than a year ago. If one adds banking level reported under other operating result as shown in the lower left-hand chart with those reported under taxes, then the banking reached a new all-time high of almost EUR 440 million in 2025. Irrespective of this earnings per share adjusted for the AT1 dividend climbed to a record level of EUR 8.24 per share. And finally, return on tangible equity increased to 16.6% from 16.3% a year ago, quite a good achievement, bearing in mind the strong capital build through the year. When we look at the development of balance sheet on Page 6, we see a picture that is evidence of the strength of the business model. The business model is geared to our superior organic growth in customer business, a perfect case in point is the performance in 2025. Both on the asset and liability side, balance sheet growth can be explained by the expansion in customer business. Customer loans grew by almost EUR 14 billion or 6.4% in 2025, while customer deposits were up by more than EUR 11 billion or 4.7%. And in context of both, we can without exaggeration talk about high-quality growth. Loan growth was driven by the retail business in CEE on the back of a solid demand for housing finance, while deposit growth was also better than average in the retail and SME business. Austria, and in particular, the savings banks made a solid contribution to loan growth, while deposit growth was solid in both Austrian retail and SME segments. With volume momentum being good across the franchise in 2025, we see no reason why 2026 should turn out any worse in 2025. Consequently, we target organic loan growth of higher than 5% in 2026. That is for the business of Erste excluding Erste Bank Polska. Including Erste Bank Polska, we also expect an underlying growth rate in a similar ballpark. So, by the end of 2026, loan stock for the combined entity should be higher than EUR 285 billion. The key highlight when looking at our balance sheet metrics on Slide 7 are our regulatory capital ratios. Having said this, the other parameters are also excellent. We can again report an ideal loan-to-deposit ratio of 91.7. The growth of customer loans and customer deposits show good momentum. And finally, asset quality also reported an improvement with the NPL ratio improving both quarter-on-quarter as well as year-on-year. Generally, the asset quality situation remained very good across the CEE region and importantly stable in our Austrian. As usual, Alexandra will provide further detail on credit risk later. Liquidity and leverage ratios were as usual. But now to our capital ratios. Year-on-year, we recorded a massive rise in CET1 ratio of more than 400 basis points to 19.3%. Stefan will lead us later. But what is important to me as a CEO is that this puts us in a perfect position for first-time consolidation of Erste Bank Polska. A year ago, when we promised to the regulator that despite the 460 basis point CET1 ratio drawdown resulting from the Polish acquisition, we will always maintain a CET1 ratio of higher than 13.5%, and we aim to reach our new target CET1 ratio of 14.25% during the course of 2026, well above 13.5% and 14.5% Tier 1 ratio will certainly be the first consolidated Erste Bank Polska in the first quarter of 2026. Let's now briefly take the macroeconomic environment and particularly the outlook for 2026 on Slide 9. Our economies predict better economic growth for 6 out of our 8 core markets than we saw in 2025. And in the 2 markets for which they project consolidation, this is expected to happen at very healthy levels of between 2.5% to 3%. I'm specifically talking about the Czech Republic and Croatia. The new country in our portfolio, Poland will provide further growth in with real GDP growth estimated at 4% for 2026. Good news are also coming out of Austria, where the past 3 years, economic growth was almost nonexistent. For 2026, a modest recovery is predicted. In this forecast, we have not modeled any material tailwind from Germany fiscal expansion as this seems to take longer than initially hoped for. All in all, this is a very good starting point for the banking business and with further ground for profitable loan growth. The other macro forecasts are equally encouraging. Inflation is forecasted to retreat in most of our markets, while labor markets are expected to stay strong. When it comes to external fiscal balance, the picture is mixed as in many other places around the world. I'm tempted to say Austria, Czech Republic, Poland and Hungary usually enjoy neutral or positive current account balances while the Czech Republic is preventing a poster child of fiscal prudence. As far as the interest rate outlook is concerned, we assume only minor cuts in countries like Poland, Hungary, Romania and Serbia, while rates in the Eurozone are expected to stay flat. This as well will support profitable banking business in 2026. Talking about profitable banking business, let me share with you a couple of performance highlights of the business in 2025. To cut the long story short, retail business was a clear growth driver in the past year. I'm on Page 10 now. Retail loans were up by 8.1% to EUR 115.4 billion. Growth was reasonably balanced between housing and consumer loans and the quality of the retail book remained very good. Retail deposits also showed good growth dynamics with retail deposits climbing by almost EUR 5 billion to EUR 173 billion in the final quarter of 2025. Retail current account deposits grew the fastest quarter-on-quarter. Year-on-year, current account and saving deposits were up by 7% to 8% each, while term deposits declined by almost 6%. We also saw continued growth in off-balance sheet customer funds, security savings plans that enable customers to build long-term rates in an easy to manage digital format approached the EUR 2 million mark at the end of the year and generated gross sales in excess of EUR 1.5 billion in 2025. George, our digital platform for retail clients continued on its growth path. The number of onboarded users reached 11.4 million by the end of the year and the digital sales ratio in the retail business inched up 67%. Going forward, our ambition is unchanged to develop George into a fully-fledged financial adviser in order to give even larger parts of our client operation access to high-quality financial advice. In the corporate segment, I'm on Page 11 already loans were up 5% year-on-year and 0.8% quarter-on-quarter. The slight growth slowdown in the final quarter of the year was to weaker demand in large corporate business after a strong performance earlier in the year, while the SME and commercial real estate business lines continue to exhibit solid growth. In terms of products, demand for investment loans continued to be more pronounced in the fourth quarter, while year-on-year, there was a good balance between investment and working capital. On the liability side, corporate deposits enjoyed good growth. And here as well, current account deposits grew faster than term deposits year-on-year. The market business also delivered strong performance in 2025 with our ECM and DCM teams successfully executing 360 transactions with an issuance volume of EUR 211 billion. In Asset Management business, after passing the historic EUR 100 billion milestone in the third quarter, dynamic growth continued. Assets under management reached EUR 104 billion at the end of 2025. This bodes well for the future fee growth. On the digital front, the corporate business also progressed well. Client migration to George business has been completed in Austria, Romania and is progressing well in the Czech Republic. With this, by the end of 2025, some 76,000 corporate clients across our region are using George business. And with this, I hand over to Stefan for the presentation of the quarterly operating trends in the reporting segments. Stefan Dörfler: Thanks very much, Peter, and good morning also from my side. Please follow me to Page 13, and let me start by saying that for 2025, I'm particularly pleased with our loan growth performance. We achieved an acceleration in loan growth to 6.4%, up from 4.9% a year ago at the same time when we needed to speed up our capital build. To accomplish these 2 competing goals concurrently is testament to the strength of this organization. As far as loan volumes by country are concerned, the Czech Republic was the standout performer, producing consistent double-digit growth throughout the year. As highlighted already in previous quarters, Czech growth was well balanced between retail and corporate business, but within retail, mortgages led the way. Of the more than EUR 5 billion worth of net loans we added there, mortgages contributed roughly 50%. Growth in Hungary was equally driven by a massive increase in housing loans, admittedly from low levels, but still due to the introduction of a government-subsidized mortgage scheme as of September 2025. Having said this, demand for consumer loans was also quite robust, while corporate lending momentum trailed. Growth in Slovakia and Romania was more or less in line with the group average and in the former driven almost exclusively by strong momentum in the mortgage business, while in the latter, growth was mostly registered in consumer loans. In Austria, as Peter already mentioned, we saw mixed trends. At the savings banks, growth momentum improved noticeably towards end of the year. Interestingly, growth was better in the corporate than the retail business and within retail, clearly attributable to housing loans. In Erste Bank Austria, however, growth was generally subdued. On an aggregated level, in the corporate business, we saw a good growth balance between investment loans and working capital facilities, while in the retail business, housing loans in absolute terms made a better growth contributions -- better growth contributions, especially in the final quarter of the year. Thanks to this growth momentum in 2025 and the constructive macro-outlook, we target organic growth in 2026 of more than 5%, both for Erste with and without Erste Bank Polska, resulting in a net loan stock of higher than EUR 285 billion for the enlarged group by year-end 2026. On the liability side, the favorable mix towards cheaper deposits continued in the fourth quarter of 2025, as you can see on Page 14. This we observed in our core retail SME and savings bank's deposit base, which rose 5.5% over the past 12 months to EUR 209 billion, but also in our corporate business line. In both, overnight deposits increased, while term deposits declined year-on-year. Consequently, the cost of deposits fell again in the fourth quarter of 2025 with corresponding positive read across to net interest income. In terms of total deposit volumes, we are up 4.7% and 2.1% year-on-year and quarter-on-quarter, respectively. As far as geographic segment highlights are concerned, we saw strong retail inflows in both Austria retail and SME segments in the final quarter of 2025, while the quarter-on-quarter decline in the Czech segment was attributable to volatility in noncore deposits. In conclusion, we benefited from strong volume momentum, and that's true for both assets and liabilities, not just in the fourth quarter, but throughout the year 2025. Let me now move to net interest income on Page 15. As those of you who follow us for some time will remember well, ever since the end of the rate hike cycle in September 2023, we talked about NII plateauing even when rates were cut in half between mid-2024 and mid-2025. Now is the time to officially start talking about the next leg up because we are right in the middle of it. Most of the moving parts that are relevant for NII performance point in the right direction. Macro is somewhat supportive. Volume momentum is strong. Deposit mix is improving. Pricing power of Erste Group is intact. And last but certainly not least, we have an interest rate environment that bar any dramatic changes is at least not unsupportive of bank profitability. Consequently, we produced the second consecutive record quarterly NII print with NII first time topping EUR 2 billion. That's a year-on-year increase of 4.6% or a plus of 2.7% quarter-on-quarter. If we look at the annual performance, we started this year, let's say, the year 2025, of course, with a flat outlook and closed it with an increase of 3.5%, resulting in NII of almost EUR 7.8 billion. A key development in this context was the stabilization of NII in Austria as the year went on, followed by a trend reversal towards the positive in the final quarter of the year, essentially driven by a better deposit mix and continued deposit repricing. One could say that we have turned the NII tide in Austria. This is not insignificant as the Austrian retail and SME segment will still contribute more than 1/4 to NII even going forward. And it bodes well for the outlook for 2026 to which I will come in a minute. We also saw continued good performance in the Czech Republic and Slovakia, where a combination of deposit repricing, upwards fixations of mortgage loans and, of course, good volume dynamics all helped. The other segment principally benefited from higher allocations of income earned on local access capital, mainly from money market and government bond investments. And a final comment on NII 2025 and also at this point in time, our sensitivity to rate cuts has declined further to about EUR 170 million for a 100-basis point instant downward rate shock with the full impact expected at the minority-owned savings bank. So actually, no big deal for you as our shareholders. Now for the outlook for 2026. We target net interest income north of EUR 11 billion for this year. This incorporates an organic growth assumption of about 5% for the -- excluding Erste Bank Polska, strong contribution from Erste Bank Polska. The nonrecurrence of interest earned on the purchase price of Erste Bank Polska, around about EUR 7 billion, as you know, and the amortization of about EUR 170 million gross, that's about only EUR 60 million net of positive fair value adjustments recognized on debt securities and derivatives on first-time consolidation. Let's now turn to another success story of 2025 and frankly speaking, the past couple of years, and that's fee income on Page 16. At EUR 850 million, we posted another record in the final quarter of the year, up 9.1% year-on-year and 6.5% quarter-on-quarter. The drivers are in the meantime well known. Securities business, which includes asset management, continued to perform exceptionally well amid a helpful market environment and customers' increased propensity to invest in capital markets. Payment fees also made a good contribution when adjusting for the shift of loan account fees from payments to lending fees as of the first quarter of 2025. And insurance brokerage fees benefited from the usual end of year performance bonus payments. If we look at fees from the annual perspective, the story is very similar to what I've just said about the quarter. Net fee income reached nearly EUR 3.2 billion, again, a new record. This means that fees grew by 8.6% in 2025, comfortably above the target we set for the year. As for the growth drivers, we again talk about securities business, payment services and insurance brokerage. Honestly, it's hard to highlight individual country segments in the context of fee performance because as you see from the chart of the slide, Page 16, all of them made great contributions in 2025. Therefore, the main task for us is now to maintain the momentum going into 2026 as the bar is clearly moving even higher. But with an organic growth target of higher than 5%, you see that this is also clearly our goal. The inclusion of Erste Bank Polska should result in a combined fee income of about EUR 4 billion in 2026, whereas where we have to look at the final print that will also depend on the allocation of local FX income from Poland, either to the fee or the trading line. Over to operating expenses now. I'm on Page 17 already. Let me start with a quick summary on 2025. We were clearly running above our 2025 cost inflation guidance of about 25%. You all remember our discussions in the quarterly calls until the third quarter as we invested in efficiency projects, but in the end, still managed to come in right on target when adjusting for booking Polish integration costs in the amount of EUR 38 million to be fully transparent. This was only possible because of a significant year-on-year slowdown in cost growth in the fourth quarter, mainly driven by a stabilization in personnel costs and a moderation in depreciation and amortization charges as well as office expenses. Quarter-on-quarter, we saw the usual seasonality, so no surprises there. For 2026, it is our target to build on the solid performance of the fourth quarter and limit organic growth inflation to 3% as we should now benefit from efficiency gains and the downward inflationary trend in our countries, even Austrian inflation numbers came down recently. But 2026 is not only about better efficiency in Erste's pre-Poland business, but all about consolidating Erste Bank Polska. And in this respect, there will be 2 absolutely very relevant topics. First, and we have been talking about this in the past already, we can be more specific today, integration costs. Secondly, is intangibles amortization. While the former will mainly impact 2026, the latter will stay with us for the next decade. Our refined estimate of remaining integration costs now stands at EUR 180 million. The net impact will be dependent on the final split between Genna and Warsaw, but a good portion can be assumed to be booked locally based on the recent announcements of our colleagues from Erste Bank Polska in relation of rebranding costs. The amortization of intangibles, essentially, it's about customer relationships, will be based on the value of customer stock for 100% of Erste Bank Polska of EUR 2.1 billion and consequently have an outsized impact on the cost line of EUR 210 million annually. As opposed to this gross amount, the bottom-line impact at about EUR 70 million will be significantly lower as tax and minority shields fully apply. This is a noncash charge and irrelevant to regulatory capital as already fully deducted. Taking all of these items into account, we target operating expenses of about EUR 7 billion in 2026 for the enlarged Erste Group. Next up is operating results, and I'm already on Page 18. At almost EUR 11.7 billion, we posted record operating income in 2025 and at almost EUR 3.1 billion, we also posted record operating income for the quarter. The reasons we have discussed already in detail. We saw high-quality revenue growth driven by our core income lines, net interest income and net fee income. Or put differently, we enjoyed strong core business momentum. And with cost performance being in line with expectations, we saw records for both annual and quarterly operating results. As cost growth was a touch higher than revenue growth in 2025, the cost/income ratio was slightly weaker in 2025. However, much better than anticipated at the beginning of the year. When it comes to the outlook for 2026, and we just look at the Erste business, excluding Erste Bank Polska, then based on what we already said about macro, interest rates and business momentum, there's only one conclusion, and that's positive operating jaws or translating this into concrete numbers, a further improvement of the cost/income ratio towards 47%. Well, obviously, this is a somewhat theoretical statement as our 2026 financials will fully include the financials of Erste Bank Polska as well as the special effects in NII and operating expenses. But given the industry-leading efficiency level that Erste Bank Polska is operating at, that will only lead to a further improvement of these efficiency metrics. Our best guesstimate and guidance at this point in time is around 45%. And with this, over to Alexandra for more details on credit risk. Alexandra Habeler-Drabek: Thanks, Stefan, and also good morning, and welcome to this call. I'm now on Page 19. In the final quarter of 2025, we booked risk costs of EUR 159 million or 27 basis points. This is better than a year ago, even though FLI and overlay releases in both quarters were more or less comparable. As shown on the left-hand chart, we continue to book risk costs in our Austrian retail and SME operations, so Erste Bank Austria and Savings Banks, but the asset quality situation in Austria has definitely stabilized, thanks to somewhat lower NPL inflows in 2025 versus 2024. Fourth quarter risk cost bookings in Central and Eastern Europe continued to be very low. Looking at 2025 overall at 21 basis points, we came in right in line with our improved full year guidance. As in the previous year, again, EB Group and Sparkassen savings banks accounted for the largest part of net allocations in the context of an exceptionally strong performance in the CEE region. However, again, both at Erste Bank Uusterich and at the savings banks, risk costs improved compared to 2024, in line with trends seen in the broader Austrian banking industry. As far as FLI industry overlay provisions are concerned, we now hold a stock of about EUR 350 million, down by EUR 109 million compared to the third quarter on the back of FLI and overlay releases. For 2026, we currently project further releases of roughly EUR 60 million. When it comes to the risk cost outlook, including Erste Bank Polska for 2026, we forecast 25 to 30 basis points as risk costs tend to be somewhat higher in the Polish market. This is adjusted for the already previously communicated one-off ECL provisions of EUR 300 million gross with a net impact of EUR 120 million that is required by IFRS 9 on first-time consolidation. For Erste excluding Poland, we would see risk costs similar to 2025 levels, somewhere between 20 to 25 basis points given the generally robust macro backdrop. Let's now turn to asset quality on Page 20. The group NPL ratio improved both quarter-on-quarter as well as year-on-year to 2.4%, thanks to a stable NPL stock and a dynamically growing loan book. The stable NPL stock resulted from lower NPL inflows as well as higher recoveries. Let me again comment on Austria in this context as it has been and still is in the spotlight. For Erste Bank Austria and the Sparkassen asset quality metrics are perfectly acceptable and have improved in 2025. We saw lower NPL inflows, higher NPL recoveries. And importantly, we saw hardly any new entrants into our early warning list. And we expect more of the same in 2026 as the Austrian economy is recovering slowly. In Central and Eastern Europe, the asset quality performance remained excellent. It is hard to single out a country for doing better than the other, whether we talk about the Czech Republic or Hungary or Serbia because all of them did really well. In Romania, you might recall, where we saw some NPL inflows early in the year, the situation stabilized. We sold some NPLs. And with this, our NPL ratio in Romania is once again below 3%. In terms of projections for year-end 2026, we expect that the group NPL ratio will stay more or less at current levels, and that applies to both Erste with and without Erste Bank Polska. NPL coverage is projected to slip slightly, but only slightly and should stay close enough to 70%. And with this, I hand back to Stefan. Stefan Dörfler: Thanks, Alexandra. Let's turn to Page 21. To top off an exceptional year, other result also turned in a tremendous performance in the fourth quarter, again, benefiting from positive one-offs in the form of real estate selling gains and releases of legal provisions, particularly in the Czech Republic and Romania. When looking at other results from an annual perspective, we saw the best print since 2007. Thomas had to go back that far in analyzing the data to find a better print. And to put this into context, back then, banking levies or resolution fund contributions, which today run into the hundreds of millions of euros and annually were unheard of. As a result of this extraordinary performance throughout 2025, one thing must be clear. This is a onetime event that is very unlikely to be repeated in 2026. We estimate that the net positive onetime items amounted to approximately EUR 270 million, as Peter already mentioned, pretax and that in 2026, other result will more closely mirror regulatory charges, which based on higher banking levies in Hungary and Romania should be in the order of approximately EUR 450 million. Typically, we already expect one or the other positive or also negative print there for the first quarter, we are anticipating a better print due to the closing of the Erste transaction in Croatia. Based on what you heard about record annual and quarterly operating performance as well as quarterly and annual other results, and I'm on Page 22. In the meantime, it follows that quarterly and annual net profits were comfortably record prints as well. And one could argue somewhat inflated, obviously, to the benefit of capital and capital ratios, so no complaints here. But still, therefore, it is only fair to adjust net profit for onetime items. And if we do this, clean net profit prior to AT1 dividend deduction, as Peter already mentioned, would be closer to EUR 3.3 billion rather than the reported figure of EUR 3.5 billion. By extension, the same comments apply to reported earnings per share and return on tangible equity, both benefited from one-off supported net profits. If one adjusts reported 2025 EPS of EUR 8.24 for this, then underlying EPS would amount to EUR 7.72 and ROTE would be closer to EUR 515.5 as opposed to the reported figure of 16.6%. When it comes to the outlook for 2026, we confirm everything we have said since the announcement of the Polish acquisition on 5th of May 2025. We expect a significant improvement on return on tangible equity to around 19% and an earnings per share uplift north of 20%. These targets are based on reported net figures adjusted for extraordinary items with EUR 3.3 billion serving as a basis for 2025 and a figure of greater than EUR 4 billion being the target for 2026 adjusted. And with this, let's move on to wholesale funding and capital, starting on Page 24. Stability and competitive advantage are the name of the game when it comes to funding. High granular and well-diversified retail and SME deposit base remains a key source of long-term funding. Wholesale funding volumes decreased year-to-date as higher stock of debt securities was more than offset by decline in interbank deposits. The stock of debt securities was pushed up primarily by issuance of covered bonds and senior preferred bonds. On to Page 25, in order to look in more detail at our long-term wholesale funding. My short summary would be that we successfully completed our 2025 funding plan and that we had a busy and successful start to the 2026 funding year. Next to several transactions of our subsidiaries, we have issued a Tier 2 and a senior preferred note, EUR 750 million each on group level in January. Overall, we expect similar funding volumes this year as in 2025 and we'll have more focus on MREL instruments compared to covered bonds. Let's now move to regulatory capital and risk-weighted assets on Page 26. In the context of other results, I talked already about a onetime event, and I think this is also a fair statement for the development of regulatory capital and risk-weighted assets. We saw a massive buildup in capital and at the same time, a massive reduction in risk-weighted assets in 2025. Of course, most of this did not happen by chance, but was the result of a well-executed strategy that was instrumental in funding the acquisition of Erste Bank Polska exclusively from internal resources. To give you an idea about the scale of the achievements, we grew loans by about EUR 14 billion in 2025, as already discussed, while risk-weighted assets were down by almost EUR 10 billion. The main drivers for this were the increased use of securitizations, positive portfolio effects and last, but not at all least, Basel IV implementation also came in handy. These factors more than offset the volume growth related up drift. The strong growth in CET1 capital by EUR 4.5 billion during 2025 is rooted in strong profitability and temporarily increased profit retention. The former also benefited from positive one-offs as detailed earlier in the presentation, but was mainly driven by strong business momentum, while the latter was supported by suspension of the share buyback we already announced early in the year and a lower dividend payout from 2025 profits. The result of these massive moves, you can see on Page 27, our CET1 waterfall, a 408-basis point increase in our CET1 ratio in 2025. Viewed differently, one could say that we absorbed almost the entire expected CET1 drawdown expected from the Erste Bank Polska acquisition within 1 calendar year. And I can only repeat what Peter said. We have far outperformed all capital commitments that we gave to the regulator in the run-up to the transaction. That's the CET1 ratio floor of 13.5% and the new increased target ratio of 14.25% to be achieved during the course of 2026. When it comes to capital distribution, we will stick to our communicated dividend policy for 2025, resulting in a payout of EUR 0.75 per share. I think it is also evident that we have the full capacity to return to our pre-transaction dividend policy of 40% to 50% and possibly even put share buybacks back on the menu if this is in the best interest of shareholders. When it comes to the CET1 ratio outlook for 2026, the triangle of profitability, loan growth and shareholder distribution will determine the extent and speed of any further buildup. In any case, we have created a space for many options for future growth. And with this, over to you, Peter, for concluding remarks. Peter Bosek: Thank you, Alexandra. Thank you, Stefan. Let's take a step back again and look at the bigger picture. What emerges in front of us, you can see summarized on Page 29. It's about strong organic growth momentum in the Erste's business without Erste Bank Polska. On a like-for-like basis, we expect loan growth of higher than 5%. We project mid-single-digit net interest income growth. We once again target fee growth of north of 5%, and we aim to push cost inflation down to 3%. With this positive operating jaws and improved cost-income ratio are firmly on the agenda for 2026. Risk costs are expected to stay at a very level. And even if other will be more in line with the reported net profit should at least be on par with what we achieved in 2025. Erste Bank Polska to the mix that the future will be brighter still. Growth opportunities will multiply by having access to the largest market in the CEE region. On the back of a better macro backdrop, we therefore project loans to surpass EUR 285 billion for the combined entity of new Erste, if you prefer. We see net interest income north of EUR 11 billion, fees at about EUR 4 billion and costs in the order of about EUR 7 billion. Risk costs will inch up to 25 to 30 basis points, leaving aside the one-off related to first-time consolidation. All of this is set to result in a significant increased return on tangible equity of 19% and an increase in earnings per share of more than 20%. Despite this very robust financial outlook, we are not getting carried away. Our full focus and attention is on integration of Erste Bank Polska and rebranding. At the same time, you can rest assured that we will not lose sight of strategic opportunities, which we expect to open up in front of us as the year progresses. Superior profitability and consequently, fast capital build will enable us to choose from a number of options ranging from increased capital return before further M&A, all of which have the potential to create significant shareholder value. And this, ladies and gentlemen, concludes our presentation remarks. Thanks for your attention, and we are now ready to take your questions. Operator: [Operator Instructions] And the first question comes from Jeremy Sigee from BNP Paribas. Jeremy Sigee: Could you just give us a quick update on the integration time line for Poland? What are the big steps in terms of systems migration or other big things? And when do they happen? And then second question, you've talked about the various options that you've got for growth. Could you talk a bit about both organic and M&A opportunities, what your priorities are, where you see opportunities presenting themselves? Peter Bosek: If I may start with the integration in Poland, we plan to be done with the integration when it comes to IT and technology within 24 months. We have already started to work with our colleagues in Poland. So, this is a lot of work in front of us, but we have both sides very experienced IT people. So, we know what we have in front of us to be able to manage. The second also very important part is the rebranding, which will take place in the second quarter. So, we have more than 400 branches, we have to rebrand. We have a lot of ATMs, we have cards, we have papers. So, a lot of things in front of us, but very much looking forward to use the opportunity to build up a very strong brand in the Polish banking market. When it comes to growth opportunities and potential M&A, it is very much depending on the market situation. I think it's much too early. I would like to -- just to remind you, although we have a very strong capital position now, we just had closing on of January. And again, now we are very much focused on integrating Poland. But if something pops up where we think it's a business opportunity and is creating value to our shareholders, we will definitely look at it. Operator: The next question comes from Gabor Kemeny from Autonomous Research. Gabor Kemeny: Thanks for walking us through the intricacies of the Polish consolidation. But my first question is actually on the business ex-Poland and the NII guidance there, I mean, 5% growth you guide for, which is decent, but it's actually similar to the Q4 run rate. It implies similar NII to the Q4 run rate, I believe. So, what makes you assume that NII will not grow sequentially from here together with loans? And the second question would be on cost. I mean you expect cost growth to half practically on an organic basis. Can you walk us -- which is a significant improvement. Can you walk us through what you actually expect to drive this slowdown and perhaps give us some quantification of those drivers? And then finally, on the capital deployment options, how do you think about your options for this year, including if you could comment on the possibility of raising your stake further in the Polish bank. Stefan Dörfler: Let me start with the remark on the interest rates for 2026. I understood you right. You wanted a reply to, say, on our growth expectations on the former Erste Group, I would call it. Look, let's not forget there are a couple of points that we need to observe when it comes to the translation of loan growth into NII. First of all, we all know that this is a buildup throughout the year. So, if we expect better growth on the loan side than 4%, 5%, then this will only get into NII numbers over the year, not only for the first quarter. The second element is, and I mentioned it on a side comment when running the presentation, we have paid EUR 7 billion for the acquisition of Erste Bank Polska. So that's in a simple calculation around EUR 130 million that we simply have less of interest on excess liquidity. It's not a huge amount given the overall dimension of NII nowadays, but it's not to be completely ignored and it is a certain churn on our growth year-on-year. And last but not least, the interest rate environment should be still okay-ish and kind of supportive, but definitely, we will not have tailwinds or tail storms from the interest rate environment. We've put ourselves in a position that is quite neutral to interest rate developments. So, from that end, we shouldn't expect too much of an uplift. And if you look at the 2025 developments, we've had a good momentum still from our investment book. This is still there, but significantly slowing down. So, I would say, at the end of the day, we are back into a game which is mainly depending on growth. You're perfectly right, but it's not a one-on-one translation of loan growth into NII. So, I think if we can deliver 5% on existing group, I would be very satisfied. The other point was on cost growth, look, it's very simple. Inflation is now really sharply coming down even in the countries like Austria, where we saw after really super elevated prints, we saw in January now a 2% number. That will help the negotiations for collective bargaining are ongoing. We hope that there will be a reasonable behavior on all sides like it was in other industries in this country. In the other countries, we see wage inflation still around, but significantly lower than in the past. So that's the external element. And the internal element, we have always communicated that the impact of the efficiency investments that we started already in the end of 2024 should have a first-time impact in 2026, and that is also something we are committed to deliver. And this in combination would land around this 3% level. Of course, a lot of integration efforts will be there, but you were asking about the core group. And then I think capital deployment. Look, Peter already made it clear in his answer just before. We are evaluating all options, but we are also not deviating from our super focus. We got everything very well done. We were achieving not only the signing, but also the closing in a very smooth manner. And I really want to praise the teams here on all sides who guaranteed very smooth operations day 1 already across the group, and we will build on that. But let's not forget that the integration will still occupy a lot of resources. And therefore, we will elevate very, very precisely how much we have still in our pockets to invest into, let me say, new adventures. I think you know the markets that we look at. There are some of the markets which are able to do transactions, for example, on themselves. If there are options opening, we will analyze them, but I think it's much too early to say. Last comment, since this is obviously also part of your question, we will not comment at this point in time about any kind of precise dividend indication for 2026, but it's natural that we have full capacity to at least -- let me stress this, at least get back to the capital distribution that you were used to up until the year 2024. Operator: The next question comes from Ben Maher from KBW. Benjamin Maher: I actually have one. It's just on the growth in the Corporate Center NII was very strong last year, effectively doubling. I think you mentioned the securities portfolio, that tailwind perhaps tailing off a bit this year. But any guidance around NII in the Corporate Center for 2026 to 2027 would be helpful. Stefan Dörfler: In short, it's going to be slightly up, not as strong growth momentum as you rightly observed for '25, but certainly also not falling from the slightly up is an indication that I can give you. Operator: The next question comes from Amit Ranjan from JPM. Amit Ranjan: The first one is on capital. What's the current outlook on balance sheet measures going forward, SRTs, et cetera? How much did you achieve in 2025? Because if I look at the credit RWAs, they declined by almost EUR 4 billion quarter-on-quarter. So, if you could highlight that and also the costs associated with that SRT in 2025? And how should we think about that in 2026? And then the second one is on -- you have provided very clear 2026 targets. How should we think about medium- to long-term targets for the group? Is that something we can expect to be provided during 2026? Are you planning a Capital Markets Day at some point for the combined entity? And last one, if I may, on loan growth. Are you seeing any pickup in corporate loan demand in the various geographies? And is there any assumption you're making around benefit from the fiscal stimulus in Germany and the infrastructure spending for countries like Austria, Czech Republic, please? Stefan Dörfler: I'll take the first question and then hand it over to Peter. So, first thing, the costs, not to forget around securitization, around about EUR 60 million, and that's in the fees. Maybe let me use this opportunity to say 2 sentences about fee development, which I'm very impressed from colleagues do a great job there. We have had already cost for securitization during the year 2025 in fees. It's even more remarkable to see the results. And that will be around about EUR 60 million in the year 2026, first point. Second point, I want to be precise on what I said on the fee trading stuff when it comes to our EUR 4 billion target. We have observed a little bit of a different treatment in the Polish market around FX fees or let's say, fixed trading revenues rather. And we will analyze in the next weeks whether we can also show this on the group level in fees or whether we have to put it in trading. So just that you can put my remark here in perspective because it fits to this point. And last but not least, in terms of planning for 2026, so nothing tremendous being planned at this point in time for securitizations in 2026. We will do 2, 3 further transactions for sure as we use this toolbox ongoingly, but significantly less than in 2025 since the effort here was directed to the capital -- I wouldn't call it rebuild, but the capital optimization effort in 2025. Peter, please? Peter Bosek: Yes. When it comes to midterm outlook, I think as we mentioned already before, I think this year, on the one hand, we are heavily focused on integrating Erste Bank Polska. It's very clear. we will see the full positive impact in terms of P&L, of course, in 2027. On the other hand, it's also fair to say that we are very -- again, very strong being up capital, which gives us a lot of opportunities. And this is exactly the other part for this year to make up our mind and see how markets are developing and what kind of opportunities are poping up in terms of M&A or further increase in our stake in Erste Bank Polska, also depending on the Polish scheme, how we are able to increase. So, there are still a lot of things we have to think through. But you can be assured that we are very well aware. And I think we are in a luxury situation in terms of our strengths being able to build up capital. When it comes to your question about the Capital Market Day, this is something we are making up our mind. Stefan, Alexandra and myself, we are, of course, discussing it. But it's also very obvious that we would go for a Capital Markets Day if we have something detailed to you, which is worth the effort of you and your colleagues to join. When it comes to potential impact of Germany, I mean, this is something we are waiting for already 1.5 years. Of course, we expect a positive impact in countries like Czech Republic, Slovakia, Poland, Romania, but the political procedure in Germany just takes longer as we expected. And therefore, we didn't take it into consideration, as mentioned during our presentation in our P&L for this year because we are sounding a little bit like broken record every time telling that there will be an impact, there will be an impact, there will be an impact and so far we cannot. Operator: The next question now from Mate Nemes from UBS. Mate Nemes: I have 3 questions, please. The first one would be a follow-up on your -- Stefan, on fee growth. I understand the uncertainty around the treatment of some of the FX commissions or FX fees in Poland. For the rest of the portfolio, putting that uncertainty aside, is there any reason why fee growth shouldn't be in the high-single digits given your track record, given strong volume growth, given good traction with the securities business and so on? That's the first one. The second question would be just a clarification, please. Could you clarify what exactly will be added back to get to the adjusted net profit in 2026, i.e., the amount slightly above EUR 4 billion. Is that the EUR 240 million intangibles amortization and the EUR 180 million integration costs or it's only the integration costs? So that's the second question. And the third question is just a, I guess, conceptual one perhaps for Peter. The outlook on retail lending, very, very strong performance in 2025, retail growth and within that housing loan growth in the CEE region is very strong. Could you talk about expectations whether that momentum can be maintained in one or the other country, be it Croatia, be it Czech, be it Hungary? Or we could see some moderation here and there? And also in that context, perhaps, what is your expectation in retail growth in Austria? Stefan Dörfler: All right. So let me take the number question first. So, we talk about roughly EUR 350 million that you should consider in this, so to say, adjustment logic, and this is the sum of ECL impact the integration costs, as you rightly assume, and the intangibles. Honestly speaking, we really try to manage, and I think we have kind of got 80%, 90% there to absorb everything as much as possible in 2026. So, you heard the question before, the earlier question to Peter regarding integration costs. That's also what we have been discussing internally. While we will be busy with a couple of the things on 28 when it comes to really absorbing most of the matters in P&L representation and so on, I would say, given the dimension of the numbers, everything that comes there after 2026 with the sole exception of the depreciation of the customer list I would personally from a CFO perspective, say you can pretty much forget, right? So, it's EUR 50 million here, EUR 30 million there, for sure, not numbers to be ignored in a bigger sense. But the way we look at, for example, NII of a base EUR 11 billion plus, yes, have an item here in 2027 impact of EUR 80 million, EUR 90 million. But frankly speaking, a small change in interest rate environment also does a much, much bigger impact, as you very well know. Fee growth. To specify the dimension that we are discussing here with the Polish colleagues and also with the audience is EUR 200 million, just to be precise. So, it's about EUR 200 million to be allocated rather to fees or FX. So that is around the -- if you map it to the EUR 4 billion total, it's around 5% difference, not to be ignored. Of course, it doesn't do anything to the total operating income. It's pretty clear. And that was the reason why Thomas and the Board discussed which guidance should we give. Otherwise, we would have been coming up with greater than 4. Now we are around 4%. We will clarify that. And by Q1, we will be very clear about where to book this. When it comes to growth, thanks for your confidence in our growth potential. I do not disagree. However, if we look around at what happened in the last 2, 3 years, let's also be fair. We had quite strong supportive factors, not the least, a positive inflationary environment, which, of course, by indexation of payment fees and so on, not only for us, but for the whole industry was supportive. And if we now go significantly down with our growth expectations on costs, it's also consequently clear that some of the tailwinds are slowing down on the fee side. That's point number one. And point number 2, as you know better than anyone else, if we have such a supportive capital market every year as we had in the last 2, 3 years, is also not a given -- and some not all, but some components of the income here on asset management fees and securities business depending on it. So do I rule out that we come up with higher than 5%. So, I think you said upper mid-single digit again in 2026? No. Do I want to guide for it at this point in time? Also no. Peter? Peter Bosek: Yes. Thank you, Stefan. When it comes to mortgage business, when we talk about volume, it's very much about Czech Republic, Austria. So, we don't see any -- or we don't expect any change in the demand in Czech Republic. So, the market is still strong I would expect even a little bit more positive momentum in Austria because demand has come back already over the last 12, 18 months, and we saw a clear correlation that demand was picking up and interest rates are coming slightly down. And Croatia, I think we are doing very well in terms of balancing between mortgage lending and consumer lending. So, which was true also for the whole year in 2025 that we have between these 2 product lines. Good that you asked for Croatia because we took a special effort in Croatia and set up an initiative to improve our mortgage lending there because there, I think it's fair to say that from our perspective, we are a little bit underpenetrated when it comes to mortgage lending is an area we would like to take more efforts to improve the situation. Operator: The next question comes from Riccardo Rovere from Mediobanca. Riccardo Rovere: Two or 3, if I may. The first one is on the NII guidance. I mean in Erste stand-alone a couple of billion per quarter in Q4. So, say before any growth land, you could land in the EUR 8 billion region without being too sophisticated. And Erste Bank Polska reported kind of anywhere between EUR 750 million and EUR 800 million in Q4. So that could be another, say, EUR 3 billion or so more or less. So, before growth will be in the EUR 1 billion ballpark and this before, again, loan growth. So, I was kind of -- I just want to understand what -- and you also say, Stefan, if I'm not mistaken, that you expect kind of supportive policy rate environment, if I got it right during the call. So, I was wondering if there is no margin pressure and if the growth stays as you land, what could to go above or well above EUR 11 billion and more than EUR 11 billion could be EUR 11.5 billion in your mind. Then again, on growth, I mean you're growing at 6.4% before Poland. Macro is expected to be to improve. Maybe you're going to have an impact from fiscal in Germany are at 7% and pretty good when they make their projections. So why 5% when the macro is improving and you're exiting '25 at 6.4%. The other question I have is on common equity. I mean, you end at 19.3%, take out EUR 460, you end at EUR 14.7 billion divided by 2, it's another EUR 2 billion, risk assets, say, EUR 180 million, EUR 150 million from you, 30, 30-something from Erste Bank Polska is another more than 100 basis point. So, as it is today, we will land anywhere between 15.5% and 16%. So, the question here, I just want to connect to what Jeremy asked right at the beginning of this call. What's the priority here? Is because the share price suffered quite a lot on in early 2025 when there was uncertainty about capital use. So just to be clear, what's the priority here? Is the priority more M&A? Or is the priority returning capital to shareholders as you have to integrate Poland, which is a transaction? Because the numbers do not adopt just don't adapt with the numbers what you said. Just to say so, but I think the market needs a little bit of clarity on that. Stefan Dörfler: So first, unfortunately, the sound was very bad. So, let's make sure that we got everything right because you started by saying 3 questions, I only identified kind of 2.5. But anyway, the first one is very clear. And I completely -- I completely can follow your thinking EUR 8 billion here because you guys are already at EUR 2 billion in Q4, then simply extrapolate that and then add the EUR 3 billion from Poland and they go EUR 11 billion plus the growth, why don't you talk about EUR 11.5 billion. That's in a nutshell what you said. Look, it's not exactly that easy this time for sure, at least from today's perspective. Number one, again, we have a clear subtraction. This is a super simple calculation of EUR 130 million from the nonrecurrence of the interest on our paid here. It's not a huge element, but not to be completely. Secondly, and I give you the precise description, we have EUR 170 million, and we always talk about the gross figures here, right? I said it -- talk about the gross figures because 11, 11.5 is also, of course, the gross NII for 2026 in the whole group. EUR 170 million impact from hedge accounting adjustments and the debt securities, both around about close to EUR 100 million adding up there, and there's a little bit of a counter effect on other positions. So, it's a total of EUR 300 million, please, Riccardo, that you have to take. This is not something which is kind of a question of optimism or pessimism. It's just the fact that this is 100% clear that this will be booked this way. So, I have to take this into consideration because then with your expectation somewhere between EUR 11.2 billion to EUR 11.5 billion, we are already talking a little bit of a different story. And the rest -- yes, the rest is a question of interpretation if everything goes fully our way, if interest rate environment is as supportive as we expected. And therefore, we decided to go for a greater than EUR 11 billion guidance, which I think is leaving also upside. And you know us then when we have more evidence for better development, we will adjust the guidance. At this point in time, I think it's a task to get there with all the moving parts around the first-time consolidation. And on capital, look, I think referring back to the first part of 2025, I don't believe it's really helpful because you know that we were negotiating the deal at that point in time. And you guys know much better than anyone else how strict capital market communication is on indicating anything that is not really watertight in terms of insider what the hell. So therefore, yes, it was also not my most pleasant quarterly call on the 30th of April 2025. I very, very much remember, and we were dancing around how we deploy capital. I agree. This was not a pleasure, but in the same moment, it was a pleasure then making very clear what we do with the capital 1 week later. It's not the case this time. This I can assure you. We are not in any whatsoever kind of negotiations or so. But what we are in is in analyzing our opportunities, both legally, Peter already mentioned it, but also in terms of how we can manage also a step-up in Poland in an efficient manner for our shareholders and in a way that we are not endangering, so to say, our economics. Other countries, I think, have been commented on by Peter and me already. I think it's fair to say, looking at my colleagues that after the first quarter, we will have a little bit more clarity. However, to satisfy everything of your expectations, what we will do with the excess capital, it might still not be enough. And it's going to be a question of the next couple of months to evaluate the deployment. We try to do the best with the excess capital, but there are many moving parts. I think there was a third kind of question, but I didn't get it from the sound. Operator: Mr. Rovere, you're still on the line. Riccardo Rovere: Let's move to the next question please. Operator: The next question comes from Jovan Sikimic from ODDO BHF. Jovan Sikimic: I would have also a question related to Poland. I mean, your colleagues from the new subsidiary, right, they indicated a kind of new strategy in coming months. But maybe at this stage, can you tell us just the key parameters, right, in terms of loan growth, in terms of NII year-over-year? And what is actually the interest rate which you incorporate because currently, it's like 25 to 50 basis points. Let's say, difference within consensus where the rates will end up in Poland, how the sensitivity is? And also from this perspective, if you can share what would be kind of cost/income ratio in the longer-term horizon because Polish subs or Polish bank kind of has significantly lower cost-to-income ratio compared to your current subsidiaries? And if you could also remind us what's the agreement on Swiss franc provisioning. I mean Q4, in my view, in Poland was a bit below expectations in terms of kind of adding to the current outstanding volumes. But what's the position at this stage in your case? Peter Bosek: If I may start in terms of strategy, please don't expect too many changes in terms of strategy in our Polish subsidiary because from our perspective, strategy is already very much aligned. So, we have a very similar approach in retail banking. We have a very similar approach in corporate banking. I think there's a lot of added value, of course, in the corporate area because the pure size of the economy in Poland is fantastic in the way how this economy in terms of economic infrastructure was built up over the last decades. I think this is a huge opportunity also for the rest of our group. And we see also kind of network value related to it because there's a lot of money flow between companies within our region now and a lot of Polish companies operating in other parts of our group and vice versa. So there, we have very, very positive client feedback. When you refer to cost-to-income ratio, of course, it's great how our colleagues are managing efficiency. Of course, it's all kind of very supportive where we have relatively high NII margins when it comes to cost/income ratio. And please, we ask for your understanding that we don't want to comment too much on local entities, especially when they are stock listed in terms of NII sensitivity. Stefan Dörfler: And that also, if I may add, Peter, that also holds true for the strategy of the local bank when it comes to Swiss franc. I think the colleagues are commenting on that. The read-through to the group is well known. So, there's nothing to add to that. Nothing has changed on that side. And all the rest is decided by our local colleagues and will be also communicated by them in their capital market communication. Jovan Sikimic: Great. And if I may add one maybe on -- it's maybe of a minor importance, but still your positioning in Hungary on rate cuts or further rate cuts and also in Romania. How would it affect the group NII? Stefan Dörfler: No, happy to take this in a very short manner. We saw the rate cut yesterday or the day before yesterday, I guess, in Hungary. We expect overall a relatively stable development of key interest rates for this year, at least for the next 2, 3 quarters. You know the policy of the Romanian National Bank. Further later in the year, there might be some changes depending on inflationary environment and so on. But at the moment, we do not see an aggressive rate cut cycle of either of the 2 national banks. Operator: We have a follow-up from Riccardo Rovere from Mediobanca. Riccardo Rovere: And just a quick follow-up on the previous one on loan growth. Why 5% when you're exiting the year at 6.4% and the macro is supposed to get better and maybe you're going to have some boost from Germany fiscal support. And then on bank taxes, if I may, can you shed some light what should be the situation in 2026 and if possible, onward, where do we stand there? Peter Bosek: If I may start with loan growth. From our perspective, we were even a little bit more aggressive than last year in terms of giving the guidance because we see loan growth above 5%, right? And as Stefan mentioned already during his presentation or answers, loan growth is accelerating over the year. So, you don't have the full impact immediately in the P&L in the first 2 months of the year. But be assured that we believe -- strongly believe in loan growth above 5%. Stefan Dörfler: What was the other question, Riccardo? Riccardo Rovere: Just on bank taxes, what should you expect? What should we expect for 2026 on bank taxes in general? Stefan Dörfler: The existing ones, I think you know precisely. It will go up in numbers a little bit. And then you know the situation in Poland, which again is to be commented mainly by our local colleagues, but we, of course, consider in our assumptions the elevated corporate income tax in Poland of 30% for the year 2026, which is expected to go down, not expected, it's in the law, to go down to 26% in 2027 and then to 23% in 2028. Those are elements that we have to consider, which all are in our guidance that we mentioned today. Other than that, forecasting or so to say, making any kind of assumptions around political decisions, I guess, is definitely not my task. And I think, Peter, you also don't want to probably say that. Peter Bosek: I would not expect any kind of material impact during 2026, but long-term trends are very, very much depending on how budget deficits in other countries will develop over the upcoming years from that perspective. We don't see any kind of that there will be additional taxes for this year. Operator: The next question comes from Robert Brzoza from PKO BP Securities. Robert Brzoza: Congratulations on the results. Sorry if I make a repeated question because I joined later during this call. I have 3 questions, actually. One on the adjusted net target. What are the adjustments actually? Is this only the integration cost or also the fair value adjustment? So that's question number one. Question number two, the 3% OpEx growth target for '26, does it include the indexation to wages? How do you manage this? And question number three, I've spotted that the NII in Hungary and Romania were relatively flattish despite great quarter-to-quarter loan book growth. What is it related to? Does it mean that you had to compromise a bit on the pricing of loans? Stefan Dörfler: Thank you very much. You were touching upon of the stuff we discussed already, but no problem. So, first answer, I specified already before, it's around EUR 350 million of adjustment. It includes the integration cost, but not only. It's also the onetime booking of the IFRS 3 related ECLs CLSA and the intangibles, as you rightly assume. So that's a correct assumption. Those 3 components play into there. When it comes to wage inflation, I mentioned in an earlier answer, it's supposed to come down. We see inflation coming down now even in Austria and other places, and that's what will certainly drive the levels of, let me say, wage and personnel cost increases down. But I also mentioned that another element of our guidance there is that we will benefit from efficiency gains that we invested in '24 and '25. And last but not least, you're right. We had a slower development in Hungary and Romania, and it is partially due to quite some pricing competition in these markets, which we usually do not take a part in as aggressively as competitors, but we cannot exclude ourselves completely. So that's certainly a driver of the NIMs in those 2 specific markets. Just adding that in Hungary, we always say, please don't analyze this market line by line. You will not get anywhere. Look at what our fantastic colleagues there have achieved in bottom line delivery, and that's really the measure that we look at. Operator: [Operator Instructions] There are no more questions at this time. I would now like to turn the conference over to Peter Bosek for any closing remarks. Peter Bosek: Yes. Thank you very much, ladies and gentlemen, for taking your time. Thank you very much for your questions. What I would like to mention is that our Annual General Meeting will take place on the 17th of April and the results for the first quarter of 2026 are on 30th of April. Thank you very much. Operator: Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.
Operator: Thank you for standing by, and welcome to the Enovix Corporation Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's program will be recorded. And now I'd like to introduce your host for today's program, Robert Lahey, Head of Investor Relations. Please go ahead, sir. Robert Lahey: Thank you. Hello, everyone, and welcome to the Enovix Corporation's Fourth Quarter and Full Year 2025 Financial Results Conference Call. With me today are President and Chief Executive Officer, Dr. Raj Talluri; and Chief Financial Officer, Ryan Benton. Raj and Ryan will provide remarks followed by Q&A. Before we begin, please note that today's call contains forward-looking statements that are subject to risks and uncertainties. These statements are based on current expectations and may differ materially from actual future results due to various factors. For a discussion of these risks, please refer to the disclosures in today's press release and our filings with the Securities and Exchange Commission. You can find these materials on our website at ir.enovix.com. All statements made on this call are as of today, February 25, 2026, and we undertake no obligation to update them, except as required by law. Additionally, during the call, we may reference non-GAAP financial measures. You can find a reconciliation to the most directly comparable GAAP measures in the materials posted on our Investor Relations website. With that, I'll turn the call over to Raj. Raj Talluri: Good afternoon, everyone, and thank you for joining us. The fourth quarter represented continued progress as we transition from qualification into early commercialization across multiple end markets. First, we continued advancing smartphone qualification for the AI-1 platform with our lead mobile customer. Second, engagement expanded across smart eyewear and other AI-powered devices. We view smart eyewear as an earlier commercialization pathway for AI-1 due to lower qualification barriers and thresholds. We are currently preparing production to support initial high-volume demand from our lead smart eyewear customer. Third, defense and industrial programs continue to provide revenue, operational validation and manufacturing execution experience as we prepare for consumer scale production. Finally, we ended the year with a strong liquidity position, giving us flexibility to execute our commercialization road map while maintaining disciplined capital allocation, including recently authorized share repurchase program. Overall, we believe 2025 positions us well for the next phase, moving from qualification towards commercialization across smartphones, smart eyewear and additional defense applications, and we'll walk through that progress today. For the full year 2025, revenue grew 38% year-over-year to $31.8 million, with the defense shipments remaining our largest contributor and batteries for naval munitions specifically being our top product in Q4. Full year non-GAAP gross margin improved to 23%, reflecting higher production volumes and improved mix shift towards higher-margin defense batteries following our April 2025 asset acquisition. We ended the year with $621 million in cash, cash equivalents and marketable securities, supporting qualification completion, commercial scale-up and additional potential strategic transactions. To support this next phase, we strengthened our operational leadership. Kihong Park, or KH, as he prefers to be called, now leads our global manufacturing organization, bringing decades of battery production experience and deep operational knowledge from our South Korea platform to our Malaysia scale-up efforts. We also welcomed Ed Casey to lead advanced manufacturing engineering, adding significant expertise in scaling complex high-volume manufacturing environments across global networks. Together, this leadership alignment reinforces our focus on manufacturing execution as we prepare for high-volume production. We continue to improve yield and throughput across Fab2. As we discussed in our previous call, Zone 1 laser dicing remains the primary rate limiting factor, and we are methodically addressing that constraint through process optimization and alternative dicing approaches. We believe in our ability to unlock higher production rates as we transition towards commercialization. In 2026, we are capable of qualifying other new products and customers in the very production line they will use and meeting demand for smart eyewear customers. Our overall company focus remains on disciplined execution, advancing smartphone qualification while expanding into adjacent markets that support earlier revenue and manufacturing scale and leading in smart eyewear markets with our silicon battery shipment. You'll see how these pieces come together through today's presentation. Now let's talk about markets. Last quarter, we introduced this framework for outlining the end applications where our technology can create a durable moat. The smartphone market represents the fastest path, the large scale and is ideal for our technology. An independent study from Polaris Labs previously validated our energy density leadership in smartphone batteries. And this quarter, we extended the validation through a second apples-to-apples comparison against the leading competitor using identical methodologies. The results confirmed that AI-1 delivers a meaningful volumetric density advantage versus commercially available silicon-doped lithium-ion batteries. We expect AI-2 and AI-3 to further expand our technology lead with performance gains well beyond historically industry advancement rates. This quarter, we updated this slide by breaking out smart eyewear and drone applications as distinct growing addressable markets where our engagement has progressed. Smart eyewear adoption is presently accelerating as AI workloads migrate to compact always-on devices. We expect to ship our first smart eyewear batteries for use in AI/AR devices in the second half of 2026. Exceptional growth in this market is expected to continue throughout this decade with display-enabled architectures that significantly increase power demand and require higher energy density for constrained form factors. We believe smart eyewear battery TAM could exceed $400 million by 2030, and we are targeting meaningful participation based on early engagement with key partners and strong technical suitability. Drones represent another priority area of focus where we see an attractive TAM and a strong competitive advantage. Western drone platforms, both defense and commercial, are increasingly prioritizing higher energy density, extended flight time and supply chain diversification. This battery segment is projected to be approximately $1.5 billion this year. Breaking these markets out reflects growing conviction that we are well positioned across multiple high-growth platforms. With that context, let me walk you through our smartphone qualification progress and the defined pathways we see towards commercialization. Turning to our smartphone commercialization plan. We remain engaged with 7 of the top 8 global smartphone OEMs by market share and validation efforts have expanded this year with multiple leading OEMs, including those serving the U.S. market. Our near-term focus, though, remains on 2 Asia market leaders with Honor being our lead customer. We commenced their formal product qualification process in the third quarter of 2025. Most of the requirements have now been met, and cycle life testing remains the primary gating item to complete qualification and move into system integration and production planning. Because cycle life testing is often misunderstood, particularly for silicon anode batteries, let me spend a minute explaining what these tests actually measure and why they matter for real-world smartphone usage. The key point, and what we want to clarify next is that cycle life results are complex and depend heavily on test protocols, which is especially important when evaluating next-generation silicon anode technology. When we say cycle life testing, we are referring to multiple tests based on different charge and discharge rates, or C-rates. This is a standardized measure how quickly a battery is discharged relative to its total capacity, where a 1C rate means the battery can be fully discharged in 1 hour and a 0.2C rate means battery discharge in 5 hours. This slide illustrates relative C-rates across common smartphone applications. The highest power consuming activity is video recording, which requires approximately 0.17C discharge rate. We include a host of other popular consumer applications as well as scenarios for running multiple applications simultaneously to account for use cases such as using ChatGPT while also playing a Netflix movie. When we refer to our lead customers' primary qualification requirement of 1,000 cycles, that is based on a rate of 0.2C. As you can see that everything below this level, which is why smartphone as well as smartware OEMs rely on this test to ensure batteries provide a positive experience for a wide range of consumer usage patterns. A test purely based on this rate would take a year to complete though. So most companies compress the test time to 4 months by using an accelerated 0.7C rate for a majority of the cycles where the battery is fully discharged in 1.4 hours. Smartphone OEMs also included in their qualification process, a secondary requirement of 800 cycles for just the 0.7C cycles, though this C-rate is well beyond any single app consumption we are aware of. For the parts shipped in December, customer qualification testing for cycle life began in January. This testing is progressing in parallel under customer control protocols. On this slide, you can see how batteries we send to our lead customer perform in our 0.2C cycle test. We made improvements over our initial version submitted in July, and our internal test indicates we are now likely to exceed the requirement of 1,000 cycles at 0.2C rate. This is a significant achievement that is indicative that our product is approaching readiness for integration into commercial products. However, these same batteries are not currently on track to exceed the accelerated 0.7C target. As it is the first time a 100% silicon anode smartphone battery has been brought to the market, we are working closely with our customer on alternative pathways for testing that is more suitable for silicon anode batteries. So while customer testing ultimately determines qualification, this internal data set gives us increasing confidence that the current batteries are tracking towards the required performance. Because there has been no 100% silicon battery qualified in a smartphone, there are no defined testing protocols for qualification. Based on current test results, we're discussing multiple pathways to qualification with our lead customer. The first scenario is approval based on our 0.2C results and acceptance of the 0.7C cycle life below their current requirement. A second scenario involves adoption of new accelerated testing protocol tailored for silicon anode batteries. Finally, we're also continuing to develop improved electrochemistry variation to hit the 0.7C target. While we believe our battery platform is ready for deployment, we also understand that we are entering the largest consumer electronic market in the world. Customers appropriately maintain a high qualification bar for new entrants. We look forward to meeting all the necessary standards in 2026 and transitioning into commercial production. Initial smartphone-related revenue in 2026 is expected to support system integration and launch preparation, positioning us for a larger scale commercialization in late '26 or beginning in 2027. Now let's turn to smart eyewear. We view smart eyewear as an earlier commercialization pathway for AI-1 due to shorter qualification cycles and lower durability thresholds. We believe this market represents a compelling near-term expansion opportunity for the platform, where our high energy density architecture is well aligned with product requirements. Our engagement in this category began early, and we're working with partners we believe are well positioned to lead in this market as it scales. Compared to smartphones, where an incumbent is deeply entrenched, this creates a more direct path to initial adoption. Our focus now is execution as we prepare for initial volume shipments to lead smartware platform later this year. Today, the eyewear market is dominated by products without displays, largely focused on audio, connectivity and basic AI assistance. However, over the balance of this decade, we expect more than 5x unit growth as display-enabled ecosystem emerge, which translates to even higher battery TAM expansion as ASPs increase over the same time frame. Display-enabled eyewear materially increases the power demand. Always-on AI processing, image capture and augmented reality overlays create sustained energy draw in highly constrained form factor. That combination, compact design and higher sustained power consumption is precisely where volumetric energy density matters most. Based on current engagement, which has accelerated rapidly, we expect smart eyewear to represent an earlier commercialization pathway for the AI-1 relative to smartphones. As this market matures, we estimate the smart eyewear battery TAM could exceed $400 million by 2030, and we believe AI-1 is well suited to participate meaningfully in this market. This slide illustrates how our platform aligns with smart eyewear cycle life requirements. Importantly, in this segment, customers typically require less than 1,000 cycles durability at 0.2C rates and do not have a pure 0.7C cycle test. Our energy density architecture is optimized for constrained space and sustained power draw. And because we architected AI-1 first for smartphones, the segment which has the highest technical qualification standards in consumer electronics, we believe extending the platform into smart eyewear is comparatively more straightforward from a performance standpoint. Once we designed for the most demanding use case, adjacent applications become natural extensions of the same core architecture. That allows us to prioritize energy density and power efficiency while comfortably meeting eyewear durability thresholds. In addition, we expect this market will have a mix of smaller customers who address a wide range of fashion preferences and use cases that are also enabled by the budding Android XR ecosystem. This means our future sales mix may include meaningful percentage of off-the-shelf products in addition to customized products for the market leaders. We are seeing this dynamic play out already with multiple wins we announced at CES earlier this year. Let me now turn to defense. Defense continues to provide both revenue and operational validation of our technology and manufacturing capabilities. We operate 2 differentiated defense-focused platforms across our global footprint. In Malaysia, we're advancing our 100% silicon anode architecture, our largest format AI-1 variation optimized for high energy density applications. These batteries are well suited for next-generation soldier systems, including augmented reality headsets and wearable power systems. We have supported U.S. Army programs since 2021 and recently provided deliveries under the conformal wearable battery program. In Korea, we have a conventional architecture platform utilizing graphite and silicon anodes. This facility has an extensive operating history in Korean defense markets and supports a wide range of battery sizes and configurations optimized for high discharge rate applications, including drones, subsea systems and munitions for several Korea's large defense contractors. Naval munitions specifically were the largest growth driver in 2025, and our pipeline is increasingly focused on expanding our presence in the aerial drones market. In 2024, we kicked off a campaign to introduce our technology to U.S. and European military contractors who are attracted by our diverse supply chain and internal manufacturing capacity. Establishing initial programs and building a pipeline has required time, but it is starting to pay off. We enter 2026 with a global pipeline of approximately $100 million, including opportunities with multiple Tier 1 defense contractors. Recent design win traction in Q4 has strengthened our confidence in pipeline conversion. As programs progress, we expect to provide greater visibility into customer engagements as we convert pipeline to backlog. Aerial drones represent a compelling battery growth opportunity with an estimated $1.5 billion TAM this year. Next-generation drone platforms require higher energy density to extend flight time and strong discharge capability to support power intensive missions. As autonomy and AI capabilities expand, power requirements will continue to increase. Our platform aligns well with these needs, enabling longer flight times, sustained high discharge performance and diversified supply chains through our manufacturing in Korea and Malaysia. We are building on deployed defense cells and existing customer relationship to expand into next-generation silicon anode drone applications. This segment demonstrates how our architecture scales beyond smartphones and supports a diversified growth strategy. This slide highlights our energy density progress in drone applications. Today, we have deployed defense cells supporting high discharge drone programs. We are now advancing a higher energy drone cell in development with internal testing achieving approximately 342 watt hours per kilogram. Looking ahead, our next-generation silicon anode road map targets energy density above the 400 watt hours per kilogram to support increasingly autonomous platforms. The road map shows clear progression, deployed cells today, higher-energy product launches next and next-generation silicon anode performance that expands mission capability. Now I'll turn it over to Ryan to talk about our financials. Ryan? Ryan Benton: Thanks, Raj. First, a few highlights on the fourth quarter results. Fourth quarter revenue was $11.3 million, a record for Enovix, up 16% year-over-year and above the top end of our guidance range of $10.5 million. This performance was driven by continued strength in defense and industrial shipments out of Korea. Non-GAAP gross profit was $2.9 million for a non-GAAP gross margin of approximately 26%. While margins can fluctuate quarter-to-quarter based upon product mix, Q4 benefited from higher volumes and operational improvements in Korea. Non-GAAP operating expenses were consistent with our planned investment levels, reflecting continued investment in smartphone and smart eyewear qualification programs as well as Fab2 readiness. Non-GAAP loss from operations was $28.9 million, modestly better than the guidance range of $30 million to $33 million. Non-GAAP net loss per share attributable to Enovix was a loss of $0.14, also better than the guidance range of a loss of between $0.16 and $0.20. With respect to the balance sheet, we ended the year with approximately $621 million in cash, cash equivalents and marketable securities, providing substantial liquidity to execute on our commercial plans as well as enabling us to evaluate strategic opportunities from a position of strength. Additionally, the Board authorized a share repurchase program, reflecting confidence in our long-term strategy and adding another tool to our capital allocation framework as we focus on long-term shareholder value. Turning to the full year results. For the full year 2025, revenue totaled $31.8 million, a record for the company, representing 38% year-over-year growth. This growth reflects sustained execution in defense and industrial markets, while new products in the smartphone and smart eyewear markets advance towards commercialization. Full year non-GAAP gross margin improved to 23%, benefiting from higher volumes and demonstrating substantial progress in manufacturing execution. Capital expenditures for the year were disciplined and aligned with our staged manufacturing expansion plans. Overall, we exited 2025 in a stronger financial and operational position than we entered it, with growing revenue, improving margins and substantial liquidity to execute upon our road map. Now turning to Q1 2026 guidance. For Q1, we expect revenue in the range of $6.5 million to $7.5 million, reflecting normal seasonality and program timing of defense shipments. We expect non-GAAP loss from operations between $29 million and $32 million, reflecting continued investment in product qualification and manufacturing readiness. We expect capital expenditures between $9 million and $11 million, primarily related to Fab2 equipment. Actual cash payments in Q4 were lower than previously guided due to the timing of equipment and vendor payments. The majority of those payments are expected to occur in the first half of 2026. This is primarily timing, though we also made a couple of intentional near-term adjustments. Coincident with the operations leadership transition, we made 2 adjustments to our capital plan. First, we deferred initiation of the NPI line in Korea to allow KH time to fully evaluate priorities and sequencing. Second, given the high demand for products from our Korea factory, we are accelerating adding incremental capacity there. This is a relatively modest investment supported by high customer demand and opportunities. On the M&A front, to provide a little bit more color there, we continue to actively evaluate a range of opportunities, both smaller and larger, that could accelerate commercialization or strengthen our manufacturing and technology position. We will only deploy capital with a focused and disciplined approach, especially with respect to strategic fit and price. And with that, I think we're ready to take questions. Operator? Operator: [indiscernible] Q&A session. Please note that this call is being recorded. Before we go to live questions, we're going to read the 2 most highly voted questions submitted by shareholders ahead of this call during the call registration. The first question is, how does your current strategy differentiate Enovix from competitors? Raj Talluri: Thank you for that question. So Enovix, we use 100% active silicon anode. Most of our competitors use graphite for the anode. Silicon anodes can store much more lithium. So we are able to provide much higher energy density because of that. One of the problems with replacing graphite with silicon is that the silicon tends to swell when using a battery when doing a charge and discharge. We've got an architectural advantage where we figured out how to enable the silicon anode from not swelling while maintaining the energy density advantage. That is our main advantage, and that is how we differ from most of our competition because we provide much higher energy density due to using 100% active silicon anodes. Operator: Thanks. The second question is, at our current burn rate, how long is our cash runway? And under what conditions will we need to raise additional capital? Ryan Benton: I'll take that one, of course. First, we ended the year with approximately $621 million in cash, cash equivalents and marketable securities. So we're operating from a position of strength, in my opinion. Second, I'd caution against thinking about runway purely in terms of static burn rate because our spending is tied to a very specific qualification and commercialization milestone set. As those programs progress, the working capital and capital expense profiles will evolve as well. As we said in the prepared remarks, we believe we have sustained liquidity -- substantial liquidity to execute on our commercialization strategy without needing to raise capital in the near term. That said, as we've discussed before, beyond that, we will always evaluate capital allocation options such as strategic M&A opportunistically but with process rigor. Operator: [Operator Instructions] Our first question comes from Mark Shooter with William Blair. Mark Shooter: Can you hear me? Raj Talluri: Yes, go ahead. Mark Shooter: Great. So I appreciate you getting into the details and geeking out with us a bit on the smartphone C-rates test requirements. The 0.7C rate life cycle test is definitely overkill for smartphones, but it's an incumbent standard, and they're notoriously sticky and difficult to change once established. So I'm wondering in your engagements with Honor, how receptive were they when you suggested the change? And given that cycle life and energy density are always paired to trade-offs, would Honor take a formulation that hits that 0.7 rate cycle life spec with a slightly lower energy density? Raj Talluri: Yes. Thanks, Mark. Thanks for the question. Yes, I think the first thing is to -- the reason I showed some of the material in this talk is to actually show that most of the use cases in the smartphones, as the batteries get bigger and bigger and more and more capacity, are under 0.2C discharge, which basically means that we have a battery that now we believe under 0.2C average discharge rate, goes over 1,000 cycles. So we essentially -- we feel we have a battery that meets the requirements of the smartphone market. Now as I said, one of the challenges is if you want to test if the battery meets the requirements at the -- how the normally battery is used in the phone, it's going to take a year to at least to run that because if you run at 0.2C, it takes a long time. So customers typically use a higher rate of discharge, like 0.7C, to cut the amount of time it takes to test. This is very similar to people used to use a burn-in test, for example, for chips, high-temperature ovens, try to find the early failures. When you change technology from graphite batteries to silicon anode batteries, silicon anode batteries behave differently when you discharge them very fast, in this 0.7C. So Honor and our other smartphone customers, we've talked to them, they understand that. They realize that this test is a proxy and an accelerated test and not a true test. But, like you said, this is a test they have been using. So we are in discussions with them. We see 3 pathways forward. One is, we're able to convince them that this is not a real-life test and the real-life test is really 0.2C, and we can get a waiver on less cycle life for 0.7C, for example. By the way, this has got nothing to do with energy density. It's purely about cycle life testing. So it's not like they need to take a lower energy density. They just have to take a lower cycle life on 0.7C, which is not a real test, an accelerated test. The second one is we have to find together with them another accelerated test that is more representative, if you will, for silicon anodes. And we have some ideas on what that is, and we are discussing with them on that. The third one is we'll just have to modify our electrochemistry just to pass this test at 0.7C. So we are working on all 3 of those. Ultimately, there is a lot of interest from our customers in wanting to use our batteries because of the higher energy density we provide. And the road map, even higher energy densities because of 100% silicon anode. And those conversations are going well. But ultimately, we need to solve this passing of this test to a way where they and us both are comfortable, that in the real-life use case, when ultimately the battery is put in the phone, it's going to do really well and everyone is happy with the performance. Mark Shooter: I appreciate all the color there. If I can switch over to the opportunity in smart glasses. In the presentation, you gave a lot of information there on the TAM as well. The performance advantage with Enovix's cell and technology goes up, but the battery application requirements get easier. So I can see this is your faster commercialization path. But you did mention an initial production demand in your -- in the release statement. So I mean, should we think about that as a purchase order? Or is that a next step? And can you frame what the revenue opportunity might be for '26? Or is this a '27 story? Raj Talluri: Yes. Good question. So as you alluded, when the battery gets smaller but still the energy requirements or capacity requirements are high, we have a disproportionate advantage because the smaller it is, the efficiency we have is more -- better compared to our competition because the additional stuff we put in there for holding the cell from not expanding is not as much of a penalty, right? So that's why I think it's much -- we are much more competitive there. And also the cycle life requirements are much, much lesser. They don't need to do 1,000 cycles because people probably change their glasses much quickly. So those 2 are very good. And also, the battery in smart glasses is the limiting factor. I mean, if you guys actually buy some of the smart glasses in the market today and start using them, you'll find that almost none of them come all day. Smartphones come all day, but most of these things will die in multiple hours. So a better battery makes the product. That's why there's a lot of interest from our customers on using our battery. And also, there's lots of different kinds of applications, lots of different kinds of products. This is what I mean by -- there could be sport glasses, there could be utility glasses, there could be fashion glasses. And as I mentioned, when Android XR ecosystem comes, there will be even more products using that. So that's why the TAM is now suddenly much larger we expect it to be in the next few years than we ever thought before. So I think that's why we are very excited by this market and the fact that we can get there. Yes, you absolutely should think of the question you asked as a purchase order, and we are manufacturing them now to our lead customer. We are very excited by that. The whole team -- I was in Penang last week. The whole team is focused on executing that and building those products and setting it out. Initial volumes will be lower just because they're just starting. But I think that '27, '28, we expect the market to really grow and be meaningful for us. So we're excited by that. Ryan Benton: Yes. If I can just jump in and chime in. Had an old boss, used to say, "All dollars are not equal." It's a very important order for us. Operator: The next question comes from George Gianarikas with Canaccord Genuity. George Gianarikas: Incredible level of detail in presentation. Appreciate it. So maybe first question, you pointed to sort of a little bit of an issue with the electrode dicing and the manufacturing process getting yields up there. How much have you been talking with your potential future customers around fixing that issue maybe together in anticipation of ramping production towards the end of this year? Raj Talluri: Yes. I think, firstly, as I mentioned, the yields on almost -- on all steps are above 80%, as you saw in our -- 80% or above, as I mentioned. On the dicing side, they're close to 80% but not quite there in fourth quarter. But this quarter to date, we're at 80%. So we feel confident that as we make progress, it will sort itself out. But that's because we just started making 2 batteries, right? We just started making the smartphone battery and smart eyewear battery. We've been sampling a lot of batteries last year. We're now focused on 2 of them, one on Agility Line, one on H-volume line -- high-volume line, and we'll continue to work on each state to get it better. Our customers have visited our factories. They have seen it. We've got man through multiple customer audits. We have enough supply to meet all the requirements for 2026. And we're looking at various options to increase the throughput and get even more cost-effective than laser dicing methods to actually get the volumes up. So yes, a lot of focus on that, and we are working with our customers on that. George Gianarikas: And maybe with regard to the drone opportunity, can you sort of talk about the different variations of chemistries that you have to work with them? I'm assuming these are silicon-doped cells, not 100% silicon that you're approaching the market with first. And so how many different chemistries do you need to approach that market? And do you need, like, any additional salespeople to sort of attack it? Raj Talluri: Yes. Great question. This, we have been making. We haven't really talked about it too much in the past. We have been making very high performance, high rate of discharge cells because we were selling into -- a lot into the Korean military from our Nonsan facility. And some of the requests came from drone batteries, and we started making those. What we find now is, with the market expanding fast, because as you guys have seen in the more recent political situations, there's lots of drones being deployed, both in commercial and also in military, we have now combined -- used some of our knowledge on using 100% silicon anodes with our Nonsan team. And now we dope those batteries also with silicon anode -- with silicon -- the graphite with silicon and to increasing amounts. As I mentioned before, when we put more and more silicon, the cells, the batteries swell. So that problem hasn't gone away. But since they are inside things like drones, even if those cells swell 10%, 15% or more, there's space inside to accommodate that. So we have now found that we can make high gravimetric energy batteries that do swell a little bit, but still good within the application. Whereas in a smartphone, if you swell, it's not acceptable because it's very space constrained. So they are both -- so in that sense, I think it's been a really good thing for us. As I mentioned, we have a strong road map now, and you will see us sampling much higher watt hours per kilogram cells this year and just continuing to increase that through next year. And we have a lot of customers now helping us with that, too. Operator: Our next question comes from Colin Rusch with Oppenheimer. Colin Rusch: Can you guys hear me okay? Ryan Benton: Yes, sir. Raj Talluri: Yes, Colin, go ahead. Colin Rusch: So guys, exciting that you're moving into the drones. Can you talk a little bit about the form factors that you're working on there as well as the diversity of electrolyte and binder materials and binder processes that you can -- you feel comfortable talking about at this point? Just want to get a sense of the full ecosystem here and potential product diversification that you might see within that opportunity. Raj Talluri: Yes, sure. Again, like I said, it's a pretty big market and all of them are not same, right? There are subsea drones. There are aerial drones. There are big aerial drones that carry a lot of weight. There are smaller ones that carry some munitions and maybe onetime use and just used for a few times. So we have different chemistries and different electrolytes to address that market. Here, this is one of those areas where we can trade off cycle life for energy density, for weight and so on because you don't need to charge them 1,000 cycles, right? So that's really not a requirement here. 300 is plenty. So suddenly, a lot more opportunities open up for us in terms of the electrochemistries we use. And our team in Korea has been doing this for a long time. So we have multiple chemistries going after that, some purely graphite, some graphite doped with silicon, a different kind of cathodes. So multiple form factors, multiple products. But we understand this market pretty well. And the other important thing is, in this market, having your own factory is really a big deal because manufacturing -- that's something that our customers tell us that the fact that we own our factories and we can make them in Korea or Malaysia is a big advantage compared to some of our competition who actually have to use contract manufacturing in China and other places. So these are sensitive areas where having our own captive manufacturing helps us quite a bit. Ryan Benton: And I'll add to it. I think I was going to say part of the question, I do expect that we'll add to the sales and business development organization to support that. So it's kind of the time to build that group out. Raj Talluri: That's right, yes. Colin Rusch: Great. And given what's going on in the U.S. in terms of trying to migrate manufacturing and secure supply chains back into the U.S. over the next few years, even from Korea, can you talk about some of your capital planning on a multiyear basis as you enter that market in terms of having to have some localized or regionalized supply in the Western Hemisphere to serve some of the [ U.S. military ]? Raj Talluri: Yes. I mean, at this point, as Ryan mentioned, we were fortunate to acquire this facility in Korea last year from SolarEdge that added 300,000 square foot of total capacity we have -- factory we have in Korea now, with a very capable team that's been building batteries for defense for like 20 years and industrial applications. So we have a large footprint there, and we are now going to invest more into that this year to get more capacity there. And again, so far, I think manufacturing in Korea, our manufacturing in Malaysia seems perfectly acceptable. We'll continue to see if it makes sense to bring something into the U.S., but we are quite -- our customers are quite comfortable right now with those 2 facilities. Operator: The next question is from Jeff Osborne with TD Cowen. Jeffrey Osborne: I appreciate all the detail on the call so far. I wanted to know, Raj, relative to the last earnings call, 3 months ago or so, the 0.7C metric that you mentioned, is that new? Because you referenced sort of a 4-month testing period. I'm just curious like when the parameters changed? And then when that -- I think you referenced a 4-month sort of shot clock to proceed through the testing process and procedures. Did the 4 months start 3 months ago and you'll know next month? Or did you get that new homework assignment, so to speak, in the past few weeks? Raj Talluri: No, that's always been there as a requirement. And our thinking was that we will figure out a way to -- I mean, we will pass that requirement also. But I think what we find now is with 100% silicon anode batteries, 0.2C requirement is something we can pass because that's -- we have data now that shows that. When you discharge a battery like 100% silicon anode battery at 0.7C rapidly, which is not a real use case, as I mentioned, you just do it for convenience. It doesn't behave like the graphite batteries do. It behaves differently. So in that sense, it's one of those cases where the accelerated test itself has to be adapted a little bit for the kind of battery we are using. And we showed this to our customers, and they understand it. So we're not discussing what the right way to resolve this is, right? So it's not a new homework assignment. The results is what we have now, is we've solved the 0.2C problem, which I believe is a real problem in terms of how a battery is used in the phone. Now we are working on how to resolve the 0.7C accelerated test in a way that both us and our customers are comfortable. Jeffrey Osborne: And do you think that can still be done in a 4-month window that started at some point this quarter? I'm just trying to understand like when do you expect, knowing what you know now, to pass the Honor test, so to speak? Raj Talluri: Yes. Like I said, I think there are 3 pathways for us. One is, we have results now on 0.7C that don't go all the way to the cycle life that they want. But we are talking to them about how real is this, like it's a proxy test, can we get comfortable? And for example, get a waiver that you pass these many cycles, it's okay as long as the 0.2C is holding 1,000 cycles. That's one pathway. That may be the shortest one. The second one, maybe we come up with a different accelerator test, which we believe is more representative or better -- makes them comfortable that silicon anodes, if we accelerate test like this, they behave like how they would in real-world use case. We are working on that, which is a different testing protocol. And the third one is they say, "No, you just got to pass this." In which case, we'll have to change the electrochemistry and find a way to pass this, which we have some ideas on how to do. The team is working on that. That might take longer. So depending upon which one we are able to convince them, we'll gate how much the time is. So we do believe that one of these things we'll be able to convince them before the end of the year and get some volume. Jeffrey Osborne: Got it. And then maybe for Ryan, just given Raj's answer on the 3 different outcomes there, as it relates to sort of modeling the business over the next few quarters, I know you only give formal guidance 1 quarter out, but I assume we should think about eyewear as the main driver outside of the Routejade facility for the next 6 months or so? That is part A of the question. And part B, can you just remind us of what you expect seasonality to be for defense? You've got a pretty precipitous decline in Q1. How should we think about that rebounding in Q2 to through the rest of the year? Ryan Benton: Yes. Thanks, Jeff. The first part of your question, the answer is yes. So for the first -- the near term, that's -- you heard it right. So smart eyewear is the more near-term opportunity. And then the second part of your question in terms of seasonality, exactly right. So if you look at the same pattern in terms of revenue that we had last year, Q1 tends to be soft based on the order pattern of these long-term defense contracts and then the back half of the year tends to be much stronger. Kind of evidenced by our Q4 that we just printed, which was record quarterly revenue. Jeffrey Osborne: Got it. And then maybe last one quickly for you. Just CapEx for the year, should we think about $50-plus million? Or what's the expectation? Ryan Benton: We don't give -- apologies, we don't give guidance beyond the quarter. I think we gave guidance for just Q1 and just speak broadly about Q1 in general, we talked about the HVM-2 line. We've already started placing some orders for some of the long lead, but we'll reevaluate all of our plans now with KH, who's in this new role of Head of Operations, who's wonderful to work with, and we'll just be smart and prudent how we phase those orders out over the year. Operator: The next question comes from Will Peterson with JPMorgan. William Peterson: I wanted to come back to the question about your Korean operations. Can you give us a sense for what the combined, the 2, Routejade and the other one, can support in terms of megawatt hours or revenue? Just trying to get a sense of the run rate you could support at sort of max capacity? And then how much capacity do you plan to add? And what -- can you give us any sort of sense on what investment you're considering? Ryan Benton: Do you want to take that or me? Raj Talluri: Go ahead. Ryan Benton: I'll go. Again, with that, we haven't given out specific numbers in terms of megawatts, but we -- I think we've talked publicly about how this is a facility that will support significantly higher revenue streams, maybe 2x, and we're investing -- we're making decisions in terms of deploying capital right now, which would incrementally add to that. Again, I don't want to quote an exact number, but it's -- we recognize what a great opportunity we have here in some of these markets that we've talked to, and we've got a great team to support. So we're starting to invest dollars. But again, the -- I think you can see the type of numbers that we've invested in Korea over the last couple of years compared to the dollars that we're investing in PEP-2, they're relatively small, but they're really important in terms of the ROI that they can return both in terms of dollars and strategic return. Raj Talluri: Yes. One other color I'd add is, we have a much larger facility now. Like I said, we have a fairly large facility that we acquired with a lot of machines. So we will be adding incrementally and in a scalable manner. So some of it that we acquired is usable. For example, we have a huge coater that we acquired from there that the coating -- we don't have to add new capacity, and coater is very expensive. But then we can add more to the dicing and stacking in a scalable manner. So we don't have to do it all at once. The facility is there, so we can prudently add it as and when we see the demand and the qualifications materialize. So it's been very fortuitous that we got this facility and now the demand is coming to us. William Peterson: I appreciate that. And then coming to the key, I guess, your first smartphone customer, trying to get a sense for the key learnings from the chemistry reformulation process. And how many more, I guess, options do you have with this customer? And you gave, I guess, a pretty clear example of cycle life. I guess is there differences in requirements between the various customers? Anything you can kind of give us to better understand what, I guess, opportunities you have ahead? Raj Talluri: Yes. I mean, look, the learning here is this for me, right? I think the learning is we wanted to give a lot more color on this call and our report on exactly what it is. And what we have learned over this is the smartphone requirements are very, very difficult because this is the largest market for portable batteries and consumer electronics, great margins because they provide clear value, huge TAM. But when you make a battery for that, the rest of the markets are much easier because this is the toughest one. And to replace an existing graphite battery and existing graphite battery ecosystem with 100% silicon anode battery, one is, meeting all the requirements. Second is, helping and learning with the customers on accelerated tests or other tests that they have put together, have to be updated a little bit for this particular kind of technology. It was kind of like thinking about when you started to add -- I don't know, I remember in my past, we added fingerprint sensors to phones. So now you've got to face ID. It's completely different, right? So it's still a biometric authenticating system, but the test cases are different and the way you use is different. So whenever you introduce a new technology, you have to work with the customer in enabling that. The reason that the customers are interested in, although it's different, is because we can provide an energy density road map that's not possible to do by just graphite batteries. And that is an absolute requirement. As I mentioned when I first took this job, the AI use case is only getting more and more and the demands are getting higher and higher. And now as I mentioned, I think a few calls ago that I expect these batteries to go to 10,000 milliamp hours, and now you see that. And they can't keep getting bigger because the phones can't get any bigger. So the customers are highly motivated to help us get this technology to market. But when you totally change the graphite anode to silicon anode, here, we have to work with them to make that to qualify. So if you look at the progress we've made, it's tremendous. I mean, I think we showed -- we have specs of like 75 different specs, and we passed most of them. So we are converging, and it's been a fantastic learning. But at the same time, other markets like eyewear are much easier to do because of this. And there are so many other markets like that, that are much easier, like if you think about wearable cameras and so many other markets where AI at the edge is really creating, there are great opportunities for us once we get this smartphone battery done or even before as we've gained a lot of technology advancements in the last few years working with our smartphone customers. Operator: Our next question comes from Derek Soderberg with Cantor Fitzgerald. Derek Soderberg: I was curious if switching out the dicing technology sort of resets any part of the battery qualification process. Obviously, your customers want to make sure you guys can scale and putting aside any of the cycle life testing, might the change to the dicing technology push back that qualification process at all? Raj Talluri: Look, any time you have a customer qualify one particular product, if you change some steps within it, we will need to communicate what those steps are and what it changes, and we will need to run some form of qualification again. That's just the way it is. Even when you move from one fab to the other, you got to do that. But the way we would do it is, these are all by different zones. For example, dicing is Zone 0 and then Zone 1 and then stacking is Zone 2. So there's many ways in my experience, we've done this. We established equivalents. We show similar performance. We can do a subset of the qual. So there's many different ways to do it, but it's still a little bit early. Right now, we are doing laser dicing on all of them. When we do some other form of dicing, we'll work with the customers to gradually phase it in. Derek Soderberg: Got it. And then just a quick follow-up. Are there any remaining technical milestones to shipping commercial volumes in the back half of the year for the augmented reality market? Raj Talluri: Any technical milestones was your question? Ryan Benton: For smart eyewear. Raj Talluri: Yes. So I mean, look, we now have seen the products from our customers with our battery in them. Very exciting. We saw a few at CES. We saw a lot more in private demos. The performance is fantastic. They really like it. They really like what it's able to do and what the AI is able to do. We don't see any big technical obstacles. But this is a new market. It's a new application. So the applications are evolving. So they are doing testing of different applications. And as and when they find them, we'll figure out how to adjust it. We did learn about one thing after we first sampled in terms of how to -- different rates and different pulses and so on, and we quickly adapted that, and now we have a new battery that meets that. So my team is very capable of quickly reacting to those now. But right now, the battery we have, we feel meets all the requirements. That's why we got a production PO, yes. Derek Soderberg: The next question is from Alek Valero with Loop Capital. Alek Valero: This is Alek on for Ananda. So my first question is, what is a good way to think about the cadence of testing and production over the next few years for smartphone, eyewear, PCs and drones? Additionally, what do the capacity needs look like over that time frame? I have a quick follow-up. Raj Talluri: Cadence of testing, how do you mean by that? Maybe you can ask a little bit better. In terms of timing you mean, how long it takes or... Alek Valero: Yes. I guess what's the timing of the phases of the testing? Raj Talluri: Yes. So my experience in the last 3 years has been that typically, we provide a standard size cell to the customers that one we have. And they give us a set of requirements in terms of cycle life, energy density, rate of charge, discharge, swelling requirements and so on. And they'll do a bench level test of that. That takes a few months. When they're comfortable with that, they come back to us and ask us, hey, we want a particular -- if they are happy with that particular size and then they put it in a product and then there's a product level testing that takes a few more months. But if they want us to change the size, it will take us multiple months to come up with a different size, like when I say size dimensions, X, Y, Z and so on, to fit in that. That becomes a long pole, maybe 3 to 4 months to build that. And then they will put in the product and do the testing again. And then when all of them have passed, they place the PO. And they do system-level testing now. They put it inside a product, test to make sure the product is performing like it's always supposed to perform, and then they go to production. So if you -- and that whole cycle can take anywhere between 1 year to 1.5 years for a brand-new customer starting from scratch. Now if the requirements are not as stringent and we already have a technology that meets those requirements, for example, it can be much shorter because we don't really have to change anodes and cathodes and electrolytes and so on. Like, for example, when we have a product that meets the smartphone requirements, we were able to quickly react and make small adjustments and meet the smart glass market -- smart eyewear market. So that -- so now it's much shorter. Now if your cycle life is 1,000 cycle requirement, well, that testing takes like 4 months. But if your cycle life is only 300 cycles, it takes much shorter time. So it depends based on the end application, whether you need a custom cell or not, whether you can use a standard technology or not. So it's -- the question -- maybe a little long-winded answer, but that's just the nature of these lithium-ion batteries in custom applications. Ryan Benton: And drones? Raj Talluri: And drones I think can be much shorter. Yes, sorry, go ahead. Alek Valero: No, sorry, go ahead. Apologies. Raj Talluri: No, I was just saying drones, very similar. But like I said, the cycle life requirements are much shorter. And the space requirement is not as bad in the sense that there's more room there, so you don't need to exactly make this exact dimension of the cell. Sometimes they stack multiple cells to get the performance. So they may be able to use the cells that we have and stack multiple of them to meet the power. So that time of making a custom cell will come down. Alek Valero: I appreciate the detail. Super helpful. And actually, just a quick follow-up and on that same note. So you mentioned the drones, and I believe you said that's one of the products that could handle a little bit more swelling. Can you speak to other markets besides drones that are maybe similar like this where you could get a little bit more swelling? Is there any markets there that seem attractive that you may want to penetrate in the future? Raj Talluri: Yes. I mean I would say industrial markets that have large space, for example, I don't know, think about forklifts, stuff like that, where there's a lot more room to put the batteries in and you put it inside a big pack and you can design the pack to enable some amount of room inside that, right? That -- those are the kind of markets. But if it's a small form factor like earphones or smart glasses or cameras or consumer, they're a lot less forgiving. I would say industrial and defense are probably a little bit more forgiving. Operator: There are no further questions at this time. With that, I'd like to turn it over to Dr. Raj Talluri for closing remarks. Raj Talluri: Yes. Thank you. Thank you all for your attention today to listen to the call. I really appreciate all the support, and we look forward to talking to you guys next quarter. Thank you.
Matthew Beesley: Okay. Good morning, everyone. Welcome to Jupiter's full year results for 2025. I'm Matt Beesley, Chief Executive at Jupiter, and I'm joined, as always, by Wayne Mepham, our Chief Financial and Operating Officer. You will have already seen results in our morning's release, and Wayne will talk you through the details shortly. But from a financial perspective, last year was a challenging one for Jupiter. We started the year with materially lower AUM. We see multiple years of outflows. Client sentiment for risk assets was limited and short-term performance was not where we wanted it to be. But we remain focused on what we could control. Careful planning and deliberate management actions many taken in years before this one allowed us to navigate these challenges and make meaningful progress against our strategic objectives. Across cost savings, capital allocation and revenue generation, we have done what we said we were going to do, and in many cases, quicker than we had initially expected. Moving into 2026, we are demonstrably in a stronger position than we were 12 months ago. Many leading indicators are now firmly pointing in the right direction, giving us increased confidence on being able to deliver on our targeted 70% cost/income ratio. Investment performance has improved across all time periods. Client demand, particularly for risk assets, has grown, and we generated positive net flows for the first time since 2017. We've also completed 2 acquisitions, the larger of which not only avoided any client overlap, but positioned us to move into a new part of the U.K. market. Importantly, we also end the year with a highly engaged and client-centric workforce. One particularly pleasing aspect of today's results is that investment performance, crucial for any active manager and often a lead indicator, has markedly improved over all time periods. Our key performance indicator is measured across 3 years, over which 68% of mutual fund assets outperformed their peer group median compared to 61% last year. Nearly half of our total AUM was in the top quartile on the same basis. On a 5-year view, 75% of our AUM outperformed with more than 60% in the top quartile. But the biggest move we saw was over 1 year, where the figure increased by 42 percentage points to 84% of AUM outperforming with nearly 70% of our AUM in the top quartile of its peer group. A number of funds have had really strong performance over this albeit shorter time period, including both dynamic bond and strategic bond, which moved from fourth quartile to first quartile. A number of funds with our Merlin multi-manager capability also moved into the first quartile and the whole range is now above median over all of 1, 3 and 5 years. Looking at this from another angle, our larger funds are also continuing to perform well. At end December, we had 15 funds with over GBP 1 billion of client assets under management. Of these, 11 outperformed across each time period, with 6 funds top quartile over all of 1, 3 and 5 years. We know clients are rightly more focused on longer-term performance, but it is nonetheless encouraging to see such a turnaround and across all time periods. Strong investment performance is not necessarily a precursor to inflows, but it is nearly always a prerequisite. Let's move on to look at flows that we have seen through 2025. It's been great to see that flows have been broad-based across regions, client channels and capabilities. And that so far, this has continued into the first quarter of 2026. From a growth perspective, it was a really strong year with meaningful upticks across both retail and institutional client channels. We generated GBP 16.9 billion of gross flows were the highest that we have ever recorded. Across all regions, gross flows increased compared to the prior year and our AUM from European clients grew by just under 40%. This is a significant achievement given our ambitions to grow internationally. From a net flow perspective, we generated GBP 1.3 billion of net inflows in 2025. This is our first calendar year of net inflows since 2017. The institutional channel was the largest contributor here with GBP 1 billion of net inflows. The real turnaround, though was from retail clients, where we generated GBP 0.3 billion of net inflows with over GBP 2 billion coming in the second half of the year. In terms of investment capabilities, clearly, systematic was a material driver of flows. And within that, Global Equity Absolute Return or GEAR, continued to demonstrate excellent performance. And as such, client demand remained high. But this was not simply a GEAR story. Rather, the majority of the systematic range saw net inflows, including the long-only world equity fund, which tripled its AUM to over GBP 1 billion. Global equities was also a positive contributor, including demand for global leaders and gold and silver. And finally, something we've not been able to report for some time, our U.K. equity capability had positive flows across both retail and institutional clients, most notably into dynamic and growth strategies. It is indeed possible that we could now be seeing a more constructive outlook for U.K. equities going forward. So a welcome return to positive flows, encouragingly diversified across capabilities, channels and regions. And this momentum has continued so far this year. As of a few days ago, we generated positive flows year-to-date across both channels to the tune of over GBP 1 billion, and we now manage over GBP 70 billion of client assets. This time last year, when I discussed growth opportunities, I said we might expect most of these 7 investment capabilities to be larger within 12 months. Well, today, 5 of the 7 have greater AUM, most notably our systematic and global equity capabilities, which are more than 60% larger than they were a year ago. Of these, 3 have seen positive inflows, too. Where there has been a decline in AUM, some of this was cyclical, such as within Asian and emerging market equities after strong flows in the prior periods and some was more performance driven as with our unconstrained fixed income strategies. However, all of these are now performing well, particularly over shorter time periods, and we've already seen outflows abate from levels at the start of 2025. We have strong performance, and we are now positioned to be both more resilient and to better embrace the growth opportunities in front of us. And there are an increasing number of opportunities out there. For a long time, arguably, the smart trade for investors has been to be long U.S. large cap and to do so in a cheaper way possible, which largely meant owning S&P tracker indices. But we could now be entering into a new environment where clients' assets shift away from the U.S. and where markets become less correlated. Against this backdrop, active stock picking becomes ever more important. And if these conditions persist, this should be positive for active managers and even more so for Jupiter, given our areas of investment expertise. Before I hand over to Wayne, I want to give a quick update on the CCLA acquisition, which completed early this month. As you will be aware, CCLA are one of the U.K.'s largest asset managers focused on serving the nonprofit sector. And they bought GBP 15 billion of client AUM with them across charities, religious organizations and local authorities. This is a new client channel for Jupiter, and there's absolutely no client overlap between the 2 firms. It is a stable business with a long-term sticky client base. They bring complementary investment expertise too, across equities, real estate and multi-asset. And as you can see, the deal results in a much more diversified product range. Much like Jupiter, CCLA have a culture of open, transparent communication with their clients. So it's no secret that their recent performance has not been where they would like it to be. Using their charities fund as a proxy here and on a longer-term view, their flagship fund outperformed for 7 straight years, but has lagged comparative benchmarks more recently. Given their style, which is more focused on quality and growth and given what has happened within markets, this is understandable and indeed, to some extent, even expected. There are not long-term concerns here. But between a period of softer performance and the corporate event of the acquisition, it's conceivable that clients could use this as a catalyst event to consider allocations. For our own budgeting purposes, we are conservatively expecting a minor level of outflows from the CISA strategies through 2026. Overall, however, the deal remains highly compelling from strategic, cultural and financial perspectives, and the market seems to recognize this, too. And the opportunities for us to leverage the strengths of both businesses as a more scaled player in this large and growing client segment are meaningful, whether that is broader investment expertise, a global footprint or a more technology-driven operating model. Wayne? Wayne Mepham: Good morning, everyone. So 2025 has been an eventful year for Jupiter with some key drivers of future financial growth. We announced the acquisition of CCLA, declared an additional distribution and identified further cost savings, all of which are important management actions that will drive value today and into the future on top of the organic growth in our underlying business. I'm going to put these into context both for our financial results in 2025, but more importantly, the expected benefits still to come. Of course, the CCLA acquisition completed only early this month. So the guidance I will give includes some estimates, and you should expect more on this in July. So let's kick off with the normal financial summary. Reductions in AUM have been one of our biggest challenges for a number of years. but the combination of those positive net flows Matt took you through and strong market performance since May has seen our AUM reach GBP 54 billion at the year-end. That's up over 19% with continued momentum into the new year. But of course, it's the average that matters for 2025 revenues, and that was down 5% to GBP 48 billion. Combined with lower fee margins, that results in around GBP 311 million of net revenues, excluding performance fees for the year. As revenues were down, our cost-income ratio is higher than I would like in the longer term at 82%. But our cost management initiatives brought benefits this year and the steps we have taken to grow revenue and manage costs will move us close to that 70% target. Performance fee revenues were strong at GBP 120 million. We committed to an additional distribution of 50% of 2025 performance fee revenues. So that leads to a distribution of GBP 60 million, which I will cover later. Overall, it means we delivered over GBP 138 million of underlying profits or GBP 62 million, excluding performance fees. That's a total underlying EPS of 19.4p. And without performance fees, that's an EPS of 8.7p, taking us to full year ordinary dividends of 4.4p per share. Let's look at this in a bit more detail, starting with AUM. Since the beginning of 2024, AUM has fallen each quarter and into April 2025. We all know about the outflows in 2024, nearly half of which came through in the final quarter. And early 2025 was also challenging with real market disruption in the lead up to tariff announcements. We reached a low of GBP 43 billion of AUM in April. But since then, we have seen steady progress each month from markets and importantly, for momentum, positive flows almost every month and over GBP 1 billion of flows in the last quarter alone. That's a strong sign for 2026. It means our AUM was up nearly 20% from the start of the year and it's up over 12% on the average for 2025. And that momentum has continued into 2026, so positive signs already for this year. As I've already touched on, net management fee revenues were down compared to 2024 at GBP 311 million. Fee margins were down on 2024 at 65 basis points, which was driven by ongoing changes to our business mix. That's both from net flows and market dynamics, pushing up AUM in relatively lower margin areas. It's a progression we saw through 2025, so we enter 2026 with a run rate margin of 64 basis points. It's also a trend that I expect to continue in the short term. So I'm budgeting for average margins to be around a further 1 basis point lower this year at around 63 basis points, but off a much higher starting AUM. Of course, that excludes the impact of CCLA, which I will guide to separately for this year. Along with performance fees, that's combined net revenue of GBP 431 million for this year. Those performance fees are a lot higher than I guided and is a clear demonstration of simply how difficult it is to predict, both in terms of AUM levels and alpha generated. But accepting years like this can happen from time to time, if I look back at the average income we've generated, that tells me that performance fees could be around GBP 20 million for 2026. I'd emphasize all the usual caveats and disclaimers and note as 2025 demonstrates, there is the potential for that to be much more. So let's move on to costs. Before I run through the details, I wanted to remind you of our approach here. We've always been very thoughtful on costs. We recognize there is both the opportunity and the necessity to focus on good cost management. Cost management to us means controlling necessary expenditure, but also allowing investment and controlling that expenditure whilst maintaining good investment with a high ROI requires careful planning, a good cost management culture and a willingness to explore new ways of working. And we've been doing just that for some time with our most recent work leading to that announcement in May of a GBP 15 million minimum targeted savings. And our approach translates well to the integration of CCLA with a further minimum savings of GBP 16 million through that same careful and considered approach. Matt and I have always delivered on our cost commitments. And as before, we see a path to get to that next milestone of a 70% cost/income ratio. So overall operating costs for this year, excluding those relating to performance fees, are down by GBP 5 million compared with 2024. But the split of comp to non-comp is a little different to what I expected even in July, and so I'll walk you through this. Firstly, our range of outcomes for total compensation costs is normally 45% to 49%. But for 2025, we have reported a 50% ratio, so just outside that range. That's a very short-term impact, and we don't expect that to repeat. In fact, our projections see that coming down by 2 percentage points in 2026. So the main reason we are above the target is the share price. It's nearly doubled over the course of the year, and that has an impact on the accounting for employee taxes on existing share awards. Of course, we seek to hedge the impact by buying shares, but that's an economic hedge and does not have -- does not remove the accounting cost. But these short term and largely accounting impacts have been more than offset by savings we have achieved in noncompensation costs. They are over GBP 11 million down on expectations at the start of the year and GBP 6 million down on our most recent guidance. That's the full year saving we targeted from noncompensation costs over a year ahead of schedule and absorbing higher variable costs linked to that rapid growth in AUM in the second half. And looking ahead to 2026 and still excluding CCLA, I expect our non-compensation costs to be around GBP 106 million. With the GBP 11 million saving already achieved, the increase reflects variable cost growth where they are linked to AUM. For my compensation guidance, where it's the same as I've said before, that's the 48% guidance from earlier this year and lower still in the future with combined -- and combined with non-comp costs gets us to the targeted savings of GBP 15 million. The investment we have made since 2024 in automation and through outsourcing has enabled us to achieve our lowest headcount since 2014 without adding to our ongoing noncomp costs. In fact, we have delivered savings there, too. So a lower compensation ratio through building scale and lower overall headcount despite having more people today in our investment management teams than we had some 10 years ago. And lower overall noncomp costs through systematic review of the smaller systems, the smaller supplier relationships that I said we would do and where we will continue to focus. With the results that we have a business that delivers greater operational efficiency today despite the well-documented cost headwinds. Turning to exceptional items. They were in line with guidance at GBP 6 million. I had said they might be higher this year, but it was dependent on the completion of the CCLA acquisition, and that did not happen until this year. So 2025 included some charge for the acquisition, but these will mainly come through in 2026 and beyond. Matt has already touched on this, but I wanted to provide an update on the CCLA financials, such as we can, having only owned the business for a matter of weeks. It's important that your model should only include 11 months of contribution. And of course, the half year is just 5 months. AUM was little changed from the announcement date at GBP 15 billion of AUM. The mix of business has changed a little and the run rate fee margin is now 43 basis points. The underlying fee rates have been stable for many years, but the mix of long-term assets to money market AUM driven by clients' needs could have an impact on the average in the future. From a cost perspective and before any synergies, my expectation is that compensation costs will be GBP 32 million and noncompensation costs will be GBP 20 million. That's 11 months' worth, so not quite half of that for this first half year. To remind you, we have a minimum targeted synergy saving of GBP 16 million to be achieved on a run rate basis by end 2027 and GBP 17 million of net cash costs to achieve the acquisition and integration. We continue to focus on the effective delivery of those financial measures, and I'll continue to update you as we progress. For your models, on synergies, I expect to deliver a good proportion of our target on a run rate basis by the end of 2026. But for the 2026 numbers, I've included GBP 4 million of reduction as savings from those headline costs I just gave you. On the acquisition and integration costs as well as the normal acquisition-related intangible asset, where we are reporting those as exceptional items. For that noncash intangible asset for now, I'll include an annual charge of GBP 5 million, and I'll confirm the number once finalized. For cash costs in exceptional items, I have GBP 14 million for 2026, and that leaves about GBP 5 million of integration costs still to come mainly in 2027. That is in line with my previous guidance of GBP 17 million net cash cost relating to the acquisition, which is, of course, after tax deductions. Later in the year, I will also set out how we intend to report on the group as a whole, so you can adjust your models. But for 2026, you should expect to get separate information on this business as we demonstrate delivery of the financial returns we announced. So finally, let's look at capital. So some capital movements after the balance sheet date this year. That's mainly the impact of the acquisition. And you can see the current expectation of our capital, but these are very draft numbers as at the completion date. Importantly, our capital position is broadly in line with where we have said, well above 2.5x cover of the higher capital requirement. That remains very strong, but also some of the acquisition integration costs have not come through yet. So I think about it net of those and still feel very comfortable we are well positioned for the future. Of course, this is after the ordinary dividend we proposed at 2.3p on top of the interim dividend of 2.1p, distributing half our underlying EPS for the year in line with our policy. And also that commitment to distribute half the performance fee revenues for just for this year. That's GBP 60 million of additional distributions, which the Board has elected to make through a combination of a special dividend and a new buyback program. So that's equally weighted between the 2, a GBP 30 million buyback or around 3% of issued shares and a 5.7p special dividend to be paid in May. As you know, we already have over 16 million shares in treasury. That's a share purchase we completed in 2025. The shares we're about to acquire and those treasury shares will be canceled. And when we are done, we will have bought back and canceled over 7% of our issued share capital since 2022. And that remaining capital continues to be put to work in liquidity positions for ongoing business needs and in seed capital, where we are supporting organic growth in our business. At the year-end, we held seed investments with a market value of GBP 73 million, all of which has been held for less than 3 years. And in 2025, we recycled funds from areas where we achieved our objective into our first active ETF and a Cayman Island domiciled version of our highly successful GEAR fund. It's early days for both of those. That Cayman fund has already attracted client funding. So we'll monitor the capital needs there very closely and put it to work elsewhere when I can. So to wrap up on the financials. Well, financial results are often a lagging indicator of performance, and that's really clear in the measures we have reported today. But there are also signs that give us indicators of future performance, too. Profits are up on 2024, driven by performance fees. But importantly, strong underlying revenue growth might be expected in the future, driven by rapid growth in the AUM at the year-end. We've delivered on our cost actions, implemented ahead of schedule and in considered way that doesn't compromise our growth potential. We have taken clear actions to deliver growth in the business, bringing in teams that are performing well as well as through the acquisition of CCLA. And finally, we have fulfilled our commitments to reward shareholders through strong distributions equivalent to 15.8p per share or well over 18% return on the share price just a year ago. Back to Matt. Matthew Beesley: This is my fourth full year results as CEO here at Jupiter. So 3 years since we first presented this strategy for the future growth of the business. I wanted to briefly look back across the real progress we have made, but also to look forward to what is coming next. We've consistently stated that increasing scale is and remains the most important of our objectives. While we continue to deliver on our cost commitments, focus must shift on to driving top line revenues and to building scale. Importantly, scale for us is not simply a question of increasing the absolute pounds of clients' assets we manage. But by better leveraging our operating model, we know that new assets for us to manage will lead to higher incremental profit margins. We are making material and visible progress here. AUM has increased by 19% over the last 12 months, supported by positive client flows, strong investment performance and good market returns. And clearly, that number increased by a further GBP 15 billion in early February with the completion of CCLA. We continue to add depth to our expertise, investment expertise this year with the acquisition of the team and assets of Origin Asset Management as well as bringing in the new investment team to manage European equities. We are not yet where we want to be in terms of scale, but there's both momentum and growth optionality, both organic and inorganic right across the group. To deliver our target cost ratio, this growth in scale must be paired with an unrelenting focus on efficiency and cost discipline. Wayne and I have continued to deliver on our commitments here. But reducing complexity is not simply about taking costs out of the business. It is evolving our structure to ensure we have an efficient operating model. The most material change in that through 2025 was unquestionably the consolidation and outsourcing of much of our middle and back-office operation functions to BNY, which will help us work more efficiently and ultimately deliver a better service to our clients. As we look forward, we remain resolutely focused on cost discipline as we find efficiencies in our core business and deliver on synergies through the CCLA deal. In prior years, we've talked much here around the rationalization of our product range. That product range now being largely complete, the focus in 2025 was on sharpening the attractiveness of our active offering. Within the underlying business, we've always looked for ways to broaden our range of expertise that we offer to our clients. And we launched 2 active ETFs last year listed in the U.K. and across Europe and also our first fund on our offshore Cayman platform. The joining of CCLA brings a whole new client channel to Jupiter, broadening our appeal now across into the nonprofit channel where we hadn't previously had any presence. Clients' needs continue to evolve, and we must evolve with them. But through the additions of new capabilities and new methods of delivery, I'd argue that Jupiter has never before appealed to as broad a range of clients. Our fourth and final objective is to deepen relationships across all of our stakeholder groups. For our clients, we continue to produce high-quality and improving investment outcomes. For our shareholders, who we appreciate who have not had the easiest of journeys in recent years, we have now delivered a meaningfully positive shareholder return and have announced total dividends of 10.1p per share and another share buyback program of up to GBP 30 million. Everything we have discussed this morning, though, has only been made possible by the hard work of our people who work tirelessly to serve our clients. We regularly conduct star surveys, and I was delighted to see that in our most recent survey, our engagement score was 88%. This is a truly great result. It is up 9 points from where we were 12 months ago and also 9 points ahead of the financial services benchmark. So it is fitting that in 2025, we were selected as one of the Sunday Times Best Places to Work. So we go into 2026, having made significant strategic progress. Many of our leading indicators are pointing in the right direction. Client sentiment has improved, and we are generating net positive flows. We built scale, both organically and inorganically, bringing new assets onto our operationally efficient platform. Investment performance is strong, and we have a broader platform of diversified and differentiated investment expertise than we've ever had before. However, we are not yet where we want to be. We know there is still a tremendous amount of work yet to be done, but we are unquestionably better placed today than we were 12 months ago to capitalize on the opportunities ahead of us. And if market trends persist, those opportunities for Jupiter could be plentiful. So with that, I will hand over to Alex to lead us to questions. I think first in the room, Alex, and then online. David McCann: Dave McCann from Deutsche Bank. Three questions from me. Matt, you mentioned in the remarks that you're expecting or possibly could see some outflows in the CCLA business this year because of the performance of the funds. I think that's a reasonable assumption given what we can see there. A question really is, was that expected, as you say, when you did the deal and therefore, was it priced in? Or is this sort of an unwelcome development that's, I guess, cropped up since? And then probably one for Wayne. You accepting the significant caveat you made around performance fee guidance, you have increased effectively the guidance from 10 to 20, all else equal. So I just wanted some color what is the sort of waterfall to get from 10 to 20? Is this just extrapolating from last year, noting that obviously, GEAR hasn't started this year as well, but we're obviously very short as a short-term period. But we'll start with those, and I'll come on to the other one in a moment. Matthew Beesley: Yes. Thanks, David. So the first question, the outflows from CCLA, was this expected. Yes, it was. Let's remember that CCLA as investment proposition has had many years of very strong investment performance, indeed, 7 successive years of outperformance prior to the 2 soft years of performance that they've currently delivered for their clients. So within context, as an active manager, this is not unexpected. They have a particular quality growth style of investing, and that style has been under significant pressure in the last 2 years, say, after a period of very strong performance. So while, of course, we want to see all our businesses grow, ideally, we recognize as active managers, there will be periods of time where some of our investment capability lags benchmarks. As a result of that, the outflows that we are suggesting might come to pass today are completely consistent with our prior expectations. Wayne Mepham: In terms of performance fees, what I've done here is look back over time and taking into account the AUM we now have in those areas that can generate performance fees, obviously, taking into account watermark as well with some of those being below. So it's an extrapolation as you put it, in terms of the outlook. I mean you quite rightly referenced here short-term performance. I mean it's difficult in January. I think if you'd ask me that question just a month ago, you'd be putting the question in quite a different way. Clearly, that strong return in January hasn't continued into February. So it's very difficult to predict this far in advance. But yes, GBP 20 million based on history, extrapolated, I think, is the right number for now. David McCann: Okay. And then the third and final question for me. Obviously, CCLA completed now, obviously, there's still some integration to do. But -- you touched on the remarks there, Matt, about the scalable platform and so forth. So would you be looking to do more of those kind of deals if you could find them? . Matthew Beesley: Yes. So look, you're absolutely right, David. In the short term, the focus is very much on the successful execution of the integration with CCLA and we obviously outlined both our targets and our time line in that regard. As of today, Wayne pointed out the very robust nature of our balance sheet. We know this is a very capital-generative business. We have a focus on improving the profitability of this business. We are very much focused on that 70% cost-income ratio. And with that improved level of profitability would naturally come likely an improved level of capital generation as well. What I hope that shareholders see is that we're going to be thoughtful and judicious about how we deploy that capital. When opportunities arise for us to deploy it inorganically as with CCLA, as with the Origin Asset Management deal, we believe we should be looking into -- looking at those opportunities given how attractive they can be both strategically and financially. But absent those opportunities, as we've shown today, we will return that capital to shareholders. So the outlook from here is to remain judicious focused and balanced in terms of how we generate -- sorry, how we allocate that capital that we expect to generate. Alex James: If no more in the room, we've got a couple online. One on flows for Matt and one on fee margins for Wayne. Matt, you referenced positive year-to-date net inflows across both channels. I wonder if we can give any more details around capabilities or regions or anything else. And Wayne, on fee margins, if you -- a question for a bit more detail around what's happened in the second half of this year and then the drivers of that guidance into 2026. Matthew Beesley: So year-to-date, the trends we are seeing so far are very much consistent with the trends we saw at the end of 2025. So still a very diversified range of investment capabilities that are attracting new client money and also a diversified range of geographies. And indeed, the comment I made in my prepared remarks is that, that positive flow that we've seen year-to-date is effect of positive growth in both our institutional as well as our retail wholesale investment trust channel as well. So very much so far a continuation of the trends we saw at the end of 2025. Wayne Mepham: Yes. So on fee margins, I mean, we always guide to in recent years a decline in the fee margin somewhere between 1 and 2 basis points on an annual basis. I mean, obviously, very difficult to predict because often and nearly always actually, it's due to business mix rather than any necessary fee pressure. Now I think what's slightly unique about last year is just the rapid change. I mean, I spoke about it in my prepared remarks, the AUM was down at GBP 43 billion in April, and we ended the year at GBP 54 billion. So that rapid increase in AUM and actually the weighting of the growth that came through, through that period was obviously beneficial to our business overall, it was tending towards lower fee margin areas of our business. So hence, why that increase. Now clearly, the impact so far is in this year has continued to follow really that trend that we saw towards the back end of last year. So hence, the 65 basis points for the year as a whole last year on average, end the year at 64 basis points. Clearly, I'm trying to look to the future and where it might go. At this stage, I'm seeing a 63 basis point average for 2026, of course, excluding CCLA. Alex James: Thank you. No more questions online. No more in the room? Matthew Beesley: Well, that leads me just to thank you all for being here today, and we look forward to updating you on our progress in the summer. Many thanks.
Gemma Garkut: Okay. Welcome, everyone, and thank you for joining IR's Half Year FY '26 Results Webinar. My name is Gemma Garkut, Head of Communications here at IR, and I'll be hosting today's session. This morning, IR released its half year results and associated presentation for FY '26, which have been lodged with the ASX. These are available on the ASX platform and our Investor Center on our website and should be read in conjunction with this webinar. Joining me on the call today are Ian Lowe, CEO and Managing Director; and Christian Shaw, CFO, who will present today on IR's business performance for the half. We will then open the session for a short Q&A. A few housekeeping items before we begin. Today's session is being recorded and will be made available on our Investor center following the call. [Operator Instructions] If we do not get to your question during the live session, you are welcome to contact our Investor Relations team via the details provided on our website and in today's ASX announcement. A reminder that today's discussion may include forward-looking statements. Please refer to disclosures by the ASX, including the materials lodged earlier today. With that, I'll now hand over to Ian to take you through the highlights for the half. Ian Lowe: Thank you, Gemma. Welcome to the webinar, everybody. We're really going to cover 3 core themes in the course of today's presentation. I'll just quickly run through these to begin with at a headline level. So, first of all, our half 1 financial performance. So, the headlines here being revenue was slightly down due to a softer renewals book. Our earnings performance impacted by expected credit losses. This is consistent with disclosures made in November of last calendar year, and we've also seen cash improvement. The second theme around continued product-led growth execution. We've launched a number of new products in the first half. We've seen some early-stage sales and adoption progress. And I'm going to expand a little today on some new product releases that we've confirmed for 2026. And the third theme is around new business growth. And so, this is where I'm going to give some color on some modest improvement we've seen in new client revenues and also improvement in revenues derived from existing clients, which we refer to as expansion revenues. Just quickly on product-led growth highlights before we get into the financials. So as many of you will be aware, product-led growth is the central growth strategy for the business. And so, we wanted to give a high-level view of our progress against this important, this important part of the overarching strategy. So, in the first half, we launched our first AI-powered product called Iris. This is a natural language interface that allows our clients to undertake deep discovery in the very granular data that we harvest for them. And Iris will evolve over time and become a foundational component in the product-led growth strategy. So, the launch of this first iteration of Iris was really important for us. In the first half, we also launched Elevate. So, this is the same Prognosis technology that we've offered as an on-prem solution for a long period of time but provided as a service. And so, this is particularly attractive to new clients that haven't invested in the Infrastructure to maintain and run Prognosis where they can essentially outsource that process to us and consume Prognosis-as-a-service, and that is the Elevate product. We also launched this in the first half. Some time ago, we launched High Value Payments. Now we've fully implemented this product for a top 10 U.S. bank, which is a really significant milestone for us. And we're engaging with other major global banks on the sale of that same product. I'll give some more detail on that through the presentation. Our innovation initiative called IR Labs. We're looking forward to launching a new AI-powered stand-alone product in calendar year '26. I'll give some more detail on that in this presentation. And indeed, as we approach that launch, we would expect to share more information in relation to it. As mentioned earlier, we've also seen some modest early-stage improvement in the growth metrics that we've laid out to monitor our progress against product-led growth. This was underwritten by a cohort of new clients that we secured in the half, in particular, across verticals, including Government, Health and Defence. So, I'll expand on this as we go, but I'll just hand over to Christian in relation to the financial update. Christian Shaw: Thanks, Ian. My name is Christian Shaw. I've been the CFO with IR for 2 years now. It's my pleasure to provide a financial update on first half FY '26. Firstly, by way of introduction, I'd like to confirm that thanks to a strong sales close in December 2025, the company's results were at the upper end of the guidance range that was provided to the market via the ASX on the 14th of November 2025. And there's a slide included in the appendix of today's presentation to this effect. The focus of my presentation today relates to first half FY '26 results versus the Prior Comparable Period or PCP. I'll now take you through the key financial metrics for the first half of FY '26. However, shareholders are encouraged to read the Appendix 4D and the interim financial report lodged this morning on the ASX in conjunction with this results presentation. In summary, core operating performance for the period was broadly consistent with PCP. However, the incurrence of material expected credit losses ultimately resulted in an operating loss and a net loss after tax. A relative earnings shortfall is more obvious given the existence of large nonoperating gains in the PCP. Statutory revenue for the first half of FY '26 was $28.3 million, which was slightly down 2% to PCP. Renewals performance and contribution to total revenue was slightly down versus PCP, reflecting a softer book of business in the period. Expansion or cross-sell and upsell revenue outperformed, albeit against a low base. Encouragingly, new client revenue grew with multiple strong wins achieved late in the reporting period and despite shorter-than-usual contract lengths. Operating expenses, inclusive of expected credit losses exceeded PCP and without which were slightly lower. Product and technology expenses increased in line with strategy, while Sales & Marketing expenses reduced, and G&A held steady. The earnings before interest, tax, depreciation and amortization or EBITDA loss was a loss of $3.1 million and a net after-tax loss of $1.5 million, both of which were down against PCP, which reported profit results of $4.6 million for both measures. First half FY '26 cash increased to $43.6 million and net assets remained strong at $95.7 million. The company has no debt. I'll commence a deeper dive now for the period with Pro forma revenue, which is an underlying measure that alters statutory revenue by apportioning the License Fee revenue from term-based contracts as the largest component evenly over time based on contract life. This alternate view of revenue provides the ability to look through cyclical swings in the renewals book and to more readily observe underlying performance across reporting periods. It's particularly relevant to the company because as you can see from the slide, the very strong majority of our business is represented by term-based contracted revenues. For first half FY '26, Pro forma revenue was down 6% to $34.4 million versus PCP, with term-based contracts revenue down 4% and services revenue down 2% to PCP. The company's product-led growth strategy is targeting a sustainable growth in Pro forma revenue, and this will happen when increased new client and expansion of existing clients' business exceeds client churn. This next slide shows Pro forma revenue by territory and product. The Americas being our largest market at 70% of Pro forma revenue was down 6% to PCP. Pro forma revenue in the Americas was negatively impacted relative to PCP by the prior sale of the testing business, although much more importantly, by the closing of new client sales late in the period and by the broader business theme where new business sales, whilst growing, are not yet a complete mitigant to churn. APAC was down 7% in a quieter period and Europe, our smallest market, was down 6%. Turning to a product view. Our largest product, Collaborate's Pro forma revenue was down 9% to PCP, with 5% of that impact coming from less services revenue, including less testing revenue after the testing business sale. Collaborate's churn, although relatively stable, continues to impede growth acceleration in Pro forma revenue despite the recent strength seen in sales to new clients and expansion in existing clients. Infrastructure, representing 28% of Pro forma revenue, similarly to Collaborate, decreased by 9% to PCP, driven by churn, whereas Transact, our third product and 22% of Pro forma revenue was up 6% and driven by expansion business. And further information is available in the appendix to this presentation on Pro forma revenue. Turning now to Statutory revenue. First half Statutory revenue was $28.3 million and slightly down by 2% to PCP. The highlight for the half was an increase in License Fee revenue of 4% that was underpinned by a combination of new client contracts and expansion uplift business to existing clients across all territories and products despite a softer renewals book that was less than that of the prior half year period. Another minor point to note is the anomalous nature of the services revenue, which contained less testing revenue in the reporting half than the PCP due to the sale of the testing business. As a reminder, because of the accounting standards on revenue recognition, the company's Statutory revenue trends with our primary sales measure, Total Contract Value, or TCV, and in turn, the renewal book of business due to the current dependency in our business composition. One of the ambitions of our product-led growth strategy is to build and sell value in IR software over time through consumption, which will drive variable SaaS style revenues that demonstrate reduced fluctuation over the lifetime of client contracts. The next slide highlights first half FY '26 EBITDA, a common non-IFRS profit measure. For the first half of FY '26, the company's EBITDA was a loss of $3.1 million, which contrasts to the prior comparable period profit of $4.6 million and a brief analysis will follow. Statutory revenue, which has been discussed, was slightly down, driven by modestly reduced renewals and increased new client and expansion sales. Expected credit losses for the half year was $4.8 million, being an increase of $4.8 million. And for clarity, this is recorded in the consolidated statement of comprehensive income in the line item, General & Administrative expenses. The charge was principally associated with a single client and reflected an increase in credit risk, which was signaled by the client, a product reseller and was not related to software performance. Operating expenses. Excluding expected credit losses for the first half, operating expenses were down 4% versus PCP to $26.5 million, reflecting an ongoing disciplined approach to cost management despite the company pursuing a growth agenda. During the half, product and technology expenses increased 14%. Sales & Marketing expenses decreased 9% and General & Administrative expenses, excluding expected credit losses, were flat. No R&D was capitalized during the reporting period. Shareholders are advised that the company is expecting expenses to increase in the second half of FY '26 as a result of accelerated investment in the company's product-led growth strategy. And further information is available on operating expenses in the appendix to this results presentation. Other gains and losses for the first half were a modest $100,000 loss comprising a grant from the U.S. government of $1 million relating to Employee Retention Tax Credit program and currency exchange losses of $1.1 million. This contrasts sharply to the PCP gain of $3.3 million relating to the sale of a testing business and currency exchange gains. Moving now to IR's cash, which for the half year increased by $3 million or 8% to 30 June 2025, leading to a closing balance of $43.6 million at the end of the half. Our operating cash flow increased strongly for the reporting period to $5.5 million against a PCP of $0.5 million. Client receipts were $3 million higher to PCP due to timing. And in combination, payments to suppliers and employees and payments for income taxes were down $2 million due to timing and some nonrecurring payments in the prior comparable period. And further information is available in the appendix on the company's operating cash flow and its link to EBITDA. Investing activities contributed a net $1.8 million cash inflow, which was moderately increased to PCP, where increased interest receipts largely offset the prior comparable period proceeds from a sale of the testing business. Net financing outflows of $4 million was a reduction of $600,000 against PCP and included a $3.5 million payment for the FY '25 final dividend and $400,000 in reduced lease payments. Exchange rates had a minor negative impact on closing cash. Lastly, IR's balance sheet, which remains strong. At 31st of December 2025, net assets were $95.7 million, down 5% to PCP and comprised total assets of $115.3 million, which includes the combination of cash and Trade & other receivables totaling $107.2 million and total liabilities of $19.7 million. There is no debt. Net tangible assets per share closed first half at $0.53, down 7% to PCP. And I'll now hand back to Ian for product-led growth update. Ian Lowe: Thanks, Christian. I'm just going to take a few minutes here to share with everybody some of the progress that we're making on our product-led growth strategy and in particular, the new products that we have earmarked for build and release over the coming months. So I think most people are probably aware that product-led growth is really a central focus of execution. And really, this slide lays out the context around that. So our historical revenue performance has really been reflective of an overreliance on contract renewals and the value of those renewals fluctuates each year. Our underinvestment in building new products has compounded our reliance on the renewals book. And ultimately, it's limited our new business growth. And so a substantial and ongoing investment to build new products is essential for the company to return to sustainable growth, and this is product-led growth. So, with this strategy, our focus is to increase our innovation investment to build the new products that align to our clients' current and future needs and then commercialize those new products. In particular, we're focused on securing new clients and the revenue that they bring and also cross-sell and upsell to our existing clients, which we call expansion revenue. And realizing these benefits over time as we build momentum is really what should lead to the secure product-led, or securing the product-led growth that we're targeting, which in turn establishes sustainable growth over the medium term. So, with this in mind, we've previously shared three growth metrics which are really a way for us to start to share with you our progress against our product-led growth strategy. And so let me go through each of these very quickly. The first is new client revenue or, if you like, client that is derived from new clients that we've signed. So pleasingly, we've seen modest progress against this metric in the first half versus PCP. The second flavor is expansion revenue. And so as previously described, this is about cross-sell and upsell driven principally by these same new products, to the client base that we already have today. In percentage terms, we saw a strong uplift in real dollar terms, it was a modest uplift because it's off a low base. But nonetheless, we saw some progress in the second metric expansion revenue. And obviously, as we continue to release new products, and I'll expand on that momentarily, we anticipate that this should strengthen our sales pipeline over time. And then the third growth metric, Subscription fees. This is flat or down 3% against the prior corresponding period. And again, this is a growth metric that really will be largely reflective of our ability to secure clients with products that are linked to a variable pricing model. So Prognosis Elevate, for example, where clients will pay a portion of their License Fee based on consumption and new products that we plan to release in calendar year '26, and I'll cover this in more detail shortly, which should strengthen both our proposition with Elevate, but also we anticipate or we're targeting an improvement in the Subscription fee revenue. So these three metrics really will continue to give us a very good sense of our progress as we execute against our product-led growth agenda. In terms of new products, in the first half, there are a couple of particularly noteworthy product launches, which I've mentioned previously. Elevate, this is Prognosis-as-a-service. This simply allows clients to consume the existing Prognosis product in a cloud-based context as opposed to on-prem. It doesn't replace on-prem. It's really just an option that clients can take if they choose to consume Prognosis-as-a-service. This is particularly relevant for new clients. And the reason for that is where clients have already invested in the infrastructure to run Prognosis on-prem, they may want to continue to commit to that infrastructure, in which case, we're seeing that Prognosis-as-a-service, Elevate is particularly relevant for new client discussions. And we will release new products under the subscription model that I've mentioned previously. And in turn, we believe that will strengthen the Elevate proposition. In the first half, we also launched Iris, and this is in its first iteration, a natural language AI capability specifically built to the needs of observability. We've started to roll this out across the client base with our collaborate product. The feedback has been overwhelmingly positive. And we're now in the process of completing the development that would allow us to roll this out to clients on both Transact and Infrastructure. And we believe the development for that will be complete towards the end of the FY '26 period. Iris really is a key pillar in our medium-term product-led growth strategy. Iris will become increasingly central to the way that we look to monetize value moving forward, and it will become increasingly focused on consumption-based revenues. High Value Payments is a product that we launched back in FY '25, and we sold that to a foundation client in the form of a top 10 U.S. bank. I'm pleased to say that, that complicated but very important deployment for that first foundational client is complete. And in parallel with that deployment, we've been talking to a number of other global banks and Tier 1 banks in different domestic markets, and we have progress against a number of those. Moving forward, there's a number of new products that we plan for release in calendar year '26. So firstly, we've talked previously about our innovation division, IR Labs. And we're on track to deliver a new stand-alone AI-powered product in calendar year '26. This will be a minimum viable product release. And we're going to share a lot more detail about what this technology does, the value it creates and our plans for commercialization. We'll share a lot more about that as we get closer to the release date. I've also previously mentioned Iris to be launched for both Transact and Infrastructure clients, and that will happen in calendar year '26. We believe we're on track for a first release towards the end of the financial year '26, the current financial year. And we have plans to extend the Iris capability in a couple of important ways. The first is to transition from a Natural Language Query Interface to also being Agentic. And really, what this means for clients is that Iris will start to communicate with them proactively, not just reactively with important insights and discovery, and it will always be on. So this gets our clients to the point where they're essentially able to subscribe to an Agentic AI capability that is purpose-built for observability data that will feed them all of the insights they need to know to stay on the front foot and maintain the performance of their critical systems. And then secondly, later in calendar year '26, we have a data layering capability that we're planning to release. And this will allow our clients to bring data other than the data that is harvested through Prognosis to correlate to the Prognosis data to deliver richer insights again. And so that contextual correlation will allow clients again to reach new insights that previously aren't possible without this data layering. So we're enormously excited about that road map. Just very quickly, and again, we touched on this at the AGM. There are three core themes in our innovation agenda. So when we think about building new products, we really benchmark those ideas against these three core themes. The first is that we are transitioning to being an AI-first platform. That is absolutely essential, but it's also going to create enormous incremental value that shifts our value proposition in a meaningful way for all of our current and future clients. The second theme is interoperability. Historically, Prognosis has been an isolated part of the technology ecosystem for our clients, and we're setting about changing that. Prognosis will become integrated into client workflows and processes. Clients will be able to leverage the data within Prognosis in new ways. Prognosis will also start to ingest data from other sources, and we talked about how we want to layer data to the benefit of the Iris value proposition. And we also want to start to expose data from within Prognosis to new users, so extending outside of the IT organization within the client into other external and internal stakeholders. The third theme is remediation. And this is really what happens after an issue, a performance issue has been identified, which is what Prognosis does so well today. We want to go on the journey with the client to accelerate their remediation process. And that will extend into predictive capabilities that look to avoid the need for remediation in the first place as well as starting to automate elements of the remediation process by interacting with the underlying technology that is actually creating the performance degradation. So, these three themes are really central to the way we think about new products and on that basis, important that we share that. So, in summary, some observations. The first half of FY '26, our performance really does reflect this historical underinvestment in new products and a softer renewals book. So, in response to that, our product-led growth strategy will see us invest substantial amounts on an ongoing basis to build and commercialize new products, and that process is well underway, as you've seen from today's update. We are starting to see new product momentum emerge. So, this is the production line that we've built and refined to deliver these new products. And we're also seeing some very modest early improvement in the growth metrics that will gauge our progress towards sustainable growth. I think it's important to understand that this transition to a product-led sustainable growth future will take a little bit of time. Our softer FY '26 renewals book on the impacting the top line, our investment in product-led growth, building new products in terms of our expenses, those 2 things come together to impact our profit performance over the short to medium term. Importantly, the business has a strong cash position to fund our product-led growth strategy. And so we continue to focus on the execution of that strategy. Thanks very much. That concludes the presentation, and I'll hand it back over to Gemma. Gemma Garkut: Thank you, Ian. Thank you, Christian. We'll now open it up to Q&A, and we have a couple of questions. The first question is directed to Christian. The credit loss is large relative to revenue, which is very disappointing. What processes have you put in place to ensure this can't happen again? Christian Shaw: Thanks, Gemma. Look, this particular client that led to this outcome was an anomalous or an unusual client contract for us. And unsurprisingly, the management and Board of this company have been all over the nature of that. And we've put in place incremental guardrails to ensure that the structure of the nature of the contract and that counterparty won't be repeated in the company's near future or hopefully at all in the future. And that risk is contained and is contained to that particular client. And there is no such risk in quantum or in nature on our books. Gemma Garkut: Okay. Thank you. Moving on to the next question. Ian, this one will be for you. There is a lot of talk about Generative AI replacing SaaS software businesses. What are your barriers to stop this happening? And what do you have that Gen AI can't replicate? Ian Lowe: It's a good question. And with the benefit of more time, I'd very happily pull all of this apart. Look, I think the first thing is that AI will present some disruption over time in a couple of areas. At the moment, the value proposition of observability is really threefold. The ability to collect all of the telemetry that speaks to the performance of the technology that we monitor. Our ability to normalize that, centralize that, tidy that data up and present it in a way that drives reporting, analytics, notifications, alerts, things of this nature. And then the third is the ability to operationalize that data. So this is about workflow automation. It's about remediation. It's about decision-making on business performance, not just the technology in isolation. And so our opportunity is, first of all, to leverage AI, so to participate in the AI dynamic by leveraging AI and in particular, increasingly Agentic capabilities to take our clients on that journey where we are operationalizing the data in new and meaningful ways. And we think about that beyond just the client organization. We also think about that in terms of the clients' stakeholders, internal and external. So, this is a very conspicuous part of our product strategy and something we think and talk about and are building towards with new products as we speak. I think that AI will be increasingly disruptive in its ability to capture telemetry, although in an on-prem environment, that presents challenges that AI today can't really address elegantly. I think AI's ability to assemble and analyze the data is probably where it will make inroads fastest. But the operationalization of that data and using AI to do that in new and meaningful ways for our clients is really a big opportunity. And it's not a space where we see a lot of capabilities in the market today. And so we're determined to get into that space quickly. Gemma Garkut: Next question. Are you looking at M&A opportunities? And if you are, what would these look like for you? Ian Lowe: Well, look, I'm happy to take that question. So, we're not determined to undertake a transaction. We absolutely would look at a rightsized opportunity that accelerates the strategy, the product-led growth strategy. Anything that is tangential to that strategy is probably going to be less interesting. So, we remain interested in opportunities that are rightsized and can accelerate the existing product-led growth strategy. Gemma Garkut: Two more questions. Can you give a little bit more color to IR Labs and what will be launched at the end of the financial year? Ian Lowe: Probably not. And the reason for that is that, look, we're operating somewhat in stealth mode here for very good reasons. What we have said, just to reiterate, is that in calendar year '26, we will launch a minimum viable product that will be available in the market, and we'll have supporting Sales & Marketing activity around that. In the lead up to that launch, that first release, we will share a lot more in terms of what that product is, the value it creates and our plans to commercialize that product, both at that point in time and ongoing, we'll share a lot more of that as we get closer to that launch date. Gemma Garkut: And final question. You've mentioned there is a lot to do next half and into FY '27. What gives you the confidence, Ian, that IR will be able to execute on these goals? Ian Lowe: Look, that's a good question. There's a couple of things that combine to respond to that question. This business has an extraordinary base of clients to which we have direct access to inform decisions around new products and understand the journey that they are on and make sure that we're aligning our future product sets and new products with those journeys. So, with that, there is a level of trust around the IR brand and the market generally that I think is quite extraordinary and a great credit to what the company has achieved historically. And that's a big part of how we succeed moving forward. We have extraordinary talent in the business. I'm reminded of this every day. And I think critically, we've got a balance sheet that funds our product-led growth strategy. So these things all combine, I think, to put us in a position where there's a lot of work to do. It's not going to happen quickly, but we do believe that over that medium term, we're in a good position to execute our strategy. Gemma Garkut: Final question. IR is still generating cash and has a very strong balance sheet with $43.6 million in cash. Notwithstanding the increased expenses for product-led growth, there would still seem to be headroom to investigate a share buyback to improve EPS, especially knowing that profit will be subdued in the short to medium term. Wouldn't this be a good use of capital while the share price is so low? Ian Lowe: I'm happy to take this one. So, look, it will come as no surprise that we've looked at this, and we've looked at it both closely and repeatedly. I think on balance, certainly, my view is that we don't know exactly what's going to lie ahead as we pursue our product-led growth. And on that basis, we think that at this point in time, at least, preserving our capital to execute a strategy that will deliver the sustainable growth we're all seeking. We think that's the priority. We, of course, reserve the opportunity or the right to continue to review this, and we may make or take a different position if circumstances warrant taking a different position. But right now, we think that, that's in the best interest of shareholders. Gemma Garkut: Thanks, Ian. That is the final question that has been sent through. So, we will conclude the webinar there. Please do reach out to our Investor Relations team directly if you have any further questions following this webinar. But Ian, before we conclude, I'll just hand over to you for any closing comments. Ian Lowe: Thanks, Gemma. Look, I really just want to thank everybody for their interest and support. Hopefully, we've explained or laid out for you the journey that the business is on, and we're looking forward to sharing our full-year results in a few months' time. Gemma Garkut: Okay. Thank you very much. Thanks, everybody.
Marissa Wong: Good afternoon. Welcome to CLP's 2025 Annual Results Briefing. My name is Marissa, Director of Investor Relations. And with me today is Chief Executive Officer, Mr. T.K. Chiang; and Chief Financial Officer, Mr. Alex Keisser. We lodged our 2025 annual results with the Exchange today. That announcement as well as this presentation is now available on the CLP IR website. This recording is also being recorded, and you can access that a little bit later on this evening. Before we begin, please read the disclaimer on Slide 2. And this year, we've got 2 languages available; one, English and one, Putonghua for you to choose from. And for today's briefing, we'll start with T.K providing the overview, followed by Alex with the financial results, and then T.K will return with the strategic outlook. We will then conclude on with a Q&A session, and we encourage your participation and your questions. So with that, I will now hand over to T.K to begin the briefing. Thanks, T.K. Tung Keung Chiang: Yes. Thank you, Marissa. So good afternoon, everyone. Thanks for joining us. In 2025, our core Hong Kong business performed strongly, providing stability that offset market headwinds on the Chinese Mainland and also Australia and kept our overall results resilient. The fundamentals of our business remain strong. Our operational excellence continues to drive value across the group, advancing critical projects that secure energy reliability and our transition to 0 carbon. In Hong Kong, we completed our smart meter rollout and maintained world-class supply reliability despite facing a record Black Rainstorms and 14 typhoons. On the Chinese Mainland, we brought our largest wind farm to date into commercial operation, launched our first independent battery energy storage system and commissioned our second centralized control center in Shandong. In India, Apraava Energy achieved full commissioning of its 251 megawatts Sidhpur wind farm, its biggest wind project to date. And in Australia, we completed outage programs at Yallourn and Mount Piper enhancing its flexibility and reliability. Our growth momentum is aligned with energy transition opportunities in our region. With a disciplined, value-driven approach, we are advancing a pipeline of low-carbon projects that will secure future earnings. At the same time, we have taken steps to drive cost efficiency and strengthen our foundations. We completed Phase 1 of our ERP rollout in Hong Kong, advanced and enterprise-wide transformation at EnergyAustralia and optimized head office operations. We closed 2025 with healthy cash flow and a strong balance sheet. This financial resilience, combined with our growth momentum, gave the Board the confidence to increase the dividend, continuing our track record of delivering shareholders' returns. Turning to the highlights. Financially, the group's operating earnings before fair value movements were down marginally by 2% to over HKD 10.6 billion. Total earnings were lower by 11% to HKD 11.5 billion, driven by coal plant-related items affecting comparability. So Alex will provide details shortly. The Board has recommended a final dividend, bringing total dividends for 2025 to HKD 3.20 per share, an increase of 1.6% from 2024. Operationally, we achieved strong performance in safety and reliability with a lower injury rates and reduced unplanned customer minute loss in Hong Kong. On the customer front, we added more accounts in Hong Kong, while competitive dynamics in Australia led to a decline in numbers. In terms of generation, electricity sendouts declined by 3% reflecting lower coal output. At the same time, non-carbon capacity rose by 3%, driven by renewables and battery investments across the group. I'll now hand over to Alex for the financial results. Alexandre Jean Keisser: Thank you, T.K, and good afternoon. A summary of the key metrics. Earnings before interest, taxes, depreciation, amortization and fair value movement or EBITDAF was stable year-on-year at HKD 25.7 billion. Operating earnings before fair value movements decreased slightly by 2% to nearly HKD 10.7 billion. Adjusted for the fair value movements and items affecting comparability, total earnings was close to HKD 10.5 billion, a decrease of 11%. Capital investment declined 13% to HKD 16.4 billion, with higher growth CapEx offset by the absence of the headquarters acquisition booked in 2024. Total dividends for financial year 2025 was HKD 3.20 per share, representing an increase of 1.6%. Let's go now into the details. The group's performance was anchored by a strong Hong Kong business performance. Elsewhere, earnings were impacted by market pressures, transformation costs and one-off items. Fair value movements on Energy Australia's forward energy contracts were less favorable compared to a year ago. Several nonrecurring items also affected comparability in '25. A HKD 680 million impairment on 2 minority-owned coal plants on the Chinese Mainland was taken due to lower demand and rising competition from renewables. A HKD 345 million redundancy for Yallourn plant closure was also provisioned. While a positive contribution of HKD 390 million was booked from EnergyAustralia's Wooreen battery following the formation of our 50% joint venture with Banpu. I'll now take you through the detailed performance and outlook for each business unit. All balances will exclude foreign exchange to reflect underlying performance of the business. Let's begin with Hong Kong. It was another solid year. Core earnings rose 7% to just over HKD 9.5 billion, driven by continued capital investment and high operational reliability. We also proactively refinanced debt in a favorable interest rate environment to lower interest costs. Capital expenditure was HKD 10.6 billion, focused on growth and decarbonization, supporting the northern metropolis development, data center expansion, grid upgrades and completing the smart meter rollout. Electricity sales dipped slightly, reflecting milder weather and a high base into '24. However, demand from data centers continue to grow, reinforcing their role as a key structural growth driver. We continue leading Hong Kong's low carbon transition, investing and partnering across sectors from transport and shipping to building. Looking ahead, our focus remains on 3 priorities: First, continue delivering safe, reliable electricity at a reasonable tariff. Second, delivered a HKD 52.9 billion development plan expanding infrastructure in growth areas and strengthening grid resilience to support Hong Kong's future. And third, support Hong Kong's 0 carbon goal by completing the clean energy transmission system and working closely with government to increase 0 carbon imports. Now turning to Chinese Mainland. It was a challenging year shaped by transitional supply demand imbalances, softer demand and resource variability. Earnings declined 12% to HKD 1.6 billion, mainly from Yangjiang Nuclear and renewables. Yangjiang's contribution fell due to a higher share of output sold at market tariffs where prices were lower. Renewables were impacted by historically low wind resources and higher curtailment of approximately 9% across the portfolio, particularly in Jilin and Gansu. Conditions improved as the year progress in key provinces like Shandong and Jiangsu with easing tariff pressure. Our minority coal portfolio saw reduced dispatch from lower demand. Nevertheless, operational performance continues to be strong. Energy sold increased across the portfolio with Daya Bay Nuclear delivering another standout year. We also commissioned 1 new win and 3 new solar projects adding to earnings, and we received a record amount of renewable energy subsidies, boosting our cash flow. While our annual contracting GEC and PPA volume with corporate customers increase, supporting short-term earnings visibility despite a softer pricing environment. And finally, on the development side, our pipeline remains healthy at over 1 gigawatt. Looking ahead, Daya Bay will remain a stable contributor, while Yangjiang will face increasing market tariff pressure. For our minority coal assets, earnings should remain stable. Higher capacity charges under Policy 114 are expected to offset the removal of the floor price. The outlook for renewables is sound. Market fundamentals are stabilizing and tariff pressure looks manageable. Importantly, we had success under Document 136. We secured full eligible mechanism tariff volume for 4 projects, locking in attractive rates for the next 10 to 12 years, providing solid long-term revenue visibility. Our capital strategy remains disciplined, and we're exploring efficient funding options, including onshore Panda Bond and strategic capital partnerships. Two, EnergyAustralia. Overall performance was impacted by tough retail conditions and a combined HKD 300 million impact from the one-off tax expenses and upfront transformation costs. In generation, the fleet performed well. Mount Piper run reliably and our fleet operated flexibly to capture optimal pricing outcomes in a period of less volatility, effectively offsetting the Yallourn's lower output and Mount Piper's higher coal cost. Retail remained challenging. Intense competition and cost of living pressures led to margin compression, loss of customer accounts and higher bad and doubtful debts. That said, we saw improvement in the second half with early benefits from cost initiatives and recontracting activities starting to materialize. We booked upfront cost under the enterprise segment, tied to the multiyear transformation program launched in 2025. This strategic investment includes our partnership with Tata to streamline IT operation and corporate functions. Separately, we are evaluating billing and [ CRM ] platforms to simplify and digitize the business. Earnings were also impacted by the one-off tax expense arising from changing law tax that limits the deductibility of interest expenses on shareholder loan. On the positive side, finance costs declined driven by lower average debt levels and reduced interest rates. We also settled the maturing shareholder loan and put in place a smaller, more flexible perpetual note, an equity classified instrument with no fixed repayment obligation to strengthen EA balance sheet. The net result was operating earnings to HKD 85 million, reflecting the combined weight of retail performance, transformation investment and the tax one-off. Looking ahead, EnergyAustralia is focused on 4 key actions: first, optimizing our generation portfolio, leveraging our flexible fleet to respond to demand and capture value in evolving NIM with high volatility. Second, building on second half momentum in retail to improve margins through targeted customer strategies, ongoing cost out and platform transformation. Third, executing our enterprise-wide transformation to deliver a leaner, more efficient operating model by 2028. And lastly, delivering new flexible capacity. We're advancing over a gigawatt of new batteries and pump hydro projects, with Wooreen on track for 2027, laying the foundation for stability and earnings growth. Moving to India. Our joint venture platform, Apraava Energy delivered solid underlying performance. However, reported earnings were impacted by one-offs. Headline results were down 29%, primarily new to HKD 82 million one-off impairment on KMTL transmission. This compares to 2024 results that including one-off gains totaling HKD 55 million. Excluding these one-offs, our underlying operating earnings improved. Renewables delivered higher output, thanks to higher wind generation and the full commissioning of the 251 megawatts Sidhpur wind farm. Solar remained stable, and we saw additional interest income from delayed payment. Transmission had solid availability and earnings from our 2 operating lines. Our smart meters portfolio is scaling up with more than 2.5 million meters installed and growing contributions as rollout accelerate with another 7.2 million meters to be installed. Jhajjar thermal output was lower. But the plan maintained high operational efficiency and reliability. We continue to drive an ambitious growth pipeline. 18 Projects won within 3 years across a diversified portfolio for an equivalent of close to 2 gigawatt capacity. Looking ahead, we remain focused on portfolio decarbonization and sustainable growth. A key milestone will be the sale of our Jhajjar coal plant, which is on track to complete in the first quarter. The sale will unlock capital for reinvestment and is expected to generate gain. With a clear path to decarbonize and a robust pipeline, Apraava is well positioned to capture India's significant energy transition opportunities and continue to deliver value to shareholders. Finally, to Taiwan region and Southeast Asia, earnings declined to HKD 179 million. Ho-Ping's contribution in Taiwan was lower due to lower recovery of coal cost while Lopburi solar in Taiwan remained stable. We also incurred higher development and corporate expenses as we explore new opportunities in the region. Looking ahead, Ho-Ping will focus on managing fuel cost. More broadly, we are assessing opportunities with long-term contracts across Taiwan region and Southeast Asia as part of our growth strategy. These targets benefit from strong economic growth, supportive policy settings and utility scale projects offer attractive potential. We are currently evaluating opportunities, including renewable energy projects in Taiwan and cross-border development linking Laos and Vietnam and we'll proceed with the right partners and funding structures in place. Turning to cash flow. Free cash flow generation was strong, up HKD 1.6 billion to HKD 22.6 billion driven by solid EBITDAF and fuel cost recovery from declining fuel prices from our Hong Kong SoC business, alongside receipt of renewable subsidies from the Mainland. With our new headquarter completed in 2024, overall capital spend came down. Total cash outflow was HKD 22.6 billion made up of HKD 14.6 billion of capital investment and HKD 8 billion of dividend payments. Of the HKD 14.6 billion of capital investment, HKD 11.2 billion was invested in our Hong Kong SoC business and HKD 3.4 billion was spent on renewables projects on the Chinese Mainland and Wooreen battery in Australia. Cash payment for dividends was higher as a result of the higher final dividends for financial year 2024. Finally, our financial structure remains strong with a slight increase in net debt. Our liquidity remains sound with around HKD 29 billion in available facilities to meet business needs and contingency. The team has successfully raised over HKD 17 billion debt for the Hong Kong SoC business in addition to the refinancing of the USD 500 million perpetual capital securities, all with competitive credit spread. Our prudent financial management continues to be recognized by rating agency, S&P and Moody's reaffirm our strong investment-grade ratings for CLP Holdings, CLP Power and CAPCO, all with stable outlooks. And finally, Moody's is upgrading EnergyAustralia outlook to positive on its investment-grade BAA2 rating. I'll pass it now over to TK for the strategy update. Tung Keung Chiang: Thanks, Alex. Energy security and decarbonization are the critical forces shaping our industry's future and CLP is committed to leading this transition. Our strategic priorities are clear and centered on balanced growth, decarbonization and financial discipline. Hong Kong remains our cornerstone. It's stable, regulated framework provides predictable returns and dependable earnings that are fundamental to our strength. We are executing the HKD 52.9 billion 5-year development plan to deliver safe, reliable and affordable power while supporting government's economic and infrastructure agenda and accelerating the city's energy transition. Our major focus is modernizing and expanding our power system to meet future demand from the northern metropolis, a 300 square kilometer development that will house 2.5 million people to the rising needs of data centers and electrified transport. This disciplined investment delivers for Hong Kong and builds a solid platform for sustainable growth. Now building on that foundation, we are targeting growth in fast-growing energy transition markets in our region and doing it with discipline. Our strategy is firmly value over volume. Each investment must meet our minimum return requirements. The goal is to build durable recurring earnings while ensuring diversification. China led global renewable energy in 2025, adding nearly 450 gigawatts of solar and wind and now reinforced by the government's landmark pledge to reduce emissions by 7% to 10% from peak levels. We are participating in that growth but selectively. In 2025, we added 0.5 gigawatt of renewable, which is modest compared with the national scale. Reflecting our calibration to ongoing market reforms, we have adjusted our development targets from 6 to 5 gigawatts of renewable energy by 2030. We are prioritizing quality opportunities with long-term earnings visibilities. This means focusing on high-demand regions with strong resources and great access, expanding at existing sites where we already have scale, and securing long-term green power contracts or GECs with corporate customers. Encouragingly, we've had success post Document 136 implementation with 4 projects across Hebei, Yunnan and Shandong, each securing full eligible mechanism tariff volumes totaling around 1 gigawatt at attractive prices and long tenors supporting long-term revenue stability. Importantly, our growth in China is being structured to be self-funded. From 2026, we plan to tap into onshore financing, like tender bonds and bringing strategic partners through a clean energy fund. It's a model we have already proven in Apraava, and we are applying that same capital discipline here. India's commitment to clean energy is clear, targeting 500 gigawatts of non-carbon capacity by 2030, alongside massive grid modernization, for greater efficiency. This creates a powerful backdrop for Apraava's growth. As our self-funding joint venture, Apraava is scaling up across a low carbon value chain, wind, solar, transmission and smart meters. In the last 3 years, Apraava secured 18 projects across a diversified portfolio, all backed by long-term contracts that lock in stable, attractive returns. Today, it has around 2 gigawatts of low-carbon projects underway, targeting 9 gigawatts by 2030. As part of a diversified portfolio, the business will begin to explore opportunities across commercial and industrial customers and battery storage. Apraava Energy is a capital-efficient growth platform, enhancing both our earnings and long-term growth profile to Australia. In 2025, solar and wind hit new milestones, supplying over 50% of the national electricity markets in quarter 4. This is a clear sign of where the market is heading. Our focus is on firming this increasingly renewable heavy grid. We are investing in flexible capacity that supports reliability and capture value as volatility grows through Australia's decarbonization. EnergyAustralia has over 1 gigawatt of new dispatchable and firming capacity slated to come online in the next 3 years. We have made strong progress on multiple fronts. Over the last 2 years, we have secured government support for 3 key battery projects; Wooreen, Hallett and Mount Piper under the federal government's capacity investment scheme. These projects benefit not just from policy tailwinds, but also from existing lands, grid connections, skilled local workforces and EnergyAustralia's growing development capability. Our partnership model is delivering results. We launched 2 major collaborations in 2025, the 351 megawatts Wooreen battery with Banpu, now under construction; and the 335-megawatt Lake Lyell pumped hydro projects with EDF in development. EnergyAustralia will remain self-funded using partnerships and project financing for large projects, EA's balance sheet for smaller ones and long-term contracts for projects outside our asset footprint. With a clear plan to reduce costs, a more flexible fleet and a strong pipeline of new capacity, EnergyAustralia is well positioned to deliver reliability, resilience and value in Australia's evolving energy markets. Let me touch on our capital allocation approach. It can be summarized as invest for growth, but within our means while protecting financial strength and delivering shareholder returns. Our foundation is solid, a strong cash generation profile and solid investment-grade credit rating give us the flexibility to fund both operations and growth. Hong Kong's sustained asset growth underpins stable and predictable cash flow, supporting our consistent dividend. Beyond Hong Kong, we apply a disciplined lens to every investment. We prioritize capital for projects that are strategically aligned and meet our return thresholds. We also run our established businesses with the objective of financial independence, maintaining stand-alone credit profiles and tapping diverse funding sources. We will leverage capital recycling and business model options, including partnerships, such as the clean energy funds on the Chinese Mainland for efficient use of capital. By adhering to these principles of discipline and diversification, we will drive steady long-term earnings growth. Now finally, our core capabilities are what enable everything I've described. For CLP, it starts with operational excellence. That means consistently delivering strong performance across the energy value chain through efficient operations, reliable networks and great customer experience. We've strengthened grid resilience, modernize our infrastructure and leverage technology to improve efficiency, all of which underpin our reliability, cost discipline and safety performance. Two critical enablers support our strategy, our people and our digital transformation. We are investing in our teams, reskilling and upskilling our workforce and fostering a culture that embraces change. At the same time, we are embedding digital solutions across the business, a key milestone was deploying our ERP system in Hong Kong alongside a digital literacy program that has reached thousands of employees, helping to improve efficiency and decision-making. These capabilities are interconnected and reinforcing. Together, they give us the competitive edge to meet the demands of a rapidly evolving energy sector. We faced the opportunities of energy security and decarbonization with discipline and purpose and with a clear focus on delivering sustainable long-term value for our shareholders. I'll now hand over to Marissa to facilitate our Q&A session. Marissa Wong: Thank you, T.K, and thank you, Alex. We will now begin the Q&A session. [Operator Instructions] Pierre Lau from Citi. Pierre Lau: Can you hear me? Marissa Wong: Yes, we can hear you well. Pierre Lau: I have 2 questions. The first one is for Alex. If you look at Page 12, regarding EnergyAustralia, I think 2025 EnergyAustralia earning below expectation. And I can see that the sharp increase in the enterprise or the corporate expenses and also increase in depreciation and amortization expense. I want to note that these 2 number, I mean, minus HKD 177 million and also minus HKD 190 million, how much of them are on a recurring basis? And how much of them on one off basis? And also, what will be the outlook for 2026? And the second question is on Page 15. Regarding your cash flow. So this is the question for T.K. So I can see that 2025, your CapEx -- for growth CapEx, mainly in Australia and China, still up year-on-year. But obviously, 2025 earnings from both Australia and China were not so good. So are we going to increase the CapEx further for these 2 countries in 2026. And also, we mentioned that we target something like double-digit IR for China and high single-digit for Australia. Are we too optimistic in terms of our return forecast? Tung Keung Chiang: Maybe Alex can answer. Alexandre Jean Keisser: Yes, I can start with the first one regarding EnergyAustralia. So -- and I will add one point, if you allow me. So if we look at the breakdown of the 3 points that you have raised, so the D&A increase depreciation and amortization is a recurrent up to [ HKD 228 million ]. That was linked to the increased CapEx that we did, mainly in Yallourn in order to increase its reliability and able to hedge more of its energy. The one which is linked to enterprise EBITDAF, this is more one-off linked to 2 activities. The first activity is the outsourcing of our IT and corporate services to Tata. So this has been done in order to prepare future reduction in our operating costs. It's an OpEx which is done in order to improve our operation. And the second type of expense that we had is for the contracting for a new platform for our customers that has been not yet set, but for which we already had some expense. The third element that I want to raise, which we have not raised is regarding taxation. This is also a reduction in our earnings linked to a one-off as we took the decision not to deduct from the taxes, the interest payment between EA and CLP for the shoulder loan that was in place. Marissa Wong: And Alex, just touching on the outlook on EA. Alexandre Jean Keisser: The outlook, I don't provide any outlook for that. So sorry for that. Tung Keung Chiang: Okay. Now regarding question 2, the CapEx for growth, as you can see on Slide 15, it's mainly for the Chinese RE projects and EnergyAustralia's Wooreen battery. Now for EnergyAustralia, Wooreen battery will only be commissioned next year. So the benefit actually will be coming. So there is always a kind of a time difference between CapEx and asset commissioning to bring in the benefits. Now regarding the -- but maybe one data point is that you -- last year, we have 4 projects commissioned in Chinese Mainland. Total is about 400 megawatts but right now, we have 5 projects under construction. The total capacity is about 900 megawatts. So we will see more asset coming online this year. Now regarding the expected return, that's our hurdle rate, and we have been very disciplined in ensuring that the investment that we're making can satisfy the hurdle rate. As I also mentioned previously, in Chinese Mainland, we have had 4 projects with total capacity of about 1 gigawatt that have been successful in the mechanism tariff bidding process last year. For those mechanism tariffs, the tariff level actually are quite attractive, and all of those projects after taking into account the future projections of the market tariff, we are quite confident that the IRR actually is higher than our hurdle rates. So we will now continue to focus on winning these kind of mechanism tariff in our markets because having the mechanism tariff with protection on the tariffs for tenure ranging between 10 to 12 years will give us profit stability. Marissa Wong: And maybe just touching on the fact that the target has reduced a little bit from... Tung Keung Chiang: Yes, because of the fact that we want to be more selective in the Chinese Mainland market. So we have adjusted down the target from 6 gigawatts to 5 gigawatts by 2030. And we want to be more selective in picking projects in markets or in regions that have relatively higher tariffs, greater demand lower risk of grid curtailment and also funding projects that are like extension projects that we have already had our existing asset, then we can leverage on the existing infrastructure to reduce the cost of those additional investments. Marissa Wong: And maybe Alex touching on the funding? Alexandre Jean Keisser: Yes, I'd like to provide 2 more information. The first one is regarding China, we financed our project with a 70% to 80% project finance, while when we do our evaluation on the return on equity, we don't assume full recontracting of this project finance, and we assume an average of 50% debt over the lifetime of the asset, so taking a conservative approach. Second information that I want to provide is when we look at our minimum return, we don't take into account potential gain on sell down in the future. So for example, when we took the Wooreen investment, we didn't take into account the gain that we did following this on the sale to Banpu, which was of HKD 390 million for the full 100% of equity. Marissa Wong: Thank you. Alex. Thanks, Pierre, for your question. Next on line is Yonghua -- Yonghua Park from HSBC. Yonghua Park: Can you hear me? Marissa Wong: Yes. Yonghua Park: Well I have about 3 questions. So in terms of long-term planning, India will add 9 gigawatt of non-carbon energy. So this seems to increase from last year's 8 gigawatt coal. Will you increase plan capital allocation from HKD 6 billion per annum to which number? And what's the reason behind this upgrade? Have you seen any improvement in terms of project return in India? Secondarily, in Mainland China, renewable target is [indiscernible] to 5 gigawatts. So can we assume capital allocation could be also trim from 4 billion per annum last year number? And lastly, Yallourn coal-fired plant will be shut down at a point or any other point after that? I saw some news previously indicated that EA will invest AUD 5 billion for their structuring. Can you just clarify? Tung Keung Chiang: Maybe I try to answer the first question. Second question on CapEx, maybe I'll ask Alex to supplement. Now for the first question about the long-term planning in India, actually, I think this 9 gigawatt target is consistent with our long-term planning since last year. Actually, our target is to have about 1 gigawatt a year, so if you look at our existing asset and those assets under construction, so by 2030, adding 1 gigawatt a year of commitment then we can achieve this 9 gigawatt of non-carbon projects. And the capital allocation basically is based on this 1 gigawatt per year to deduce this HKD 6 billion per annum. Marissa Wong: Just on the point that Yonghua, I think you were looking at the 8 gigawatt, it was a 2028 target. So now we've added 2030 an extra year, which is now 9 gigawatts. Tung Keung Chiang: Yes. So it's consistent, yes. Yes. And then on Yallourn, basically, we are maintaining this -- retiring Yallourn by middle of 2028. That's our current plan and actually the agreement with the government. Regarding the CapEx investment, I think it's longer term, after Yallourn closure. Marissa Wong: I think Yonghua, that's -- you're referring to the Yallourn precinct investment? I assume that he is, yes. Alexandre Jean Keisser: I can try to cover here. Tung Keung Chiang: Maybe you cover the CapEx. Alexandre Jean Keisser: Yes. So first of all, on China, yes, of course, the HKD 4 billion per year will be slightly reduced by a bit more than -- by a bit less than 20% in light of the reduction of the target. One incremental information that I want to provide on this, we have taken the decision that by end of 2026, renewable activity of BU China will be self-funded with the raise of up to HKD 3 billion of Panda Bond and also the creation of a clean energy fund, we will have some partners to that. So that's regarding China. Regarding Australia, maybe that was the question is we have a target to have by 2030, up to 3 gigawatt of flexible capacity or contracted or developed, and we are not looking at developing any renewable projects, and we also plan to do this on the balance sheet of EA with similar structure for the large project that what we have done for Wooreen, which is project finance and also we're seeking the right partners in order to reduce the funding needs and increase our return on these projects. Marissa Wong: Thank you, Alex. Next question from JPMorgan, Stephen Tsui. T. Tsui: [indiscernible] The first is, can you please give some guidance on the CapEx outlook this year in terms of growth CapEx, maintenance CapEx and SoC? And about the dividend [indiscernible] because you've raised dividend by more than [indiscernible] this year despite [indiscernible] decline in operating earnings. So how about dividend growth this year given the headwind Mainland China and the Australia [indiscernible]. Marissa Wong: CapEx. Tung Keung Chiang: So 2 questions. Yes, maybe I'll ask Alex to shed some lights on the CapEx. Now regarding the dividend outlook. So basically, our dividend policy is to target to maintain a steady and growing dividend supported by sustained growth in our business. So we'll -- based on the longer-term assessment on our sustainability of our business and then decide the appropriate dividend level. So we will not give any outlook for the moment and all the dividend will be approved by the board by year-end. And maybe Alex can touch on the CapEx? Alexandre Jean Keisser: Yes. On the CapEx, so regarding the SoC CapEx, so we have a total of HKD 10 billion to HKD 11 billion per year that will be spent. Regarding growth CapEx, the growth that we had in India has slowed down slightly this year versus 2023, 2024. It's not being consolidated in any case, and it's being self-funded. The growth in terms of CapEx in China will be linked to the project that we will be able to close and the growth of CapEx related to Australia will be depending when we'll be able to start our project of Mount Piper BESS and when we'll be able to close our partnership on this. Marissa Wong: Thank you, Alex. On the line is Cissy Guan from Bank of America. Cissy Guan: I have a few questions, all regarding to the future capital strategy. First of all, you mentioned the clean energy fund in China, when do [indiscernible] on this? And what kind of partners are we looking for? Are there going to be insurance money or any specific type of investor do you think that may be interested in collaboration with us in renewable energy in China? And also secondly, India, we saw that Apraava has sold the Jhajjar power plant. So will there be any special dividend be upstreamed to CLP? And thirdly, for EnergyAustralia, first of all, are we still looking for disposal of stakes? And also can you provide an outlook as regard to the wholesale power tariff in Australia going forward? And also how will the next [ CMO ] and video reset going to be? And how will the retail competition landscape going forward? Tung Keung Chiang: Okay. Maybe for the CF strategy, Alex can help address it. maybe also including the -- what happened after the Jhajjar sale. Now regarding the EA, the Australian market. Now we do see continued intense competition in the retail sector. So this will continue. So in order to address this, so we have taken steps to improve the business performance. First is to optimize our cost of operation. Secondly is that we are looking at upgrading and replacing our customer platform. We are in quite an advanced stage, and we hope that we can confirm the technology and start execution this year. So with a new platform, we target to further improve the efficiency as well as enhancing the customer experience so as to improve our competitiveness in Australia. Regarding the power price, I think in short term, if you look at the forward price curves, it softened slightly. So we will see, this will continue in the short term. But I think maybe starting from 2028, we do see the potential of forward price increase later because of some of the changes in supply situation. Now in Australia, because of the -- actually, the whole energy transition and decarbonization for CLP Group, the capital requirement is very significant. So we want to be focusing on our core markets, in particular, Hong Kong and China. So for EnergyAustralia, firstly, it will be self-funded. Secondly, that we want to have different kinds of partnership in order to have more efficient use of our capital. So one example is the partnership in the Wooreen battery, where we have sold 50% to Banpu. This is a good example that on one hand, we can have a more efficient use of capital and secondly, that actually, the overall return of the project can be enhanced. And we are open-minded about different forms of partnership, be it at project level or enterprise level. But more importantly, I think in the short term, we want to make sure that the business, actually, the performance is -- can be further improved, both in terms of the efficiency as well as how do we manage all the risks in the market. Maybe I ask Alex to address the first 2 questions. Alexandre Jean Keisser: Yes. So I'll start with India. So the plan is when the transaction will be closed to have Apraava Energy doing it full distribution of the proceeds to [indiscernible] and CLP 50-50% over the year 2026 and 2027. CLP, however, doesn't plan to have an extraordinary dividend distribution being done following this distribution. Regarding China, we have to recognize that the CLP brand is very well recognized. The first was when we had our RMB 3 billion bond being approved by the regulators, we started to do a road show with our underwriter, and we plan to have this first RMB 1 billion being drawn upon in H1, which have been quite well received. Regarding the clean energy fund, let me first explain you what the business model. The business model that we have is looking for the partners, bringing our full expertise in terms of development, in terms of operation, in terms of market sales, in terms of project finance and keeping our brand attached to this clean energy fund, meaning that we want to sell the project once they are being built. But we want also to stay into the fund being an LP with 50% in order to have aligned interest because this is not a one-off. This is a long-term strategy that we want to do, not only for Chinese Mainland, but also for other countries. Regarding who are the different investors. We are looking for a potential insurance company to be an anchor investor. And pending that, we will look for a few others, but a limited number for a fund, which will be around HKD 4 billion fund size with a total CapEx of HKD 20 million. Marissa Wong: Thanks, Alex. I'll just note one more point on EA retail. Yes, it has been challenging conditions. But if you look at first half versus second half retail results, second half was a turnaround, and that was based on the work around customer acquisition, recontracting and the cost-out initiatives. Okay. We've got a question from Huatai, Weijia Wang. Weijia Wang: [indiscernible] The first is on market to specific [indiscernible] energy. We have all anticipated nuclear products. [indiscernible] share and also onshore [indiscernible] the next CapEx on [indiscernible]. Marissa Wong: Okay. Weijia, you were cutting in and out there. So I'm just going to assume your question. Number one is on nuclear investments. And then the second one, how that might impact CapEx in Hong Kong? Tung Keung Chiang: Yes. Okay. Now I assume that you are talking about our so-called nuclear imports in the medium term because in -- for the Hong Kong market, the government has set a decarbonization targets. And by 2035, we have to have 60% to 70% of our generation mix being known or being 0 carbon energy. So in order to fulfill that target, the plan actually is to import 0 carbon energy, mainly nuclear from the region to Hong Kong by 2025. Now for that plan, we are now still in a very early stage because importing nuclear from, say, Guangdong to Hong Kong, we need to have central government supports. And actually, right now, the Hong Kong government is discussing with the central government on identifying the right location for the nuclear power station and then how the power can be delivered to Hong Kong. Now despite the fact that this is still in the early stage, if you look at the existing Daya Bay arrangement, actually, this is -- this could be a president arrangement in which CLP invests in the Daya Bay. Right now, the arrangement is we invest in 25%, and then we import 80% of the power from Daya Bay to Hong Kong through a dedicated transmission line, which can ensure that we are clear about the source of the power as well as ensuring reliability. So this is a good reference for the future import arrangement. But as I said, I think right now, it's still very early stage. Once the -- it's more kind of -- it's clearer about where the power will be coming. Then we will enter into more detailed discussion with the relevant stakeholders in the Chinese Mainland, about the design of the network, how to bring the power in and also the commercial arrangement of the investment. But again, another reference point is that for Daya Bay, the investment in the -- the equity investment in Daya Bay is not part of the SoC CapEx. Actually, it's invest at the CLP Holdings level. And through a PPA from Daya Bay to Hong Kong. So for the Hong Kong SoC, all this will be treated as OpEx and then the return on the investment in Daya Bay is based on an ROE approach. So again, this is a reference model. And whether this will be applied, it depends on the future discussion with the relevant stakeholders. Marissa Wong: Thank you, T.K. We are heading towards time. So I'll take this as a last question from Rob Koh, Morgan Stanley. Thanks, Rob for joining us at the late hour in Australia. Go ahead with your question. Robert Koh: My first question is in relation to the customer platform upgrade in Australia. Other companies down here when they do that, they obviously do that very carefully. They take 2 to 4 years. Is that comparable time frame for EnergyAustralia? And then the second question is on the performance of the wholesale Energy segment. which saw some lower prices, but I guess the volatility capture offset that. Just want to make sure that's the right way to think about the generation performance? Tung Keung Chiang: Yes okay. Thank you, Bob -- I think Rob, sorry. Yes. Now for the customer platform, our current plan is to take about 2 years or slightly more than 2 years. So by before end of 2028 would be our current targets. Now -- but we are still working on the detailed planning right now. And as I mentioned, we are in a very advanced stage of selecting the appropriate technology. So we are working very closely with the future potential vendor on this detailed plan. So there will be more details later in the year. But our current thinking is that we will complete this before end of 2028. Now for the wholesale market, as we mentioned, in the forward price, you can see lower price level. But actually, if you look at the intraday volatility, over the past few years, this volatility actually is increasing. So that's why for EnergyAustralia, we have been focusing on investing in storage -- energy storage projects so that we can capture the benefits of this volatility in the Australian market. Marissa Wong: Thank you, T.K. Thank you all for your very good questions. And thank you, T.K and Alex for the briefing and answering the questions. Before we wrap up, I just wanted to announce the winners of our closest estimates competition. There are 2 this year. The first goes to Qi Kang from Huatai Securities, again, for the closest operating earnings. And the second for the closest annual dividend goes to Evan Li from HSBC. So congratulations to you both. My team will reach out to you about your prizes. That brings today's briefing to a close. My team and I will be available for any follow-ups. And thank you all for joining us today. Take care and goodbye. Tung Keung Chiang: Thank you. Alexandre Jean Keisser: Thank you.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Preliminary Full Year 2025 Results Conference Call. I am Jota, 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 Rafael Pérez, CFO. Please go ahead. Rafael Perez: Good morning, and welcome to the Preliminary Full Year 2025 Results Conference Call of Befesa. I am Rafael Pérez, CFO of Befesa. And this morning I'm joined by our Group CEO, Asier Zarraonandia. Asier will start with an executive summary of the period. Then we will cover the business highlights for the steel dust as well as aluminum salt slag recycling businesses. I will then review the preliminary full-year financials by business, and we'll cover the evolution of commodity prices, our hedging program, and finally, cash flow, net debt, and leverage and capital allocation. Asier will close this presentation, providing an update on the outlook for 2026 and an update on our growth plan. Finally, we will open the lines for the Q&A session. As always, this conference call is being webcasted live, and you can find the link in our website. Now let me turn this call over to our CEO, Asier, please. Asier Zarraonandia Ayo: Thank you, Rafael. Good morning all. Moving to Page 5 of the business highlights. We have delivered strong full results -- year results, continuing the solid trends seen in the first 9 months of the year. Our performance demonstrates once again the resilience of our business model and the benefits of our diversified operations. Adjusted EBITDA for the full year of 2025 reached $243 million, up 14% year-on-year. The EBITDA margin improved significantly to 21% in the full year '25 compared with 17% in '24, reflecting a strong operational efficiency and disciplined cost management. Financial leverage was further reduced to 2.27 in December 2025 compared to 2.19 a year ago, well below the 2.5 target, marking the seventh consecutive quarter of deleveraging. Net income and earnings per share also increased sharply. EPS rose 58% year-on-year to 2.01, reflecting a strong profitability and improved financial performance. In our steel dust business, we achieved resilient EAF dust volume across all markets despite adverse market conditions. Performance was further supported by lower zinc treatment charges and favorable zinc prices. Our salt slag operation delivered solid performance, while secondary aluminum has been impacted by persistent challenging environment, driven mainly by the weak automotive market in Europe, as well as the usual summer period maintenance activities in the auto industry. The Palmerton expansion project was completed as expected, with the second kiln successfully commissioned in July '25. We expect '23 to be another year of earnings growth, primarily driven by higher EAF steel dust volumes in the U.S. as well as some recovery in secondary aluminum. Our financial leverage is expected to remain at around 2x by year-end 2026, supported by solid cash generation and disciplined capital allocation. Growth CapEx will continue to focus on the Bernburg project. I will comment on the outlook in more detail later. Moving on to Page 6, business highlights for the steel dust business. In Europe, steel production in the full year of 2025 has remained depressed, down 3% year-on-year, mainly due to weak manufacturing activity and higher imports from China. Despite this, our steel dust deliveries from electric arc furnace steel customers continued in line with the 2024 average at very solid levels, demonstrating the resilience of the business model. Operationally, the European plants performed strongly, achieving a 94% load factor in the fourth quarter, showing a strong performance and no maintenance stoppages. In the U.S., steel production increases by 3.1% year-on-year, driven by overall economic growth. Our U.S. plants operated at a 71% load factor in Q4, continuing a gradual improvement year-on-year. The 2 new kilns in Palmerton have been fully operational since July 2025, and new electric arc furnace steel supply contracts are ramping up progressively through the Q4, following some initial start-up delays. At the same time, cost reduction measures in the U.S. Zinc refining plant continued to deliver the expected improvements in asset profitability. In Asia, volumes in Turkey increased by 11% year-on-year, recovering strongly after a weak second quarter affected by maintenance shutdowns. In Korea, the load factor reached 76% in 2025, up 6% year-on-year, driven by higher domestic deliveries and strong operational execution. In China, operation continued at low utilization level with earnings around breakeven, reflecting ongoing market weakness. Moving on to the Page 7, business highlights for the aluminum salt slag recycling business. In our aluminum business, performance has remained mixed in 2025. Starting with the salt slag recycling business, operations have continued to perform strongly, running in line with previous quarters. Utilization levels remained above 90% in 2025, demonstrating the robustness and efficiency of our assets. In our secondary Aluminium segment, the market environment continues to be very challenging. As we have been commenting during the year, the European secondary aluminum industry remains under pressure with tight metal margins and limited production activity, largely as a consequence of the ongoing weakness in the automotive sector. However, the performance in the fourth quarter of 2025 reinforces the view that the Q3 was the lowest point of the cycle and that the recovery should be underway. Despite these headwinds, we continue to focus on operational discipline, cost efficiency, and customer diversification to preserve profitability and position the business for recovery once market conditions improve. Now Rafael will explain the financials in more detail. Rafael Perez: Thank you, Asier. Moving on to Page 9, the financial results for the Steel dust segment. Steel dust delivered EUR 212 million of adjusted EBITDA in 2025, which represents a 25% year-on-year improvement. EBITDA margin improved from 21% to 27% in the period, mainly driven by better pricing environment on treatment charges and zinc hedging. The EUR 42 million EBITDA improvement has been driven by the following factors. The year-on-year impact from volume has practically no impact, with similar plant utilization at group level around 70%, similar to last year. As explained by Asier, we have been able to run our European assets at a high utilization despite a very challenging market environment. On price, strong positive EBITDA year-on-year impact of around EUR 35 million. With the 2 main price components being higher zinc hedging price, 3% higher year-on-year, and lower zinc treatment charges, which was set at $80 per ton for the full year 2025 versus $165 per ton in 2024. On cost and other, the net positive EUR 6 million impact is largely driven by the lower operating cost in the zinc smelter in the U.S., as well as lower average coke price. These 2 positive effects have been partially offset by higher inflation costs in the recycling business as well as unfavorable FX. Moving on to Page 10, financial results for our Aluminum segment. Aluminum salt slag delivered EUR 32 million of EBITDA in 2025, which represents a 27% year-on-year decrease compared to the EUR 43 million in the same period of last year. The year-on-year EUR 11 million negative EBITDA development was mainly due to the lower aluminum metal margin, as well as slightly higher operating costs and energy prices. On volumes, overall marginally negative EBITDA year-on-year, with a decrease of EUR 3 million. Our recycling volumes of salt slag remained pretty much in line with the previous year. With these volumes, we operated our plants at a strong capacity utilization rates of about 89% in salt slag and 75% in secondary aluminum. With regards to prices, negative EBITDA year-on-year impact of around EUR 5 million, mainly driven by the pressure aluminum metal margin versus the previous year. As commented by Asier, our view is that the industry has bottomed out already in Q3 last year, and we expect positive development from now on. This was partially offset by higher aluminum F&B price with an increase of 3%, averaging EUR 2,369 per tonne. On cost and other increased pressure from higher operating and energy-related expenses. Moving on to Page 11, zinc price and treatment charges. Regarding zinc LME prices during 2025, heat zinc has traded in the range of $2,521 to $3,351 per tonne, showing a particular positive trend in the last months of 2025. The average of zinc LME price in 2025 have been $2,867 per ton, which is 3% above the last year average. However, unfavorable evolution of the foreign exchange of the euro-dollar has resulted in a slightly lower zinc price in euros, down 1% at EUR 2,542. On the right-hand side of the slide on treatment charges, in 2025, treatment charges for zinc were set in April at $80 per tonne for the full year 2025, compared to the $165 of the previous year, marking an all-time low record level. Turning to Page 12 on hedging. We have taken the opportunity of the recent rally of the zinc price to be very active on our hedging program. Our hedging book has been extended to the first half of 2028 at all-time high levels of $3,100 per ton. For 2027, the hedge is set at $3,000 per ton. This provides stability and visibility over the coming quarters and years. Average hedge prices amounted to $2,923 in 2025 and $2,990 per 2026. Turning to Page 13, Befesa energy prices. The page shows the evolution of the 3 energy sources that we have in Befesa: coke, natural gas, and electricity. With regards to coke price, which today represents around 60% of the total energy bill, the normalization that started in the second quarter of 2023 continues throughout 2025. Average coke price in Q4 was around EUR 152 per ton, consolidated its downward trend compared to the previous quarters. Regarding electricity, which today accounts for 30% of the total energy expense, price are at similar levels than in Q3 2025 after significant correction in the second quarter of last year. Finally, gas prices continue its normalization throughout 2025 with a slight increase to EUR 45 per megawatt hour in the fourth quarter of last year. Turning to Page 14, the cash flow results. Operating cash flow in 2025 has reached a record of EUR 212 million, which represents an increase of 10% compared to the same period of last year, despite higher taxes, with EUR 21 million paid taxes in 2025 versus a positive tax impact in 2024. On the EBITDA to cash flow walk, starting with EUR 243 million adjusted EBITDA and to the left, working capital consumption amounted to EUR 10 million in 2025 with a strong end of the year recovery from previous level in the first quarter, reflecting the intra-year seasonality that we explained already in the first quarter. Taxes paid in 2025 came in at EUR 21 million as a result of the final tax assessment of the previous year, in comparison with a positive tax impact in 2024, resulting in an operating cash flow of EUR 212 million in the year, making a record in the history of Befesa. On CapEx, in 2025, we have invested EUR 50 million in regular maintenance CapEx across the company, EUR 26 million in growth CapEx related to the refurbishment of the Palmerton plant in Pennsylvania, which is now completed as well as the part of the Bernburg expansion project in Germany. In summary, total CapEx of EUR 76 million in the year, which is lower than the range of EUR 80 million to EUR 90 million that we initially provided, reflecting a strong discipline on capital allocation. Total interest paid amounted to EUR 34 million, and total bank borrowings amounted to EUR 34 million in the full year. For 2025, the EGM approved in June to pay a dividend of EUR 26 million in July, equivalent to EUR 0.63 per share or 50% of the net income. In summary, final cash flow amounted to EUR 40 million in 2025. Cash on hand stood at EUR 143 million, which together with our EUR 100 million undrawn revolving credit line, provides Befesa with more than EUR 240 million of liquidity. Gross debt at the end of December stood at EUR 695 million. Net debt was greatly reduced by 11% to EUR 552 million compared to EUR 619 million in the same period of last year, resulting in a net leverage of 2.27 at closing of December '25, a strong improvement compared to the 2.9 at December 2024 and well below our initial target of 2.5. Turning to Page 15, debt structure and leverage. Following the refinancing back in July 2024 and the repricing in March last year, 2025, Befesa today has a long-term capital structure with optimized financial cost. Net leverage improved significantly, as explained earlier, to 2.27 at the end of last year. This marks the seventh consecutive quarter of leverage reduction, as well as well below our company target. For 2026, net leverage is targeted around 2x and below 2x onwards, reflecting Befesa's continued commitment to disciplined capital management. We will prioritize the growth CapEx on those projects that will deliver immediate cash flow upon completion, like the approved project of Bembur and other market opportunities that may appear. Also, we will keep the annual regular maintenance CapEx around EUR 40 million to EUR 45 million over the coming years. On dividend, we are committed to maintain our dividend policy to pay between 40% to 50% of the net income to shareholders. For 2026, the Board will propose to the EGM to pay a dividend of EUR 40 million, equivalent to EUR 1 per share or 50% of the net income. This dividend is 37% higher than the dividend paid last year in 2025. Moving on to Page 16. Befesa is entering a new cycle of low CapEx and high earnings, resulting in a strong free cash flow generation and shareholder value creation. During the last years, we have gone through a high CapEx cycle, which has allowed us to expand our operations globally into the U.S. and China. Now that this cycle is completed, we enter a new cycle of limited total CapEx below 80% over the coming years, along with high earnings, resulting in a strong free cash flow. Total cash flow after 3 years of negative cash flow, 2025 has been marked at an inflection point, delivering strong final cash flow. Total cash flow is expected to follow a positive trajectory, reflecting the company's improving a stronger underlying cash generation profile. Finally, as we have already commented, leverage is expected to be kept below 2x for the coming years, allowing greater optionality in future capital allocation decisions. Now back to Asier on outlook and growth. Asier Zarraonandia Ayo: Thank you, Rafael. Moving on to Page 18, 2025 guidance. Befesa closed 2025 with solid delivery within the guidance provided, achieving $243 million in EBITDA and strong operating cash flows of $212 million and maintaining a strict CapEx discipline, spending $76 million. The company continued to deleverage, reducing net leverage to 2.27, supported by improved EBITDA and consistent cash generation. Earnings per share rose to $2.01, reflecting a strong underlying performance and enhanced financial efficiency. Overall, the result demonstrates disciplined execution and continuous focus on long-term value creation forareholders. Moving to Page 19 on '26 outlook. Looking ahead to '26, as in the past, we will provide guidance in the first quarter once the 2026 treatment charge has been announced. However, I can provide some comments about the year. We expect 2026 to be another year of earnings growth, strong cash flow generation, and continued deleverage. Steel volumes are expected to remain solid and stable in Europe, while the U.S. anticipates higher volumes driven by new contracts with the steelmakers. In China and the rest of Asia, stability is also expected to prevail. Salt slags operations are projected to maintain stable volumes compared with 2025, supported by higher collection fees. The metal margin for second aluminum is also expected to improve gradually through the year, particularly after having bottomed out in the third quarter of 2025. The smelter has benefited from a strong fixed cost reduction achieved in 2025, and further efficiencies are expected to be realized through 2026. On the other hand, energy costs are expected to evolve more moderately. The group anticipates a slightly lower to stable overall coke prices, while European natural gas and electricity prices are projected to rise in 2026. General inflation continues to impact maintenance, ancillary materials, and personnel costs across all regions, creating a negative pressure point in the cost structure. In the treatment charge environment, the benchmark TC settled at $80 in 2025, its lowest level in 15 years. Although the concentrate market remains tight, characterized by low spot treatment charges, TCs are expected to rise in '26 toward a range of $100 to $130. Hedging activity foreseen remains stable with the average '26 hedge price set at approximately EUR 2,990 per metric ton, consistent with 2025 levels, suggesting a neutral hedging position. Total CapEx for the year will be below EUR 70 million, with around EUR 45 million for regular maintenance and the remaining for growth in expansion of Bernburg. Net leverage will be around 2x by the end of the year. Moving on to Page 20 on Palmerton. In the United States, our Palmerton plant has been successfully refurbished, marking a key milestone in our strategic growth road map. Both kilns are now fully operational, positioning Befesa to capture the significant growth expected in the U.S. electric furnace steel dust market over the coming years. U.S. electrical furnace steel capacity is projected to increase by more than 20% by 2028, equivalent to around 18 million tons of new steelmaking capacity. This expansion translates into over 300,000 tons of additional steel dust, creating a substantial opportunity for Befesa's recycling operations. With a total installed capacity of 650,000 tons across our U.S. plants, we are now well-positioned to leverage this growth. Our goal is to progressively ramp up utilization from below 70% today to around 90% by 2028 as new electric arc furnace capacity comes online. The combination of our modernized departmental facility, long-term customer relationships, and strategic geographic footprint near key steel producers ensures that Befesa is ready to capture this next phase of growth in the U.S. market. Moving on to Page 21, our expansion project in Bernburg, Germany. This is another important milestone in Befesa's growth journey as we continue to strengthen our aluminum business and expand our recycling capacity in Europe. From a timing perspective, our permits have now been obtained, and our construction officially started in August '25. We expect a 12-month construction period followed by a 6-month ramp-up phase in the second half of '26. On the commercial side, we have already secured strong customer support. Overall, the Bernburg expansion is progressing fully in line with plan. Moving on to Page 22 about the European steel industry. Europe is accelerating its transition toward electric arc furnace steelmaking, largely driven by decarbonization targets and supportive policy frameworks. Between '26 and 2030, 12 new electric arc furnace projects have been announced to come online. This represents more than approximately 20 million tons of new EAF capacity, which means 23% increase compared to the 60 million, 90 million of electrical arc furnace capacity in Europe. As a result, EAF penetration is expected to rise from the current 45% over the next 5 to 10 years, supported both by this new project and the progressive replacement of blast furnaces. Given our strong market position, established customer relationships, and ongoing business development efforts, Befesa is strategically well positioned to capture the significant volume growth expected from this strong. We are already engaged in advanced negotiations with key customers to support this expansion phase in the coming years. Thank you very much. Rafael Perez: Thank you, Asier. We will now open the lines for your questions. Operator: [Operator Instructions] The first question comes from the line of Shashi Sekhar with Citi. Shashi Shekhar: So I have a couple of questions. So my first question is on capital allocation. I just wanted to understand what's the priority here? Is it deleveraging, dividend payment, or further expansion into European steel dust business, given improved outlook for European steel segment? My second question is on China. I believe one of the plants is still burning cash. So I just wanted to understand at what point you will consider either closing it or moving it to some other province? Rafael Perez: Thank you, Sashi. On capital allocation, I think we have tried to explain many times. We want to deliver a combination of keeping the leverage below 2x. I think this year, we have made -- last year, 2025, we made great progress in our deleveraging efforts, achieving a target which is below what we initially envisaged at 227. We are targeting around 2x for this year, 2026. And beyond 2026, we expect to keep the leverage below 2x, okay? Secondly, on dividend, yes, we want to keep the promise that we made at the IPO to pay 40% to 50% of the net income as a dividend to shareholders. And then on growth, obviously, as we have explained, we are coming from a high CapEx period where we have invested heavily in China and in the U.S., and that has enabled us to expand our operations. I think the focus at the moment is for this year in Bernburg, as Asier has explained. And then we also see a clear opportunity to deploy capital in Europe, as Asier explained at the end of his speech, to capture the growth of the EAF steel market in Europe, okay? We envisage to do that through a brownfield. We will provide all the relevant details about the project at the right time. But it's a combination of capturing the growth opportunities that we see in our main market, Europe, while keeping the leverage below 2x and keeping the commitment to pay dividend. Asier Zarraonandia Ayo: Yes. Sashi, and regarding the second question about China, well, yes, we have one plant running probably levels in 50%, 60% and the other one is just 10%, 20% depending on the availability. But it's not burning cash because basically, what we have is that plant stopped under control, and even when we run in periods where we have stopped the plant, moving the people to run the business. And basically, the cash is -- we are not negative cash in general in China for the whole business. So we are doing EBITDA positive and converting into cash positive for the year. So we have some confidence to be in that way until the market comes back. Possibilities for the future, well, you talk about. I mean, we are open to see if we can move in another province. And in that case, we consider even to transfer or translate the assets. We will see. The whole thing now is that China is in a situation that we don't see the need to invest in that so far more and wait for the recovery and as well because we are not, again, making cash negative, we have time to do that. Operator: The next question comes from the line of Adahna Ekoku with Morgan Stanley. Adahna Ekoku: I also have 2. So first of all, just on secondary aluminum, there was quite a strong margin improvement quarter-over-quarter, given the market backdrop. Is this a level we should expect to persist throughout 2026? Or were there any kind of specific positive effects in Q4 here? And second, just on the Q1 outlook, could you run through the kind of key moving parts to consider here, like volumes and margins? And are there any maintenance activities we should be aware of? Rafael Perez: Adahna, thank you for the question. Well, secondary aluminum, I think that -- well, yes, I think as I reference the last quarter margins, and probably we will see this, and we are starting to see this level in the first part of the year. But still, it's a little bit early to say this is going to be there, perhaps the level even is increasing, we will see. I mean it's a good reference because we see that the last part of the part has gone. In terms of the outlook and maintenance, I think that the reference could be the last year situation for maintenance stoppages, and probably the dust and the activity volumes are going to be in line with 2025, but we think that we can improve the figures. But in terms of activity, it could be a good reference, the first quarter of 2025. Operator: The next question comes from the line of Fabian Piasta with Jefferies. Fabian Piasta: I have 3 and one follow-up. So could you give us an indication what the EBITDA contribution from your U.S. smelting business is? Are we breakeven already this year? And what are you expecting for 2026? The second one is on the treatment charge outlook. Do you think that this is more driven by capacities or the recently increasing LME zinc price, basically making smelter compete for the zinc? And the third question would be you were referring to demand from data center verticals. Is there an end market split that you can share? How do you see that? What do you expect this growth to influence volumes in the U.S. And the last one was on maintenance. Did you say that the phasing is going to be similar like last year, so more maintenance shutdowns in the first half? Or did I get that right? Asier Zarraonandia Ayo: Thank you, Fabian. So many good questions. Well, regarding the U.S., refinery is where the plan is where we thought to be and is closing to the breakeven point, and the costs are under control. Now the operation depends on the volumes as well of material we can treat there, and it's basically a control of the cost already done. Even you can gain a little bit more efficiency cost for next year. Regarding the treatment charge, it's a good question about what is affecting the most is capacity demand of about concentrates market, and it's a little bit strange. But obviously, it's affected by the rest of the factors, which affects to the zinc price. Normally, the period is still in favor of the miners. The question is where it's going to be spot TC that is not -- has not to be a real election, but it's a little bit down again. So well, all the music sounds that it's going to be another year of favor of minus. The level could be in the range as we see more than $100 now, but it has to be confirmed, basically those days with a meeting for the International Zinc Association in U.S. those days. We will see. In terms of the steel demand and so on, I think that everywhere is an expectation about the general evolution looks positive because we can see the steel share prices of everyone. I think that the expectation is that a recovery, and because the tax and custom action they are taking for -- in Europe or U.S. could have an effect in the production. If this happens, we see positive outlook for the steel in general. And regarding the last point, as I said before, yes, when we -- maintenance stoppage is sometimes not easy to move from 6 months or a longer period because yearly basis is when we do the maintenance. So more or less, what we see now for '26 is the same level than '25 with the Q1 and Q2 and then Q3 and Q4 having more volumes. This is a little bit the view that we have now, no major changes. We try to move and to do longer periods before the maintenance, but no big changes are going to come in the short term. So again, the '25 maintenance stoppage reference is a good point of your expectations. Operator: The next question is from Olivier Calvet with UBS. Olivier Calvet: I have 3. Firstly, on volumes in the U.S., what's your expectation for additional volumes in 2026, and that if you could give us a sense of the range you're thinking about, depending on when your clients' volumes come through? The second question would be on the CapEx level. So I fully understand the message on sort of below EUR 80 million CapEx going forward. But I noticed slightly higher maintenance CapEx in '25 than I think you had indicated. So are you expecting a similar level of maintenance CapEx in '26? And just the growth CapEx part related to Berenberg, I had in mind the EUR 10 million to EUR 15 million. Is that fair? And the third one, just on the zinc hedges. So great to see you've been active on hedging. So what you've added in '27 and '28 is in USD, right? In '26, I think you had hedged in euros, right? And just if you could remind us what level of exchange rate you hedge '26? Asier Zarraonandia Ayo: Thank you, Olivier. I can get the first question about the U.S. volume, which is what we do expect, is partly the same that we were expecting in '25 with the new contract. So -- and then depending on the evolution of the steel production in general for the rest of the customer, but we see more or less in the range of 60,000 to 70,000 tonnes of more volume in U.S., more or less is a good reference for you to have. Rafael Perez: Regarding CapEx, Olivier, I think we have said very clear, obviously, it's not a fixed number, but maintenance CapEx will stay between EUR 45 million to EUR 50 million over the coming years. And then growth will be based on -- in this year, for 2026, on Bernburg. We are envisaging a maximum CapEx for this year of EUR 70 million. And for the coming years, we don't see any year of CapEx higher than EUR 80 million. So what I tried to explain is that we are entering into a new cycle of limited capital, limited CapEx, and high earnings resulting in strong free cash flow. And regarding the hedging, yes, we -- for 2026, we are hedged in euros for our European volumes, in dollars for our American volumes. And for '27 and '28, the hedging at the moment in U.S. dollars. Olivier Calvet: And just on the CapEx, so the growth part of the guidance for '26 is basically only Bernburg, or is it -- is there some headroom to do-- Rafael Perez: Yes. Operator: The next question is from the line of Jaime Grivanomayes with Banco Santander. Jaime Escribano: A couple of questions from my side. The first one on salt slag. So the EBITDA in '24 was close to EUR 32 million, around EUR 29.5 million in '25. What could we expect in 2026? Also, if you can comment on the margin of Salted slags in Q4, which was a little bit low at 21%, more or less. What could we expect? If you can give us some color on the dynamics in salt slags, basically? And second question on secondary aluminum would be very much of a similar question. So EUR 2 million in 2025, which seems to be a trough. What should we expect for 2026, a number that you feel comfortable? And maybe a final question on the guidance 2026, which I know you don't provide, but if we look to the consensus at EUR 260 million EBITDA, EUR 260 million EBITDA more or less, how comfortable you feel with this number? And building on this, if the treatment charge ends up being around 100 million, 110 million, and zinc price averages above 3,000. How do you see this 260, do you see upside risk, or you're still comfortable with this number? Asier Zarraonandia Ayo: Thank you, Jaime. Starting for the salt question, yes, we have -- I think it's a business which the current normal capacity of the secondary aluminium production in general in Europe is quite stable. We do hope this reference of EUR 32 million that we have in '25 could be a reference even to increase something in '26, because we have increased fees for aluminum producers. So we see that it is a good reference, even slightly higher. The '25 number has been affected by basically the volume that you have seen that is not better, and some more weight of the cost of production because you are not increasing or compensating with the volumes. But the dynamics of the business is clear. It's very similar to the steel dust. The volumes is the key because we have the plant almost full capacity. But the current aluminum producing -- secondary aluminum producing situation is putting some stress to the plant, and we are not so efficient like in the past because the full production is the best situation to absorb the cost. We see the '26, as I say, a stable business, but probably a little bit higher, 10% or something like that could be a good reference. With regards to secondary aluminum, what we can wait or we can expect for '26. Well, the 2 million of the Q4 is a good reference. I mean, just repeating the 2 million in every quarter, we will talk about $8 million or something like that. So well, it's not coming back to the years that we have even EUR 20 million in this business, but well, [ Sala's ] reference of EUR 8 billion to EUR 10 billion is something that will be very strange for us, right? We will see if it's going to be even better because we see very difficult to be back on the worst period like it was the Q3. So yes, the Q4 could be a good reference, perhaps conservative, but repeating this, as I say, could be a reference. And with regards with the guidance, I know you guys that you like the numbers and basically one number and an average in the range, whatever, EUR 260 million, something that is the current consensus. Well, we are comfortable with this figure, but we need a little bit more time to see the evolution of TC and put our estimations. But I think that is, in any case, will be in the range, this amount, and we are not -- we are comfortable, yes, really. Operator: The next question is from Bertran Palazuelo with DLTV. Beltran Palazuelo Barroso: Congratulations all of you and the team for the strong results. I have 2 questions. First of all, regarding capital allocation, I know you answered, but I will ask again. Clearly, seeing the dynamics you're seeing and you're stating and clearly also stating the visibility you start having with the zinc prices due to the hedges, and seeing that the spot price is higher than your hedges? Well, it looks like in the future, well, your balance sheet should get stronger and stronger. So my question is, apart from paying the dividend, what is making you not start buying a little bit of shares to show the market all your, let's say, improvements. We -- from us, we would like to see the share count decrease. In 2021, you increased it at a good price. Now we want to see it decrease because the balance sheet, it looks like it gets stronger and stronger. And then my second question is apart from the -- what growth opportunities now apart from the state do you see medium to long term to allocate capital accretively. Rafael Perez: Thank you, Beltran. I think we have discussed many times. I think, obviously, share buybacks is something that we have looked in the past, but the financial profile of the company was not adequate. It is true that we expect to generate a very healthy cash flow going forward. We want to keep the leverage slightly below 2x. And yes, if we don't see any growth opportunity, we will definitely consider share buybacks, considering also the share price and the valuation of the company. So always any time that we see that the valuation of the company or the share price doesn't reflect really the -- what we believe should be the fair value of the company, we will analyze share buybacks. I don't think that's something that you can expect this year. We have another project in the pipeline, which is going to explain to you, which is in Europe, as you know very well. So it's about balancing everything. But yes, I think share buybacks are something that we are looking at, not in the short term, but more in the midterm. Asier Zarraonandia Ayo: Yes, indeed, I think Beltran is a good question. And I think that we are starting to enter in a cycle that we are going to generate strong cash, and the massive growth opportunities that we have in the past are not coming so high. So probably those considerations are on the table, and we have to see what is better is to keep growing with the projects as you are asking, or yes, to some program of say buybacks or whatever, what is better for the shareholders at the end of the day. In this regard, the project that we have in the pipeline for the next years clearly is to finish the Berburg plan as we are indicating basically in '26, and the next one could be -- or it could be -- the question is when, but probably starting '27 is a good reference and to run in '29 is the European second kiln in our French plant going on hand-to-hand with the projects of the steelmakers. We have in the pipeline as well the slab plant in the East Europe. If and following the developing of the decarbonization and the evolution of the automotive sector that nowadays, I think that is not the time to do because everything is delayed and has to be confirmed. Out of those 2 projects, we have, of course, the idea to medium term for new geographies like India, or let's say, 4, 5 years, China is back at the end of the day to see opportunities, small M&As or whatever. But it's true that this is the reason, as Rafael said, that we have to evaluate the new projects against new ways of contribution to the sales holders clearly. But anyway, we are really interesting because I think there is a very good opportunity for the Befesa evolution on the growth of the European market, and then we will see what is going on with the rest of the geographies. Beltran Palazuelo Barroso: Okay. But also, as I said in the past, and I said it now publicly, I think you have demonstrated to the market that you're extremely good, let's say, operators. Now what you have to demonstrate to the market is that you are extremely well capital allocators. I think you demonstrated in 2021. Now you have to demonstrate it going forward because if you start a share buyback of EUR 10 million or EUR 20 million in the future when the stock is at EUR 60 million, that would make no sense. So I -- you don't have to make a big thing, but I think the balance sheet is getting stronger and the stock market is not reflecting it, and all the support. Rafael Perez: Fully agree, Beltran, you so much for your comments. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Mr. Perez for any closing remarks. Rafael Perez: Thank you all for your questions. Please don't hesitate to contact the Investor Relations team of Befesa for any further clarification. We will now conclude the conference call. Thank you for joining, and have a good day. Bye. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call.
Sam Wells: Good morning, everyone, and thanks for joining today's first half FY '26 results call for Cettire. My name is Sam Wells from NWR, and I'm pleased to have with me from the company today Cettire's Founder and Chief Executive Officer, Dean Mintz; as well as Chief Financial Officer, Tim Hume. Both Dean and Tim will spend some time reviewing the ASX results released this morning, including some notable financial and operational highlights. [Operator Instructions] We'll aim to have this call wrapped up within 30 minutes, including Q&A. And thank you, and over to you, Dean. Dean Mintz: Thanks, Sam. Good morning, everyone, and thank you for joining Cettire's interim results briefing for the 2026 financial year. Before we begin, I'd like to remind you of the disclaimer statement in our results presentation. That disclaimer also applies to this investor call. I'm joined today by our CFO, Tim Hume, and together, will take you through the company's results for the 6-month period ending 31 December 2025. Today's results are the outcome of our relentless focus on profitable growth with a clear bias towards profit in what remains a tough luxury market. Gross revenue was $505.7 million and sales revenue was $382.8 million, both were broadly stable year-on-year. Importantly, excluding the U.S., sales revenue grew 13% year-on-year to $225 million, which is a testament to our ability to grow our market share in newer markets. We had 613,000 active customers during the period, reflecting a deliberate reduction in paid marketing, combined with softer U.S. demand. Repeat customers continue to represent a growing share of gross revenues now at 69%. Our bias towards profitability saw adjusted EBITDA of $8.7 million and a half-on-half improvement of $20.5 million. This result clearly demonstrates the benefit of our agile and flexible business model. Our AOV increased 17% year-on-year to $961, reflecting the continued loyalty of our customers and the pass-through of our higher U.S. duties in our pricing. We closed the period with $61.4 million in cash and 0 financial debt. Against the backdrop of significant headwinds, our team executed exceptionally well. Our steadfast strategy to prioritize profitability, maintain cash and strengthen customer loyalty continued into H1 FY '26. This was executed in an environment where demand for luxury goods remains soft. The global personal luxury goods market declined approximately 2% in calendar year 2025, as a result of falling consumer demand globally, ongoing macroeconomic uncertainty and significant changes in U.S. trade policies. In the U.S. specifically, the elimination of the de minimis duty exemption from late August '25 resulted in price increases that further impacted U.S. demand. To address these challenges, we focused on growing market share outside of the U.S. This resulted in sales revenue ex U.S. growing by 13%. We also deliberately reduced paid marketing investment and turned our efforts towards enhancing engagement with our existing customers. This drove further growth in gross sales from repeat customers. On the supply side, engagement with brands and inventory holders has never been stronger. We exited H1 FY '26 with record available inventory levels, further strengthening our customer value proposition and minimizing supplier concentration. Localization remains a core strategic priority. Our efforts in the half delivered an uplift in sales from emerging markets representing 45% of gross revenue, up from 37% the same time last year. And from a balance sheet perspective, our capital-light model continued to deliver resilience with closing cash at $61.4 million and no financial debt. Turning to Slide 6. We finished the 6-month period with 613,000 active customers. New customer adds slowed, reflecting softer demand and a decision to lower marketing spend. We prioritize our investment towards quality engagement and conversion of the volume. Our average order value increased to $961 with repeat customers spending $1,050 per order on average compared to $811 for new customers. This increase largely reflects the incorporation of higher duties in our pricing. Repeat customers now account for 69% of gross revenues, up from 67%. This trend of increasing loyalty reflects the ongoing attractiveness of our business model to consumers. This loyalty is a key enabler as it helps sustain the business through cycles and underpins the long-term profitable growth. This chart once again reflects the benefits of having a strong cohort of loyal customers and our ability to increase our share of wallet over the long term. Our unit economics over the period strengthened with both customer -- with both customer acquisition costs and delivered margin improving compared to the preceding 6 months. Customer acquisition costs declined to $83, reflecting a reduction in paid marketing investment. While this comes at a cost to new customer adds, we believe it is prudent to manage marketing spend in line with achieving a reasonable return on investment. Delivered margin per active customer was $179, delivering a sequential improvement versus H2 FY '25 at $148. This reflects our deliberate reduction in promotional activity to prioritize profit. Our localization strategy continued to diversify our revenue base during the period with emerging markets, gross revenue increased by 21% year-on-year. These strategic markets now represent around 45% of Cettire's gross revenue. Established markets, including the U.S., U.K. and Australia contracted 13%, primarily driven by the challenges impacting the U.S. The U.S. now represents approximately 41% of gross revenues, the Australia at 6%, and U.K at 8%. We continue to focus on increasing market share in existing and new markets by focusing on enhancing our capabilities and driving localized initiatives. During the period, we launched our Arabic language capability to capitalize on the momentum we are seeing in the Middle East. We have also successfully launched Cettire's flagship store on the JD platform in China, and we'll continue to explore additional routes to market in that region. Our supply chain with hundreds of suppliers continued to grow strongly over the past 6 months. Engagement levels remain very high as inventory holders and luxury brands seek new routes to market in the challenging demand environment. Pleasingly, we exited the half with record levels of inventory and grew our published stock products by 60% year-on-year. To support our strategy, we continue to invest in our commercial team to support our increased levels of pipeline opportunities that includes luxury brands and third-party inventory holders. I'll now hand over to Tim. Timothy Hume: Thanks, Dean, and good morning, everybody. Sales revenue was $382.8 million, down 3% on the prior year. This reflects the impact of U.S. tariff changes and softer demand in the region. Excluding the U.S., sales revenue grew by 13% to $225 million. Gross revenue was $505.7 million, while refund rates remained relatively stable. Delivered margin at 14% of sales was impacted by higher U.S. duties costs being absorbed into our fulfillment cost base. This was partially offset by a decrease in overall promotional activity. The duties impact was more fulsome in the second quarter due to the end of the de minimis exemption in the U.S. from September onwards. Importantly, however, delivered margin percent improved compared with the second half of fiscal year '25. Paid acquisition expenses were 4.2% of sales revenue and brand investment was modest at $1.9 million. This reflected our deliberate strategy to prioritize profitability. Adjusted EBITDA was $8.7 million, delivering an EBITDA margin of 2.3%. Pleasingly, our focus on driving profit delivered a half-on-half adjusted EBITDA turnaround of $20.5 million. Moving on to the balance sheet. Closing cash was $61 million, and we continue to have 0 financial debt. The increase in cash since June was supported by operating profits combined with favorable working capital dynamics. The year-on-year increase in contract liabilities is reflective of lengthier delivery times that we saw in the period leading up to the end balance date. This has resulted in a deferral of revenue recognition until the subsequent period. We continue to invest in our technology platform to develop capability and reinforce our competitive advantage. This resulted in capitalized investments as a proportion of sales revenue being 2.2%. The other key call out relates to the receivables. As a reminder, we have receivables relating to credits for VAT paid on purchases in Europe. To be more specific, these are statutory receivables that are due and payable. They could be paid at any time. However, we're subject to the time line of the government to pay out these amounts. The government has been slow to pay and out of caution, we have conservatively re-classed an additional portion of this receivable to noncurrent. Short-term challenges in luxury are expected to persist, albeit there are some signs of improvement. Importantly, the long-term fundamentals of the sector remain robust. The most recent study on luxury by Bain-Altagamma estimates the personal luxury goods market for the '25 calendar year declined by 2%. They cited macroeconomic headwinds, trade disruption, shifting customer preferences and a deteriorating value proposition as the reasons for the slowdown. On the positive side, the research is forecasting 3% to 5% growth in the 2026 calendar year. Moving now to the outlook. In the short term, there continues to be uncertainty within the global luxury personal goods market with performance varying significantly across geographies. In the current quarter, Cettire is cycling a period of aggressive promotional activity and some pull forward of U.S. demand that occurred ahead of the Liberation Day tariffs being implemented in early April 2025. Promotional activity peaked in March 2025, whereas in the current year, Cettire has meaningfully reduced its level and frequency of promotion. In light of the above, the Q3 comparator from last year has made the current quarter a lot more challenging from a growth perspective. And as against this backdrop, that our quarter-to-date gross revenues have decreased by 13% versus the prior corresponding period. The U.S. policy and macroeconomic environment remain dynamic and will continue to influence our sales activity in that market. However, the company expects to achieve a significantly improved growth profile in the fourth quarter of fiscal year '26. I'll now hand you back to Dean to conclude. Dean Mintz: Thanks, Tim. In closing, the fundamentals of our business have not changed. We have a large and loyal customer base that has multiple growth pathways. We continue to grow our supply base, creating 1 of the world's largest online inventories of luxury goods. We have a capital-light, self-funded model built for profitable growth and have flexibility to adapt to changing market conditions quickly. And we have a fit-for-purpose strong balance sheet, leading proprietary tech stack and a first-class team with exceptional capabilities. With these foundations, Cettire is well positioned to navigate near-term challenges and deliver long-term profitable growth. On that note, I'll now hand back to Sam. Sam Wells: [Operator Instructions] The first question is on delivered margin. Can you talk to how delivered margin progressed through the half? And how much of this is structural versus cyclical changes? And sort of further looking from a medium- and longer-term perspective, how do you think about delivered margin... Timothy Hume: Thanks, Sam. Just in terms of the Q1 versus Q2 profile, first quarter, we were -- delivered margin 15%. Second quarter, we came in below that. I think, the key influence there on the Q1 versus Q2 is the impact of the de minimis changes in the U.S. was felt from September onwards. So we've seen a large step up in our fulfillment costs since that point. We now have a duties attachment rate in the U.S. of 100%. So every order into the U.S. attracts duty. Prior to the changes in the de minimis, the duties attachment rate in that market was a fraction of what it is today. And so if you think about the duties essentially as a pass-through, you might maintain the same amount of dollar delivered margin on an order, but that's off a higher revenue base. And so your percentage margin comes down. Now I think you had the second part of your question, Sam, was around structural versus cyclical. I think if you compare our margin today with a couple of years ago, the bulk of the decline that we have seen is cyclical in nature. The luxury market has been through a number of challenges in the last couple of years that have been well documented. And the market remains very competitive. So the bulk of the change that we've seen is cyclical. But more recently, the increased duties attachment rates in the U.S.A., which I referred to is dilutive to margin. Now looking forward, we certainly think there's room to grow that delivered margin over the medium term. So there's no reason why we can't get back to 20% plus over the medium term. I mean currently, the market remains promotional. The other thing we've seen in the recent period is that there has been some consolidation in online luxury. And other things equal, that should provide a more constructive backdrop looking forward. Sam Wells: And just in terms of the turnaround in EBITDA half-on-half, what are the main levers that have enabled that from negative $12 million approximately last half to positive $9 million... Timothy Hume: Look, Sam, obviously, it's been a challenging environment when you take into account a slowdown in the luxury market and the elimination of the de minimis in the U.S., which is our biggest market. Despite this, we've been able to hold revenue and improve EBITDA, as we said, by $20 million in just 2 quarters. I think in terms of how we are able to do this, from a tariff perspective, we increased -- we've increased our pricing to absorb the additional duties. And we've also moderated our promotional activity to really focus on improved revenue quality. Also drove a lot of efficiencies on the fulfillment side. And we continue to invest in marketing in a strategic and conservative way. There's still a lot more to be done, and we're targeting to have further improvements in the coming half. Sam Wells: And next question, your biggest market, the U.S. has had its challenges of late, many of which you've talked to in the presentation, what's driving the growth ex the U.S.A.? And can you specifically touch on margin expansion in regions like Middle East and China, and comment that on the time it takes for these markets to switch... Dean Mintz: I think in a lot of these markets, we're still relatively early. And they're very large luxury markets. We've put a lot of effort into our localization initiatives, which we spoke about previously. In the Middle East, we released localized language, Arabic language. And that's been very, very helpful. And at the same time in China, we're continuing our efforts there. And we launched our flagship store on the JD platform, which took a considerable amount of work from both sides, both JD and us. Sam Wells: And just a follow-up on the expansion strategy more broadly. How do you balance increasing sales and engagement in existing markets and with existing customers rather than expanding into new locations like you mentioned? Dean Mintz: Do you want to take that one, Tim? Timothy Hume: I think we're -- look, I mean, of course, we want both. There's no question. I think in the recent period we've been putting a little bit more weight on engagement with our existing customer base. And that's simply because the returns on marketing investment have been more challenging. And so we have had -- we've taken a very conservative approach to our marketing spend. You see that on our numbers in this half. You see that in effectively our net adds. And -- but the level of engagement that we have with our existing base continues to be very strong. And the customers that we do have are extremely attractive, right? You see that in the repeat customer AOV. And you see that in the repeat customer spend. So the returns on -- unsurprisingly, the returns on engagement are on existing customers, I should say, are very, very attractive in current market. The other thing that's interesting at the moment, which if you just kind of peel back the next layer of our -- the customer profile. We've seen in the last several months now a stabilization in our retention rates, which is very encouraging, notwithstanding some of the external pressures that we touched on through the course of the call. So that retention rate is very much stabilized and goes to the strength and engagement of the existing customer base. And -- but we have less gross adds coming into the funnel at the moment as a consequence of our more conservative investment profile. It won't always be like this. As the return profile improves, then we'll -- there will be an opportunity for us to be more outward facing in terms of that marketing investment. And you can expect that, that will be -- a good portion of that investment will be allocated to the markets where we're newer. And so -- but those markets at the moment are growing really encouragingly even at current investment levels. So that's certainly something to keep an eye on. Sam Wells: Great. Next question, your auditor has highlighted a material uncertainty in relation to going concern. Why is this? And do you expect any change in supply chain relationships or terms as a result of this? Timothy Hume: Well, I mean, let's -- I think, first of all, let's just be very clear that we have an unqualified set of accounts out today. And that's very clear from the report from the auditor. So I think that's very important for people to understand. I think, from my perspective, there's not really anything new here. If you look back at our accounts in June, there was a current asset shortfall in June and also a note in our annual report around going concern. Now I mentioned earlier on the call that we've taken a more conservative view around the timing of our -- of when our tax receivables will convert to cash naturally, and as a consequence of taking that more conservative view, we have re-classed some of the receivable from current assets to noncurrent assets. So naturally, this will impact the current asset balance, and that's why the auditor has commented in the way that they have. I think -- this is -- there's an element here of this being a technical accounting point. The auditor has flagged that the business has a current asset shortfall and accordingly directed readers to read the relevant note in the accounts. So I don't think there's too much more to say on that. With regards to supply chain, I think -- if I can refer back to our comments earlier in the presentation, the level of engagement that we have with the supply chain at the moment, both in terms of directly with brands as well as with third-party suppliers is the strongest it's ever been. Our supply chain has continued to grow very strongly over the last 6 months. And we're a very important partner to all of our suppliers, and it's business as usual on that front. Sam Wells: Great. And just maybe a follow-up there. Can you please explain why these Italian VAT receivables are still growing and getting larger and whether or not they can be collected? Timothy Hume: Sure. So the simple mechanics work that we make purchases in various markets around Europe. We pay VAT on those purchases. This is purchase of goods and services. We pay VAT. And in payment of that VAT, we generate an input VAT credit, no different to a business operating in Australia that pays GST, generates an input GST credit, same thing conceptually. The process of getting a refund though, is not necessarily the same. And so -- and we have a net receivable position in those markets because our purchases exceed our sales in the market. Why does it take so long? Well, look, certain governments in Europe are notorious for being slow around managing their own payables, if you will. And can be particularly slow for foreign companies. And so I think this is a very frustrating situation, but it's a major priority for us to convert it to cash. And we're working on broader improvements to our supply chain, which we expect to be implemented during this half, which should considerably improve our cash flow profile around European input VAT going forward. Sam Wells: And you might have just touched on that with your final comments to the answer, Tim, but can you just -- sorry, you flagged a few options to mitigate your current asset efficiency. Can you elaborate on these and whether or not they could possibly impact the business? Timothy Hume: Look, I think the initiatives that we have in place are very straightforward. We need to continue executing in the market and driving sales. And there remains considerable scope for us to improve the efficiency of our cost structure, both as it pertains to variable costs as well as fixed costs. And so we are -- commercially, our objective is to run with the leanest possible cost structure and ultimately translate that into profitability. I refer back to Dean's comments, we have had a $20 million-plus turnaround in profitability in the last 2 quarters. And we're very focused on continuing to drive improvements in profitability going forward. I think the business has faced some very significant disruptions in its major markets over the last couple of years. In the last 12 months, in particular, we think about some of the news flow out of the United States, which is our largest market. And we've absorbed those challenges. We've held revenue. And against that backdrop, not only if we held revenue, but we've significantly improved profitability. And I think that's a testament to the flexibility that our business model has. And that sets us up well to drive improvements in profit going forward. Sam Wells: Great. How should we think about marketing spend going into H2? Will spend be aggressively cut again in light of the Q3 '26 trading update that you provided and the ongoing volatility there? Timothy Hume: I don't think you should -- investors should expect any meaningful change in terms of current run rates. So we're investing at the moment at a level which is still achieving a good balance between generating a return on investment and overall growth. I think there are some funny comps that we're working through in this quarter from a growth perspective. But we're also -- if you look back at the fourth quarter of last year, where anyone who was operating cross-border of the -- against the backdrop of the changes in U.S. trade policy had a very difficult operating environment. We had a very challenging fourth quarter in fiscal year '25. And I think at this stage, our best current view is that the business will -- from a growth perspective, even if this is a challenging quarter that it will rebound strongly in the fourth quarter of this fiscal year. And you've -- we've indicated that in our trading update today where we're anticipating that revenues are going to be not too far off where they were last year. Sam Wells: Great. Do you have a rough sense of what gross profit dollar growth decline has been in the quarter to date? And what is the offset on delivered margin with lower promotional intensity? Timothy Hume: Sorry, I think the question is what is profit in the third quarter? Is that the question? Sam Wells: So do you have a rough sense of what gross profit dollar -- sorry, gross profit dollar growth or decline has been in the quarter? Timothy Hume: I don't think we're -- we've made any comment today about current quarter profitability in our trading update. And I don't think that it's appropriate to provide that on this call. Sam Wells: Okay. Next question, any prospects you might get a tax cash refund at some point given the NPAT losses over the last calendar year? Timothy Hume: Cash tax refund, is that the question? No, generally, the bulk of our business is resident in Australia for tax purpose. And so we tend not to get income tax refunds in Australia as a company, but you do have losses that you can offset in the future. So I think that's a consideration in the Australian market. But I don't think we can expect income tax refunds. But naturally, we work in -- we're operating in many markets around the world at this point. And whilst there are certain markets in Europe, which may not be as speedy at paying their -- their payables as we are, there are plenty of other markets around the world where we do have import tax credits, which are paid on a timely basis. Sam Wells: Great. And just another one, sticking with the financial statements. Why did you pay $5 million of cash taxes when you made a pretax loss last year? Timothy Hume: So the tax payment that we made would have been in relation to our tax position for the prior year, where we were profitable. Sam Wells: Okay. Are you able to break down the Q3 '26 sales performance by region, U.S.A. versus ex U.S.A.? Interested to understand if ex U.S.A sales growth is holding up in Q3. Timothy Hume: Yes. We haven't disclosed the numbers in terms of the Q3 to date regional splits. But the dynamic that we've described broadly around the company that we have, we have a 2-speed company this year, okay? We have the U.S., where we are cycling not only the -- if you think about this quarter last year, and tariffs were not something that people were talking about. And so we have 2 layers of this tariff issue in the U.S. One is the general discussion around which country has to pay what based on where something is made. And then there's a separate threat to that discussion around does the de minimis exemption apply or not. So both of those changes in the U.S. have been individually and collectively meaningful for us as has the corresponding uncertainty that, that's created for the consumer in the U.S. These are dynamics which have unquestionably had an impact on our business in recent quarters, and we are still cycling a world where that was not on the table. That's going to continue to present itself in year-on-year growth rates in coming quarters. If you think about it, the de minimis change was implemented at the end of August. So we're going to be seeing some strange things in the U.S. comps really until the December quarter in this calendar year. So that will continue to play out. The rest of the business, excluding the U.S., continues to grow very strongly. We talked on the call about the global luxury market down 2% year-on-year in calendar year '25, and our business has grown in the teens percent in the second half of the year. And that is again, in the context of much lower promotional activity from our business. So that's a very encouraging sign for us. We're continuing to take share. Our localization strategy is doing as it was intended to do. And I think we can expect this dynamic to play out for the foreseeable future. Sam Wells: Great. Thank you. That's all the time we have for questions today. If there are any unanswered still, please feel free to send them through or if there's any additional follow-ups, and we'll endeavor to get back to you. And that concludes the Q&A session and brings us to the end of today's first half earnings call for Cettire. Thank you all for joining, and have a...
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Wendel's Full Year 2025 Results Conference Call and Webcast. [Operator Instructions] Olivier Allot, Director of Financial Communication and Data Intelligence will read them. I must advise you that this conference is being recorded today. I would now like to hand the conference over to Mr. David Darmon, member of the Supervisory Board and Deputy CEO. Please go ahead, sir. David Darmon: Thank you, and good morning, everyone, for this 2025 full year results presentation. As always, we're going to make this presentation with several speakers today, including Jérôme Michiels, Benoit Drillaud, Cyril Marie and later, Laurent Mignon. So to start, let me comment the Slide #4 in the presentation, which is a recap of the 2030 ambitions that we present to you in last December. We showed you that we have a pretty ambitious portfolio rotation plan and the capital allocation plan. We do intend to get EUR 7 billion of committed cash flows through 2030 through asset rotation and FRE generation and to reinvest this amount and returning EUR 1.6 billion to the shareholders in the meantime. We also announced to you back in December some good organic growth target with a 15% growth organically for the asset management platform. And we mentioned to you that we intend to create value in the portfolio investment of our principal investment from 12% to 16% per annum with the new mandate that we have given to the IK Partners team, and we'll get back to that later in the presentation. So this is the background on which we are all working at Wendel, and I will give you more details on what we achieved in 2025 and in early 2026 to achieve those ambitions. I'm moving now to Page #5. And as you can see in 2025, we made progress on our 2 legs, I will start with the asset management, where you can see that the platform really ramped up in 2025. We did close the acquisition of Monroe Capital in March 2025. The 2 platforms that we had during the years, Monroe Capital and IK Partners had a very successful fundraising cycle. They both raised a combined EUR 11 billion in a market which you know was not so easy. In 2025, we also signed the acquisition of Committed Advisors. We announced the signing in October 2025, and we do intend to close this acquisition end of Q1 2026. We believe that we now have a platform at scale, we manage close to EUR 47 billion of assets under management, including pro forma creation of Committed Advisors. And we have a target for the year of over EUR 200 million of fee-related earnings with this platform. So in less than 3 years, you can see that we have built something of scale and pretty attractive and pretty unique. Now talking about the principal investments. 2025 was also a year of transformation. We've been very active in the portfolio. We are going to come back on the various divestitures that we made recently, the various bolt-on we did in the portfolio and the change in management that has happened. But the most important information is probably this IK Partners advisory mandate that I mentioned earlier, which is changing significantly the way we operate, and we believe it is going to create much more value in the future, but I will get back to that later in the presentation. Turning on Page 6. You can see that we had a pretty busy early 2026 with the announcements of the disposals of both Stahl and IHS. Those are investments that we had in the portfolio for quite a long time. You remember that we initially invested in Stahl in 2006. IHS was a 2013 investment. So they've been in the portfolio for quite a long time. And we're happy that in this pretty tough market, we managed to secure those liquidity options. For Stahl, we signed an acquisition with Henkel, and I will give more details later on. And with IHS, we did support the tender offer that MTN announced a couple of weeks ago. Those 2 divestitures should bring EUR 1.65 billion of proceeds for Wendel, so it's pretty significant. You will see later on that, that takes our leverage down quite significantly. So it brings us some strong capability to execute on our shareholder returns policy and also to deploy capital towards the both legs, I mentioned earlier, WPI and WIM. So those sales are pretty important in that we're going to execute our strategy. Moving to Slide 7 and a few numbers on our 2025 results. First, you can see on the left side of this slide for Wendel Investment Managers, some pretty strong growth. There is organic growth. You see the plus 13% organic growth in fee-paying AUM. And obviously, with the consolidation of Monroe Capital over the period, which we didn't have in 2024, we also have a scope effect. And so the increase of 200% is due to this scope change. But beyond the M&A, you can see that organically, the platforms are growing very, very nicely. On the right side, you can see that Wendel Principal Investments today account for over EUR 5.5 billion of gross asset value. It's growing with a positive impact of listed assets and which as of today is mainly -- is going to be mainly Bureau Veritas because we secured the public to private in December for Tarkett. And as I mentioned earlier, IHS should not be in this bucket by the end of 2026. The unlisted assets have been impacted by the market multiples, and I'll come back to that later on. We did value in those numbers and in 2025 Stahl at the Henkel offer price. We did not take into account the -- our share of cash flow between signing and closing, which are due to be paid to us. But as this amount is quite uncertain at this stage, we cautiously ignore this amount in our NAV. IHS is valued at the average share price in -- before the year-end and not at the MTN offer price. So we published a NAV per share of EUR 164.20 as of December 31, 2025, which is up 0.7% over the previous quarter and up 1.17% if you include the interim dividend that we paid in Q4 last year. I'm coming back to -- I'm moving now to Slide 8 and coming back to the performance over the last quarter of this fully diluted NAV, which has been growing 1.7%, as I mentioned, so EUR 2.7. So how did we grow this NAV? First, we had a negative impact on the investment manager side, the asset management part. We had some negative impact from the market multiples of our peers despite the positive growth of the aggregates that I mentioned earlier. The Wendel Principal Investments saw some growth in terms of NAV per share, EUR 4.9. This is obviously mainly Stahl because we sold Stahl above our NAV value, and I will get back to that later on. We -- as I mentioned, IHS was valued at the share price as of December 31. And last Tarkett is now in our bucket of private assets and not anymore in our listed assets bucket. You can see that the ForEx has been negligible over this quarter, which is very different from the first 3 quarters of 2025, where the impact was pretty strong in Q4, it was pretty remote. So plus EUR 2.7 over the quarter, fully diluted and plus EUR 1.2 when you take into account the interim dividend that we introduced last year, and we paid in November '25, EUR 1.5, which has already been paid to our shareholders. I'm moving now to Page 9 and give you a bit more details on the 2 earlier divestitures I mentioned, namely Stahl and IHS. The sale of Stahl is going to bring $1.2 billion of net proceeds to Wendel and the expected tender offer on IHS should bring $575 million for the shares that we own in IHS. The combined proceeds from those 2 divestitures should bring our pro forma loan-to-value under 10%. We should also note that this EUR 1.6 billion of proceeds account for over 27% of the portfolio rotation that we announced just a few weeks ago. So quite a strong start on this program. I'm moving now to Page 10 to give you a bit more insight on the return to shareholders. We do intend to distribute around EUR 500 million to our -- sorry, to return EUR 500 million to our shareholders, both through dividends and through buyback. In terms of dividends, we are raising our 2025 dividend to EUR 5.10, up 8.5% compared to last year. As we already paid an interim dividend in November, the additional dividend to be paid in May 2026 is going to be EUR 3.6. Those combined amounts of EUR 5.10 compared to the current share price generate a yield of 5.8% based on the spot price of February 25. So a strong dividend policy and yield, combined with the share buyback program that we mentioned end of December that we are going to launch, which is going to be around EUR 340 million in terms of size that we're going to return to shareholders. So above -- around EUR 0.5 billion to be returned to our shareholders during this year. I'm going to turn now the mic to Cyril Marie to present to you the development for the Wendel Investment Managers division. Cyril Marie: Thank you, David. So I will not comment on Page 12 because the key highlights have been presented by David already. Let's move directly to Page 13 where you have the roll forward of the assets under management. So here in this chart, you have at the extreme left and right, the AUM. As you know, the way we monitor our activity, we have the AUM and the fee-paying AUM. So let's start with the AUM. In '24, as David said, we had only IK with EUR 13.8 billion of AUM composed of the NAV of our fund plus the dry powder or the money available for new investment and the co-investment. Now at the end of '25, we are at EUR 41.2 billion. So it's EUR 15 billion for IK, plus 11% and $30 billion for Monroe, up 22%, which is, I think, a strong achievement in the current environment. And in the AUM, the last information is that the Wendel Sponsor money represents EUR 500 million. So it's around 1% of the total AUM. I think it's an important information. In the middle of this chart, what you have is the dynamic of the fee-paying AUM. So it means that the fees that are paying AUM that will have an impact in '25 on our P&L. So we started the year at EUR 10 billion. Then we had the impact of Monroe. But then what is very important is the EUR 9.2 billion and the minus EUR 5.2 billion. With this, you have the new fee-paying AUM. So for IK, it's the money raised over the year, so EUR 1.3 billion and the money invested because it's not the same business model for our 2 important GP, IK and Monroe, so close to EUR 8 billion for Monroe. So with that, you have the new fee-paying AUM. And then you have the exit and the payoff so because you know what is very important for these LPs also is to return capital. So if you sum the EUR 9.2 billion and the minus EUR 5.2 billion you get the 13%, and we believe it's a good indicator of the organic evolution of our business for '25. Then let's go on the following page, Page 14. Here, the idea is to give you really the more detail on the evolution of our business with 2 things: growth -- organic growth and two, diversification. I think that are the 2 key messages here. So let's start with private equity, IK Partners. In terms of fundraising first, it was the last part of their fundraising vintage started in '23, '24. As you know, already, they have reached the up cap in all their strategies, the mid-cap, the small cap, the partnership fund. And so the fundraising was at the beginning of '25 for EUR 1.3 billion. Now their priority is to invest the money raise and also to return capital to shareholders. In '25, it was a good year. As you can see, as always, they have returned more capital than they have invested for the LPs. It's very important. The dynamic of AUM plus 11% in '25. What is also very important for us is to maintain the organic growth of the businesses. And I will present to you later on that we have reached the target in terms of FRE. But despite this, we are still investing in the business and the FTE have grown by 8% because in private equity, as you know, it's very important to have local team to understand the businesses, to invest in the operating partner. So we maintain a high level of investment in order to pursue the growth of the business. Another very important point for IK, it's the development of the retail. As you know, in the development of a private asset platform, the retail is a new engine of growth for us, and it's still ahead of us. And we are -- we have now created the first evergreen vehicle for IK called IK Private Equity Solutions. It's now available for subscription. So if you want, you can get it through all the life insurance platform. '26 for private equity priority. Now the revenue are secured because we have raised the money. I think the priority is now to deploy and to return capital to shareholders. We have a strong ambition for '26. And also, we want to pursue the implementation of IK. As you know, IK is a pan-European private equity manager. They are very close to each of their markets. They have 7 implementation, and they have in mind to open a new office in Spain in '26. I think it's very important in order to maintain the quality of the deal flows for our LPs. So that's for private equity. Private credit, here also a very strong organic dynamic. Equity raised EUR 3.8 billion. As you know, post acquisition, it's always very important to see how the LPs will react and the signal was very positive with a lot of free-up, we have maintained the client base, and it's very positive for Monroe Capital. They have raised capital also with their retail evergreen vehicles during the year '25. And if we talk about the first 2 months of '26, the flows remain positive. So we are still gathering money on our retail evergreen vehicle for Monroe. Deployment, money invested EUR 8.3 billion, a very high level of investment. It's a record year for them. They remain relatively selective in terms of deployment. If you look at all the key KPIs of the private credit, LTV, leverage, diversification, Monroe is very well positioned. And also, if we -- just to give you one figure, if we look at the performance of the underlying companies of Monroe, the growth of the EBITDA is 12%. So private credit remains a very good asset class. And it's with Monroe, they invest, as you know, they lend money mainly to small and mid companies in the U.S. and the U.S. economy is still very strong. AUM grew 22%. Here, the same message regarding the workforce. We are still investing in the business to reinforce the diversification. And the last comment on Monroe, probably '26, 2 important message. The first one, we want to develop organically Monroe in Europe. So we are working on it. We hope to be in a position to execute something in '26. And also, we are pursuing the diversification with the launch of new strategies and evergreen strategies for Monroe Capital. Last strategy for us, even if it's not closed so far, as David said, it's Committed Advisors. We expect to close it in Q1 '26. They have started the new round of fundraising with their Vintage VI, and I can tell you the dynamic is very positive. The feedback from clients is positive. The cornerstone investors are there. So the dynamic is very good, and we hope that it will contribute to our growth in '26. Now if we turn to profitability, we have 2 slides. The first one, Page 15, it's the actual profitability. So here, you have, as David said, a very important scope effect because last year, you had only 8 months of IK in '24 and in '25, you have 12 months of IK and only 9 months of Monroe. So you have -- the growth rates are very high, 177% for the revenues, 150% for the profitability. What is important is to show you here that the profit contribution to Wendel is increasing significantly, and it shows you the execution of the strategy. But what is more important probably is to go to the next page on Page 16, just to have a more analytic view of the P&L. So let's take the second column, the pro forma. What pro forma means here? It's 12 months of IK and 12 months of Monroe. And for that, so if you look at the first line, the revenues, the recurring revenues, so excluding carrying interest, the revenues tied to the FRE. So above EUR 400 million for EUR 30 billion of fee-paying AUM on average, it means an average fee rate of 135 basis points. I think it's a very good level with our mix of business as of today. So IK is closer to 180 and Monroe remains above 100 basis points because, as you know, Monroe is really focused on Alpha. So they are not chasing AUM. The idea is really to focus on fees and performance for the LPs. Then the second indicator I would like to comment here is the margin, 38%. So it's a good margin because it's a good balance between our objective of profitability. But at the same time, we maintain investment in the business in order to have a sustainable growth. And the last comment on this slide for me is the EUR 159 million. When we have announced the Monroe acquisition last year in October '24, we gave you this objective of EUR 160 million. We have reached this objective despite the dollar effect. It means that IK and Monroe have been in a position to compensate the negative dollar effect. And we are today able to announce you that we have reached this target for the full 25 years. Then last page, so '26, it's a summary of what we said previously with David. So the organic growth is there. We have now also Committed Advisors part of the platform. We have reached EUR 47 billion. As said in December, we have a good level of diversification in terms of clients, geographic areas and products. So we can maintain this pace of growth. And as you can see, it will have a significant impact also in terms of FRE growth because we have in mind to reach EUR 200 million for '26. David Darmon: Thank you, Cyril. Now I'm going to turn to Slide 19 to talk about the activity during 2025 in our Wendel Principal Investments area. I will first cover the key highlights in 2025 and with this IK Partners mandate I mentioned earlier, which went effectively in operations on January 1, 2026. So from now on, all the past controlled private investments and the future investments in the controlled private equity made on Wendel balance sheet will be managed by the IK Partners team, which sits in the IK Partners ecosystem, and so we'll benefit from the expertise and resources of IK Partners, which we believe is going to be very helpful to create more value for the group. We also have been very active in 2025, including some leadership changes at Scalian, William Rozé joined us from Capgemini with a very strong experience in the industry. And we had as well a new CFO during the year. So a strong change of leadership at Scalian. At CPI, the long tenure CEO, Tony Jace, retired during the year, and Andee Harris joined as well during the summer. She's bringing a very strong tech and commercial background, which is exactly what CPI needs today. In 2025, we also invested roughly EUR 100 million in Scalian, both to support the M&A strategy and to strengthen the balance sheet. As I mentioned earlier, in 2025, we secured the public to private of Tarkett and Tarkett became a private company in late December 2025. We've been very active in our portfolio companies and financed 16 bolt-on acquisitions, 1 at Scalian, Tarkett and CPI each and 4 for Globeducate, which has been pretty active and 9 at Bureau Veritas. So a very active year for our portfolio companies. Last, I remind you the 2 disposals of shares that happened at Bureau Veritas in 2025 in March and September. And those gains flow through our balance sheet and not in our P&L, and Benoit will come back to that later in the presentation. I'm turning now to Page 20, where we are going to come back to the sales of Stahl and IHS and give you more details. So as I mentioned, the Stahl sale is expected to bring EUR 1.2 billion of proceeds to Wendel. This sale at EUR 2.1 billion enterprise value was secured with a 20% premium above the latest NAV published in Q3 2025. And it did generate a return above 15% per annum over the last 20 years. So a strong 6.6% cash-on-cash return when you include the previous dividends that we had over the years. So a very good return over a very long period. Beyond the financial results, on the right side, we wanted to give you a bit more insight on the value creation that happened on this investment. You can see that the revenues grew nicely over this period. The EBITDA grew actually at a higher pace because we increased the margin quite significantly over the years with a strong control of cost and some operational leverage, which was combined with an upscaling of our product portfolio where we moved to higher-margin products over the years. It has been a very thoughtful process to reposition Stahl to a more attractive asset under the leadership of Maarten Heijbroek. We -- over the last few years, we made some strategic acquisition in the specialty coatings business to make the company more attractive with the higher growth prospects. And at the same time, we worked on the carve-out of the wet-end business, now which is called Muno that is going to stay under our Wendel portfolio, which is having different market dynamics, and we thought will be not as attractive as the rest of the portfolio to potential buyers. So we've been quite active, and we are very pleased with the results that you can see here. I'm moving now to Slide 21 to give you some insight as well on our investment in IHS, which has been a long-term hold as well, slightly shorter because the initial investment was in 2013, but still 13 years is quite a long investment. This is our last investment in Africa. So we are closing this chapter with this sale. We expect $535 million of net proceeds, which is around 21% above the NAV that we used for this stake in Q3 2025. It is a 0.7 cash-on-cash net multiples for this investment. The financial return is not showing the actual operating performance that you can see on the right side because IHS has been a very strong organic growth and M&A growth success. We multiply by 10 the sales and by 21 the EBITDA. But this is not showing up in terms of financial return because we did suffer both from a volatile FX environment in naira, which is the main currency in Nigeria, was devaluated over 8x over that period. So that did impact us quite significantly. And the Towers business industry did suffer some strong derating as well. So the combination of an industry derating and FX actually made this growth story in terms of operational success, less attractive in terms of financial outcome, as you can see on the left side. I'm now going to cover on Page 22 and 23 the results of our listed assets and private asset portfolio. In the listed assets, I'm only going to comment on Bureau Veritas because once again, Tarkett is now in private assets, and we don't consolidate IHS. Bureau Veritas just announced its results yesterday. They published some strong results. You can see with some good organic growth, plus 6.5% and some improvement in the margin. So we are quite happy with those results. In terms of 2026 guidelines, we expect the results to be fully in line with the LEAP 21 -- sorry, the LEAP28 strategic plan. You can also see here that Bureau Veritas did announce a new EUR 200 million share buyback program yesterday as well, which is going to be completed over the year. Moving to Slide 23 to give you more details on the performance of our private assets, and I will be starting with ACAMS. ACAMS had a very good year last year. As you remember, in 2024, we made some significant investments, both in terms of talent, in terms of technology, and we can see that in 2025, we can see some early results of those changes. Both the top line were very strong. The margins were strong as well. And we did a refinancing as well of ACAMS at the end of the year. So we secured a longer maturity for the debt and a lower financial interest expenses as well. So across the board, it was a very good year for ACAMS. CPI had a soft year in 2025. We were used to much higher growth rate in the past, plus 2% in terms of sales, plus 2% in terms of EBITDA. It's mainly in the U.S. where we saw some softness. The rest of the portfolio had some good growth. But in the U.S., there was a lot of uncertainty in the federal budget, both for health care and education customers, and that did impact the company growth profile. Regarding Globeducate, you can see that the company has grew nicely in 2025. It's a combination of both on organic growth, the enrollment in terms of students and pricing, but also in terms of M&A, as I mentioned earlier, we did some acquisition in Cyprus, in the U.K. during the year. And so the company is on track to deliver some good growth in 2026 as well. Scalian had a tough year in 2025. It's a tale of 2 stories. We had some good resilience for the large accounts and for the core markets where Scalian is a very strong niche player, namely the aerospace, defense, energy and financial service industries. But at the same time, we did had a lot of softness in our smaller accounts and IT accounts, which did suffer from a market pullback. And so the combination is this minus 5.1% in terms of sales. The company had some fixed cost basis. So the EBITDA reduced by 8.2%. In 2026, we believe we're going to see a stronger growth from those large accounts and in our core markets. We are going to work to have those IT customers to decline at a lower level. So we expect some sort of stability. And we have some strong program to reorganize the business to improve our margins. So we expect to have a different trend in 2026. You can see that Tarkett had a year with some margin improvement, and we were happy to see a plus 4% growth in terms of EBITDA. On Slide 24 and 25, we wanted to quickly show you how the portfolio of Principal Investments is changing if we include the pro forma sale of IHS and Stahl, which are ongoing. So on 24, you can see the -- what we showed you at the Investor Day actualized with December 31, 2025. So this is a slide that you know. But interestingly, on Slide 25, we did the same description of our portfolio, assuming IHS and Scalian are sold and with the newcomer Muno, which is the name of the wet-end business of Stahl that we're going to keep. What you can see is that the industrial part of our portfolio is shrinking down to 5% and the business services part of our portfolio, Scalian and Bureau Veritas is growing in due proportion. So the principal investments, including those 2 asset disposals is down to EUR 3.9 billion in terms of gross asset values and with a more balanced education, training and tech on one side and business services sector exposure on the other side. So we thought it will be an interesting view for you. I'm going to turn the mic now to Benoit Drillaud to present you the financial results of 2025. Benoit Drillaud: Good morning. I'll start the presentation of the P&L with 2 significant profits that are not booked in the P&L. The first one relates to 2 significant events of 2025 in the development of our strategy, the forward sale of Bureau Veritas shares and the block sale of Bureau Veritas shares in September. They have translated in a profit of EUR 980 million booked in the equity, close to EUR 1 billion booked in the equity. And the second profit is the change in fair value of IHS. The share price of this company has doubled over the year and it has been booked in the equity. So EUR 1.2 billion booked directly in the equity in accordance with the applicable accounting principle. If we go through the detail of our P&L, you can see that Monroe has strongly contributed to the asset management platform from EUR 42 million that was 8 months of IK to EUR 127 million, 12 months of IK plus 9 months of Monroe. The contribution from the WPI portfolio is decreasing a little bit with the earnings of Stahl and Scalian. The operating expenses and taxes have decreased by 9%, demonstrating the good cost control. Last year, we benefited from a very exceptional level of income from cash and cash equivalent because the money market rates were close to 4%. And in 2025, they were a little bit above 2%. So this explained the level of the financial income in 2024. In 2025, it's more balanced. So globally, the net income from operations that is the most meaningful aggregate for Wendel is stable at EUR 753 million. Same in group share is lower because of the earnings of Stahl and Scalian and because the percentage of interest in the net income of Bureau Veritas is lower at the beginning of 2024, the percentage of interest was close to 35%. And at the end of 2025, this percentage was 15% with the 2 block sales we made in 2024 and 2025 and the forward sale. The nonrecurring cost mainly come from the portfolio companies with restructuring costs, M&A cost, the cost of the disposal project of Stahl, the carve-out cost of Muno. And last year, we had the very significant capital gain on Constantia. The impact from the acquisition entries have increased because we had the acquisition of IK last year. We had the acquisition of Globeducate of Monroe. So these acquisitions explain why this cost -- this accounting expenses have increased. And concerning the impairment, we have in 2025, the loss that Scalian booked in June. And we also have the reversal of the depreciation we had on Tarkett because the share price went from EUR 14, if I remember well, to the squeeze out price that was EUR 17. So the total net income is EUR 345 million. The net income group share is a loss of EUR 152 million, but if we take into account the 2 significant positive entries in the equity, we have a level of equity group shares that increased from EUR 3.2 billion to EUR 3.5 billion in 2025. If we turn to the following page, the Page 28, you have here the 3 main components of our very strong financial structure. First, liquidity with EUR 2.2 billion of cash and the undrawn credit line. You have, of course, the LTV ratio that is below 10%, well below the S&P ceiling for our current rating. And you have a very long maturity profile of our bonds after we'll have repaid in the next weeks, the exchangeable bonds and the 2026 bonds that are coming to maturity. So I now leave the floor to our CEO, Laurent Mignon, for the conclusion. Laurent Mignon: Thank you, [ Michiels ]. Thank you, Benoit. Thank you, David and Cyril. Just one point to add on that and then I'll make the conclusion. The LTV, the 9.6% include the pro forma of the share buyback that we have announced today. So it's a fully -- it's full. So what can we take away from this presentation? A very strong and tangible execution of what we have announced in December for the Investor Day. We've said at that time that we will do EUR 7 billion of asset sale and cash flow generation cumulated by 2030. We already have made 27% of that through the sale of Stahl and IHS in February this year. We've said that WIM will represent 50% -- more than 50% of the Wendel GAV, excluding cash by 2030. We are already at 38%, including the acquisition, obviously, of Committed Advisors. And we've said that we will return EUR 1.6 billion to shareholders. We're going to return in '26 more than EUR 500 million to our shareholders through the dividend and the share buyback. So I think that we have strong headroom for new investment and continue to move on our strategy, create some value by creating capital appreciation through WPI and create long-term value and recurring cash flow through the development of WIM, where we think we have a good way forward with a 15% potential growth per year, and a good development altogether, and that will be in line exactly with what we said, I think, in December, and that's it. So I think we are all here to answer your question, and I pass over to the moderator or to Olivier in order to decide how to organize the Q&A session. Thank you. Operator: [Operator Instructions] We will now take the first question from the line of Geoffroy Michalet from ODDO BHF. Geoffroy Michalet: I have one question is what is -- what will be your criteria of your, let's say, [indiscernible] before deciding any new investment in WPI or in WIM? What will be the trigger? Laurent Mignon: Well, thank you for the question. Well, first of all, we have a lot of headroom as we mentioned and as evidenced by our LTV. So the criteria, we would say that we will be investing, and I think that was presented during the Investor Day, the equivalent of, let's say, EUR 300 million plus per year in the WPI, and then we will make potentially more -- some investment in the WIM. So we're -- together with the mandate that we've given with IK, so with the IK teams, we're constantly looking to opportunity to invest in WPI. Our objective when we do this type of transaction is to make a transaction that we can generate 12% to 15%, let's say, 15% of targeted return on those investments with a view of investing it at least for 5 years and potentially for more if the asset is great and we want to keep it longer, which is a little bit of our characteristic. So we're reviewing the different thing. My priority in 2026 concerning WIM is to continue building the platform. We've done a lot already, but we are working on building the platform more. And we have, as was, I think, clearly explained by Cyril, we have a lot of internal growth objectives being product, being geography, for example, for Monroe, being a product for IK. And we've got for Monroe also of being the fundraising activity of Committed Advisors that is starting a new fundraising activity has already started a new fundraising activity. So our priority is to do that, create more -- a little bit more of the sales organization, develop that, develop the -- as was said by Cyril, the retail development. So that's really our top priority. However, if we see a good opportunity, we'll look at it. We have the headroom to do it. But my priority is the one I mentioned to you. So on WPI, to make it simple, we constantly look to opportunities and we'll take benefit of the ability of the IT teams to bring us good opportunities to make some investment. And on the other side, we'll first give the priority to internal development. If we see a great opportunity that fill the expertise needs that we have, we'll look at it. Operator: [Operator Instructions] We will now take the next question from the line of Alexandre Gerard from CIC CIB. Alexandre Gérard: I have 3 questions. So the first one is related to ACAMS and CPI. I just wanted to know to what extent AI might be a threat for the business model of these 2 companies. So that's my first question. Second question, it's a question related to the Scalian and the valuation of Scalian in your latest NAV. There are similar top-notch listed assets trading on 5 or 4x -- 4x EBITDA and Scalian is also very leveraged. So I just wanted to know to what extent you've been very conservative on the valuation of that asset. And the last question is related to private credit, of course, regarding the current bad buzz around that asset class. How can you be so confident that the bad buzz will not have any short-term impact on fundraisings or withdrawals? Laurent Mignon: Well, thank you for the 3 questions. I will start and Cyril will help me complement the last one. I will take the second one also. And probably, David, you will take the one on ACAMS and CPI. So I mean, those questions are absolutely relevant and crucial question. I'll start with the easiest one because it's the most factual, which is the Scalian valuation. Scalian is, as you can see on page whatever it is, Page 24, Scalian is based on listed peers multiple. So I think the fact that listed peer multiples are trading at lower multiple, we've taken that into account in valuing Scalian. I think that the profit we've been making on -- I mean, the up value in -- we've been making by selling Stahl show you that we have a conservative approach to the valuation. And we take comparable and when the comparable move down, that affects the thing. So Scalian, the value of Scalian since we bought it has had 2 negative impact, the negative impact linked to the EBITDA, which went down and two, obviously, the multiple. So yes, we take that -- we think that there is -- this is a period of the cycle. We think that the future is much brighter. But yes, we are working on the underlying asset, and we're pretty sure that the actions we're taking are the right one in order to valuate in long term. So -- but we are taking not a long-term value. It's listed peers value, if I answer well to that. The second one is private credit. A lot of noise about private credit. By the way, let me remind you something, which I think I said during the Investor Day, but I want to say it again, is credit is not a free lunch. I mean, doing credit means risk and everybody knows about it. You're getting a return for the credit, so you need to have some risk, and it's the next banker that talks to you. So we know that. However, we feel that the way Monroe do it business is a relatively good risk/return reward way to do the credit. They're doing that to lower middle market companies in the U.S., very much linked to the U.S. economy. I don't think they're doing so -- and the way they process, I think I already said that here in this audience about the way they do origination, underwriting and so on is a way to have the most professional approach to private credit. They've been in the market for 20 years. And their performance today are good. We see some element of -- you've got -- sometimes you've got bad news. But overall, the performance of the private credit sales is good because it's a portfolio. It's a very diversified portfolio also. They're doing more than per fund. Cyril, correct me if I'm wrong, but it's more than 100 lines per fund... Cyril Marie: Exactly. Laurent Mignon: That they have. So this is the basic. They have no concentration in sectors. They've got no concentration in lines in -- so they are diversifying, which I think is a very important element of the performance. The only element of concentration that they have is that they are on the lower middle market part of the U.S. industry, which, in fact, reflect the health of the U.S. industry, which is good, in fact. So that's why we are confident. There is bad buzz. So it is true that we see less natural inflows on the retail part because people are reading press and say, well, can we -- but we first see a lot of confidence and gaining new mandates on the institutional part with very sophisticated investors that do understand the business and are very confident in the skills of Monroe and are putting more Monroe to be managed by -- more money to be managed by Monroe. And on the retail side, we think that as long as the performance will be correct, we see less strong inflows, but we still see inflows. So it is -- I think it's -- we have to just go through that period of bad buzz, as you mentioned. And then it goes from bad buzz to specific. And whenever you go to specific, then it's fine. Cyril, do I have to -- do you want to add something to what I said on that? Cyril Marie: No, no, it's, okay to me. Laurent Mignon: I was clear. Okay. AI, and then I will leave the floor to David on that because we've worked a lot. I mean, AI is a big disruption in the market everywhere. Everybody is starting to say how much AI is impacting our business model. And obviously, we have the discussion with all our investment company. This is specifically the case for ACAMS and CPI. You want to say a word, David? David Darmon: Yes. Alexandre, before I answer directly your question on the threats from AI, just a quick word on the opportunities from AI because we do believe we -- there's a lot of upside on specifically on those 2 companies. We are working quite actively, especially on ACAMS to develop a new product, a new AI product, which we believe it could be very valuable to our customers, producing and giving access to the 150,000 pieces of proprietary content that we have in a very attractive way. So we are developing a very strong and attractive product. It's probably going to have an impact on the cost base to produce our content in terms of translation, delivery, organizing the travels for the trainers, for instance, for CPI. So there is still a lot of good positives to come from AI. But back to your question on the threats and how we believe that we have some boots here and to protect those businesses. I would say both of them have -- are regulated businesses and in most places, are mandatory by the regulators, it could be the state for CPI. It could be the financial supervisors for ACAMS. That's not something that you can shift, and if the regulator is asking you to have some CAM certified people or to have people trained by CPI. You can't answer, well, I pay like a Copilot license to my team. This is not going to work for the regulators. Two, the importance of the brand, ACAMS and CPI by far are the leaders in their industry with very, very strong market share and they are the references, and that's a very strong moat. Then each of them have some specific barriers. And ACAMS, remember, this is a certification business and a body which deliver a CAM certification. So that's pretty unique. And ACAMS is really based on assemblies and community, those anti-money laundering specialists. They gather together, obviously, in trade shows, but also in local assemblies that ACAMS organize and that's really unique. And CPI has a different barrier, which is the physical part of the training for roughly half of the sales of CPI. You need to have a physical presence to deliver the training. So there will no way to get understanding on how to restrain an agitated patient or students purely online. You need to have the physical training. So I know it's a long answer, and we're really, as Laurent was saying, putting a lot of efforts to understand the implication and there will be implication. But so far, we believe that the positive are going to be above the negative on those 2 assets. Operator: There are no further questions on the phone at this time. I would like to hand back over to Olivier Allot for webcast questions. Olivier Allot: We have 2 questions about shareholder return. Will the shares repurchased through the share buyback be canceled? Laurent Mignon: For the time being, we've said that we will allocate those shares to potentially pay the potential further paid of the puts and calls that we have in IK or be in front of the long-term incentive plan that is regularly given to the management, but it can be canceled. It's not a decision taken for the time being. We just announced before we do that late December that we've canceled how much -- how many shares did we cancel in late December, Benoit, I think 3.5%, 4% of the company. Benoit Drillaud: Yes. Laurent Mignon: 4%? Benoit Drillaud: Yes. Laurent Mignon: So we'll review. We do the share buyback, we see and then we'll make cancellation of shares whenever we need in order to give us more headroom to do share buybacks. Olivier Allot: Thank you. A question about the dividend. Just for the sake of clarity, should we expect EUR 3.6 of dividend to be paid in May and EUR 2.55 of interim dividend in November? Laurent Mignon: Well, this -- the EUR 3.6, everything will be related to the approval by the shareholder meeting, which is in May. I don't expect to have non approval. But should it agree with the EUR 5.1 dividend that we have announced that we're proposing, out of the EUR 5.1, EUR 1.5 has been paid. So the remaining EUR 3.6 will be paid then just after the AGM. And as I announced, we will pay 50% as an account interim dividend we will pay in November 50% of the dividend of 2025, which is EUR 5.1, which effectively make EUR 2.55, which then will be in payment somewhere in November. So the answer is -- long answer to say yes. Olivier Allot: Question about WPI. For how long time, do you expect to keep your shares in Bureau Veritas and the other larger unlisted assets? Laurent Mignon: Well, thank you. The question is when we invest in companies is because we want to create some value, and once we feel that our -- I mean, we have created the value we wanted and that we have to pass the company needs other means to do it, we pass it. So that's what happened for Stahl, for example. We've been Stahl for many years. So if I take the other unlisted assets, the -- as I mentioned, we always have an objective at 5 years. And after 5 years, we reassess the position to know whether we want to keep it or we want to sell it depending on what we see as a perspective. Bureau Veritas is a bit of a -- so it's really what we will do for the same for Scalian, for CPI, for ACAMS, for Globeducate or for Tarkett. The situation is for Bureau Veritas. We've been a shareholder for now 30 years. We've listed the company. Now the company is listed, and we have sold some of our shares during the last 2 or 3 years -- the last 3 years based on the fact that the exposure that we had not based on the fact that we didn't like the value creation potential of Bureau Veritas but the fact that the size of the concentration of Bureau Veritas was too high compared to their own portfolio and that we need to rebalance and use that to develop our new strategy, which is to develop the asset management strategy. Today, we've done more or so. So the question is only to know do we -- are we confident or not in the perspective of Bureau Veritas. And we are confident. So for time being, we are a happy shareholder of Bureau Veritas. And we will only reduce our shares into it. Whenever we feel that the value we have in mind is achieved. But for the same being, we think that the LEAP28 plan has a strong tailwind and that the team is doing a great job and that we can create more value with Bureau Veritas than the current share price today. Olivier Allot: A technical question about Stahl consolidation. Was it 100% consolidated into Wendel's account in 2025? Can you share the 2025 sales EBITDA and usual information you publish about the company? And can you do the same about Muno? Laurent Mignon: I think it's -- Benoit, you will confirm, we are on IFRS 5 now, So it's a discontinued activities? Benoit Drillaud: Yes. So it's consolidated, but classified under a specific account, but it's consolidated. Olivier Allot: What is Monroe exposure to software investment? Have you seen any drop off in flows into private credit focused wealth product, which has been quite clearly among the scaled U.S. players? Laurent Mignon: Well, I can leave Cyril to say that. I think I already answered partially to that. But Cyril, if you want to take that? Cyril Marie: No, no. Yes, for sure. Monroe is exposed to the software industry. If you look at -- it depends on the strategies and the various vehicles. But keep in mind that what they do, it's -- they do -- they are focused on the lower mid-market. So their companies are between EUR 20 million and EUR 50 million maximum of EBITDA. So most of their exposure to the digitalization of the U.S. economy is tied to businesses close to the firm to support the digitalization of the industry, the health segment. So for sure, as David said, in AI, you have challenges and opportunities, but we do believe that Monroe is very well positioned to go through that. And there is a risk and opportunities and the team, the underwriting team is really focused on that. They are always reassessing their exposure to software in order to be sure that they monitor their exposure. And the second question regarding the inflows, as I said, there was some reduction of the inflows on the BDCs, MCIP, the main one, but it's still -- we are still seeing inflows. And we do believe that over the long term, the allocation of private market for retirees and the 401(k), et cetera, will increase. For sure, it's a bumpy road because there was some noise now. But over the long term, we do believe that the potential is there in Europe and in the U.S. Laurent Mignon: But to rephrase what Cyril said, they don't have a specific tweaks to software and so on. So they have software, not more or less globally the market. Am I right saying so, Cyril? Cyril Marie: Yes, yes, for sure. Yes. Laurent Mignon: Yes. Just to be clear on that. Olivier Allot: We have a question about the execution of the share buyback. How the share buyback program will be executed, is there a certain percentage of traded volume that will be bought every day on the market? Or will it be more opportunistic? Laurent Mignon: I think -- I don't know what I can say. We will give a mandate to a bank that will execute that. And I think they will have -- they will execute that on a daily basis based on the mandate. So once we've given the mandate, it's not us doing it. They have a time frame, which is the end of the year. They have the amount, and they will execute that by respecting the rules of the AMF and whatever are the rules to be respected. So that's how it will be done. So it's -- am I saying it the right way, Benoit? Benoit Drillaud: Absolutely. Laurent Mignon: Good. Good. But basically, it's an everyday business. It's not like buying one day and be off the market. It's -- they have -- but again, we will not be interfering into that. We've given a mandate to buy that to a bank, and that will be executed by the bank following the rules as a mandate from us. The mandate will be starting tomorrow morning. Olivier Allot: A question about the discount to NAV. How do you explain the wide discount on the NAV? Is there any specific reaction to Wendel management and track record? Laurent Mignon: Sorry, I don't understand. Is there any -- you mean -- do we do well our job? I don't know. We're trying to change the company, make it evolve. I think there are severe discount to NAV to any other investment capital heavy firms that is publishing an NAV. Is the NAV the right way to look at us? Probably not because we are becoming more and more an asset management company. So we have to think about whether this is the right way to think about us because now the asset management is representing 38% of our total business, and it's not here up to sell. So it's a different approach. It's a long-term business and should be valued on the flows. So we have to think about the way we do it. Now -- each time I see somebody, he gives me a different reason from the discount to NAV, too much concentration on one stock, then it's too much listed assets, then it's too much nonlisted assets. So the other one is the value of listed, nonlisted assets is unclear, so people make discounts. So the others -- again, what we are trying is not to focus on that. We focus on long term. We focus on value creation. We want to demonstrate that we will create value through the WPI strategy and for sure that we are creating a lot of value by the WIM strategy. The growth will be there, return will be there. Return to shareholders through dividend will be there, again, and through share buyback. So we've been very clear about where we want to go during the Investor Day, and we'll execute on what we say. And I think that the first 1.5 months of this year '26 show that when we say we will execute is that we are doing it. Olivier Allot: No more question on the web, but we turn back to question by phone. Operator, please? Operator: We have 1 more question on the line from Alexandre Gerard from CIC CIB. Alexandre Gérard: Yes, 2 follow-up questions, please. The first one on Tarkett. I mean, can you remind us what are your liquidity options on that investment? Could you trigger any put option? Or are you stuck with that stake for the long term. Second question also, it's on the FX impact on your NAV year-on-year. What was -- can you remind us what was the negative impact linked to the depreciation of the USD on your NAV? Laurent Mignon: So I'll leave that last one to Benoit. I think the impact of dollar because it's a dollar depreciation was quite [ null ] on the fourth quarter, but the full year, Benoit will give you the answer. For Tarkett, well, we are a minority investor in Tarkett alongside a family. So we're working with the family on improving the company making better developing the sports business in the U.S. -- well, not only in the U.S., but globally, improving the metrics of the company in terms of efficiency and a lot of work has been done in 2025. So we feel that Tarkett and the company and the family together with us is doing a good job. We have -- it is clear for them that we are here for -- to be on their side and to help them developing the thing and that one day we will need to find an exit, there is a clear agreement with them. I don't have to comment the legal environment to that, but I'm pretty sure that everybody, once we finalize the value creation plan that is ongoing and ongoing, we will be in a position to exit our participation in good conditions. Benoit, you have... Benoit Drillaud: Yes. The depreciation of the dollar resulted in a decrease of EUR 6.9 per share between the end of 2024 and the end of 2025, EUR 6.9. Operator: There are no further questions at this time. I would like to hand back over to the speakers for closing remarks. Laurent Mignon: Well, no, thank you very much. Not much in fact, in this. Most of what we're saying was already there. But the point I want to really stress is that we are on the move, and we're doing what we -- we are saying what we do and we're doing what we say. That's very important. And we have a lot of further things to do in '26. We're very optimistic about creating value there. And thank you for being with us today, and we'll meet you soon. David Darmon: Thank you, everyone. Laurent Mignon: Thank you. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good morning, and good evening. First of all, thank you all for joining this conference. And now we will begin the conference of the fiscal year 2025 fourth quarter earnings resulted by KEPCO. This conference will start with a presentation followed by a divisional Q&A session. [Operator Instructions] Now we shall commence the presentation on the fiscal year 2025 fourth quarter earnings resulted by KEPCO. Si-young Yang: [Interpreted] Good afternoon. This is Siyung Yang, Head of Finance Department of KEPCO. I'd like to thank you all for participating in today's conference call for the business results of the fourth quarter of 2025 despite your busy schedule. Today's call will be conducted in both Korean and English. We will begin with a brief presentation of the earnings results, which will be followed by a Q&A session. Please note that the financial information to be disclosed today is preliminary consolidated IFRS figures and all comparison is on a year-over-year basis unless stated otherwise. Also, business plans, targets, financial estimates and other forward-looking statements mentioned today are based on our current targets and forecasts. Please be noted that such statements may involve investment risks and uncertainties. Now we will begin with an overview of the earnings results for the fourth quarter of 2025 in Korean, which will be then consecutively translated into English. [Interpreted] I will first go over the operating items. The consolidated operating income in 2025 stood at KRW 13,524.8 billion. Revenue increased by 4.3% to KRW 97,434.5 billion. Power sales increased by 4.6% to KRW [indiscernible] billion. Overseas business and other revenue decreased by 1.8% to KRW 4,429.9 billion. Cost of goods sold and SG&A decreased by 1.3% to KRW 83,909.7 billion. Fuel costs decreased by 13.8% to KRW 19,036.4 billion and purchase power costs decreased by 1.8% to KRW 34,052.7 billion. Depreciation expense increased by 2.3% to KRW 11,667.8 billion. Next, I will go over the nonoperating items. Interest expense decreased by KRW 325.6 billion Y-o-Y to KRW 4,339.5 billion. As a result of the foregoing, the 2025 consolidated annual operating income stood at KRW 13,524.8 billion, and net income was KRW 8,007.2 billion. Taeseop Eom: [Interpreted] Good afternoon. I am Taeseop Eom, Head of IR team. Now I will go over the matters of interest. First, I will talk about the performance of power sales and its outlook for the remainder of the year. Annual power sales volume due to economic downturn and as a result of that, given the industrial demand has decreased. The total sales volume was 549.4 terawatt hour, which is a 0.1% decrease Y-o-Y. In 2026, the economic growth rate and number of operating days increase should lead to a slight increase in the total sales volume. [Interpreted] Next, I will go over the fuel price by fuel source and S&P trends. In 2025, if you look at the annual trend of the fuel prices for bituminous coal Australia, the price was around $105.7 per ton. For LNG, JKM was KRW 980,000 per ton and the S&P was around KRW 112.7 per kilowatt hour. [Interpreted] Next, I will go over the [indiscernible] company. If you look at the annual 2025 generation mix, the capacity factor of nuclear power increased and thus, its contribution to the mix increased as well. For coal, the capacity factor increased and thus, the contribution in the generation mix increased. For LNG, the installed capacity decreased. And due to the increase of baseload power generation, the contribution to the mix decreased. For 2026 on annual basis, we expect the contribution of nuclear power to increase, coal to decrease and LNG should largely remain flat. In 2026, the capacity factor for each fuel source should be as follows: nuclear power around mid- to high 80%, coal around mid-40% and LNG should be around early to mid-20%. [Interpreted] Next, I will go over the RPS cost. In 2025, annual RPS expense on a consolidated basis was KRW 3,989.7 billion. And on a stand-alone basis, it was KRW 4,818.8 billion. Last, I will go over the funding situation. As of 2025 Q4, consolidated total borrowings was KRW 129.8 trillion. And on a stand-alone basis, it was KRW 84.9 billion. [Interpreted] Now we will move on to the Q&A session. Since we will be conducting the Q&A session in both Korean and English, please make your questions and answers clear and brief. Operator: [Interpreted] [Operator Instructions] The first question will be given by Jong Hwa Sung from Securities. Jong Hwa Sung: [Interpreted] I am from LS Securities and my name is Jong Hwa Sung. Please understand my sore throat today. I have 2 questions. Number one, it's about the contribution of the nuclear power generation in the generation mix. So I think largely fuel cost and power purchase cost was in line with expectations. But nevertheless, the operating income was underperforming expectations by around KRW 1 trillion. I think this is largely because of other costs. I think other cost was around KRW 1.2 trillion higher than what we expected. I believe this is mainly coming from the recovery of nuclear power generation sites and costs associated to carbon and greenhouse gases. it seems that these cost items were concentrated in Q4 in 2025. However, if you look at other years, sometimes it's booked in Q2, sometimes it's booked in Q4. And so the seasonality is not stable. So on an annual basis, how much do you expect these other cost items to be generated or incurred every year? And then second is about the contribution of the nuclear power generation. So in Q4 2025, on a Y-o-Y basis, I think the nuclear power generation contribution went down by around 6%, which is unusual given that for the first 3 quarters of 2025, nuclear power generation contribution was higher than that. So when you say -- or you said in your keynote that the contribution of nuclear power will probably increase in 2026. Is it compared to Q4 2025? Or is it compared to the first 3 quarters of 2025? In other words, in Q4 2026, will nuclear power generation contribution be slightly higher or significantly higher than 2025 Q4? Unknown Executive: [Interpreted] Yes. So I will first address your first question regarding the other cost. So the provisions related to greenhouse gas emissions went up by around KRW 120.6 billion to KRW 340.6 billion. As for the provisions regarding the nuclear -- provisions regarding the recovery of the nuclear power generation sites, it went up by KRW 411.2 billion, resulting in a negative KRW 4.6 billion. So there was actually write-backs. As to the exact timing of when we book these type of provisions and costs, I think we will discuss internally, and I'll get back to you later on. Unknown Executive: [Interpreted] Yes. Regarding your second question, we mentioned that the capacity factor for nuclear power should be around mid- high 80% on an annual basis. So maybe towards the end or early part of the year, the capacity factor may seem lower than that. But on an annual basis, I believe that it will be higher, especially given that we have nuclear power plants who are going through and completing its preventive maintenance process, which should come back online. And also the addition of new power plants should add to the higher capacity factor of nuclear power in 2026. Operator: [Interpreted] The following question is by Kyeong Won Moon from Meritz Securities. Kyung-Won Moon: [Interpreted] My name is Kyeong Won Moon from Meritz Securities, and I have 3 questions today. One, if you compare the consolidated operating income of Q3 and Q4 and the stand-alone operating of the 2 quarters, I believe that the stand-alone operating income is relatively higher numbers or relatively better -- showed better performance. I believe this is largely driven by the adjustment coefficient. So is that the main reason? What is the main reason behind this? And what would be your expected adjustment coefficient for Q1 2026? My second question is regarding the before tax profit. So compared to the operating income, the before tax profit seemed to have performed quite strongly, both for consolidated and stand-alone numbers. What would be the reason behind this? Were there any one-off P&L items in other categories like the finance and other businesses? My third question is related to the dividends. So I believe that -- so the dividend was just announced. And if you look at the dividend payout on the stand-alone net income basis, it seems that it actually decreased compared to last year. So how did you come to this DPS number? What is the logic behind that? And what would be your expectation or outlook for the dividend payout of 2026? Do you think it will be higher than 2024 and 2025? Unknown Executive: [Interpreted] Yes. So regarding your first question, it may seem that the stand-alone profits are stronger than the consolidated numbers because there are some costs associated with our subsidiaries, which is booked under consolidated financial statements, but not on our stand-alone numbers. [Interpreted] Regarding the adjustment coefficient, in Q4 last year, the numbers were slightly higher than previous average quarters. [Interpreted] And the coefficient for 2026, we expect to be slightly higher than 2025. Unknown Executive: [Interpreted] And regarding your question comparing the operating income and the before tax income. So for our subsidiaries, there were some lease liabilities that could not be hedged due to the decrease in the FX rates. And so because of the FX -- in the process of the FX conversion, there were some valuation losses and gains that needed to be booked that impacted the numbers. Unknown Executive: [Interpreted] And regarding your question on dividends. So last year, the payout was 16.5%. And this year, it was 13.65%. So like you mentioned, it did decrease. However, I'd like to note that the size of the net income on a stand-alone basis increased significantly. So the absolute amount of dividends that were paid out will increase. And DPS also increased to around KRW 1,541 per share. As for 2026, as you know, we are subject -- we are a public corporation and subject to the relevant legislations, we need to discuss the dividend strategy with government departments. So at this point, unfortunately, we are not able to comment on the direction of 2026 dividends. Operator: [Interpreted] The following question is by Jaeseon Yoo from Hana Securities. Jaeseon Yoo: [Interpreted] I am Jaeseon Yoo from Hana Securities, and I have 4 questions. My first question is provisional liabilities related to used fuel -- used nuclear fuel. So in January, I read news that the unit price has gone up. And so maybe can you give us a little bit more color on this topic? And my second question is also related to this as well. What was the total amount of the used nuclear fuel-related provisional liabilities booked by KHNP in Q4 2025? And third, there was a 15% decrease -- price decrease that was subject to a grace period, and that grace period is coming to an end. I believe, therefore, the bituminous coal price can go up. So what would be the associated cost that you are expecting in regards to the end of the grace period? And fourth is related to the bond issuance limit. So what would be the outstanding amount of bonds issued? And how much room do you have in comparison to the cap? Unknown Executive: [Interpreted] I'll try to address your first 2 questions at once. So the provisional liabilities that were booked for the recovery of nuclear power sites was KRW 904.5 billion -- increased by KRW 904.5 billion to KRW 24,769 billion. As for the used nuclear fuel, it decreased by KRW 178.4 billion to KRW 2,745.3 billion. And as for the mid- and low level nuclear waste associated provisions and liabilities, it went up by KRW 10.2 billion to KRW 1,077.2 billion. Unknown Executive: [Interpreted] As for your third question regarding the grace period of the individual consumption tax coming to an end and how that would impact our cost. So we do have an internal estimate, but unfortunately, we are not able to disclose those numbers to the public in the market. So we ask for your understanding. Unknown Executive: [Interpreted] Yes. And regarding your final question on the bond issuance cap. So that can -- the final exact number can be calculated after the dividend is finalized at the Board and shareholders' meeting. But we believe that it will be something around just over 3x once all of those dividend-related activities are finalized. Operator: [Interpreted] Currently, there are no participants with questions. [Operator Instructions] The following question is by Jong Hwa Sung from LS Securities. Jong Hwa Sung: [Interpreted] I have 2 questions. First is regarding the nuclear power generation export strategy. So I believe that there is a process currently ongoing to streamline the Korean nuclear power generation export strategy. So maybe can you elaborate a little bit on how that is moving forward? And second, I believe that there is some court case in the international mediation courts by KHNP regarding the additional KRW 1.4 trillion construction cost that was incurred during the BNPP construction project. Has that been already reflected in the financial statement? And if so, if KHNP is able to recover the cost from the UAE government, will that have impact on the financial statements? Unknown Executive: [Interpreted] Yes. I will address your first question regarding the export of nuclear power plants of Korea. And so we are -- I believe that the research project has been outsourced by the Ministry of Industry, and they are currently waiting for the results. KEPCO, of course, will be closely cooperating with the government to ensure that high-quality nuclear power plant export strategy can be developed to maximize and satisfy the global customers. Unknown Executive: [Interpreted] Yes. And your second question regarding the dispute between KEPCO and KHNP. So we are currently in conversation and negotiation with them. And I think both parties are making utmost effort to resolve this conflict in a stable manner. However, please understand that we are not able to disclose any specific numbers. Operator: [Interpreted] The following question is by Yoon Cho from UBS. Yoon Cho: [Interpreted] I have 3 questions. One is regarding the tariff. So the press recently has reported that there may be some differentiated price scheme applied to industrial power. And currently, you are thinking of, for example, different pricing per time or offering weekend discounts for the industrial use. There are also talks about regional pricing schemes for the industrial power. And these elements have been mentioned by the Minister of Climate, Energy and Environment. So can you elaborate or give us a little bit more color on these schemes? How do you think it will impact the average unit price of power, overall? And when do you think that these new schemes can be introduced? My second question is regarding to your comments earlier today. You mentioned that in Q4, there were some cost associated subsidiaries that were booked. Were there any unusual one-offs that we should be aware of? And my third question is about the SG&A cost. What was the exact amount consolidated basis for Q4? Unknown Executive: [Interpreted] Regarding your first question, with the increase of the solar PV power generation, the overall load patterns are changing. And to reflect this change, we are currently developing seasonal and -- seasonal pricing schemes and also different pricing schemes for time period. We are also considering the balanced growth of the overall national economy and regions and also working to distribute or disperse the power demand nationwide. And these are the reasons why we are also developing a new pricing scheme that can better reflect the regional situations and regional demand. We are working closely with the central government to develop a reasonable and rationable new pricing scheme, reflecting all of these elements. However, as to its impact on unit price and the exact time line, I believe it's a little bit early. We are also listening to the opinion of the corporates and overall business and industry community as well. So once we have a better idea on the specifics of this matter, then I think we can disclose some other information. But currently, we are under close negotiation and discussion with the government. [Interpreted] And regarding your second question, I think all we can say at this point about the cost booked by subsidiary is that it is related to overseas businesses. Unknown Executive: And as for your final question regarding consolidated SG&A cost. So currently, we are in the process of closing the books. And so we do not have the final exact numbers right now. But once the audit report is released, the number will be included in the financial statements. Operator: [Interpreted] The following question is by [indiscernible] from JPMorgan. Unknown Analyst: [Interpreted] I only have one question. I believe that in the past, there were some discussions on reflecting the individual elements in the fuel cost of the ASP. So have you continued those discussions? Do you have any updates that you can share with us? Unknown Executive: [Interpreted] Can you please elaborate on that question, please? Unknown Analyst: [Interpreted] Yes, I believe currently, when the tariffs are determined, KEPCO would make a proposal to the government, maybe around plus/minus 51. And ultimately, the government would make the decision. However, I believe that there were some discussions on finding the legal mechanism to ensure that the cost pass-through system can work like other utility companies outside of Korea. And so if the fuel cost would go up, this would naturally be reflected in the tariffs through the cost pass-through mechanism. So I was wondering if there were any progress in those discussions with the government. Unknown Executive: [Interpreted] Yes. So currently, we have implemented -- we have in place the cost pass-through system. So on a quarterly basis, the fuel prices are reflected in the tariffs. But we are also working to improve how it is being implemented. We are discussing with the government and listening to the voices of the related parties and industries to find ways to further improve the cost pass-through system going forward. Operator: [Interpreted] Currently, there are no participants with questions. [Operator Instructions] [Interpreted] As there are no further questions, we will now end the Q&A session. If you have any questions -- additional inquiries, please contact our IR department. This concludes the fiscal year 2025 fourth quarter earnings resulted by KEPCO. Thanks for the participation. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Operator: Welcome to the Vistance Networks, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, participants are in a listen-only mode. Good day, and thank you for standing by. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. To ask a question during the session, you will need to press star 11 on your telephone. There will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Jenny Thompson, Vice President, Investor Relations. Please go ahead. Jenny Thompson: Good morning, and thank you for joining us today to discuss Vistance Networks, Inc. 2025 Full Year and Fourth Quarter Results. I am Jenny Thompson, Vice President of Investor Relations for Vistance Networks, Inc. And with me on today’s call are Charles L. Treadway, President and CEO, and Kyle D. Lorentzen, Executive Vice President and CFO. You can find the slides that accompany this report on our Investor Relations website. Before I turn the call over to Charles, I have a few housekeeping items to review. Today, we will discuss certain adjusted or non-GAAP financial measures which are described in more detail in this morning’s earnings materials. Reconciliations of our non-GAAP financial measures and other associated disclosures are contained in our earnings materials and posted on our website. Please see our recent SEC filings, which identify the principal risks and uncertainties that could affect future performance. Please note that some of our comments today will contain forward-looking statements based on the current view of our business, and actual future results may differ materially. All quarterly growth rates described during today’s presentation are on a year-over-year basis unless otherwise noted. I will now turn the call over to our President and CEO, Charles L. Treadway. Charles L. Treadway: Thank you, Jenny. Good morning, everyone. I will begin on Slide 3. On January 9, we announced the closing of the CCS transaction to Amphenol. We are excited about this transaction as it allows us to manage our leverage situation and create significant value for shareholders. As a result of the transaction, we repaid all of our existing debt and redeemed the preferred equity after placing a modest amount of new leverage on Vistance Networks, Inc. Our global team of innovators and employees are trusted advisers who listen to customers first and then deliver value, pushing past what is possible. Vistance Networks, Inc. will shape the future of communications technology. We deliver solutions that bring reliability and performance always in motion. Vistance Networks, Inc. will be the parent company of Aurora Networks, formerly known as the Access Network Solutions business, and Ruckus Networks. The company was renamed Vistance Networks, Inc. on 01/14/2026 as the CommScope name and brand conveyed with the CCS sale. We would then distribute the excess cash to our shareholders as a special distribution. Aurora Networks provides broadband network products. Aurora Networks’ comprehensive end-to-end product portfolio supports global service providers with innovative solutions. Ruckus Networks develops purpose-driven networking solutions enabling positive business outcomes in the world’s most demanding environments. An industry leader in innovation, the Ruckus Networks portfolio includes award-winning Wi-Fi, switching, and cloud-managed platforms. Now I would like to give you an update on the fourth quarter and full year earnings on Slide 4. I am pleased to announce that in the fourth quarter, Vistance Networks, Inc. delivered core net sales of $1.93 billion. We ended the year with cash of $923 million, an increase of 31% from the prior quarter. For clarification, Vistance Networks, Inc. delivered core net sales of $515 million, a year-over-year increase of 24%, and core adjusted EBITDA of $99 million, a year-over-year increase of 55%. Core adjusted EBITDA ended the year at $379 million, an increase of $242 million, or 176%, compared to the prior year. In addition to strong revenue and adjusted EBITDA in the fourth quarter, positive results were generated by strong performance by our Aurora Networks segment. On an annual basis, Vistance Networks, Inc. results include our two remaining businesses, Aurora and Ruckus. We beat our full year adjusted EBITDA guidance of $300 million to $375 million for core Vistance Networks, Inc. As we move into 2026, we are well positioned to continue to benefit from the upgrade cycles in both businesses. Based on our current visibility, we are projecting 2026 core business adjusted EBITDA in the $350 million to $400 million range. Charles L. Treadway: I would now like to give you an update on each of our businesses. Starting with Aurora Networks, shipments in Q4 were strong. Our FDX amplifier deployment with Comcast continues to go well, and this is reflected in our results, and they have been qualified by another major operator as they ramp up their upgrade plans. The full year net sales ended at $1.23 billion, which increased $397 million, or 47%, compared to the prior year. These increases were primarily driven by the continued deployment of our new DOCSIS 4.0 amplifiers. We continue to make headway with our suite of next-generation ESD DOCSIS 4.0 amplifier and node products. We had another record quarter of DOCSIS 4.0 amplifier shipments in the fourth quarter. We expect to begin shipping to them in 2026. Although we expect our legacy business to decline over time as customers continue to delay DOCSIS 4.0 upgrades, we expect legacy license sales to normalize in 2026, which could result in a decline in EBITDA. During the fourth quarter, we received approval for our node within a single device. This new node allows our customers to choose between either the 1.8 gigahertz ESD or FDX technology, expected to ship in 2026. This new product is now available and paves the way to DOCSIS 4.0. In the quarter, we also continued development on our next-generation products and the rollout of our BCAP solution with multiple large European service providers. The solutions deployed also include a mix of Aurora Networks nodes and remote devices, as well as those from other vendors, demonstrating the flexibility of our standards-based solution across multiple operator environments. The network upgrades include Aurora Networks’ cloud-native vCAP evo, providing significant enhancements to the operator service offerings, including advancing our relationship with Altice Labs. We also won a significant new order in Asia with remote OLT and a new PON chassis order in Europe. As stated before, we believe Aurora Networks is well positioned with decades of knowledge of our customers’ ecosystems and a broad array of new products for service providers to take advantage of the latest DOCSIS 4.0 upgrade cycle as well as evolving their legacy DOCSIS 3.1 networks. Charles L. Treadway: Turning to Ruckus Networks, core Ruckus Networks full year revenue ended at $687 million, up $166 million, or 32%, compared to 2024. Revenue was up 16% in the fourth quarter compared to the prior year. Core Ruckus adjusted EBITDA of $20 million was down $5 million, or 22%, versus 2024. The decline in adjusted EBITDA was driven by our continued investment in sales and higher incentive compensation. One of the key drivers of our above-market growth was the approximately $30 million year-over-year investment in sales initiatives. Core Ruckus Networks adjusted EBITDA for the year was $128 million, which was up $86 million, or 210%, versus the prior year. We are pleased with our revenue growth year over year, and the adjusted EBITDA we delivered, which allows us to invest in our strategic initiatives to fuel growth in 2026. In addition to our investment in sales, products, and technologies, we are pleased with our progress in our RuckusOne subscription business where we grew deferred revenue by 93%. We gained market traction with our Wi-Fi 7 solutions. As we continue to execute new commercial strategies within select verticals, we expect to continue to gain market share, as demonstrated by securing multiple deals in the fourth quarter, with major U.S. professional sports stadiums, and executed our vertical market strategy. We continued our focus on providing purpose-driven networking solutions for our customers and support model, including projects for upgrading aging Wi-Fi 5 and switching infrastructure for a luxury boutique hotel group in Europe. Subsequent to year end, we were also awarded a deal for a hospital in the Middle East where we will implement a complete Wi-Fi 7 switching network refresh. Ruckus Networks unveiled the new Ruckus MDU suite featuring innovative AI and Wi-Fi 7 wall-plate solutions for high-density residential environments. This new suite of solutions meets stakeholder demands through its ability to combine enterprise-level Wi-Fi analytics with cloud simplicity and automation. This enables more devices per unit, lower latency, higher reliability, and a reduction in manual troubleshooting. These outcomes will drive improved resident satisfaction. Ruckus Networks will provide its purpose-driven network solutions to the TGR Haas F1 Team. In January 2026, with our versatile and high-performing offering and pipeline of innovations, we began delivering cutting-edge connectivity across its factories in Kannapolis, North Carolina, Banbury, UK, and Maranello, Italy, allowing the team to deploy an advanced engineering solution and optimize operating cost with the ability to manage all locations remotely. Ruckus will be trusted to power critical race-day network operations to meet the demands of the pinnacle motorsport. We made progress across all of our initiatives in 2025, resulting in market share gains. Ruckus is well positioned for growth in 2026 driven by continued demand for our Wi-Fi 7 product offering and our strategic go-to-market investments. We expect to continue to grow market share and deliver low-teen EBITDA growth in 2026. Before handing the call over to Kyle, I would like to address the DDR4 memory chip supply issue that is impacting most companies in our industry. As we navigate this situation, we are actively working on several countermeasures, including product reengineering, alternative chip supply, and price increases. Both of our businesses use these chips. As you are aware, supply of DDR4 memory has tightened, and we are experiencing availability and pricing impacts. Vistance Networks, Inc. already has significant seasonality and variability in our quarterly results. As we have said in the past, due to the seasonality and project nature of our business, annual performance is the best measure. And with that, I would like to turn things over to Kyle to talk more about our full year and fourth quarter results. Thank you, Kyle, and good morning, everyone. I will start with an overview of our full year 2025 results on Slide 5. Kyle D. Lorentzen: For the full year, Vistance Networks, Inc. reported net sales of $1.93 billion, an increase of 40% from the prior year, primarily driven by the FDX amplifier deployments at Comcast and growth in Ruckus driven by Wi-Fi 7 products and subscription services. Adjusted EBITDA from continuing operations was $292 million, which increased by 1,095%. Adjusted EPS was $0.77 per share versus $0.10 per share. For core Vistance Networks, Inc., which excludes the CCS business, we reported net sales of $5.7 billion, which increased 35% from prior year, with adjusted EBITDA of $1.3 billion for the full year 2025, which increased 90% from prior year. We believe this is a better representation of our performance and future results as it excludes certain stranded costs and one-time write-offs that are included in the U.S. GAAP discontinued operations presentation. Vistance Networks, Inc. core adjusted EBITDA for the full year 2025 was $379 million, up 176% versus prior year. As Charles mentioned earlier, 2025 was a very strong year for us in all businesses with core revenue and adjusted EBITDA growth of 40% and 176%, respectively. As it relates to Vistance Networks, Inc., both Aurora and Ruckus rebounded well from weak 2024 results. Aurora revenue grew 47% over 2024 as Aurora benefited from the start of FDX amplifier shipments as well as a strong year in legacy product licenses as delays continued in DOCSIS 4.0 upgrades. The stronger revenue resulted in Aurora adjusted EBITDA growth of $146 million, or 138%. We would expect a continued decline in legacy business in 2026 and beyond as DOCSIS 4.0 picks up momentum. In core Ruckus, we saw year-over-year revenue growth of 32% driven primarily by improving market conditions. The stronger revenue resulted in year-over-year adjusted EBITDA improvement of $86 million, or 210%. Adjusted EBITDA in core Ruckus was helped by a roughly $10 million favorable net impact of one-time E&O benefits partially offset by higher incentive compensation. Turning now to our fourth quarter results on Slide 6. For Vistance Networks, Inc. continuing operations, net sales ended at $515 million, up $100 million, or 24% year over year. Fourth quarter ended stronger than we had expected. The increase in revenue drove continuing operations adjusted EBITDA for the fourth quarter to $99 million, up 55% versus prior year. Adjusted EPS for the fourth quarter was $0.17 per share versus $0.14 in 2024. Vistance Networks, Inc. backlog ended the quarter at $65 million, up $37 million, or 136%, and up 10% sequentially versus the end of the third quarter 2025, which was expected due to strong fourth quarter shipments. Order rates were up 38% sequentially in the fourth quarter. Vistance Networks, Inc. core adjusted EBITDA ended the quarter at $632 million, down $15 million, or 2%, versus the end of 2025 as a result of higher Aurora Networks revenue. Turning now to our fourth quarter segment highlights on Slide 7. Full year segment highlights are on Slide 8. Please refer to Charts 7 and 8 to view both the Ruckus Networks and core Ruckus Networks results. Starting with our Aurora Networks segment, fourth quarter net sales of $347 million increased 33% from the prior year. Aurora Networks adjusted EBITDA of $79 million was up $42 million, or 112%, from the prior year, driven by higher amplifier revenue and year-end license purchases, and we realized higher legacy product sales as customer inventory levels stabilized and DOCSIS 4.0 products increased. Aurora Networks is a project-driven business with timing of projects driving some volatility in quarterly results. We experienced a strong rebound in revenue and adjusted EBITDA in 2025, as our investments made over the last three years on product development positioned us for the pending upgrade cycle. In addition to new products, Aurora realized strong legacy product sales in 2025. The business remains well positioned to take advantage of upgrade cycles while offsetting declines in the legacy business. As we have discussed in the past, both revenue and EBITDA are expected to decline sequentially, although Aurora adjusted EBITDA is expected to be up year over year in 2026, both from a revenue and EBITDA perspective. The expected decline in legacy products, and the impact of stranded costs, would result in Aurora adjusted EBITDA being down in 2026 versus 2025, partially offset by improving DOCSIS 4.0 revenue. Core Ruckus net sales of $167 million increased by 16% versus 2024, and adjusted EBITDA in 2025 was impacted by our investment in sales and higher incentive compensation due to stronger-than-expected 2025 results. Core Ruckus backlog at the end of 2025 was 19% higher than 2024 ending backlog. We expect the stronger market conditions to remain in 2026. We continue to drive our vertical market strategies and new product initiatives and are well positioned to grow faster than the market as we move into 2026. First quarter revenue and adjusted EBITDA are expected to be in line with fourth quarter. Finally, early in the first quarter, the activity of the segment was reported as discontinued operations while the assets and liabilities of the segment were reported as held for sale. Net sales of the segment were $1.0 billion in the fourth quarter and increased 38% from the prior year. Turning to Slide 9 for an update on cash flow. During the quarter, we generated cash from operations of $281 million and free cash flow of $255 million. As we stated during our third quarter earnings call, we completed the divestiture of the CCS segment to Amphenol. We expected cash to be up $250 million from where we started the year, and it ended up $260 million. Turning to Slide 10 for an update on our liquidity and capital structure. During the fourth quarter, our cash and liquidity remained strong. We ended the quarter with $923 million in total available cash and liquidity of $1.54 billion. During the quarter, our cash balance increased by $218 million. In the quarter, we purchased no debt or equity on the open market. With our current excess cash and the addition of new modest leverage on Vistance Networks, Inc., we plan to distribute the excess cash to our shareholders as a special distribution. We expect the special distribution to be at least $10 per share and to be paid no later than April. We expect the distribution to be a return of basis for tax purposes. Post-distribution, we expect to maintain ample liquidity and significant financial flexibility. As of 01/31/2026, post-CCS transaction, the company, including CCS, ended the quarter with a net leverage ratio of 4.8 times. I will conclude my prepared remarks with commentary around our expectations for 2026. We will continue to focus on running the businesses and delivering results. On the performance side, we experienced strong growth in 2025 in both segments. As Charles mentioned earlier, we are projecting adjusted EBITDA in the $350 million to $400 million range in 2026. In our Vistance Networks, Inc. adjusted EBITDA guidepost, we have included approximately $30 million of stranded costs associated with the CCS transaction in 2026. During 2026, a large majority of this stranded cost will be eliminated and drive our initiatives, and we expect the stranded costs to be minimal when we move into 2027. Within our guidepost, we expect low-teen adjusted EBITDA growth in Ruckus as we continue to invest in sales and go-to-market initiatives. Adjusted EBITDA growth in Ruckus will be partially offset by adjusted EBITDA pullback in Aurora as legacy business normalizes after an unusually strong 2025. If you recall, we started out the year with a net leverage ratio of 7.8 times. Following the ODBN DAS transaction closing, we used those proceeds to pay down a portion of our debt. In January, we then announced the sale of the CCS segment in August 2025. During the year, all three segments successfully grew on both the top and bottom line. Vistance Networks, Inc., including CCS revenue, grew from $4.2 billion to $5.7 billion, an increase of 35%, and EBITDA grew from $700 million to $1.3 billion, an increase of 90%. We ended the year with a net leverage ratio, including CCS, of 4.8 times. It was a great year. And, again, I want to thank our employees, customers, and shareholders for their support in 2025. I am excited for 2026 as Vistance Networks, Inc. is positioned for another strong year. And with that, we will now open the line for questions. Operator: As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. Our first question comes from Samik Chatterjee with JPMorgan. Your line is open. Samik Chatterjee: Maybe if I can start on the memory sort of challenges that you firstly referenced in your prepared remarks. I just wanted to understand how confident you are about getting capacity as you work through 2026 at this point. Are you able to secure some of the capacity that you need? And how much of an EBITDA impact are you embedding from that in your 2026 guide? And then I have a follow-up. Thank you. Kyle D. Lorentzen: Okay. Yes. Thanks, Samik, for the question. As discussed in our prepared remarks, like most companies, we are dealing with tight supply, but we are working very closely with our suppliers and customers on availability. We have orders that have been on the books with suppliers for more than a couple of years. In addition to availability, we are dealing with the memory chip price increases, and we are passing on most of the price to our customer base, but there is a little bit of lag in our ability to pass it on. I believe we are in a relatively good position on supply at this point. We have also looked at redesign options in both businesses. We have successfully passed most of this cost onto our customers as a result of the memory chip price increases. Samik Chatterjee: And any impact on EBITDA that you are factoring in? Or is it— Kyle D. Lorentzen: We factored in about a $20 million impact as a result of the memory chip price increases. Samik Chatterjee: Got it. Got it. Okay. And for my follow-up, I think you mentioned $2.6 billion of cash on hand. You would add some modest leverage before doing the special distribution. How should I think about minimum cash that you want on the balance sheet to run the business in the current revenue profile? And given that you have the proceeds now, is there anything that prevents you from accelerating the announcement of the special distribution before April? Kyle D. Lorentzen: Yes. So from a cash perspective, think about it as a couple hundred million dollars of cash. That is probably conservative. I think we want to maintain the financial flexibility, maybe a little bit more cash on the balance sheet. So think about it as a couple hundred million, and then a little bit more cash on the balance sheet. On the distribution, we talked about what we are saying about the distribution in our prepared remarks. We expect the distribution to be at least $10 and the return of basis. So that is generally what we outlined regarding the distribution. Operator: Thank you. Our next question comes from Tim Savageaux with Northland Capital Markets. Your line is open. Timothy Paul Savageaux: Hi. Good morning. Question on the Aurora business. I am trying to get a sense of the outlook for the year. I know you talked about EBITDA declining. I imagine mix is a big part of that. On the top line, would you expect to be able to grow maybe a little bit on the top line given wins that you are talking about, especially in the U.S., and see that weakness reflected in margin decline and mix? Would you expect revenues to be down for the year in Aurora for 2026? Thanks. Kyle D. Lorentzen: Yes. Hi, Tim. I think we expect the revenue to be up. What is dragging the EBITDA down a little bit in the Aurora business is, as you mentioned, mix. We had very strong legacy business revenue last year, which comes at a little bit higher margin than our DOCSIS 4.0. And then the other piece that is impacting the EBITDA, as we mentioned in the prepared remarks, is the stranded cost. So in 2026, we will have some stranded cost. Then as we go through the year, those stranded costs will be removed. By the time we get to 2027, the CCS stranded cost impact will be minimal. But that will be a drag for us from an EBITDA perspective in 2026. Charles L. Treadway: Just to give you a little color on the market overall, we are seeing a resurgence in the DOCSIS upgrade activity that started coming back. Comcast is moving forward with FDX at better-than-expected levels. In general, we are seeing this uptick across the board, and especially where we have a strong position in amplifiers. That should be positive for us. Timothy Paul Savageaux: That was where my second question was heading. I guess you described a key DOCSIS 4.0 win beginning to ship in Q1 2026. Any way you can provide any color on the size of that opportunity or how meaningful that could be for the business in terms of that second Tier 1 MSO win in driving the amplifier shipments in particular to continued record levels? Kyle D. Lorentzen: We are not going to give the precise number, but it is a meaningful dollar amount. It is tens of millions of dollars of opportunity that comes with that win. Operator: Our next question comes from Amit Daryanani with Evercore. Your line is open. Amit Daryanani: Thanks a lot. Good morning, everyone. Maybe the first question on my side, it looks like at a high level, EBITDA dollars will be flat year over year in 2026 versus 2025. But it sounds like Aurora margins are going to dip down, Ruckus should go up. Wondering if you look at a more steady-state scenario, what do you think the optimal or the target margins should be for Aurora and Ruckus? Is there a specific revenue run rate you need to get there, or would you get that through some of the internal cost reduction initiatives? Kyle D. Lorentzen: Yes. I think the way to think about our guide really has to do with some of the things we talked about in the prepared remarks. We have our stranded costs, as we talked about, Aurora mix change. We also talked, and we have been talking about the last couple of quarters, some E&O reversals in 2025 that will not repeat. I think on the EBITDA side, as we look at both the businesses, what you see in Q4—those are the types of gross margins that we would expect moving forward. As we grow our revenue, which we expect to do in both businesses, we should see some EBITDA percent improvement just based on fixed-cost leverage to drive EBITDA percentage improvement. Amit Daryanani: I was really more wondering if there is a longer-term target from a margin basis on either of the segments that you can talk about? And then maybe just separately on Ruckus specifically, there seems to be a really good Wi-Fi 7 adoption cycle that seems to be inflecting higher. Just touch on what is the revenue growth you expect out of Ruckus in calendar 2026, and the competitive narrative you are seeing there against Cisco and HPE, Juniper, and everyone else in that space as well? Thank you. Kyle D. Lorentzen: Yes. So I think on the Ruckus side of the business, we expect growth faster than the market. We think the market is going to grow plus or minus 10%. Particularly the access point market is growing a little bit faster than the switch market. As we mentioned on the call, we believe there is strong market growth, but also with the sales investments we are making in the Ruckus business, we would expect to be able to grow faster than the market. We think we can grow revenue next year in the mid-teens level. Relative to margin profile, on EBITDA margins, think about Aurora at 20% adjusted EBITDA margins. If we are able to leverage some of our fixed costs, we think the Ruckus business we can manage into the low-20s on an EBITDA margin basis. Operator: Hi, guys. It is Brenden on for George. Wanted to get a sense of the customer concentration that is left in the overall Aurora Networks business. Is there anything that you can share about that? Just trying to get a sense for gross margins since you are investing in the business, and we are seeing that impact some of the adjusted EBITDA margins. Thanks. Kyle D. Lorentzen: Yes. So on the second part of your question, the E&O benefit was about a $25 million impact favorably on our gross margins. On an EBITDA basis, that was partially offset by higher incentive compensation that we paid just because we had a strong year. Net-net, the EBITDA impact that we got between the E&O and the higher incentive comp is about a $10 million favorable impact. On customer concentration, for Vistance Networks, Inc., our top three customers represent about 40% to 45% of the business. The businesses are very different. Aurora has high customer concentration. Ruckus does not. Presentation-wise, incentive compensation sits below the gross margin line in the P&L. Operator: Thank you. I am showing no further questions at this time. I would now like to turn it back to Charles L. Treadway for closing remarks. Charles L. Treadway: Thank you for your time today, and we appreciate your interest in our company. We would like you to have a great rest of your week. Thank you. Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
Unknown Executive: Welcome to the Westgold Resources First Half '26 Financial Results Presentation. Our presenter today is Westgold Managing Director and CEO, Wayne Bramwell. Go ahead, Wayne. Wayne Bramwell: Thank you, Steve, and welcome to everyone on the call. Thank you for taking the time to dial in today. With me today, I have our Chief Financial Officer, Tommy Heng. We are assuming you've all seen our report. I'm going to hand over to Tommy to run today's call, and I'll jump in at the end to talk to what's ahead before opening up the call for questions. So, Tommy, over to you. Su Heng: Thanks, Wayne. It's fair to say that this was a record half. But before I go through the numbers, I think it's important to reflect on the journey that has brought us to this point. Our outcomes this half aren't accidental. They stem from years of disciplined effort. We worked through the tough times, stayed focused and made deliberate long-term decisions about how and where to invest in this business. We committed early to becoming unhedged, strengthening Westgold's infrastructure, investing in drilling and development and upgrading our equipment base. And that strategy has been validated by increasingly consistent operational performance across the group. And whilst we have substantial room to improve, what we're seeing now is the direct result of executing that strategy, progressive improvements in operational consistency, production growth and a relentless internal focus on managing and reducing cost pressures. Importantly, all of this work has been delivered at a time when the gold price environment is becoming increasingly favorable. As an unhedged producer, we've been fully exposed to those strong prices, giving us the ability to convert this operational momentum directly into financial returns to shareholders. Thanks to this increasing production and the realized gold prices, our revenues effectively doubled compared to this time last year, allowing us to deliver $550 million in underlying treasury build, a remarkable step up from the $100 million recorded in the prior corresponding period. This momentum has strengthened our balance sheet substantially, driving our closing treasury balance to $654 million compared to $152 million in H1 FY '25. Our operating performance translated directly into earnings with underlying EBITDA rising to $612 million, up from $224 million and the underlying net profit before tax increasing to $447 million, a significant uplift from $89 million a year earlier. This accumulated in underlying net profit after tax of $314 million, more than 5x the previous corresponding periods $57 million. Overall, H1 FY '26 marks an exceptional financial performance and demonstrates the capability of the business to generate sustained value. Slide 5. Not surprisingly, our record financial results coincide with record production results. Production from Westgold's mined ore amounted to 170,000 kilo ounces of gold for the half at an all-in sustaining cost of $2,871 per ounce. This production is a core business, which generated $517 million in net cash flow. From core business to side hustle, Westgold commenced production from ore purchased from New Murchison in September 2025. Over the half, we produced 25,000 of gold at an all-in sustaining cost of $5,644 per ounce. These are comparatively low-margin ounces as we purchased this gold at a discount to the average spot price, yet this strategy has generated an additional $15 million of net cash flow for the period. The key point about the OPA that is not captured in these numbers is that the OPA ore does not displace our own ore. In fact, the opposite is true. The blending of soft oxide material from the OPA with Westgold mine hard underground ore actually allows us to process increased volumes of our own ore, effectively increasing the throughput of our Meekatharra mill and dropping unit processing costs. So combined, Westgold's group production for the half was 195,000 kilo ounces of gold at an all-in sustaining cost of $3,225 per ounce, allowing us to generate $532 million of net cash flows from operations. Slide 6. This slide breaks down our P&L and the record underlying profit we were able to deliver this half. $1.2 billion in revenue drove a gross profit of $436 million. Fair value appreciation in some of our liquid investments were offset by admin costs and the negative impact of fair value movements in our royalty agreements, resulting in an underlying net profit before tax of $447 million. Unsurprisingly, when you're making profits, you pay taxes. Westgold's income tax expense was $133 million for the half. This accumulates in an underlying profit of $314 million. To reconcile to statutory profit, we need to account for one-off items, the most impactful of which is the accounting loss on the sale of the Mt Henry-Selene project. Though the sale hadn't completed by the end of this period, the accounting standard dictates the assets are moved to assets held for sale, resulting in a preliminary loss of $178 million. This one-off accounting loss on sale is 100% noncash, but it's important to note that the sale generated immediate real cash inflows of $15 million and approximately $65 million in Alicanto shares and up to $30 million in deferred considerations payable in cash or shares upon the achievement of agreed project milestone. This demonstrates our ability to generate value from noncore assets that would have otherwise remained unrealized within our portfolio. The loss results in a positive adjustment to the income tax expense to the tune of $53 million, resulting in a strong statutory profit of $191 million. This compares very favorably to the statutory loss of $28 million for the prior corresponding period. Slide 7. Key slide for me, $550 million in underlying treasury build for the half before paying $129 million for growth and exploration, $76 million in stamp duty for the Karora transaction, $50 million in debt repayment to end the period debt-free, $29 million for dividends and share buybacks, $2 million in New Murchison capital raise and receiving $26 million of cash inflows from the sale of the Lakewood mill and the deposit from Alicanto for the Mt Henry-Selene sale. We ended the period with $521 million of cash and an impressive $654 million in treasury closing balance. After paying for growth and one-off payments, our treasury still grew by $290 million in the half. Slide 8. This slide shows our treasury growth over the longer period. Since the acquisition of Karora, cash is king, and we're happy to see our strategy is increasing cash flows and further strengthening our balance sheet. This balance sheet strength gives us flexibility and optionality as we build momentum post our merger with a steadfast focus on delivering our guidance and 3-year outlook. Slide 9. To that end, we maintain our production and cost guidance for FY '26. We maintain a conservative estimate for third-party ore purchases going forward as we don't control mining for this ore source. We expect to produce around $365 million for the period being the guidance midpoint at an all-in sustaining cost between $2,600 and $2,900, excluding the OPA. Slide 10. Let me quickly recap our 3-year outlook. We're on a clear path to grow production from 326,000 ounces in FY '25 to 470,000 ounces by FY '28 with the all-in sustaining cost stepping down towards circa $2,500 per ounce. This is a high confidence executable plan built on organic growth from our existing operations, not blue-sky assumptions. The strategy is simple: mine and process higher-grade ore and optimize the mills. By investing sensibly in our mines and processing hubs, we're steadily upgrading the grade profile and matching capacity with better quality feed, lifting ore sources and margin. And importantly, we're delivering against this plan. Beta Hunt infrastructure upgrades have lifted development rates, setting up a sustainable ramp-up towards 2 million tonnes per annum. Great Fingall filed its first reef stope, a key milestone in the Cue Hub's high-grade transition. Starlight continues to deliver strong high-grade stopes, improving feed quality through Fortnum. This is real progress and exactly the trajectory our 3-year outlook sets up. Slide 11. Now while the 3-year outlook gives us a solid high confidence baseline, it's important to remember that it does not capture all of the upsides we're actively advancing. I won't run through everything on this slide but let me call out a few of the material opportunities already in motion. Bluebird South Junction. Our plan assumes 1.2 million tonnes per annum by FY '28, while we're aiming to hit 1 million to 1.2 million tonnes by early FY '27. Higginsville mill expansion, feasibility work is looking beyond 2.6 million tonnes with options assessed up to 4 million tonnes per annum. Operational improvements. We've made significant gains that aren't baked into the base case and have the potential to drive further cost and productivity benefits. Each of these represent meaningful tangible upside to our 3-year outlook baseline. And collectively, they highlight just how much flexibility and growth optionality sits within the Westgold portfolio. Before I hand over to Wayne to wrap up, I would like to touch on shareholder returns. Westgold continues to deliver on its commitment to shareholder returns. We declared a $0.03 per share final dividend for FY '25. And while we did not declare an interim dividend for H1 FY '26, during the half, we upgraded our dividend policy for FY '26 to demonstrate our growing confidence in the business and commitment to delivering against that policy. In addition, we launched a 5% on-market share buyback program, a clear signal of our belief in the value of our shares and our disciplined approach to capital management. These initiatives are underpinned by strong cash generation and a robust balance sheet, positioning us to continue rewarding shareholders while investing in growth. We paid $28 million for the FY '25 dividend during the half and commenced on the market share buyback. With that, I'll hand over to Wayne. Wayne Bramwell: Thank you, Tommy. What a gorgeous set of numbers. We made some tremendous progress on our portfolio simplification goals during the half, bringing forward value from noncore and nonproducing assets. After the end of the period, we completed the sale of the Mt Henry-Selene Project to Alicanto Minerals for a total consideration of $110 million, comprising $80 million of immediate value from $15 million in cash and $65 million in Alicanto script and up to $30 million in deferred consideration based on specific performance criteria. This transaction was consistent with our strategy to unlock value from assets that would otherwise remain unrealized within our greater portfolio. We are also making good progress on the planned divestment of Peak Hill and Chalice, which like Mt Henry-Selene, are assets that sit outside of our 3-year plan. We are demerging our noncore Reedy's and Comet assets in the Murchison into a new soon-to-be listed company called Valiant Gold. Like the assets on the previous slide, Reedy's and Comet are assets that for Westgold have value but are under scale and don't feature in our longer-term plans. What makes this different is that their proximity to each other and to our processing hubs lend themselves to become a great value generator under a smaller focused management team where these assets are their top priority. The prospectus for Valiant was released last week, describing the $65 million to $75 million IPO with a $20 million priority offer for eligible Westgold shareholders. Following the raise, Westgold will retain a 44% to 48% cornerstone equity position in Valiant. As part of the transaction, we are entering into an OPA with Valiant, providing them with a fast-track pathway to cash flow. I think of this as an analog to the deal we've recently done with New Murchison Gold. If you would like more information on the Valiant IPO, I encourage you to obtain a copy of the prospectus from the Valiant Gold website. Okay. Final slide for me. This is a great set of results, and I'm incredibly proud of what the team has delivered. Our strategy is working and the early outcomes are clear. But we're not in celebration mode here. There is still plenty of work ahead of us. Our focus remains exactly where it needs to be on safety, on delivering our full year guidance and on executing the 3-year outlook, which sets the minimum bar for what this business can and should achieve as we continue to live performance. With that, let's move straight to questions. Unknown Executive: Your first question comes from Adam Baker. What is the reasoning behind not paying a dividend for H1 FY '26, noting minimum dividend policy of $0.02 per year and a maximum of 30% of free cash flow. To you, Tommy. Thank you. Su Heng: Thank you, Adam, for the questions. Our reason for reasoning is we would like to pay a fully franked dividend, such as the timing of when our tax returns are launched, the franking credits will only materialize circa in the second half. So hence, that's why we want to pay a fully franked dividend and stay tuned. Unknown Executive: Next question comes from Hugo. Should we still expect Fletcher reserve and resource updates in the coming months? Wayne Bramwell: Thanks, Hugo. Certainly, we're continuing to drill Fletcher, so I would expect a resource uplift this year and a small reserve conversion. We're basically doing both. We're doing infill and extensional and that will feed into resource and reserve updates. Unknown Executive: Next question also from Hugo. Can you provide some color on the timing of integrating recent ore purchase agreements and the impacts to FY '26 production and cost guidance? Wayne Bramwell: Thanks again, Hugo. Certainly, the NMG ore purchase agreement was factored into our FY '26 guidance. Going forward, '27, '28, none of the other ore purchase agreements that we have in place, for instance, with Valiant have been factored in. Unknown Executive: Next question comes from Kevin. How far above nameplate could you run Higginsville mill given the blending of soft Forrestania resource? Wayne Bramwell: Thanks, Kevin. Even with us feeding our own sort of softer oxide from Lake Cowen late last year, I mean, on face value, that Higginsville mill has a 1.6 million tonne per annum throughput. There were days where there was a high blend of soft in it doing 1.7, 1.75. So we'd expect to see similar numbers with Forrestania. Unknown Executive: Stay with us while we go through some other questions. Next question comes from Ganesh. When does the mill expansion at Higginsville proceed? What is the grams per tonne from Beta Hunt and Great Fingall you are targeting? Wayne Bramwell: Thanks for that, Ganesh. Expansion of Higginsville, the proposal to do that is with the Board now. Your second question is? Okay. The number that we use in our mine plan for Beta Hunt is circa 2.4 grams. It often does better than that, but we forecast and schedule Beta Hunt conservatively. The same is true with Great Fingall. We at steady run rate. Great Fingall, we schedule at 4 grams, but our expectation is in that ore body with high components of gravity gold, we'd see numbers much higher than 4. Unknown Executive: Next question comes from Paul. Wayne and team, you moved a few deposits from exploration into development, including Larkin and A Zone. How quickly could you bring these into development? Wayne Bramwell: Good question. We are actually mining in the A Zone. So currently, West Beta Hunt, we mined A Zone and Western Flanks. And we do actually have stopes in Larkin. So really, what we see as the opportunities in terms of scale at Beta Hunt, Western Flanks, A Zone, Fletcher, Murchison, Larkin, these are all things which were either drilling or actually mining from. So yes, Beta Hunt, much bigger system than we would expect. Unknown Executive: Another question from Paul. With the ore purchases, why have you not upgraded guidance? Wayne Bramwell: I think I answered that one. We basically -- the existing FY '26 guidance has already got the NMG ore purchases baked in. But until Valiant actually starts to deliver, we'll be conservative. We won't build any of that in until Valiant starts to produce. Unknown Executive: We have no further questions at this time. I think I'll give it to you, Wayne, to close off. Wayne Bramwell: Look, thanks, everyone, for patching in today. And I think the main issue Tommy explained well was that in terms of why no half year dividend, really, it's the fact that we're in the process of building our franking credits. From an investor's perspective, and I'm one as well, I much prefer fully franked dividends than unfranked, and that's really the focus going out to the full year.
Andrew Livingston: Good morning, everyone, and welcome to Howden's 2025 Results Presentation. So I'll begin by introducing our performance for the year. Jackie Callaway, our CFO, will then review our financial results for the period. And then I'll share my perspectives on our 2025 performance and our plans for this year and then we'll take your questions. The business advanced on all fronts in as we anticipated a challenging U.K. marketplace. The results were at the top end of our expectations and we've made an encouraging start to 2026. Group sales were up 4% year-on-year, with the business continuing to perform well in the final two periods of the year. In the U.K., we gained kitchen market share, which helped us mitigate a small single-digit decline in the overall market size. Our kitchen volumes rose which helped us consolidate the significant market share gains that we've made over the past 5 years or so with our longest established depots making a substantial contribution to the share gains that we've made over this period. We delivered an industry-leading gross margin with gross profit up on last year, and we balanced recovery of cost rises with our commitment to providing competitive pricing for our customers. Reported profit was 5% ahead of last year, increasing at a higher rate than sales. We progressed our strategic initiatives for the U.K. and total sales of our international operations increased significantly. At the year-end, we had a total of 970 depots trading, including 891 in the U.K. The business delivered strong operating cash flow, and we maintained a robust balance sheet. This gives us flexibility to continue to invest in our growth plans for the business and provide shareholders with an increased total dividend for the year. For 2026, we've also announced today a new GBP 100 million share buyback program. Our full year results demonstrate the strength of our local trade-only, in-stock model, a strong product lineup, high stock availability, industry-leading service levels and a very engaged team have all contributed to our performance which benefits from the ongoing investments in our strategic initiatives. In the U.K., the number of customer accounts as at the year-end and the number of accounts trading during the year were similar to last year's record levels with customers and average spending more. So far this year, our performance has been in line with our expectations. And whilst it's early in the year, we are on track to meet current market expectations for 2026, what remains a competitive marketplace. For 2026, our planning assumptions that the overall size of the kitchen market will be about level year-on-year following several years of decline. We are well prepared for the challenges and opportunities ahead with our customers who are typically self-employed. People are highly adept at winning business in all market conditions. And delivered by our highly entrepreneurial and well-incentivized depot teams, I believe, are service-orientated, trade-only, in-stock local model is the right one to deliver sustainable market share gains. Our model is hard to replicate, difficult to compete with, and we have initiatives in place to make it even more so. In 2025, we believe the value of our principal U.K. markets totaled some GBP 11 billion. versus our U.K. sales of GBP 2.3 billion, which also includes the contribution from our fitted bedroom initiative, bedrooms being a significant market in its own right. Our markets remain relatively unconsolidated and there are significant long-term opportunities for us. We will invest in the business on this basis. So I'm going to update you on our strategic initiatives, which are key to our longer-term development of the business after Jackie takes you through our financial results for the year. So Jackie, thank you. Jacqueline Callaway: Thanks, Andrew, and good morning, everyone. I'm pleased to present Howden's financial results for 2025, and I'll begin by summarizing the key highlights. The business performed well against all financial metrics in a challenging marketplace. In the second half, we continued the positive trading momentum achieved in the first half and following our last trading update, the business continued to perform well in the final two periods of the year. Group sales increased by 4.1% to GBP 2.4 billion. Gross margin was 110 basis points ahead of last year. We benefited from the price increase implemented at the start of the year and from effectively managing price and volume as we continue to take market share. We maintained our focus on productivity and delivered further sourcing and manufacturing efficiencies in the year. Operating expenses were tightly controlled, and we delivered an EBIT margin of 14.7% with profit growth ahead of sales while continuing to invest in our strategic initiatives. Profit before tax is up 5.1% to GBP 345 million. The effective tax rate was 22.4%, down from 24% in 2024 as we refined the patent box claim. And finally, we delivered an EPS growth of 8%, and this reflected the profit growth achieved in the year, a lower tax rate and the lower share count as a result of the share buyback program. Now let's look at sales growth in a bit more detail. In challenging market conditions, we maintained a disciplined approach to pricing and volume through delivery of a differentiated business model by a highly entrepreneurial depot teams, we also gained share in a market we estimate fell by around 3%. Overall, U.K. revenue increased by 3.8% to GBP 2.3 billion, was up 2.6% on a same depot basis. The price increase implemented at the start of the year had an impact of around 2%. And our international depots, revenue was EUR 99 million, 12% ahead of 2024 and 9% higher on a same depot basis. In France, the new senior leadership team focused on strengthening depot capabilities. Our Irish depots have traded well since we entered the market 3 years ago, and we expect to expand the footprint further this year. Andrew will talk through these initiatives in more detail shortly. Now turning to profit before tax. Starting from profit before tax of GBP 328 million in 2024. Gross profit was GBP 84 million higher. The price increase delivered a GBP 41 million benefit with volumes and mix contributing GBP 29 million and sourcing and manufacturing benefits a further GBP 14 million. Kitchen volumes increased, and we grew our share of sales in each of the three price bands we follow as we continue to invest in new kitchens and associated kitchen products. We believe there are significant longer-term growth opportunities across all three price bands. Our in-house manufacturing and strategic sourcing capabilities remain a key competitive advantage for us. We are progressing plans to develop the Runcorn site, which will increase capacity there by around 1 million rigid cabinets, supporting our longer-term ambition for the business while preserving the low-cost manufacturing advantage. Total operating cost increases were held to GBP 68 million, balancing tight cost control with investment in our strategic initiatives. This disciplined approach supported an increase in EBIT margin and a profit before tax of GBP 345 million for the year. Now let's look at operating costs in a bit more detail. Ongoing investment in our strategic initiatives was GBP 28 million in the year. This included the incremental costs of the new U.K. depots, which totaled GBP 12 million and included the cost of the 52 depots opened this year and in the prior year. We invested a further GBP 13 million in other strategic initiatives, predominantly digital. We invested in our international businesses, for example, by expanding our presence in the Republic of Ireland. And our existing U.K. depots, additional costs of GBP 11 million related predominantly to volume increases, we also incurred GBP 11 million of additional labor costs arising from the government's changes to the employees, national insurance and the minimum wage, which came into effect last April. And other costs, this mainly related to variable pay and incentives, which were higher this year given the strong trading performance and the actions we are taking to optimize the depot network in France. I would also highlight that we offset around GBP 27 million of inflationary cost increases with productivity and efficiency actions taken in the year. In 2026, we expect continuing inflationary headwinds of around GBP 30 million in the total cost base, in areas such as commodities, labor and additional property costs. And as in previous years, we will offset these where practicable with further productivity and efficiency savings. We will also continue to invest in our strategic initiatives to fund future growth, and Andrew will take you through our plans for 2026, shortly. Next, our cash flow. Cash generation was strong, and we ended the year with GBP 345 million of cash. In total, we invested around GBP 26 million in working capital in the year to support our growth. Capital expenditure for the year totaled GBP 125 million as planned before the GBP 31 million for the purchase of the Runcorn site. Our normalized CapEx spend will continue to be around GBP 125 million a year and aside from maintenance CapEx, which is around GBP 30 million a year, within this total, there are three major investment categories that we are prioritizing to support our growth. First, manufacturing. We continue to make investments in our U.K. manufacturing base to enhance productivity and increase capacity and broaden our capabilities. Second, depot reformats and openings. Our updated format provides the best environment to do business with our trade customers, and we continue to see attractive investment returns when we convert a depot. And finally, digital, we will continue to support our trade customers for upgrades to our digital capabilities to make them more productive and to raise brand awareness. We are also using technology to support new services and ways to trade while delivering productivity benefits to the depots. Moving on to cash tax. We benefited from the prior year tax credit arising from our patent box claim. And looking forward into 2026, we expect cash tax to be around GBP 60 million, with an effective tax rate of around 23% to 24%. And finally, you can see that in the year, we returned over GBP 216 million to shareholders through ordinary dividends and share buybacks, and we'd expect to have a similar approach in 2026. Moving on to the pension scheme. Over the last 9 months, we have worked with the trustees to review the strategy of the defined pension scheme. The scheme is well funded with a surplus on an ongoing funding basis, meaning that, no contributions are currently payable by the company. The current funding arrangement is in place to the end of May 2027, while we undertake the next triannual valuation, which is due at the 31st of March this year. We are now actively engaging with the trustee to manage and reduce pension risk over time through a collaborative joint working party framework. This will look to reduce and manage pension risk proactively in areas such as investment strategy, data and benefits and scheme funding. Howdens is a strongly cash-generative business, and we have a robust balance sheet, which gives us the opportunity to invest in future growth as well as rewarding shareholders with attractive cash returns over a long period of time. In total, we have generated GBP 3.8 billion in operating cash flows in the last 10 years. We've invested over GBP 900 million in the business. This high returning capital investment has been across both strategic organic growth initiatives and bolt-on opportunities like the investment in the solid work surfaces business 3 years ago, alongside our maintenance CapEx programs. Howdens remains disciplined in the returns we achieved from our capital allocation and investment. This discipline is unchanged over many years and has driven our overall return on capital employed which in 2025 is a healthy 25% -- sorry, 23%, well ahead of our cost of capital. Over the same time frame, we've returned over GBP 1.5 billion to shareholders in dividends and buybacks. In 2025, we grew earnings per share by 8% as a result of our earnings growth, a lower tax rate and the buyback we completed in the year. Now moving on to capital allocation. Our capital allocation policy is unchanged with the principles set out on the slide. We continue to operate within our clear capital allocation framework. And for several years, we have operated with a policy where year-end surplus cash defined as amounts in excess of GBP 250 million is returned to shareholders. This is unchanged and appropriate for Howdens despite the significant growth in the business over time. This still provides sufficient headroom to accommodate our seasonal working capital requirements, support CapEx into organic growth and ongoing investment into our strategic initiatives and opportunities whilst maintaining our strong balance sheet. We also recognize the importance of the dividend and dividend growth to shareholders. The Board is recommending a final dividend for 2025 of 16.9p an increase of 3.7% and resulting in a total dividend of 21.9p per ordinary share. And the final dividend will be paid on the 22nd of May 2026. Taking all of this into consideration and reflecting the group's continued strong financial position, the Board is also announcing today a new GBP 100 million share buyback program for 2026. So to summarize, we have performed well this year in a challenging marketplace. Our trade model is different -- differentiated, and our strategy is well defined, and we are executing well. For 2026, our planning assumption is that the overall size of the U.K. kitchen market will be level year-on-year after several years of decline. We continue to be proactive in delivering productivity and efficiency savings to deliver profit growth and offset inflationary headwinds. Our robust balance sheet and cash generation support our continued investment in the business. And we remain confident of delivering growth ahead of our markets while generating strong cash flow and attractive returns for shareholders. While it's early in the new financial year, we're on track to meet current market expectations for 2026 and what remains a competitive market. Thank you, and I'll now hand back to Andrew. Andrew Livingston: Thank you, Jackie. As I mentioned earlier, we believe that our markets give us significant long-term growth opportunities. Our strategic initiatives are key to capitalizing on these. And I'm going to use those as a framework to review our 2025 performance and our plans for this year. They are based around our key -- the key features of our business model, such as industry-leading levels of service and convenience, trade value, product leadership, but they're all delivered by highly entrepreneurial teams who, in turn, build long-term relationships with local tradespeople. So our initiatives are to evolve our depot network, to improve our range in supply management, to develop our digital capabilities and services and to expand our international operations. So first, depot evolution. And high service levels, including local proximity and immediate availability are very important to our customers. And we continue to see profitable opportunities to open up depots. Overall, we have a line of sight to around 1,000 depots in the U.K. In 2025, we opened up 23 U.K. depots, including 18 in the two final periods with a total of 891 trading at the year-end. This year, we expect to open around 25 more depots, and we continue to take a highly disciplined approach to the location of our depots. Our updated format enables us to provide the best working environment for our depot teams and to make productivity and space utilization gains in a cost-effective way. We will now show you a short video that takes you around our Stockport depot, which we opened last year, and whose layout is very typical of the latest situations of our formats. The kitchen displays show most of our kitchen families, including paint-to-order options and solid surface. Our trade counter stocks many of our everyday products and provides a chance for a chat and a brew. Our open plan business area makes it easy for our trade customers to easily access advice from our teams. We have space for our designers to plan kitchens for trade customers and a full wall of our kitchen collection known in our depots as the Wall of Fame. And we have a new selection area for customers to view our kitchen door and work top combinations, including our solid surface proposition. And our presentation rooms are private and have high-definition screens to bring to life customers' kitchen choices in 3D. Our sales conversions here are extremely high. Our restructured warehousing and racking is a vital Howdens USP and enables us to serve the trade with stock reliably and often instantly. The updated format has strengthened our competitive proposition and our program to convert older depots to this format is well advanced. Last year, we completed a further 60 revamps, including nine relocations, taking the total so completed to 410. These principally comprise conversions of our larger and longest established depos. Now this year, including relocations, we plan to convert another 45 depots. And by the end of this year, we'll have revamped around 68% of all depots, which opened in the old format, and we'll have around 77% of all U.K. depots trading in the updated one. As I mentioned earlier, the latest iteration of the format has a separate area for customers to view kitchens, doors and worktop combinations. And over the next 2 years or so, we will also be making the minor layered modifications necessary to include this area in the depots that were prior to the 2025 refits. Next, range and supply management. Investment in service, product and availability helps us develop long-term customer relationships and build competitive advantage. Sales of new products are a significant contributor to our performance. Sales of product introduced in 2025 and the prior 2 calendar years represent around 29% of U.K. product sales, with product launch in 2023 being the largest contributor. Value for money is a constant feature of our purchaser's buying decisions, and we are committed to providing our customers with market-leading, easy-to-fit and fairly priced product. And given pressures on high sale budgets, price featured predominantly in 2025, and we expected to do so again this year. With an emphasis on value for money and choice at all price points, our offering is well positioned to take advantage of this. Our kitchen NPI for 2026 makes more colors, styles and finishes available to more budgets, including at entry and mid-level price points. We are innovating in other long-established product categories and adding more colors and styles to our fitted bedroom offering launched 2 years ago. As we continue to invest in product innovation to capitalize on the significant growth opportunities we have, efficient management of our kitchen range is crucial to balancing customer choice and availability with our profitability. Our rigid kitchen platform is shared across all our families, which helps us introduce new kitchen options at more price points cost effectively. And our stock management and replenishment enhancements, including our XDC network, enabled us to provide best availability on a broader offering at a lower cost. More efficient new product testing enables us to bring more proven new styles to market more quickly. Our increased presence in the premium end market, which is where range innovations are usually made is also forming -- informing and accelerating our ranging decisions at other price points. Excluding paint-to-order, we have 24 new kitchens confirmed for 2026 as compared to 23 last year and 11 in the prior year. We will enter the second half with our entire offering of such kitchens organized into 11 families with a similar total count to last year. In 2025, sales of our entry-level and mid-level kitchen families represented, respectively, the highest number of kitchens we sold and the most kitchen sales by value. Last year, we brought to market 13 new kitchens for our established entry and mid-level families and launched Frome in four colors, a new family whose styling updated that of our long-standing Chelford family. This year, we have 15 new kitchens for these families. For our entry-level families are Heartland -- our traditional Heartland, we have five new kitchens in colors, which are popular elsewhere in our offering, including Greenwich, and Witney in porcelain and Allendale, shown there in Reed Green. At mid-level, we have discontinued Chelford, and we will add six colors to our most modern and shaker range Frome, including Mist and Pebble. Elsewhere, we've introduced some more emerging colors and finishes to our best-performing mid-level families, including Clerkenwell in Super Matt Mist and Halesworth in Ash Green. We've upscaled our higher-priced kitchen portfolios in recent years, utilizing Howden's scale, supply and manufacturing capabilities to offer the bespoke look most associated with high street independents at competitive pricing. Our offering now comprises four families including three shaker-style Timber families, which are closely marketed as Classic Timber Kitchens. In 2025, our Classic Timber Kitchen families performed particularly well with the paint-to-order options growing in popularity. The number of our Chilcomb and Elmbridge kitchen sold and paint-to-order colors, which are priced at the premium to stocked colors increased significantly in 2025. This year, we are refreshing our paint-to-order pallet with four new colors with two of the leading paint colors becoming Chilcomb and Elmbridge stocked colors. Last year, we extended the reach of our timber offering with the launch of a new family called Ilfracombe, an in-framed timber kitchen of classic design. Precision above Chilcomb and Elmbridge families, Ilfracombe is exclusively available in 24 paint-to-order colors. Solid surface worktops, which are often but not exclusively associated with the sale of higher-priced kitchens continue to represent significant opportunities for the group. In recent years, we have increased the number of decors we offer in this service. And for this year, we've introduced clearer and simpler ranging and more delineated pricing to demonstrate the value we offer at all price points. Ahead of peak trading later this year, our total offering will comprise a similar number of options to last year with increased space available to display worktops in more of our depots. We continue to upgrade our offering in other categories, including our own category, specifically own label brands, which complement the third-party branding product we sell. So our Lamona branding is one of the leading integrated appliance brands in the U.K. And for this year, we have a major refresh of our brands offering. We've modified the design, lowered the prices of a suite of high-volume products without compromising these products functionality. Elsewhere, we've updated the design and specification of a number of high-priced products, including washing machines, fridge, freezers and cookers. Launched in 2023, our own label flooring brand, Oake & Gray now represents a substantial portion of the category sales, having introduced water-resistant laminates last year. New product for this year includes sustainably sourced engineered wood flooring with market-leading standing water resistance. In Ironmongery, we launched our own label called Fuller & Forge. Fuller & Forge product has landed well and has significantly improved this offering in our category. For this year, we have new finishes and new designs, and we'll be adding new subcategories. As well as being substantial businesses, Doors and Joinery remain a key footfall building product for us in our depots. Last year, we launched our more colors and bolder styles at all price points to our door lineup. A new product this year includes a new premium range of Howden branded solid engineered doors. In Joinery, we will continue to develop the subcategory extensions into wall paneling, stair parts and lost spaces that we initiated in 2025. Fitted bedrooms were well ahead of the previous year. Bedrooms represent a growing source of incremental sales and profit and help us foster customer relationships. Installing fitted bedroom suits the skills of our customers who fit kitchens. And last year, a substantial portion of our total bedroom sales represented purchases either by new customers or by customers who bought from us relatively infrequently. We developed our bedroom ranges in house, utilizing our existing design and supply infrastructure, and they have a high cabinetry content, which, of course, matches our manufacturing capabilities. In 2025 -- our 2025 offering comprised bedrooms in five leading family designs drawn from our kitchen portfolio, including new family Clerkenwell launched during the year. This year, we will continue to target entry and mid price points with five new bedrooms, including new colors for Bridgemere and Halesworth. Our product offering is underpinned by our dedicated sourcing operations, which manufacture or source the right product in complex categories and distribute it efficiently across our depot network. Howdens is an in-stock business and the trade tell us that high levels of stock availability is one of the key reasons that they buy from us. The investment in our XDC network, which enables us to offer next day delivery service and other recent initiatives, including Daily Traders facilitate exceptional levels of service to our depots. In 2025, deliveries totaled some 73 million pieces, and our service level from primary to our depots was at 99.98%. Now that is a world-class performance by any standard. Our in-house manufacturing capability has a source of competitive advantage for us. And we always keep under review what we believe is best to make or buy by balancing cost and overall supply chain availability, resilience and flexibility. Recent investments in manufacturing have strengthened our competitive position by increasing our manufacturing capacity and by adding broader and new capabilities. So our Runcorn factory with its high volume, low-cost making capability has always been an integral part of our manufacturing and logistics strategy. With planning permissions in place, our development program for Runcorn site is now underway. And at the end of last year, we also acquired the freehold of this site. We expect the works will take about 3 years to complete in line with our long-term ambitions for the business. And the program will give us at Runcorn more capacity, more flexibility and broader capabilities to deliver lower cost of goods sold than might otherwise have been the case. Now turning to our digital platform, and we use digital to reinforce our model of strong local relationships between our depots and their customers. And we do this by raising brand awareness to support the business model with new services and ways to trade with us and to deliver productivity benefits and more leads into our depots and into our depot teams. Usage of our online account facilities, which provide efficient -- which provide efficiencies and benefits for our customers and depots alike has continued to increase. New registrations have totaled some 59,000, around 61% of our customers had an online account at the year-end. Total users viewing our trade platform has increased by 45%, with around 80% of users regularly looking at their individual and confidential pricing. Customers with online accounts have on average continue to trade more frequently and spend more than non-users. We generated high levels of engagement with our web platform and grew our social media presence, which also stimulates interest in viewing our products and services online. Total visits totaled some -- site visits totaled some 24 million in the year. Amongst kitchen specialist, we continue to have the highest number of fitted kitchen site visits in the U.K. The time spent viewing pages and the number of sessions were consistently at high levels. Across the leading social media channels, our follower base at around 720,000 was up 18%, and with around 6.8 million engagements in a month. Usage of our upgraded Click & Collect service for everyday products increased and the new depot account management tool introduced last year is helping depots manage their customer relationships more efficiently and more productively. We have also recently introduced a new depot pricing and margin tool, which we call PAM, and its now operational in all our U.K. depots. We designed this in-house and PAM makes depot price management easier and more effective. It provides comprehensive data for depots to make more informed pricing decisions with a higher degree of confidence and enables depots to access quickly and see the impact that it has on their margin. Depot feedback has been very positive, and we are seeing both more bespoke local pricing and improvements in depot margins on products, which we incorporate in the system. And finally, international. In 2025, year-on-year sales of our international operations based in France increased at a higher rate than in the previous 2 years. In tough market conditions, the business responded positively to the measures taken to improve existing depot sales performance. We now have in place a highly experienced leadership team adept at depot management and have invested in enhancing offerings of footfall promoting products alongside a number of other initiatives. In 2026, we will continue to build out our depot teams capabilities, particularly account management, and actively manage our depot estate, including by closures and relocations where necessary as we look to build on the progress that we've made there. We are also trialing a more compact version of our format initially at a test depot in Reims in France, to the west of Paris. At around 500 square meters, this version is under half the average size of a current U.K. depot has a lower rental cost and the layout incorporates all the latest U.K. format innovations that you saw in the video earlier. We expect to maintain the aggregate number of depots trading at around the current number as we actively manage our depot estate to optimize its performance. Sales in the Republic of Ireland, we're well ahead of last year, and we will be opening more depots there in 2026. The Irish market suits our differentiated model and one which sets us apart from the competition there. We opened for business in the Republic of Ireland in 2022, and we used a similar depot location strategy to that in France with the local team supported by our U.K. infrastructure and also our digital platform. By the end of 2025, we had 16 depots trading, including nine clustered around Dublin, with three serving Cork. This year, we expect to open around five more depots, which would increase the number trading to 21 by the year-end. So for 2026, we are well planned, including on our strategic initiatives. These are aimed at increasing our market share profitably as day-to-day, we deliver value to customers across all price points and product categories. We have 24 new kitchens in stock well ahead of peak autumn trading plus a very competitively priced paint-to-order kitchen offering. And overall, our lineup in all product categories is the best that we've had in my time at Howdens. We have a program of Rooster promotions in place to keep Howdens at the front of the trades minds together with other price initiatives. We will continue to improve service and availability and increase the range of services and functionality we offer online to the benefit of our depot teams, customers and end users alike. During 2026, we plan to open around 25 depots in the U.K. and refurbish around another 45 existing depots to the updated format. In total, we expect to end the year with around 85 depots trading in the Republic of Ireland, France and Belgium together. So lastly, before we take questions, outlook. So far this year, our performance has been in line with our expectations. And whilst it's early in our financial year, we are on track to meet current market expectations for 2026 in what remains a competitive marketplace. We are planning for the size of the kitchen mark to be level year-on-year following several years of decline, and we are well prepared for challenges and opportunities ahead. We aim to retain a profitable balance between price and volume as we continue to maintain competitive pricing whilst aligning operating costs and working with suppliers to keep product and input costs controlled. We are confident that our business model is the right one to address the opportunities of our markets. And in summary, we're well placed to outperform our competitors again in 2026 as we both continue to invest in our strategic initiatives and return GBP 100 million to shareholders through the new buyback program that we've announced today. So thank you very much for listening to me and to Jackie, and we will now both take your questions. Allison Sun: Allison Sun, from Bank of America. Congratulations. It's very good results. Two questions from my side. So first is what makes you confident that 2026 overall kitchen market will be flattish instead of another decline? And second is, can you give us a bit more color in terms of the sales rate for P12, P13 last year and year-to-date? Andrew Livingston: Yes. We do a really incredible job in our business of listening to our depot managers and we highly value our day-to-day trading and the rhythm that we feel out of that comes a lot from our meeting with depot managers. And I go to -- we have 70 regional boards where we have about 90 managers coming to meetings, that happen 70 times a year. I get to 92% of those meetings this year with Austin, who sat with us today. So you feel it. You can see the numbers online. You can feel the rhythm of the business. Last Tuesday, Austin, and I had some of our top managers to dinner in London. They come from different parts of the U.K. and Austin, I wanted to talk about a number of issues in front. All of them are feeling pretty good about the market. They say it's tough. They say it's competitive. There's no doubt, we're out fighting. And the retailers who go out with their false sales in my mind of establishing prices in December and giving you a half-price dishwasher and interest-free and all that nonsense. That's what we're fighting against at the minute, but we are making good progress against it all. And I would say our feeling and our knowledge of the market would lead us to believe that we've got a decent year from a market perspective in us. Things like interest rates moving down and we would, of course, help. Do we feel that on a day-to-day basis? I don't know. But I think a combination of our initiatives, the product that we're landing this year and I have not chosen to show you all the product we've got coming this year because I just feel it's too sensitive now to be sharing in this forum to the market. So what James McKenzie has done and brought to this business is brilliant. We've got so much product coming through in the second half of this year, and it will -- I think it's sensational what's happening. So I think it's a combination of the market is going to be a bit better. We are so well placed to take more of it. Look, the back end of the year was good. There were different days of trading. We tend to trade pretty well towards the back end of the year, because we were the only guys in time with stock on the ground. And if somebody wants to get a job done pre-Christmas, they come to us. And so we have a sort of rhythm in our business where we closed out our accounts. We've done Trade Fest, which was a great success for a new sort of branded proposition of our peak trading, honoring the trades and supporting the trades, great Trade Fest, delivered it all out, closed out the year, get the price increase prepared for, bedded in, in January and then come out fighting in January. And all of that, we would say it's gone very well to plan. So not really going to comment on individual figures. We used to give out periods one and two at these events. And actually, if you look at it, it doesn't give you any indication as to whether the year is going to be good or bad, but we're just saying we're comfortable right now. Aynsley Lammin: Aynsley Lammin from Investec. Just two for me, please. Maybe just elaborating on the kind of early trade in terms of timing and scale of price rises you expect this year? And within the 2.6% same depot sales last year, how much of that was price? And then secondly, I guess just coming back again a bit more on the market share. You've obviously outperformed the market for, I think you said the market was down 3% last year, do you expect to continue to grow market share as much as you have been over the last couple of years in '26? Andrew Livingston: Yes. Look, we've probably become more and more sophisticated in our price increases as we've put them in and mentioned the PAM tool, which is mostly outside of kitchens where the depot managers will be flexing more prices as they go through the year, you'll see us do more dynamic prices as more and more customers go online, see their confidential pricing. But we want them to see pricing that our managers are completely comfortable with on a local level, and we've been making progress on that side. On kitchens, we typically go out with the sort of 4%. We hope to retain about 2% of it type of thing, but it's too early to say that we've done that at this point in the year, given the depots are out fighting in the market. So -- but we're pleased with how that's all sort of laying out in terms of the like-for-like for last year. I think you can read a sensible mix between half price, half volume. I think that's what we are pleased about what happened last year. I would continue to say that the market this year will be competitive, there's no doubt. We love the scrap. And our customers are so well placed because they're running their own businesses. And when the market is tough, our customers go out and win the business, there's more at stake for them. And the depots that really perform like the depot managers, that Austin and I had in the room on Tuesday night, they're incredibly close relationships with their customers. It's like here, it is like -- and people say they know their customers in the business. We know our customers and our business. And when I say we know them, they really are very close to their customer base. And one of the depots had 1,600 customers there. One had 800 customers there. The depot with 800 customers happens to be our highest-performing depot in the whole estate. And they don't change and they come back and they're regular and they just spend more and more with them. So I would say the proposition is well placed with what we've got from a sort of a product point of view. We believe interest rates, I think, I say that, I'm not leaning on that as a thing for this year, but this is self-help, and it's the model really working incredibly well with the initiatives and our very strong day-to-day trading. The thing I would add to it also for last year, people and our teams, I think they feel well. Morale in the business is high. And people have had a good taste of making money. And we don't turn up for the dental plan in this business. We turn up to grow profitable volume and I'm excited to see our depots earning well with the opportunity to earn even more in the coming years. They're a formidable bunch. Christen Hjorth: Christen Hjorth from Deutsche Bank. Two for me. First one, just for Jackie. So your first full year will be in 2026. Just an idea of the sort of areas that you'll be looking to focus on, is relatively new to the business. And the second one, just for Andrew. You point there's a lot more to go for in terms of strategic growth. I mean, how should we think about that? Is that sort of leveraging the investment that you've done to date in XDC and range, et cetera? Or are there more new areas to invest in to drive growth? That's the two. Andrew Livingston: Do you want me to start? Jacqueline Callaway: Yes, let me make a start. So look, it's been -- it's 9 months here at Howden's. It's been an absolutely fantastic first 9 months. It's an amazing business. And you don't really know till you get in. Having got in, it's well invested, very well invested. We've invested through what has been a difficult cycle, I think, in the industry. We're well set up for growth going forward. And we've got highly motivation teams to support us. So from a -- is there things that I think I need to come in and massively fix, I think the answer to that is no. Because the business is well placed. There's a few areas that I am focusing on. I think pensions would be a good example of one that we talked about. I think there's some good opportunities around our pension scheme and how we might derisk it. So that would be an area. And I think it's around just within finance is just driving the finance team to be a good business partners to the business and to support what we're doing strategically. Those would probably be my two key areas. Andrew Livingston: And in answer to your second question, I think one of the things that we've got really right here is actually our strategic plan, which we call raised ambition internally is well understood right up and down the organization. And we tie together our business design with trusted trade relationships right at the center, and we constantly think about product innovation at value and making sure it's really convenient for customers to buy. But then, of course, we're always developing new things. You'll see in our depot format, we're moving on the iterations. I'll never let this get as bad as it was when I sort of turned up. The depots were retired, and I don't think they did represent the right environment for us to do business with our customers. And I remember my first presentation, Geoff Lowery gave me a knock and said, sort of, isn't it about time? And that has been a very, very successful program. We continue to do that and take lessons into France and just think about sizing as well to make them more profitable quickly. From a ranging point of view, there is always more you can do, and we are very keen to stay on the front foot of a high proportion of innovation brought in as a big portion. So we measure it. We're incentivized on it, and the teams are incentivized it from bonus and LTIP point of view. So we do it because it's the right thing. It drives interest for customers. It drives margin accretion. It helps us deal with old stock. So we are obsessive. We spend an extraordinary amount of time on ranging. We're very good at testing it. And I say these things because we're a kitchen and a joinery business. And we think in our heads about joinery driving footfall, joinery being the place where customers start working, they do flooring, they do doors, they do skirting, they do wall paneling and then they start creeping into doing kitchens. And we've got to keep on getting people into doing these trades. And there is a bit of a thing here about AI is going to change jobs and markets and so on. AI is not yet fitting kitchens in my mind. So we are keen on doing a lot of great work about how you build your business. We've got to build a business builder program on in Howdens at the minute where we want to encourage people to go and start their own businesses in this trade space, and you can make a fantastic living out of the fit and out of the product on margin. We feel we're comfortable with the categories. And each one of those categories, we feel we can grow in. So we're only 24% of the kitchen market by value. 75% of the market that we're not having right now, we've got a significant opportunity. And I think we're upsetting our competitors as we progress forward with that. And out there, you've got a number of competitors who are either clearing what they're doing and they're lashing out on price or they're trying to make it work and you've got some people under new ownership. And just chasing down a price rate is not the way to win in this market. I'm also excited about what we're doing digitally and in preparation for the future, and people will think about how they design and plan and do thing -- different things on kitchens in the future. And then I suppose the final part of it is the international piece of the business, and we are making progress in France, and I'm excited about the work that we've been doing on the estate there. And we've got two divisions that are flying. We had 1/3 of the depots that performed incredibly well there last year. Fortunately, we've got a 1/3 that need work. So we adjusted some of them and we're going through manager-by-manager and under SEB's leadership, we will get to a good place. And Ireland, we've gone in. We don't offer trade credit accounts in Ireland interestingly. We just have gone in and done cash. It's not held us back in any way because the proposition is so fresh to the market and where it gets right. So I was explaining to the teams I've been down to Wexford to see the opening of our Wexford depot, right, the most beautiful plum site right in the middle of Wexford, and we will dominate the market. The depot only just opened. It had 150 accounts already opened. It opened three when I was stood there. The manager and the team were exceptional. So we're really making a difference and understanding more and more how this model lands well because we're able to give new depot managers to our business tools and kits that help them run the business a bit more that we may not have been able to do before. So they get daily traders and they get a better stock management system, and they can do livestock. They're supported with online activity. They've got PAM now. They're well supported from an availability point of view. And I think we've become better and better at doing that. And I think overall in the business, we've become strong at sort of pairing up, used to feel like a sort of supply and a trade division that feels very much like one business where we think right up and down. And even in France, Seb sits on the exec, he's part of the team. He -- we've even done a thing where we're twinning depots in France with U.K. depots and the way you sort of towns are twin. We're doing that. So U.K. manager, will work with a French manager plus an interpreter and build a relationship together. So a bit of a long answer, apologies. Benjamin Pfannes-Varrow: Ben Varrow from RBC. I'll do two as well, please. First one on the market share, in the U.K. Could you provide some more detail on how that's developing at the different price points? And the second question is building on the France topic. What do you need to see there to start accelerating the depot rollout again? Andrew Livingston: Yes. I think one of the things on the market share and you're right on price points because sometimes you think of families as you go up and down the architecture and what is brilliant about our offering is it all sits on a common carcass platform. So it's a bit like the chassis of a car business, and you can move your way up and down. And if you want to hit your price point by putting a lower-priced door standard carcass and then invest in the solid surface work surface. That might be what you want to do. We've seen growth at all price points. We've seen growth at opening price points all the way through difficult times because we're sort of untouchable down at that bottom end. Many of our kitchens will not even make it into customers' homes, because you'll find them in universities and council houses and whether it's genuine churn. And we brought some innovation at opening price. Mid-price, we've grown. It's been tougher because everybody is at that mid-price thing and some people throw on credit, consumer credit and that type of thing. But we have stayed ahead by innovating and being faster than others to market and bringing things like metallics in into some ranges that might be sort of needing that kind of innovation. And the best end of the market for us has been a combination of just beautifully styled product that I think is better quality than the independents. You'd expect me to have a Howden's kitchen, but it's what I've put in my house, the paint-to-order offering is just beautiful. And with a solid surface, good lighting, walk to any one of the independents around where I live in London, and I'm thinking it ain't as good as what I've put in my home. And I think more and more people are discovering that do I go to an independent and I spend GBP 60,000, GBP 80,000 or do I go to Howden's, I've got a really strong relationship with my builder, and I'm doing it for considerably less. And I think you'll just see us continue to grow in that space of the market, and you'll see us doing work like this that just makes people reassess the brand and people sniff at value. So we've done well at all price points. And we think we wouldn't particularly pull out one over another. We're just pleased with how we're doing. What do we want to see in France? I want to see more consistent delivery across all of the regions and we're very clear with that. More depots in profit. And we've got and had to put some fixed cost in France that will only be covered when the depots gets to -- the depot estate gets to a certain level of turnover. But we're pleased with how it's progressing. And we've made some choices about depots that perhaps we opened too quickly post-COVID, when we were growing very, very fast. And we got all our eyes with attention on this new smaller format that we're doing there. But I'm very pleased with the team and the level of energy in that business is fantastic. Jackie and I went over to do their year-end celebration, and it was electric. Yes. Shane Carberry: Shane Carberry from Goodbody. Just two for me. Firstly, you've mentioned a couple of times the competitive markets. Could you just expand on that a little bit more? Is it the pricing point that you made earlier? Or is there some kind of shift in industry dynamics we should be aware of? And then second, just kind of a longer-term one. When I think about this business in kind of 5 years' time and I think about the mix of products obviously doing a lot more in the bedrooms, doors, other joinery components. How big a portion of the pie could that be going forward? Andrew Livingston: Yes. I think when we say competitive market, we think about -- I suppose we think about price and we think about availability of product and we think about product innovation. And if I split it down like that and I think about product innovation, nobody is anywhere near us from a product point of view. And I think 8 years ago, when I turned up in the business, I think people were ahead of us. And what we've done with innovation and find the gap and testing products and bringing more products to market, we're leading. We're not following at all. And with that and with our availability, the combination of those two, it's very, very tough combination to fight against. But of course, if you've got people trying to get any kind of volume to put over their fixed costs, they're going to come out fighting on. January is the time. It's a very, very difficult period for a retailer. They don't have a bit of success in January. It's a long, long journey up until the summer for them. So I say competitive in that context. But when we think of our depot managers, Austin's language is no kitchen left behind. And we're very, very clear about that. I think if you think forward to this business, we're pretty good at sticking to our knitting. And we're pretty good at realizing the customer first and in our case, trade customer, trade customer all the way. And the stronger you are with your trade relationships, the stronger the business will become. They do well, we do well, and we appreciate entrepreneurialism deeply. We appreciate it in the depots, and we appreciate it amongst our supply base as well, those who come first to market. We -- James has got a suppliers conference in about a month, and that will be a big topic for all of us to talk about. So I think the business will always be kitchen-centric, kitchen dominant. And I think you'll see innovation and new ways of shopping online and AI and scanning the room with your phone to help develop plans. But we see these as opportunities to help our design consultants or help customers get an image of where they want to go to, but we think it's important that we keep going with our business model. Charlie Campbell: Charlie Campbell at Stifel. I've got sort of two. The first one was on the efficiency gains. So sort of GBP 41 million in the year, GBP 14 million of that is from suppliers. Just does that not get harder and harder as the more to get out of that bucket? The GBP 27 million from kind of manufacturing efficiency, does that get more difficult as you're moving towards the new Runcorn? And then the other question, just want to detail really, there's a GBP 6 million sort of exceptional around France, is that the end of that? Or does that kind of run on for a bit more as you further kind of arrange the branches? Jacqueline Callaway: So let me take the -- both of those. The efficiency gains, we've had a good result last year, to say GBP 14 million and cost of goods sold and GBP 27 million in OpEX. I think as we go into the budget, we see that there were inflationary headwinds coming again this year. We've guided that at around GBP 30 million, and it's across a number of areas, a little bit of timber inflation, a little bit of -- we see people inflation and also some property inflation, particularly around London rents. We will always look to offset inflation with efficiency projects. And I think one of the things that positive with Howden's has got a very strong muscle in this space. And it's one that we already have a track on the costs, and we already have all the projects that -- a lot of the projects identified. So I feel confident that we can make a good dent in the inflationary amount again this year. And it's across multiple projects. I look to Julian here. So across manufacturing, it will be things like waste reduction, more efficient use of labor, good examples across logistics, it could be thinking about how we can optimize deliveries out to depots. It's another area that's a big project for this year. So I think we've got good confidence that we'll certainly dent a lot of that inflationary pressure this year. And then on the cost for the French depots that we were looking to close over the next 2 years. It's a GBP 6 million charge in OpEx, and we don't see any further any further amount coming through at this point. Ami Galla: Ami Galla from Citi. A couple of questions from me. The first one was just understanding the bundles that typically a customer takes in. Can you talk about some of the attachment rates of flooring currently? And is this scope to penetrate that further? The second question was on the pricing model that you are talking about today. What sort of information do you think does the depot manager now have it handy, which you previously did not have? I mean, just understanding more in detail as to what is different today with the model that we have in place? And the last question was just on the maturity of the existing network in the U.K. Often, you've talked about the potential of the younger branches to kind of come up to the mature level. Can you give us the range as we sit here today of what the mature U.K. depot looks like? And where is the opportunity as we think over the next couple of years? Andrew Livingston: Yes. I'm sort of rethinking what maturity is for our business. Because when I wrapped up here, people said, they all mature in 7 years, then we thought of all these initiatives that we've brought into the business, like solid work servicing better kitchens, you grow your account base, we've been more efficient in the warehouse. I was telling Matthew Ingle about our best depot there last year and where it had got to, and he nearly fell off his chair because it was about twice the level that he's seen before. And he offered the manager, if he hits his number here of GBP 10 million this year, he's offering a case of champagne, which he is very thoughtful about. So I think we've just got such a long way to go even at our first depot hitting a big milestone like that. And so I don't know where the top end of maturity is. We've got a lot of work. If you think of the range between sort of GBP 10 million down to a depot at GBP 1 million, you've got a wide range there. And a lot of it's down to the capabilities of the manager and making sure the manager is empowered to develop the local relationships. Of course, there's area and all the rest, but one of our depots we talk a bit about in Great Yarmouth is a very big job in our peak trading period. It's his sort of thing that he does each year. Half of his catchment in the sea, but he's the biggest depot. So I would say we've just got really significant opportunity. And even when this business runs out of space and depots and we hit the 1,000, we will still grow and the like-for-like will still grow because we see so many opportunities in that. Your question about the pricing model is a good one, because our range count has grown, given XDC -- and we put in XDC to make sure that product is available, and we've become very clear with Richie's leadership from supply chain about what's right to hold in stock in a depot and what's right not to hold in stock in a depot, because it might have high value, it might create a long discontinued problem later on. So we've -- our shape of our stock in our depot is brilliant. And we gave the depots tools to develop that, and we call the system TED. Those of you who have been around some of our visits and depots, we often demonstrate it. And then through meetings that I've taken with some of our managers, some of the managers then said, well, can we not use the same sort of thinking where we can look by SKU, balance it out and bring the same thinking into pricing, and we went back and built PAM. And what it gives our depot managers is understanding of where their price volume mix per SKU, per range, sort it all out and they can see where they're at versus their region. And then we feed in local pricing data. And it gives them real confidence that they're not only too cheap on some stuff or they're not too expensive on some stuff. When we've got promotions going in that we do from a group from a sort of Rooster point of view, they can press a button and accept them. They're going to override them and not do it. All of this is to empower our depot managers not take power away from them because it's our managers operating locally. But it's using tech to make sure they're better enabled to make the right pricing decisions for customers and confidence levels go up with it as well. Hopefully, that explains that. You did ask about flooring and attachment rates. We've got loads of room. We're only fourth in the U.K. on flooring. We're #1 in kitchens. We're #1 in doors. We've done some great work on own brand and own ranges. It's a priority for Austin to sell more flooring this year. Our attachment rate is not bad with kitchens, but there's lots more to do. Geoff Lowery: Geoff Lowery, Rothschild & Co Redburn. A question really around your supply business. If you had to rank what it really does for you across those buckets of product exclusivity, flexibility, resilience, sheer cost advantage, what would that ranking really look like? And I guess the second question is you've obviously invested considerable amounts in that back-end infrastructure and transformed this in a wonderfully positive way. But we haven't really seen it at this scale, at this efficiency in an upmarket. So in a theoretical scenario where your volumes were plus 20%, say, would we see a meaningful leverage of a fixed cost component there? Different issue what you did with it, but the maths of that, would it be a kicker on your margin? Andrew Livingston: Yes. I think when I was looking at from Howdens from the outside, and I was running Screwfix at the time I was going around all the U.K. depots, I remember in the conversation with the guy that I taken over running Screwfix from and he said, businesses often have strengths. And it's clear to me that Howden's strength is in its manufacturing capability because you've got some incredible front-end implementation in the depots. But the strength -- I think the big strength of this model is our vertical integration, our supply, our exclusivity, the cost advantage it gives us, our nimbleness around us, our ability to keep raw materials untouched and then flex in. We do things that I have never seen other businesses be able to do because of our agility. And that's at scale on big product, but also when we go and do a testing, a small testing thing, we've got -- James has got in his capabilities, a small batch production unit. And the amount of work that batch production unit does for us around building out extra doors, flexing up and flexing down, making small batches that we can go and test in markets. It gives us an agility of [ Azara. ] And I think there is -- it gives us fundamental lower cost base where we can take higher margins in the market. If -- I think we probably demonstrated our strength when we came out of COVID and we were able to flex up so quickly, and we hardly missed a beat. I mean, our service levels weren't at 99.98%, but they weren't very far off even though volumes dramatically lifted. And you saw the business started making 20% on sales. So it's a cash machine when you push volume through it. I mean, there isn't anybody who could manufacture this level of volume for us and need another 1 million cabinets, hence, the investment in Runcorn. But I suppose we think about panel manufacturing where we're making -- we're moving beyond raw materials, but we're leaving stuff as work in progress. And then we build those items up to deliver to customers through our peak trading period. But I think it's absolutely fundamental and it's incredibly hard to replicate what we've done. And I just sort of add just a wee bit of color to it. We -- I went to our Runcorn Christmas party and took my wife, which was an eye-opener for -- I can tell you. She -- but the feeling of our 1,000 manufacturing personnel at Runcorn at that party because we had purchased the site, made very clear what our plans were that this is a big future, and I stood up in front of them and said, you do a fantastic job for us. You make 3 million cabinets. The trouble is, I need another 1 million. And I think they are -- it's very common to meet people in our Runcorn site that have got 20, 30, 40 years' experience working for us. You don't -- you can't just -- one of our suppliers, Egger -- Michael Egger, Senior, who makes most of our chipboard for us. He said to me, Andrew, you can buy the assets, but you can't buy the people. And I think it's that sort of combination of that is very powerful for a business. I don't know if I've answered you well enough, Geoff, but it's fundamental to us. Zaim Beekawa: Zaim Beekawa, from JPMorgan. The first is on the new product sales. I think you said 29% in recent years, but quite excited about what's to come. So is that a number that you feel will pick up in the coming years? And then secondly, obviously, very strong on the gross profit margin in '25? Can I think about the moving parts into '26, please? Andrew Livingston: Yes. I sort of feel comfortable that 2025, it will move up and down depending on what we do. I feel comfortable with where we're at. When you bring new range into a business, you've got to make sure people understand it. The depot teams understand it. We do have a big exercise in James' team. We build an expo. Some of you have been up to the expo at the factory, and we've got an expert Runcorn, and we're opening up our first expert, Watford next month worth going and having a look at. And we use these spaces to show off our product offering, and you've got to train it into the team. So there's only so much a business can consume. You don't want to throw too much range in and not land well. And I think our cadence of about 2024 feels pretty good on the kitchens where the majority of the profitability is. You will see us do more on own labels. You'll see us do more innovation on outside kitchen areas. Kitchen is a fashion business. We've got to stay up on the front foot on it. Colors change, styles change very rapidly. I think we were pleased with the margins, but margins, we've got to leave enough room for the managers to flex it. We did well last year. I think Austin incentivized the teams incredibly well last year to deliver margin and volume. We all understand the rules on it, but if the kitchen comes out and it's cheaper, we will always take it, and we will develop the margins on the other side. But we're comfortable with our industry-leading margins. We don't chase the percent. We chase cash. We like cash. And I would say probably more of the same this year would be my guess, yes. Jacqueline Callaway: So we've got time for one more. Christian, do we? Priyal Mulji: It's Priyal Woolf here from Jefferies. I've just got two questions on the International division. I appreciate you said that in the U.K., you're rethinking what maturity even means. But can you give us any sense of what maturity time line looks like in France, just in the context that, obviously, you're slowing down on the depot openings, focusing more on getting to profitability there. And then the second one is just a quick one. Obviously, you're expanding in Ireland, you will be again at some point in France, is finding the correct sort of sites, any sort of obstacle yet at this point in time? Andrew Livingston: I think the quick answer on the second is no. We're always looking at -- we've been able to find the right sort of price location mix and very similar type of setup on trading estates in Ireland. And when we go into these secondary towns, we're getting good value, and we're getting prominent locations. So -- we've said around about 40. I don't know, it might be more, but a business of 40 in Southern Ireland would feel pretty good to us, and we'll be about halfway there by the back of this year, lots of growth to put on it. In France, yes, we were very clear. We're putting the foot in the ball. We're going to get the operations absolutely where they want to be. This year is an important year for the French team. And next year, the one after will be the same, but we want to see that business getting to breakeven in a sensible time frame. And we understand that happens when you push more depots on top to cover the fixed cost, but we want every depot in profitability in France in the near term. There's one question that we have to take because you've tried about 15 times now. Charlie Campbell: My arm is so tired from going up and down. I've got loads, but I'll keep it to two. Wren has bought Moores, it takes them into the trade bar, the kitchen market. Do you think that changes the way about how they attempt to broaden their addressable market in the U.K. at all? That was the first one. The second one was on the small branch depot formats you're going to start opening in France. Should we be looking to see those pop up in the U.K. anytime soon? Andrew Livingston: Yes. Yes, I don't -- it's interesting. The Wren business have tried several times to open up a trade business to be like us. Often, they've opened up a specific site, and we get wind of it and we release margin criteria to our depot managers and extinguish any potential flame coming out. On the contracts piece, we like routine, repetitive, repeating sort of maintenance type of businesses that we would sort of consider contract. The housebuilding stuff, we're happy to leave that to somebody else. I don't want large, long production runs that disturb high-margin supply to trade customers. And I think it could distract us. We're very happy to take local, smaller regional house builders if the margin is right for us. But I'm not looking to chase after big house builders. Symphony Group is better at doing that than us, they're better set up to do that than us. And the market is big. I don't know what their plans are, but I don't think it's going to change anything in the near future. Small depots in the U.K., I think we just -- it's more important for us to be in the catchment than not be in the catchment. So sometimes we go in and we will take a site that's a bit bigger or a bit smaller. You'd certainly see us doing a wee bit being a bit -- wee bit more curious in London. And of course, we've got the capabilities to do it. We've become much better at how we merchandise depots, built all that skill, and we're amazing at how we fulfill and supply depots, and we know what to put in the depots. It's the right type of product. So you can cope on smaller spaces. We're just about to open up in the arches at Waterloo, and that would be worth popping down having a wee look there. Limited parking, we think it's going to be a flyer. I think we'll call it quits there, if that's okay. So thanks very much for your time.
Operator: Good morning and thank you for standing by. Welcome to the Worley Half Year 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Chief Executive Officer, Chris Ashton. Robert Ashton: Good morning, everybody, and welcome to the call today, and thanks for joining the half year results presentation for Worley for 2026 financial year. The results are defined by a solid revenue growth and resilient earnings outcome, once again showing our adaptability in the face of dynamic markets. As I start my seventh year as CEO, these results continue a pattern of consistent growth. Despite market disruptions, Worley continues to deliver. Our performance reflects deliberate decisions about portfolio, capability, where we compete and the agility with which we can adjust. And we have a dedicated team around the world who work to deliver the outcomes that our customers trust. Let me now give you an overview of our business performance for the period before our CFO, Justine Travers, takes you through the financial results in more detail. I'm pleased to share an early look into how we're positioning for the next phase of growth as we go through this presentation today with the strategy focused on increasing our total addressable markets and generating value for shareholders. Today, we reconfirm the outlook we provided to the market at our full year results in August last year. We continue to expect a year of moderated growth, but calendar '26 has started with renewed momentum. Some big wins recently include being provisionally named as EPCM partner on Glenfarne's Alaska LNG pipeline and appointed marine and port infrastructure technical adviser for the WA Westport program in Western Australia. We're already delivering Phase 1 of Venture Global CP2 LNG project in the U.S. and are continuing our partnership to deliver Phase 2. These wins on some of the largest projects in the world demonstrate the confidence customers have in our capability to execute major complex projects, and we continue to scale across a growing pipeline of these opportunities. Given this momentum, we're encouraged by the visible signs of growth for Worley beyond this financial year. Turning to Slide 2. I remind you to review the disclaimer shown here. I'd also like to take the time to acknowledge the Gadigal people of the Eora Nation, the traditional custodians of the land from which I'm calling today, and I pay my respects to the elders past, present and as well to the emerging leaders. Turning to Slide 3. Let me now turn to our business performance for the first half of the financial year. And so let's turn to Slide 4. As I said, revenue has grown even while navigating challenging market conditions and earnings have been resilient. The last 6 months, we've seen solid revenue growth of 5.4% over the prior corresponding period. A number of major projects in execution phase contributed to steady earnings and bookings are up 63% on the prior period. Venture Global CP2 Phase 1 was a major contributor, but I want to highlight some of the other significant wins across the sectors and regions, like the EPC for ConocoPhillips Scandinavia for their Norwegian Continental Shelf project, the FEED for OQ Refineries and Petroleum Industries decarbonization project for the Sohar refinery in Oman, and construction for ExxonMobil's major reconfiguration project of its integrated complex in Baytown, Texas. Momentum through increased wins in the first few months of this calendar year reinforce our confidence we can deliver a stronger second half. We've taken deliberate actions to enhance earnings quality. Our cost out and business restructuring initiatives are well advanced, and we're targeting more than $100 million of annualized savings from 2027 onwards, resetting our cost base and positioning the business for our next phase of growth. We acknowledge there's been $82 million of transformation and business restructuring costs this half, and Justine will talk to this later. And finally, our balance sheet remains strong. Disciplined working capital management drove strong first half cash performance, giving us the capacity to keep investing in growth. Turning to Slide 5. Our highest priority remains the safety of our people. Our safety performance has been maintained with a total recordable frequency rate of 0.10. At Rio Tinto's Rincon project in Argentina, for instance, we recently marked more than 1 million work hours with 0 safety accidents incidents. Visiting last year, I witnessed the discipline, care and pride the team brings to their work, and it's milestones like this that reflect the safety leadership on the ground and the commitment to looking out for one another each and every day. Positive ESG progress continues too. We've maintained leading external ESG ratings, and we've strengthened our approach to preventing modern slavery. And we remain on track with our own Scope 1 and Scope 2 emissions reduction targets. We're also well prepared for the new Australian sustainability reporting requirements. Bookings are up 63% compared to the prior 6-month period. And in the first half, bookings totaled $9.8 billion, including Venture Global CP2 Phase 1, which achieved FID last July. Sole source wins also increased, reinforcing customer confidence in Worley's capability and delivery. And as I've mentioned, a number of significant project awards already this calendar year build on this momentum. Energy and resource have both grown with the Americas continue to deliver wins for our portfolio and the mix of bookings reflect increased construction, fabrication and procurement activity as these projects move into the execution phase. The quality of these bookings remains high. As noted, large complex projects where Worley is supporting customers across the full project life cycle underpin backlog quality and forward earnings visibility. Turning to Slide 7. I'll now turn to leading indicators. Backlog remained resilient at $6.7 billion (sic) [ $16.7 billion ], providing good visibility of revenue into the second half of FY '26 and into '27. Backlog is slightly lower than the reported period for June '25, and this reflects the delivery timing rather than a drop-off in demand. $6.3 billion has been added to backlog through scope increases and project wins during this period. And while work on the Baytown Blue project has paused, we've retained in the project backlog and continue to work closely with ExxonMobil on that. Project wins already in the first few weeks of calendar year '26 will add more than $3.5 billion to backlog. Our factored sales pipeline remains robust, and we continue to convert opportunities into backlog as we secure contract wins, and the pipeline keeps replenishing. Around 46% of these opportunities are expected to be awarded in the next 12 months, reflecting the extended project delivery time frame for major projects. As we target more of these projects, we're focused on opportunities in the early-stage consulting phase with potential for pull-through and consulting opportunities increased by 24% in our pipeline over the past 6 months. Turning to Slide 8. The slide shows the diversification and competitive strength underpinning our business model and earnings resilience. Our broad exposure across sectors, geographies and services reduces reliance on any single market or customer decision and revenue is well balanced across energy, chemicals and resource. It's geographically diversified with meaningful scale across the Americas, EMEA and APAC. Our services mix across professional services, construction and fabrication and procurement shows our increasing relevance to customers across the full project life cycle. And we're attracting a greater share of project capital with expanded capabilities. We also continue to differentiate through our use of digital and AI. Enterprise efficiency is a non-negotiable. Technology is transforming project delivery. Our digital and AI initiatives will reshape how we deliver projects and strengthen our competitive advantage. For customers, intelligent solutions will bring their assets into operation sooner and accelerate returns on capital. I'd now like to give an update on each of our sectors and turning to Slide 9. Aggregated revenue from energy work increased 8.8% over the prior corresponding half, and growth was driven by major projects moving into the execution phase, lifting construction, fabrication and procurement activity, particularly in the Americas. Integrated gas continues to be a growth driver. Demand for gas is supporting ongoing LNG import and export terminal developments and integrated gas work represented 25% of Worley's total revenue during the period. The variety of LNG projects we're working on around the world is notable in places like Germany, Indonesia and Australia as well as the U.S. While the outlook remains softer overall in oil, activity is increasingly concentrated in higher-margin offshore projects and selected onshore developments, particularly shale. And power is an important growth market. Structural change is driving energy demand and investment across gas-fired power generation, renewables and nuclear. Turning to Slide 10. The global chemicals market remains important to us. Near-term conditions are challenging, reflecting regional [Technical Difficulty]. Aggregated revenue declined 9% over the period with project cancellations in Western Europe and lower professional services activity across APAC and EMEA. This was partially offset by ongoing major project execution in the Americas, where construction and fabrication activity continues. Looking at specific subsectors, refined fuels remains promising, and it continues to attract investment in product slate optimization, decarbonization and asset life extension. Petrochemicals remain a major contributor to our chemicals revenue, although Western European plant closures related to global overcapacity have had an impact. Low carbon fuels present more selective opportunities where projects are commercially viable. Turning to Slide 11. Finally, resource have delivered growth for Worley in the first half and aggregated revenue has increased 12.3% over the prior corresponding period. Resources now represents 29% of our business. Population growth, urbanization and the energy transition are demand fundamentals, which will continue long term. Fertilizers remains our largest subsector. Here, demand is supported by population growth and food security. Demand for copper is driven by the need for energy transition materials and an increasing demand from data centers, cloud and AI infrastructure. In battery materials, there's been a resurgence in activity and sentiment with a focus on front-end work and commercialization of technology. And we're confident resources will make an important contribution to second half growth, and we expect this to continue beyond the next year. I'm now going to hand over to Justine for further details on the financial results. Justine? Justine Travers: Thanks, Chris, and good morning, everyone. Turning to Slide 13. Our half-year performance and execution of strategic priorities such as cost management and earnings quality, coupled with strong capital management positions us well to deliver moderate growth this year. I want to reemphasize 3 points in relation to the results we are delivering today. First, we continue to deliver aggregated revenue growth and solid earnings, supported by our global operations and strategic focus on major project delivery. Second, targeted actions to reset the cost base are underway and aim to strengthen earnings quality and resilience. And finally, we remain in a strong financial position to support growth and return capital to shareholders. Aggregated revenue for the half was $6.3 billion, up 5.4% on the prior corresponding period. We continue to see an increase in construction and fabrication revenue as we execute on major projects as well as an increase in procurement revenue. Supported by the contribution from our global operations and our major projects, underlying EBITA was steady at $377 million. Underlying NPATA was $207 million. A lower statutory NPATA at $152 million reflects the inclusion of transformation and business restructuring costs. While business as usual costs are included in underlying EBITA, these transformation and business structuring costs were beyond the scope of the normal course of business. Normalized cash conversion was 95.5%, a fantastic achievement. This continues to be an important focus for our business. Our balance sheet strength and strong cash position provide capacity to invest in growth and return capital to shareholders through our ongoing buyback and payment of dividends. Leverage at the end of the half was 1.5x, comfortably within our target range, reinforcing the strength of our financial position. Turning to Slide 14. Our aggregated revenue growth has supported steady earnings despite the challenging market backdrop. As I've highlighted, a driver of revenue growth this half was major project activity with increased volumes flowing through construction, fabrication and procurement, particularly across the Americas. This work is delivered under a lower risk contracting model and has supported a stable earnings outcome, reflecting both project delivery stage and disciplined delivery across the portfolio. As a reminder, we don't do competitively bid lump sum turnkey projects. On the right-hand side, the EBITA and margin walk highlights our continued focus on rate improvement. Margins reflect the combined impact of volume, mix and pricing with rate improvement partially offsetting mix impacts in the period. Importantly, this demonstrates an ongoing focus on margin discipline. While near-term earnings reflect project phasing, the underlying drivers of margin improvement continue to build through backlog, the cost-out program and disciplined execution. Turning to Slide 15. As communicated at the full year results in August, we're transforming the way we work by removing complexity, improving efficiency and driving consistency. This work is well underway. We acted proactively to reposition the business in response to softer conditions in chemicals and some project cancellations in Western Europe to strengthen margins and ensure ongoing business resilience. We've accelerated actions aligned with our strategic priorities, specifically resetting the cost base, scaling GID and expanding margins. During half one, we incurred $82 million of costs associated with these actions, much of this being severance and related costs, predominantly in Western Europe, where we have seen high restructuring costs due to local labor protections. We expect further costs in the second half as the program continues. However, we do anticipate these costs being lower than those already incurred in half one. The actions we've taken include repositioning capability to areas of higher demand and rightsizing where demand has softened. These restructuring actions together with our efforts to transform the way we work are setting the foundation for stronger earnings and margin quality. Our business will be supported by a leaner, more scalable operating model, supported by global integrated delivery, GID. In delivering this transformation, we are progressing at pace. With a disciplined cost-out program, we're targeting over $100 million annualized savings from FY '27 onwards. Our cost management efforts are focused on and include repositioning capability to areas of higher demand, increasing enterprise service center utilization, rationalizing our third-party contracts and adjusting our office network to reduce costs while supporting global delivery. We're also deploying digital solutions to simplify processes and improve productivity. Embedding AI across our business will be an ongoing part of our broader strategy to leverage technology and new ways of working to create sustainable value. I have been working closely with the business on this program, and it is clear to me that steps that we are taking strengthen our cost discipline and will enhance our earnings quality. We will ensure we retain the capability and capacity required to support growth and deliver for our customers with greater cost discipline, commercial agility and technology focus. Turning to Slide 17. Finally, I'd like to take you through our capital management position. Operating cash flow is strong. Normalized cash conversion of 95.5% is above our target range and continues to reflect strong underlying cash generation and a disciplined approach to working capital management. Day sales outstanding of 46.2 days remains well controlled and comfortably within our target. We have been consistently delivering returns to our investors through dividends and our buyback program. The Worley Board has determined to pay an interim dividend of $0.25 per share, which is unfranked. We continue to execute our share buyback program of up to $500 million, reflecting the confidence we have in our business. As at 31st of December, 2025, we had purchased over 24 million shares for a total consideration of $324 million. We will continue to execute on this program. During the half, we continued to invest in the business in a measured way while prudently managing debt and maintaining flexibility to invest in growth with capital directed towards initiatives aligned with our strategic priorities. Our balance sheet remains strong with leverage at 1.5x, comfortably within our target. We continue to use free cash flow to manage liquidity and support growth. We remain committed to maintaining a diversified funding base and proactively manage our debt maturity profile. We are looking at a variety of options for the group's euro medium-term note debt as it matures at the end of the year. I am getting to know our debt investors and we are confident and well placed to manage this upcoming maturity in June. Our weighted average cost of debt remains stable and our effective tax rate continues to track within our expected range. Overall, our disciplined approach to capital management remains a key differentiator and supports long-term value creation. I'd like to make a final comment on foreign exchange rates. The Australian dollar has moved over the past few weeks and we note the possibility of FX being a headwind in the second half if it remains at these levels. In summary, our solid half year performance and execution of strategic priorities, including cost management and earnings quality, coupled with consistent and strong cash conversion and balance sheet strength positions us well to scale for growth. I'll now hand back to Chris to take you through strategy and outlook. Robert Ashton: Thanks, Justine. Just moving straight on to Slide 19. But before I share the outlook for '26, I want to step through some of the fundamentals underpinning growth, and then I'll turn to our growth strategy. Worley is a diversified, resilient business with a robust foundation and demonstrated agility to adapt to market changes. And this foundation and agility gives us the confidence as we move into our next phase of growth. Our end markets are supported by strong structural tailwinds. Energy security, affordability, electrification, energy transition and decarbonization, along with the rapid progress of AI and digitalization are long-term demand drivers. And Worley's growth should be viewed independently of cyclical factors. Our growth has been secured across commodity cycles, not dependent on oil prices and continues to outpace customer capital expenditure. Turning to Slide 20. Our strategy has 3 pillars supported by disciplined capital management and operational excellence. One, we're strengthening leadership in our core markets; two, we're expanding into growth markets and along the value chain, including expanding EPC and EPCM capability; and three, we're innovating to differentiate delivery with technology. This strategy supports sustainable growth and resilient earnings. Moving to Slide 21. We remain committed to our purpose of delivering a more sustainable world, and Worley's next phase builds on our strengthen, expand and innovate strategy to secure both within and beyond our core markets. We've built a leading position across energy, chemicals and resources with sustainability solutions embedded now in the business. And now we'll grow our total addressable market by extending our project delivery capabilities to capture a greater share of spend across the customer asset life cycle. This positions us for more EPC and EPCM scopes with continued growth in consulting and value-added services from concept to completion. These capabilities mean we can target high-growth adjacent markets beyond ECR. We'll selectively expand into adjacent complex critical infrastructure where our skills are transferable. And the next phase of growth is supported by disciplined capital allocation, margin focus, which will ensure accretive and resilient growth. Turning to Slide 22. We're expanding our total addressable market by accessing a greater share of our customers' capital expenditure. The graphic on the left represents a typical customer capital program for an asset. As projects progress into execution, customer spend scales significantly. And by extending our EPC and EPCM delivery capability enabled by technology, we're positioning Worley to capture a larger share of this overall capital investment. And you can see the results of this focus as we turn to Slide 23. The major projects shown here in LNG, cement decarbonization and iron ore demonstrate our execution capability at scale and reward our deliberate shift to more EPC and EPCM scopes. And while major projects are reinforcing our confidence in this strategy, extending our ability to support customers across the asset life cycle is not just about project size. It's an evolution as we expand the services we offer all customers globally, deepening and broadening the capability of our workforce. EPC and EPCM have always been part of Worley. Consulting and other services along the value chain enabled by digital and AI differentiate how we deliver. And now we're leaning into scaling this full project delivery with intent, and we're excited by the early success shown in major projects. Turning to Slide 24. Backed by the capabilities I've described, our growth strategy seeks to strengthen our leadership in existing markets by growing market share and expanding into high-growth adjacencies. LNG and energy transition materials are areas where Worley has an established presence and a strong track record in execution, and we can further grow market share with more major projects. We're also expanding into new growth opportunities in complex critical infrastructure markets such as data center infrastructure, power, ports and marine terminals, and industrial water. These are capital-intensive markets where we have an existing or an emerging presence and can leverage transferable engineering services, EPC, EPCM and digital delivery capability. Importantly, these markets offer a clear pathway to scale. Together, these existing and new market opportunities reflect a balanced but deliberate approach, and they build on what we do well today while selectively expanding into adjacent areas of growth. And more detail of this will be shared at our Investor Day in May. Turning to Slide 25. Before I present the group outlook, I'd like to give a brief update on key focus areas. Our first is full project delivery, a key enabler for our growth strategy. And as I've outlined today, we're winning and delivering more of this work within a disciplined risk appetite. As Justine said, we will not do lump sum turnkey EPC. We'll seek to balance the portfolio with high value early-stage consulting, study, FEED and scale as we pull through to more execution phase construction and procurement work. Alongside this, we're resetting the cost base to build a more efficient technology-enabled business, targeting $100 million plus exit run rate annualized savings. We continue to focus on margin growth by targeting higher quality work and delivery excellence, scaling global integrated delivery and deploying digital, embedding AI across the business to drive capability efficiency and differentiation. And together, these deliberate efforts set us up for the next phase of our growth. Turning to Slide 26. Geopolitical uncertainty and shifting market dynamics are a reality of today's market. Nevertheless, we've continued to deliver growth in revenue and steady earnings in the first half. This speaks to our business model resilience, portfolio diversification and disciplined execution strategy. We reconfirm our moderate growth outlook for the current financial year on a constant currency basis. We're targeting higher growth in aggregated revenue than FY '25 and growth in underlying EBITA and expect the underlying EBITA margin, excluding procurement, to be within the range of 9% to 9.5%. We continue to benefit from favorable long-term macro tailwinds, and these support demand in our existing end markets with high-growth adjacent markets also identified to support Worley's growth beyond FY '26. A diversified business model, increased cost focus, commercial and financial discipline and a strong balance sheet positions us well for both the short and the long term. That concludes the formal presentation today. Justine and I are now happy to take any questions from those on the call. Operator: [Operator Instructions] And our first question comes from the line of Scott Ryall of Rimor Equity Research. Scott Ryall: Chris, thanks for the presentation and some of the color. I just wanted to follow up on your comments on Slide 24 and the energy and power slide that you were talking about before. And I'm just wondering, you've moved into new markets historically and you've had to invest money a couple of years ago. You did that across a range of different industries. Are there investments you need to make in terms of expanding into some of these new areas? How long do you think it will take? And can you just remind us on -- you mentioned nuclear in the presentation. What's Worley's nuclear capability or experience, please? Robert Ashton: Well, let's start with the nuclear first. So Worley is the engineer of record for 15% of the U.S.'s nuclear commercial power generation capacity. We're currently doing a nuclear project for -- in Egypt, the El Dabaa project, that's over 2 gigawatt nuclear facility where we own as engineer. We're currently doing nuclear work for Canada OPG. So we have a long track record of doing nuclear. So it's expanding into that. In terms of investing, we invested -- when we did the transition or the push into sustainability, we committed $100 million of investment over 3 years to support that transition. And look, and where we have -- we've got effectively there's 3 growth pathways: organic, strategic partnering and M&A. And where we need to develop -- invest in ourselves then, we're actually going to -- we're absolutely going to make sure that we commit to building the incremental capability. The reality is when it comes to power, just even look at the thermal power, we're currently doing the U.S.'s largest thermal -- in construction, the largest thermal power generation facility, over 2 gigawatts, that happens to be in the CP 2. So we've got a long history in power out of our Reading office in Pennsylvania. So power, nuclear, long history. Industrial water, we do a lot of industrial water. It's integrated part of the offering to our customers, but we see that is going to be an increasingly important part of our future. And so it's about putting focus on it. And our data center infrastructure, if you look at this really through the lens of data factories, these are becoming increasingly complex in terms of needing independent power generation and also cooling. So you look at the water and the power needs for some of these multi-gigawatt data factories, that's in the sweet spot. So we've got capability in these areas. It's about expanding them. And certainly, should it require organic investment for organic growth, we'll do that. And more will come in Investor Day. Operator: Our next question comes from the line of John Purtell of Macquarie. John Purtell: Look, just in terms of what you're seeing from customers, Chris, obviously tariffs impacted decision-making through calendar '25. What are you seeing on the ground? And maybe if you could just provide some commentary on the different segments there for you as far as Energy Resources and Chemicals. Robert Ashton: Yes. Look, I would say in the latter part of '25 calendar year and now coming into '26, we're seeing a different tone of voice coming from our customers. Clearly not across every sector, every geography, but certainly on the resources side. We're seeing a lot of interest in the major project delivery capability. But our customers in the Middle East, North Africa, definitely a sense of, I guess, stability. Last year was a lot of uncertainty around the tariffs and the customers working through that. And we did say we thought by the end of the calendar year '25, things would have settled down. I would say that's occurred. Look, the single area of softness continues to be the conventional chemical side in Western Europe and just generally as a result of overcapacity. But on the energy side, integrated gas, power, oil, that that continues -- certainly seeing a renewed interest and a renewed, I would say, buoyancy in that. On the resource side, whether it's on iron ore, copper, lithium, on the [Technical Difficulty] materials, we're seeing a return in interest or a continued buoyancy there. So I think generally, John, the tone has shifted with our customer base, from last year where everybody was thrust into a period of uncertainty as a result of what was happening in the U.S. But that seems to have [Technical Difficulty] been normalized with the decisions that our customers are making. Operator: The next question comes from the line of Nathan Reilly of UBS. Nathan Reilly: Just a few questions in relation to the restructuring activity. The number came in probably a little bit higher than what I was expecting. Was there a decision made to maybe accelerate/even increase the level of restructuring activity when you sort of previously flagged that back at the AGM? And can I just get a little bit of an update [indiscernible], I guess, the nature of some of that restructuring activity in the first half, but also what you're expecting to undertake in the second half? Justine Travers: Sure. Yes. And Nathan, you're right. The amount of work that we've done around restructuring is greater than we had anticipated. And I would say the cost of both the cost and scale is higher than what we would have initially thought we would have incurred for the first half. It is really driven by predominantly severance and associated costs that we've seen in Western Europe as we've looked to restructure that workforce and move into areas of higher demand. And so what we've seen is the scale and duration that it's taken to actually move on that restructuring was longer than anticipated. We've also taken the opportunity, though, as we looked at this, it was a real catalyst to take deliberate decisions around accelerating that shift of moving from higher cost location to areas where we would see higher demand. You'd note within a number of our priorities, we talk about scaling GID. This has really been an opportunity to say how do we accelerate in doing that and actually driving a lower cost base through the business. In terms of what we would expect for the second half of this year, we do expect continued restructuring costs in the second half. We're doing work looking across our enterprise services as part of that restructuring. We do, however, expect those costs to be lower than what we've incurred in the first half. And what we want to do is not continue to have a multiyear program of restructuring. We're really saying what can we do in FY '26 to reset the cost base and reposition ourselves strongly as we go into FY '27. Operator: Our next question comes from the line of Gordon Ramsay from RBC Capital Markets. Gordon Ramsay: Chris, just wanted to ask you about where you stand in terms of project cancellations or scope reductions. I know there were none in the second half of FY '25. Is there anything you can comment on in the first half for FY '26? Robert Ashton: I mean the only one as we talked about before was the Shell Red Green project in Europe, but that was announced at the time. So we've not seen a continuation or any sort of trend around cancellations other than the ones that we've talked about previously. And I think that's just -- that reflects a shifting confidence in the market. But yes, we've not -- there's no trend of continued cancellations. Gordon Ramsay: Just on deferrals, are you seeing companies, especially in what I call the green energy or renewable transition area, it looks like a lot of companies are kind of slowing down investment there. Are you seeing that in your work at all? Robert Ashton: I think it depends on which region you're talking about. Certainly, in the U.S., the extreme green has slowed down, but not in Europe. You saw just this week, we announced a hydrogen backbone pipeline project in Europe. So it just depends by region. But certainly, in the U.S., the more extreme green has seen a slowdown in that. And that's reflected in our future factored sales pipeline. We've actually reflected the slowing down of that. But again, no material trend around cancellations. Now there's always deferrals. And I would say the deferrals are no more or less material than they are historically at this point, yes. Certainly, in '25, as what was happening in the U.S. with the U.S. changing its position, you saw a ripple effect, but I would say that's really dropped off now. And I think we're probably in a much more -- well, we are in a much more stable environment. Operator: And our next question comes from the line of Megan Kirby-Lewis of Barrenjoey. Megan Kirby-Lewis: My question is just on the margins and by activity. So it just looks like professional services and construction dipped slightly year-on-year, but procurement has held steady. So I guess just keen for you to talk through the dynamics for each of those areas and how we should be thinking about them going forward? Justine Travers: Yes. Thanks, Megan. We don't see a structural issue with margins. And we don't see a decline in the quality of work that we're being engaged to do. I think what we are seeing is, as you said, procurement margins have hold relatively steady. Construction and fabrication, we see that more as a phasing around the execution stage of the projects that we're undertaking at this point in time. And with the portfolio of major projects, we expect to see that really normalize over a period. In terms of professional services, again it's largely driven by how we would see in terms of the stage of the projects that we're undertaking. But we're not seeing anything structural within that margin profile that gives us a cause for concern. And I think on top of that, the actions that we're doing around cost management, the efficiency within the organization, removing some of that legacy complexity that we've had is really all in service of ensuring that we maintain that margin resilience as we go through and over the next 12 to 18 months. Megan Kirby-Lewis: And I guess just as a follow-up on that, like more focused on the construction piece, but you are continually talking about moving more into EPCM and EPC. I guess just how like that will start to flow through to margin. Is there anything sort of to think about in terms of risk sharing between customer and contract -- customer and Worley and how that might impact the margins there? Robert Ashton: Well, as we grow the EPC business, the mix of what we do across, the phasing of those, the phasing of engineering against another major being in the procurement phase or in the construction phase. So it's the mix that will -- the mix of the phase of projects that will drive the margin rather than EPC alone. I think you've got to look at it as always a portfolio of projects, which, yes, we'll do more engineering procurement and construction. But it's just driven by mix, Megan. I mean, yes, I mean, I'm not sure what more. Justine Travers: No. And I'd say, Megan, we're holding our outlook position on the margin, excluding procurement, between 9% and 9.5%. So looking at that from a mix perspective, we think that's able to be maintained. I know you've covered Worley for a long time, and you will have seen over the course of the last few years that we've really gone from strength to strength in terms of our margin profile across the portfolio. So something absolutely that we're mindful of in terms of that composition of volume, mix and rate. And so we need to be doing the things that we can proactively manage around quality of what we bring into our pipeline and then through to backlog, and we need to be resilient around the work we're doing on cost discipline and margin expansion. So yes. Operator: Our next question comes from the line of Cameron Needham of Bank of America. Cameron Needham: Just one quick question for me, just on Baytown. Could you talk me through the logic of leaving that in your backlog, please? And then just more generally, could you talk through the process that you guys go through internally in terms of deciding if a project meets requirements to actually stay in the backlog versus what comes out as a cancellation? Robert Ashton: Yes. Baytown Blue has not been canceled. So it remains in the backlog. If you look at Exxon's announcement, it's been paused. And until it's been canceled, it will remain in backlog. So we have a very rigorous process of what goes in or comes out of backlog, and we consistently apply that. But Baytown Blue, if you read ExxonMobil's announcement, has been paused, not canceled. Operator: And our next question comes from the line of Tom Wallington of Citi. Tom Wallington: A quick question on customer mix and growth adjacencies. So just noting 28% of the backlog is associated with traditional work, including oil and gas. And I appreciate you've highlighted these complex critical infrastructure scalable opportunities in your priority markets. Can I just get a bit of color as to how these early customer engagements have been and how we should think about the mix of Worley customers evolving over time? Robert Ashton: I would say that the early engagement has been very, very positive. And the customer mix, I think it's an important point because we often, in conversations, have the conversation pivots around capital expenditure of customer base is shrinking or dropping off or may not be as big as the previous year. And I'm speaking generally. And it may be for the majors. But if you look at the number of customers that we're working with that are outside of that analysis, it's significant. You look at Glenfarne, Venture Global as 2 examples. These are not necessarily companies that attract when the overall market or the overall capital spend is being considered. So look, early phase conversations are fantastic and certainly a lot of interest in what we're offering, whether it's in the full project delivery side or on the power ports or marines or industrial water or even on the data factory infrastructure side. So good early engagement, very positive early engagement, I would say. And in terms of opportunity to grow, I think that there's significant opportunity to grow outside of the addressable market that are traditionally sort of assessed and associated with Worley. So we do a lot of work for customers that are -- that is outside of the majors, outside of the Rios, outside of the BHPs, outside of the ExxonMobils or Chevrons, outside of the BASFs. And we see increased opportunity for growth in that space. Tom Wallington: That's very helpful. And potentially a second question, if I can, a follow-up to Nathan's question around the restructuring costs. Noting that the scale and the scope of these costs has likely exceeded initial expectations. Just curious, going into the result, we thought that these costs would be taken above the line, noting that they are taken below the line now given they have exceeded those initial expectations. Can you give us, I guess, any color as to why the change of thinking as to how this would be treated for from an accounting purpose and potentially what this might have implied if all of these costs were taken above the line? Robert Ashton: I don't think the -- in terms of -- well, I'm going to let Justine answer the technical side. But look, there's a lot of things that go into the decision-making around this and clearly, and I have communicated, we've communicated that the cost will be taken above the line. What changed was as we got into the -- toward the end of the year, as we got into the detail of the restructuring costs, we saw an opportunity to restructure parts of the business more deeply than we initially assessed with an objective of relocating that work when the markets -- when the opportunities and the projects present themselves, repositioning and relocating it to India. So rather than keep people on the bench and do a moderate restructure, we took a strategic decision to do a deeper restructure with the intent of moving the work to a higher profit location such as India or Bogota at our GID center there. So it was a strategic decision. Now in terms of the accounting side, I think I'm going to hand over to Justine. Justine Travers: Thanks, Chris. And Tom, clearly, the costs that we've seen in the first half of the year around this transformation and restructuring are outside the normal course of business. And putting them below the line for us really and hopefully for the market provides a much clearer and more transparent view of our underlying operating performance. It also makes it much easier to look at the comparability of our results across periods. And it is a very typical treatment of costs of this nature for Worley historically, but also if we looked at our customers and/or other peers that are undertaking similar programs of work to have treated them in this way. So we believe that is very comparable to what the industry would do, what we have done historically. And it is important that it does provide a more transparent view around our underlying operating performance of the business. Operator: Our next question comes from the line of Rohan Sundram of MST Financial. Rohan Sundram: Just one for me. Following on from John's questions around the tone of customer discussions. Take on board, there's a renewed buoyancy in the market. But Chris, just can you hear your thoughts on how that's translating into higher sole sourcing on the back of all of that? Robert Ashton: Well, it is. I mean what it is, is the customers that we have strong deep relationships with and have historically looked at sole sourcing is their capital -- is their confidence around investment returns, then it's leading to an increased level of sole-source work. And sole-source work is now up to 48% of what we do. And so we actually look at this very closely. And so you look at the percentage of sole-source work, it's increased compared to the prior corresponding period. And I think that's a great sign that the customer confidence is returning and the confidence they have in Worley in terms of supporting them. Operator: Our next question comes from the line of Ramoun Bazar of Jefferies. Ramoun Lazar: Just a couple from me for Justine. Just in terms of the treatment of the restructuring costs now below the line, how should we think about the seasonality in the business in the second half? Is that going to look more like what it did last year now? Justine Travers: Yes. Ramoun, we do expect the phasing to be broadly similar with what we've seen in FY '25. We know and traditionally have seen a strengthening in the second half. And so you can assume that that would be a similar profile to what we've had if you're looking at the underlying result, just consider that phasing broadly similar. Ramoun Lazar: Yes. Got it. And within that, are you assuming any benefits from the restructuring coming through in the second half out of that $100 million annualized number? Justine Travers: The $100 million, really we see as an exit run rate, and we see the real benefit of that coming through into FY '27. We will see a little bit into the second half as we start to see the translation of that cost come through that resetting of the cost base. But the $100 million is really a reset for FY '27 and should be considered in that way. Operator: I'm showing no further questions at this time. I would now like to turn the call back over to Chris Ashton, CEO, for any closing remarks. Robert Ashton: I just want to thank everyone for joining today. And I know over the next 4 days, 5 days, we've got a number of meetings with yourselves and others on the call or on the -- dialing in on the Internet. So look, we look forward to having the conversations, answering further questions after you've had an opportunity to digest what we presented today. Look, I do think that it is a strong first half result. And look, I look forward to -- Justine and I look forward to talking to you and hopefully being able to answer the questions that you've got. So we'll be connecting with you over the next few days and today as well. So thanks, everyone, for your time and look forward to meeting. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Better Collective Annual Report 2025 Presentation Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Better Collective Co-Founder and Co-CEO, Jesper Sogaard. Please go ahead. Jesper Søgaard: Thanks a lot, and good morning, and welcome, everyone, to Better Collective's Full Year 2025 Webcast. My name is Jesper Jesper Sogaard, Co-Founder and Co-CEO of Better Collective. Normally, our VP of Investor Relations, Mikkel opens the call, but as he is currently out sick, I'll have the pleasure of doing so today. I'm joined today by our CFO, Flemming Pedersen, and I will provide today's business update in connection with our full year report that was disclosed yesterday. Please follow me to the next slide. We ask you to pay attention to this slide where we display our disclaimer regarding any forward-looking statements in today's webcast. Please turn to the next slide. Here you see today's agenda. I'll start by providing a business update, including some of the highlights for Q4 and full year 2025. Whereafter Flemming will take you through some of the financials before handing the word back to me for the key takeaways. As usual, we'll end the call with a Q&A session. Please turn to the next page. Let's dive into the highlights of report that for the first time is a combined Q4 report and a full annual report as we have moved the full year reporting forward by several weeks compared to earlier years. Please follow me to the next slide. Before turning to the details of Q4 and the full year of 2025, I would like to extraordinarily to take a step back. Over the past decade, we have successfully navigated multiple structural shifts across technology, regulation and market dynamics. Today, new themes such as AI and the emergence of prediction markets are increasingly shaping the industry landscape. Against that backdrop, it's relevant to provide a broader perspective on how Better Collective has evolved to reach its current position and what lies ahead. Better Collective has been built over more than 2 decades of continuous evolution in a fast-changing landscape. Our growth has come through a combination of organic growth and a series of acquisitions that have expanded our capabilities, strengthened our market presence and significantly increased our scale. Over time, this has enabled us to build a comprehensive ecosystem positioned at the intersection of sports media, sports betting and casino affiliation. The industry we operate in has never been static. I still remember the early shift from Yahoo being the leading search engine to Google gaining dominance, which was an early reminder of how quickly digital audience and traffic dynamics can change. Since then, regulation, technology and user behavior have continuously evolved and each structural shift has required us to adapt our model. We started as a small local affiliate business and quickly recognized that scale was essential to survive, which led to our transformation into a leading global aggregator. Over time, we also saw the strategic importance of owning stronger brands and direct audience relationships and gradually evolved into a global digital sports media group, while remaining anchored in affiliate marketing as our core monetization engine. Strategic acquisitions have played a key role in this journey, enabling us to establish strong positions in what are now some of the most important global markets, including North America, U.K. and Brazil, all while navigating changing regulatory environments. In parallel, we identified early that paid media would become an increasingly important acquisition and monetization channel, which led to the acquisition of Atemi and the subsequent significant scaling within the group. In essence, external change has consistently driven internal evolution at Better Collective. This long history of adapting to shifts in platforms, regulation and market structure has made adaptability a fundamental and embedded characteristic of the company. Importantly, we do not look back to anchor ourselves in the past, but to extract lessons from it. Experience across multiple market cycles provides perspective and informs how we prioritize investments, develop products and prepare for the next structural shift rather than the previous one. Today, we operate a scaled global platform with a very large audience reach, diversified monetization and strong positions across both sports betting and casino affiliation, supported by leading sports media brands and long-standing sportsbook relationships. Our positioning at the intersection of content, audience and iGaming is strategically relevant in an ecosystem that continues to converge and evolve. Looking ahead, the landscape will continue to evolve through AI, new wagering formats, regulatory developments and shifting user journeys. Our focus is, therefore, forward-looking. By learning from the past while preparing for what comes next, we believe we're strongly positioned for the next phase of industry development, supported by our scale, M&A track record, diversified business model and unique position at the intersection of sports media and iGaming. Moving back to 2025. The year has been defined by disciplined execution and structural strengthening of the business. We simplified our operating model, enhanced scalability across the organization and delivered on the full EUR 50 million efficiency program. This focus was about building a leaner, more focused and more scalable platform for long-term growth. We delivered on our full year guidance despite significant external headwinds, Brazil regulation, foreign exchange movements and sports win margin volatility all impacted reported performance during the year. Navigating through those factors while maintaining high profitability demonstrates the resilience of our diversified business. We are adding new layers to our ecosystem, strengthening engagement, data capabilities and partner value. The development within AI is on most companies and management's agendas these days. Let me also address this and its implications on Better Collective. AI is one of the most significant structural shifts in the digital landscape in decades. For Better Collective, it is first and foremost an enabler. We have embedded AI across product development, content optimization, data analysis and commercial optimization. Playbook is a clear external example, while internally AI is improving productivity, scalability and execution speed across the group. At the same time, we take a disciplined view on potential structural risks. We closely monitor AI-driven changes in search and discovery. Importantly, we remain unaffected by recent shifts and our traffic and commercial performance continue to demonstrate resilience, supported by strong brands and diversified acquisition channels. Most of our revenue base is structurally resilient. Within publishing, the existing recurring revenue share is not exposed once users have been referred to our partners. which provides a stable earnings foundation. Our advertising revenues are likewise not directly dependent on search dynamics as they are primarily driven by audience scale, engagement and direct commercial relationships. Paid media is also structurally robust. As a performance-driven, highly agile acquisition engine, we can dynamically allocate spend across channels and platforms if traffic patterns or user journeys shift. This flexibility significantly reduces platform dependency risk. [ esport ] in turn is built on strong direct community engagement and brand loyalty, making it inherently less reliant on traditional search and discovery channels. The area with the highest long-term exposure is future publishing growth, particularly related to new revenue share NDCs and CPA-driven NDC growth, where changes in search, discovery or user behavior could influence acquisition dynamics over time. We do not underestimate this risk. However, we have successfully navigated multiple structural shifts in the digital ecosystem over more than 2 decades and our diversified audience mix, strong brands and scalable platform give us confidence in our ability to adapt to future changes as well. My intention is not to suggest that AI does not introduce risks, but rather to emphasize that we are proactively addressing them and closely monitoring the development. Any potential impact is primarily concentrated in specific areas of our otherwise well-diversified revenue streams. which limits the overall exposure at group level. Another important emerging theme is prediction markets. During 2025, prediction markets have emerged as a structurally important addition to the broader sports and event-based wagering ecosystem. For us, this is an expansion of the total addressable market. Prediction markets introduce new product formats and attract incremental user segments while overlapping meaningfully with our existing sports and betting audience. Given our position at the intersection of sports content and wagering, we're structurally well positioned to support this evolution. We already have commercial relationships in place and are collaborating with relevant players. It's still early days with only a limited number of platforms live, and we expect increased competition in the coming year, which typically strengthens the aggregator position. Overall, we see prediction markets as a natural extension of our core business with the potential to diversify revenue streams and expand long-term growth opportunities. Lastly, we look forward both as shareholders and as sports enthusiasts to what is expected to be the largest World Cup in history. Importantly, for us, it will be played across some of Better Collective's core markets. Beyond its global appeal, the tournament represents a significant commercial opportunity. Historically, major football tournaments provide strong acquisition tailwinds, and we expect 2026 to be no different. The World Cup is likely to drive elevated user acquisition across our platforms as well as meaningful reactivation of dormant users and increased activity across our existing player base. This combination of new customer intake and high engagement levels supports both revenue growth and lifetime value expansion. Given our strengthened position with broader revenue mix and scalable platform, we believe we're well positioned to capture the incremental activity associated with the tournament. I'm extremely proud of the organization and my colleagues for navigating through another demanding period of change with focus and discipline. And I look forward to returning to a year of renewed growth in 2026. With that, let us move to the usual webcast. Please turn to the next slide. Overall, we are pleased to report a strong finish to the year with underlying growth and record profitability. Group revenue reached EUR 94 million in Q4, corresponding to minus 2% year-over-year and plus 2% in constant currencies. We were negatively impacted by a lower sports win margin compared to the year prior. Normalizing the sports win margin to a similar level as the year prior, revenue growth would have been 7%. Group costs were down 8% year-over-year, reflecting the disciplined execution and continued harvesting of synergies from acquisitions. We delivered record EBITDA before special items of EUR 37 million, translating into a 39% margin and growth of 10% year-over-year. In Brazil, we continue to see good activity levels in line with recent quarters with revenue above our expectations. However, the market remains affected by the marketing restrictions, which continues to dampen our ability to send new customers to our partners. In North America, revenue share amounted to EUR 7 million in Q4 as our revenue share database continues to ramp up, making it EUR 17 million pure revenue share for the year versus our own expectation of EUR 10 million to EUR 15 million. Value of deposits reached a record level of EUR 820 million in the quarter, up 6% year-over-year and 13% quarter-over-quarter. This was achieved despite being -- we continue to see strong momentum in Playbook, our AI betting solution, and I look forward to scaling the product across the U.S. and into additional geographies and platforms. Please turn to the next slide. Let me briefly put the 2025 financial performance into a longer-term perspective. Looking at the full year, revenue declined from EUR 371 million in 2024 to EUR 337 million in 2025, corresponding to minus 9% year-over-year. EBITDA before special items decreased from EUR 113 million to EUR 102 million or minus 10%. Since 2018, we have delivered a revenue CAGR of 35% and an EBITDA CAGR of 30% -- while 2024 and 2025 shows a temporary slowdown in organic growth, this must be seen in the context of significant headwinds from external factors such as foreign exchange headwinds on revenue of EUR 9 million as well as the regulatory transition in Brazil, which impacted EBITDA negatively by EUR 22 million and lower sports win margin volatility of EUR 17 million. These factors implied a combined headwind versus 2024 of more than EUR 40 million on EBITDA in 2025. Please turn to the next slide. Let me now turn to what we see as important part of the next chapter of growth journey driven by innovation with Playbook and FanReach. Starting with Playbook, we successfully introduced our AI-powered betting solution in 2025, just ahead of the NFL season. The product is designed to integrate naturally into how sports fans already consume content and make decisions. We have seen strong early engagement with millions of bets sent to our partners. Importantly, Playbook enhances user engagement and improves conversion strengthen the monetization of our existing audience while also opening new avenues for geographic expansion and product development. We will continue to invest in product refinement and international rollout to unlock further scalability. On the FanReach side, this is central to our advantage ecosystem. FanReach combines our proprietary first-party data with advanced audience segmentation, enabling more measurable, scalable and precise media solutions for advertising partners. FanReach was launched firstly in the U.S., utilizing data from selected brands, currently reaching more than 50 million sports fans across our network. We are moving beyond traditional performance marketing and adding a broader media monetization layer built on audience ownership and distribution strength. Together, Playbook and FanReach expand our monetization stack, deepen engagement and reinforce the structural scalability of the business. They are key building blocks for our next phase of profitable growth. Please turn to the next slide. On this slide, we show our new guidance for 2026 and the medium-term outlook. For 2026, we expect organic revenue growth in the range of 7% to 12%. On EBITDA before special items, we guide for growth of 8% to 18% or EUR 110 million to EUR 120 million. This reflects growth with lower cost base, continued focus on operational efficiencies and an expected stabilization of external factors compared to 2025. We also plan to execute an annual share buyback of EUR 40 million, in line with our capital allocation priorities and are confident in the long-term value creation potential of the business. At the same time, we remain committed to maintaining net debt-to-EBITDA below 3x, ensuring continued financial discipline and flexibility. Looking beyond 2026, for the 2027 to 2028 period, we expect continued positive organic revenue growth and target an EBITDA margin in the range of 35% to 40%. This margin ambition is supported by scalability in the business model, a maturing recurring revenue base, especially in the U.S. and increasing AI enablement across products and operations. Furthermore, we expect continued strong cash conversion and net debt-to-EBITDA to stay below 3x. With that, let us move to the next slide and over to Flemming. Flemming Pedersen: Thank you, Jesper, and good morning to you all. Please follow me to the next slide as we dive into the financials. Let me start by bridging the Q4 revenue development in more detail. We started from Q4 '24 revenue of EUR 96 million. During the quarter, foreign exchange negatively impacted revenue by EUR 4 million. Sports win margin volatility reduced revenue by a further EUR 5 million, reflecting more player-friendly results compared to last year. In addition, the regulatory transition in Brazil impacted revenue negatively by EUR 3 million. In total, these external factors reduced revenue by EUR 12 million year-over-year. This was partially offset by EUR 10 million of underlying operational growth across the business, mostly driven by paid media, talent-led media and sports media. As a result, Q4 2025, revenue landed at EUR 94 million, corresponding to a minus 2% year-over-year and positive growth of 2% in constant currencies. The key takeaway is that the underlying business continues to grow, but reported performance in the quarter was impacted by temporary external factors. As these headwinds normalize, the operational growth becomes more visible in the reported numbers. Please turn to the next slide. Let me briefly comment on recurring revenue as revenue share remains the backbone of our recurring earnings model and supports visibility and cash flow generation going forward. Revenue share continues to account for approximately 3/4 of our recurring revenue base. In Q4 '25, revenue share amounted to EUR 41 million out of total EUR 55 million of recurring revenue. Looking to the North American market, historically, a larger portion of the revenue share income has come from hybrid deals with a meaningful upfront component. Over the past 2 quarters, however, we see a clear transition towards predominantly pure revenue share agreements. This represents a meaningful improvement in earnings quality as pure revenue share provides stronger long-term visibility and cohort value. For the full year, we outperformed our expectations in North America. We expected EUR 10 million to EUR 15 million in revenue share, but delivered EUR 22 million. Out of this EUR 17 million was pure revenue share. Importantly, this number would have been even higher in constant currencies, highlighting the underlying strength of the region. In short, North America is scaling with an improved revenue mix, strengthening the recurring revenue and compounding nature of our earnings base. Please turn to the next page. Let me now bridge the EBITDA development in the quarter. Lower revenue year-over-year reduced EBITDA by EUR 2 million, as I just spoke to. In addition, we deliberately increased paid media investment, which impacted EBITDA by EUR 5 million downwards. This reflects continued confidence in the long-term return profile of our paid media activities, where we, to a large extent, spend to harvest the revenue later through revenue share agreements. However, these effects were more than offset by EUR 10 million in cost reductions, driven by the execution of the EUR 50 million efficiency program and broader structural improvements across the organization. And a lot of these cost savings relate to the synergies from previous acquisitions. As a result, EBITDA increased to EUR 37 million in Q4 '25, representing a 10% growth year-over-year and the highest quarterly EBITDA in our company history. This clearly illustrates the operational leverage in the model even in a quarter with slightly lower revenue, external headwinds and increased growth investments, disciplined cost execution enabled us to expand profitability and deliver record EBITDA. Please turn to the next slide. Let me now turn to 2 of our main KPIs, net depositing customers and value of deposits. As expected, NDC levels in '25 were impacted negatively by the regulatory transition we saw in Brazil. The marketing restrictions on welcome bonuses continue to deliver -- continue to limit our ability to send new customers to partners in that market, which is reflected in lower reported NDCs. However, and importantly, Q4 '25 did not show a return to growth quarter-over-quarter of 9%. Also in Q4, value of deposits reached an all-time high of EUR 820 million, showing growth year-over-year of 7%. This is a very strong outcome, especially considering the regulatory headwinds in Brazil during the year. Deposit values are reported quarterly and are not accumulated, meaning this represents actual quarterly activity. The fact that we reached a new record despite regulatory constraints clearly demonstrates the strength and loyalty of the users that we have in the revenue share databases. In combination, the graphs illustrates that while new customer intake has been temporarily impacted, existing cohorts remain highly engaged and continue to generate increasing deposit activity. Furthermore, it signals that we are -- that we continuously manage to send higher-value customers to our partners. This supports the durability of our revenue share accounts and underlines the quality of earnings. Please turn to the next slide. Now let's focus on our funding position and our considerations regarding capital allocation. From a financing perspective, we also took an important step in 2025 that further strengthens our financial position. During the year, we signed a new EUR 319 million 3-year committed club facility with our banking partners, including an EUR 80 million accordion option as well as a new EUR 50 million dedicated M&A facility. This extends our financing maturity profile through October 28 and significantly enhances our financial flexibility. Access to long-term committed financing on attractive terms has been a structural advantage for Better Collective since the IPO in 2018 and has been a strong facilitator in our M&A strategy. It has allowed us to act with speed and certainty when strategic opportunities arise while maintaining a balanced capital structure and disciplined leverage profile. In a fragmented and fast-evolving industry, the ability to combine strategic M&A with stable financing is a clear competitive advantage. Moving to 2025. We guided free cash flow at the low end to be EUR 55 million and landed at EUR 38 million. The deviation was driven by short-term working capital timing effects of EUR 15 million shifting into 2026. We also invested in new significant partnerships in Q4, where we'll see the most of the upside from 2026 and onwards. These deviations are mostly timing and growth related in nature and do not reflect any structural change in the underlying cash generation profile in the business. Cash conversion for the year ended at 92%. Board of Directors and executive management has formalized our capital allocation framework, which is as follows: First, we prioritize deleveraging when net debt-to-EBITDA exceeds 3x. Second, we invest in high-return organic initiatives and selective value-accretive acquisitions. Third, we return excess capital to shareholders, primarily through share buybacks and secondarily through dividends. Overall, we believe this balanced framework supports our focus through many years. For 2026, the Board of Directors has decided on an annual share buyback of EUR 40 million, in line with this framework. Please turn to the next page as I hand the word back to Jesper for the key takeaways. Thanks. Jesper Søgaard: Thanks, Flemming. Let me conclude with the key messages. 2025 was a year of disciplined execution and structural strengthening of the business. We delivered on our full year guidance despite significant external headwinds. In North America, revenue share ramp-up exceeded expectations. Innovation accelerated with Playbook and the continued build-out of FanReach. Looking ahead, 2026 marks a return to growth. We expect the World Cup in men's soccer to be the largest in history and played across some of our core markets to act as a big catalyst. Lastly, prediction markets is expanding our total addressable market and is becoming a clear tailwind despite it being early days. I'm proud of the organization for navigating a demanding period, and we look forward to delivering renewed growth in 2026. With that, we are happy to take your questions. Jesper Søgaard: [Operator Instructions] Our first question comes from the line of Sebastian Grave of Nordea. Peter Grave: Congrats on a strong result. And also thank you for a very comprehensive presentation. Now it's encouraging to see that you expect to return to growth here in '26 and with further top line expansion beyond that. I know you don't provide concrete numbers on the midterm target, but I'm going to try to push my luck anyway here. So the 7% to 12% growth in '26 is led by, easy comparisons in Brazil and from sports margins. And you also see significant tailwinds from a strong sports calendar here in '26 and prediction markets, as you highlight, Jesper. So I guess my question is, is this, i.e., 7% to 12% growth, is this as good as it gets? Or do you also believe that you're able to reach similar growth levels beyond '26? Jesper Søgaard: Yes, it's a bit boring, but obviously, we will not sort of comment further on the targets for '26 and 2028. But looking at the coming years and also a bit to the second half of '25, where we have seen the underlying growth in the business, we really feel we are on track to deliver this growth. And we're sort of further out feeling confident about continued organic growth. But for us, it's too early to start to put numbers to the outer years. Peter Grave: I guess it's not a big surprise, but I tried at least. My second question is on the midterm margin guidance, which you also reiterate here, 35% minimum from '27 kind of big leap from the implied margin here in '26. So how do we get to that number? And I mean, if this is just a question about scalability, well, then I guess the implied growth rates you give here for '27 is quite upbeat? Flemming Pedersen: Yes. I think the guidance, Flemming here, I can try to answer that. The guidance that we give 35% to 40%, you can say, reflects, of course, the scale that we see in the business, mentioning Jesper touched upon some of the growth areas that we see with Playbook, the AI bot that we have launched, FanReach speaking into the advantage and increased CPM revenue. And then you can say the scale from that is, of course, also reflects our opportunities for investing further to mention one is paid media, where we also can, you can say, invest part of the increased revenue into further growth when we see opportunities and of course, also in other growth areas such as talent-led media, which comes with a bit lower margin. So I think the scale is one thing. And with these, you can say examples, we see a higher margin. Actually, in Q4, we saw a 39% margin. So it's a scale that will drive this on a much lower cost base that we have seen in past years. Peter Grave: Okay. And just the last question from my side on the EUR 8 million tax effects you bake into the guidance in '26. I guess it's fair to assume a similar effect on top in '27, given the delayed impact on sports betting taxes in the U.K. Now I guess my question is, is this a gross or a net number that you provide? Meaning do you assume any mitigating actions from operators such as lower odds, et cetera? Or this is just sort of a mechanic gross impact from higher taxes? Flemming Pedersen: It's a number that we have, I would say, tried to assess as a net number also with mitigating factors because there will likely also be market factors such as lower bidding prices within paid media in the Google auctions. And you can say, in general, likely, you can say, lower competition. So there are also counteracting factors where we have a good position. So this is a net number that we have tried to assess and also continue that into the outer year guidance. Jesper Søgaard: [Operator Instructions] Our next question comes from the line of Hjalmar Ahlberg of Redeye. Hjalmar Ahlberg: Just wanted to check a bit on -- if you look at the Q4 numbers here, we see that CPM and sponsorship saw good growth at least what I could see initially here. Just wanted to hear if for the CPM part, if you already see kind of positive impact from Advantage there or what drives the CPM improvement? Flemming Pedersen: Yes. So on the sort of CPM and overall advertising developments, yes, we are starting to see effects of optimized ad campaigns and formats that is sort of part of the Advantage ecosystem. And as we already -- as I alluded to in the speak, is that we now have launched here in '26, the FanReach part of Advantage. So yes, we are gradually incrementally seeing the effect of Advantage, which we also expected that, that would be the way we could tell it in the numbers, incremental and gradual development. Hjalmar Ahlberg: Okay. And also listening to the Playbook here, it sounds like you are getting ready to expand the product internationally here. Is this something you will do during the World Cup? Or is it a broad expansion or is it more gradual expansion in new markets? Flemming Pedersen: So the view we take on this is that we obviously look at core markets and where the product would be most relevant and have the biggest impact. And that guides decisions for the launch. And yes, we have obviously in mind that the World Cup is a good event to have a product like a Playbook out. So yes, we are assessing where we will see the biggest effect from launching Playbook and have the World Cup in mind. Hjalmar Ahlberg: And then just a question on your efficiencies here. So really strong progress in cost savings during the year. Do you see more efficiency from here? Or is it more that you have the new cost base now and then the next step is maybe more to invest in growth? Flemming Pedersen: I think we are, of course, constantly driving efficiencies throughout the business, and now we have a new framework. So this is what we will go with. And you can say the primary focus is now to scale revenue from here on that lower cost base. So hence, also why the higher margin guidance for the outer years. So it's -- yes, it's a constant work in progress, but I think the big chunk we have behind us. Hjalmar Ahlberg: And then just a final one. I don't know if you have a comment on that, but looking at the kind of seasonality for the year, I guess, World Cup means that Q2, Q3 could be a bit more seasonally stronger than normal. But if you have any flavor on the seasonal effect over the year, it would be interesting to hear. Flemming Pedersen: No, you're correct on that, that the World Cup will sort of support Q2 and Q3. And then as usual, Q4 will be the quarter with the highest activity for our business. Jesper Søgaard: I will now pass to the speakers for questions via the webcast. All right. And I'll be taking those. So yes, there in Danish, I'll try and just sort of get to the essence of the questions and read that out loud. Yes. And it has always been already been answered to some extent because it relates to the margin profile in '27 and '28 and the structural drivers. And essentially, I think we will not -- like Flemming covered that just before. So I'll move to the next question, which relates to the continued buildup of our revenue share database, in particular in North America, whether we can quantify how big a part of the future EBITDA growth in '26 to '28, which is expected to come from already existing users rather than new depositing customers. And no, we are not quantifying that. But I think as the value of deposits show, there is a very high quality in the database and players already there. So in general, a significant part of the revenue and earnings generated are stemming from our databases, existing databases. And then a last question. Elon Musk implemented a new policy on X, which limited gambling affiliation marketing. Please comment if you noticed any impact on your partnership with X for Playbook. And we have seen no changes. And with that, I think we are at the end. So thank you very much for showing interest in Better Collective, and we wish all of you a very nice day. Thank you. Bye. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good morning, and welcome to the investor and analyst call for LSEG's 2025 Full Year Results. [Operator Instructions] I would like to remind all participants that this call is being recorded. I will now hand over to David Schwimmer, Chief Executive Officer, to open the presentation. Please go ahead. David Schwimmer: Good morning and welcome to our 2025 full year results. I'm joined by our CFO, MAP; and our Head of IR, Peregrine Riviere. We have delivered another year of strong performance and rapid strategic transformation for the group. Revenues grew 7.6% with all businesses contributing positively and Data & Analytics accelerating. Our focus on driving efficient and scalable growth delivered 210 basis points of margin expansion, a little over half of that organic, taking full year EBITDA margins north of 50% for the first time. Adjusted EPS grew 16%, reflecting our disciplined execution throughout the P&L. We continue to invest in future growth with the Post Trade Solutions transaction in Q4. We continue to deliver strong cash conversion with GBP 2.8 billion of dividends and buybacks in the year. And today, we've announced our plan to execute a further GBP 3 billion of buybacks over the next 12 months. We see a great opportunity to invest in our own shares during this market dislocation. This strong performance is a direct result of the strong execution of our long-term strategy and the rapid transformation we're driving across our business. November's Innovation Forum provided insight into how we are innovating across LSEG as we deliver on our AI strategy. We are already seeing the fruits of that innovation. Our LSEG Everywhere AI data strategy is embedding our trusted data into the AI tooling of financial services. It's only been a few months since we launched our MCP server, but early demand has been very strong. I'll give you some numbers on that later. We're also innovating to capitalize on the accelerating pace of change in capital markets, building new platforms for growth in digital assets. We launched our digital markets platform last year and, at the start of this year, successfully piloted tokenized cash settlement via our new Digital Settlement House. The strategic partnership with 11 leading banks we announced at our Q3 results is accelerating growth and helping us unlock the multiyear opportunity in Post Trade Solutions, a great example of our strong customer relationships and partnership-led approach, creating unique opportunities for growth. Let's take a step back and look at our 2025 performance in the context of the multiyear delivery of our strategy. We have achieved a lot over the last 5 years. Financial performance has been very strong with organic growth [Technical Difficulty] improving significantly. [Technical Difficulty] all of our businesses. Across the whole group, we've driven significant revenue and cost synergies, built better products and better infrastructure, integrated the operations and unified the brand and culture. This is all still work in progress. And every day, we discover new ways to transform our business. But right now, I can see more growth opportunity in front of us [Technical Difficulty] trading, settlement and depository have huge potential for future growth. But let me take a step back. Right now, the market seems to be taking a view on the impact of AI on our business. We do not agree with it, and all fact-based evidence would indicate the negative market narrative is wrong. We feel as confident today about our products, our partnerships and our prospects as we ever have. [Technical Difficulty] entering into enterprise agreements, run some of the most rigorous procurement, risk and technology processes in any industry. They understand exactly what our products do, they know how their own workflow needs are evolving with AI, and they know the role of our data, analytics and infrastructure in their operations. [Technical Difficulty] heavily regulated and risk-averse customers are going to rely on outputs compiled from the public Internet. That is how much you should be worried about. But more importantly, let's look at the 98% of group revenues that are not from public data. I'll cover the rest of D&A in detail later. But in a nutshell, these revenues are derived from [Technical Difficulty] that are proprietary, used in regulated environments [Technical Difficulty] intelligence and particularly World-Check is an industry leader. Two things that are not well understood about this business. First, its value goes far beyond the thousands of official sources. Our customers make 200 billion checks a year across 700 million of their own end customers. And once anonymized and aggregated, we can use the decision data to improve our own detection and matching capabilities in a huge and constantly evolving content set. World-Check is the leading product in this space and we are able to continue to improve the product to extend that lead through what is in effect a massive and constant flow of customer contributions. Second, history is important. Customers need to justify decisions they made about counterparties going back decades, for example, in high-profile tax or fraud cases. We have all that history with the information that was available at the time. AI cannot create that past record for customers. And moving to Markets, 40% of our business. AI is a tailwind here, too, as more data consumption drives more insights, leading to more trading volumes and ever-growing demand for risk management. So our positioning is strong, and our strategy is working. I'll say more in a moment about our strong commercial and strategic progress and the opportunities we are seeing with AI. But first, I'll hand over to MAP to discuss our financial performance in more detail. Michel-Alain Proch: Thank you, David, and good morning, everyone. It has been a very strong year of financial execution for LSEG. So first, some headlines, and then I will unpack this all in more detail. Organic growth was 7.1%, slightly above the midpoint of our guidance and another year of organic growth above 7%. EBITDA margin improved by 110 basis points underlying plus another 100 from the Post Trade Solutions transaction. We delivered this performance through a significant improvement in our labor cost ratio. And this strong growth, combined with operational leverage, translated into EPS growth of over 15%. So that was the P&L. Now moving on to cash and capital allocation headlines. Capital intensity continues to trend down, as guided, but do note that we are still investing in our business at least twice the rate of our peers. The dividend is increasing by 15%, in line with EPS, and we doubled the rate of share buybacks in 2025. With the growth in cash flow and the reduction in share count, this translates into 14% growth in free cash flow per share, which is actually 60% over the last 2 years. In summary, we are growing our business strongly. We are investing in our future growth, we are generating significant free cash flow, and we are being very decisive and agile in our capital allocation. So let's cover revenue over the next few slides. On this slide, you can see that our growth is very broad-based with Risk Intelligence continuing its double-digit momentum and Markets growing high single digits against a huge year in 2024. FTSE Russell continues its revenue trajectory and D&A accelerated on 2024. As you know, I like to look at our subscription businesses as a whole, and here, we have achieved 6% of growth for the year, as we guided to. We will start with D&A in more detail on the next slide. We achieved good growth across all lines in D&A. In Workflows, we completed the migration from Eikon, the largest ever of its kind in financial markets. As a result, clients are using the platform more frequently, and we continue to innovate and improve it. In Data & Feeds, we maintain our strong momentum. We are adding significant new data sets, particularly in private markets, and we have launched our LSEG Everywhere strategy for AI-ready data. As David will cover, the initial uptake here is very strong. Our Analytics business is well advanced on its acceleration journey. In partnership with Microsoft, we have driven a strong acceleration through the Analytics API and have just launched the Model-as-a-Service platform with our first partner bank, Societe Generale, onboarding its own models. Overall, D&A is posting a 5% organic growth, accelerating versus 2024, as communicated during our half year results. Turning to the other subscription businesses, we continue to see strong momentum and healthy demand. In FTSE Russell, we have seen balanced growth between subscription and asset-based fees, and we expect the growth rate to improve again in 2026. Risk Intelligence had another very strong year. World-Check, which represent the bulk of its revenue, continues to innovate from its position as market leader, launching World-Check On Demand for real-time updates. This platform is increasingly deeply embedded in customers' regulated workflow. Our Digital Identity & Fraud business accelerated in 2025 with transaction volumes up 16%, and the launch of our global account verification platform. I will spend a little longer on this slide to talk about some new KPIs we are introducing for 2026, there will be an addition to ASV. And from 2027, we will report only these new KPIs and we will be retiring ASV. We are doing this to give investors more insight into our commercial progress and with measures that are less volatile than ASV. But let's come back to ASV. As you remember, I previously guided to 5.8% growth at the end of Q4, and we achieved a bit better than this at 5.9%. This reflects a very strong end to the year, which set up well for 2026. And now on the new measures. Before beginning, I shall tell you that they cover exclusively our 3 subscription businesses: D&A, FTSE and Risk Intelligence. We have given you the baseline here. Gross sales represents the annualized total amount of new business over the last 12 months, so not contract value but more annual recurring revenue across our subscription businesses. We performed strongly in H2 2025 with a rolling figure increasing around 11% over H1. On revenue retention, we already mentioned that this typically sits in the low to mid-90s depending on the product. We are formalizing that today at 92.4% on a consolidated basis, you can see that it's pretty much stable on H1. And finally, we are introducing a KPI that measures the level of innovation or newness in our product set, the new product vitality index, or NPVI. This measures the proportion of revenue from products that are new or enhanced in the last 5 years, giving you insight into how our investment into product is translating into revenues. Taken across our subscription businesses, this figure sits at a very healthy 24%, growing strongly against 2024 and H1 2025. A significant proportion of this relates to Workspace, as you would expect, and reflects the substantial enhancements to the customer experience that the new product gives to customer. In other business lines, this index sits more in the mid- to high single-digit range, which we expect to increase over time. Finally, we plan to give these KPIs, including ASV for 2026, twice a year as we see little benefit in reporting them quarter-to-quarter. Turning now to our Markets businesses. These are incredible strong franchise, which I believe do not get the attention they deserve, and they continue to deliver exceptional performance year in, year out. In Fixed Income, as I have already reported, Tradeweb had another very strong year with continued high levels of activity across all main asset classes backed up by great execution. And in Foreign Exchange, we recorded our best performance in recent years with 7.5% growth. In OTC Derivatives, our Post Trade businesses went from strength to strength, and David will detail them in a few minutes. Finally, and for ease of presentation, we have shown Equities on this slide with some other lines from Post Trade. Our Equities business had a solid year with revenue up 5.1%. We launched our Private Securities Markets with the first transaction taking place right now, and we also went live with our Digital Markets Infrastructure, built in partnership with Microsoft. So now on to EBITDA and the rest of the income statement. We translated the 7.1% organic top line growth into 11.8% growth in adjusted EBITDA, 14.3% growth in AOP and, finally, 15.7% growth in EPS. And as you can see from the main table, EPS growth was 19.4% on a constant currency basis. This is truly operating leverage at work, plus very good control in financing, tax and our share count. Let's take each of those levers to improve earnings in turn. Number one is cost control with total OpEx up only 3.5%, half the rate of revenue growth. Within this, you can see that we have really managed third-party services very effectively, down 11.6% year-on-year. This is a core part of our labor strategy. Total headcount is roughly stable, a small decrease of 700, with ratio of internal employees rising to 75%, driven mostly by engineering. As previously mentioned, this is not just about cost. We have seen significant upskilling and improvements to productivity as we build a true engineering culture. As usual, we show the margin improvement graphically on this slide. Once you adjust for FX at either end, the improvement year-on-year is 210 bps. 100 of this relates to the SwapClear revenue surplus agreement, and that leaves 110 bps of underlying. Actually, the real underlying improvement was 140 bps, taking into account the minus 30 bps of the disposal of our Euroclear stake and its related dividend income stream that ceased. On net financial expense, we saw a slight reduction year-on-year. The underlying position was broadly similar. But as reported at H1, the numbers include a GBP 23 million credit from the bond tender offer we completed in March and a one-off gain of GBP 12 million following the discontinuance of a U.S. dollar net investment hedge. We currently expect net financial expense to be in the GBP 260 million to GBP 270 million range for 2026, reflecting the effect of refinancing existing low coupon debt in 2025 by higher rates in 2026 and, obviously, the new buybacks announced today. On the next slide. Our tax rate came in at the lower end of our guidance range, and we expect the same range for 2026. So if you take all of those lines together, this is giving 15.7% growth in AEPS for the year, more than double the rate of organic revenue growth. Over the last 4 years, we smoothed out some FX impacts along the way. That's a steady compound growth rate of 11.5%. And as I said last year, we expected nonunderlying costs to come down in 2025, and they did. Integration costs fell by 41% as we came to the end of the formal Refinitiv process, and we expect them to come down again in 2026 as the other areas of restructuring continue to reduce. Now turning to cash flow. This continues to be another highlight of the business model. We posted a record free cash flow of GBP 2.45 billion. As I'm sure you remember, we guided at, at least GBP 2.4 billion at constant rates. And we beat that at current rates, absorbing the current weakness of the dollar. We are posting this very strong result despite a negative variation of working capital of GBP 400 million. There are three main reasons for that. First, a reduction of around GBP 90 million of the pay accrual for our SwapClear partners following the reduction of the revenue share; second, an GBP 80 million reduction in creditors related to the net treasury income, reflecting lower balances and interest rates; and third, we triggered around GBP 150 million of payments that we've made earlier than usual to suppliers to crystallize better procurement conditions before year-end. Anyhow, going forward, typically a working capital outflow of GBP 100 million to GBP 150 million is a safe assumption to model. Given the ongoing buybacks, this 12% growth in free cash flow translates into 13.6% growth in free cash flow per share. Turning now to capital allocation on the next slide. Against the GBP 2.4 billion of free cash flow, we deployed GBP 3.5 billion across shareholder returns and M&A activity. Total dividends were just over GBP 700 million, and we are proposing a final dividend of 103p today, up 15.7%, in line with our EPS growth. We have deployed a net GBP 700 million on the Post Trade Solutions transaction that I already mentioned. And finally, we have had a record year for share buybacks with GBP 2.1 billion completed in the year. This demonstrates our very active approach to capital allocation and reflects our strong view of the deep value inherent in our own shares. Even with this very active year, we ended 2025 with leverage at 1.8x net debt-to-EBITDA, still slightly below the midpoint of our target range. So now let's look forward to 2026 and beyond. We are very well positioned as we enter 2026 with a record fourth quarter for gross sales in our subscription businesses and very healthy volume growth already at Tradeweb and our Post Trade businesses. We are guiding to organic revenue growth of 6.5% to 7.5%, the same as in 2025, but importantly, with a steady acceleration in our subscription businesses as I have mentioned before. Within this, we also expect our D&A business to accelerate. On margin, we expect 80 to 100 bps of improvement on a constant currency basis. So if you take the midpoint, 90 bps, you will find 60 bps to complete the 250 bps improvement that we committed to for '24, '25, '26 and an extra 30 bps, which comes from the further decrease in revenue surplus share terms at SwapClear. For CapEx, the steady downward trajectory in intensity will continue, and we are targeting around 9.5% for 2026. And finally, we see this all translating into at least GBP 2.7 billion of free cash flow. And as I mentioned earlier, the tax guidance remains unchanged at 24% to 25%. On this slide, I want to take a slightly longer-term view on how our cash generation and capital allocation has developed over the last 4 years and into 2026. The most important message here is how purposeful and consistent we have been in deploying capital to build a better business. We have maintained high levels of capital intensity to invest organically in the business. We have grown the dividend strongly. We have done regular bolt-on M&A to strengthen our offering to customers. And then, when appropriate, we have returned surplus capital through share buybacks. This approach has supported strong top line growth, more innovation, improving margin and strong shareholder returns. Our plan for 2026 continue that consistency. CapEx will be pretty consistent as an amount, but reducing to around 9.5% of revenue in terms of intensity. Free cash flow will grow strongly to at least GBP 2.7 billion. Dividends will continue to go up in line with earnings. And we remain active in our search for good M&A targets depending on fit and value. And then today, we announced a further GBP 3 billion buyback over the next 12 months. So you can assume, given we have already done over GBP 400 million this year, that there will be a total of around GBP 3 billion in 2026, and then we will complete the new commitment in early 2027. And finally, we are updating our medium-term guidance today, so I mean from 2027 to 2029, after several years of strong growth and margin delivery. On revenue, we are confident of mid- to high single-digit growth, including acceleration in our subscription businesses. So after the 6% reported in 2025, you can think of it at around 6.5% for 2026, heading to 7% for 2027, as I mentioned last year. On EBITDA margin, we will carry on improving our productivity, and we are now guiding to a cumulative improvement of circa 150 bps over the period 2027 to 2029. We will drive this through continued strong revenue growth, investment in technology and other ongoing operational efficiencies, but while allowing room to reinvest in future sustained growth. On CapEx, we expect intensity to come down to circa 8% in 2029. So think of that as the absolute CapEx figure staying relatively steady at GBP 900 million, GBP 950 million while revenue continues to grow. And then finally, on cash flow, we are moving to a free cash flow per share metric, and we are guiding to double-digit compound annual growth in this important figure for the years to come. And now I will hand over to David to take you through our strong strategic progress. David Schwimmer: Thank you, MAP. Let's start with the obvious topic, AI. As we discussed at the Q3 results and the Innovation Forum, we're benefiting from our unique position at the forefront of AI-driven change, and we are excited about what that means for our customers, our people and our future growth. You've seen these three pillars before: trusted data, transformative products and intelligent enterprise. Over the next few slides, I'll update you on how we're bringing this to life today for our customers and our organization. We have a great starting point, and everything we are doing is only making us stronger. As a reminder, roughly 90% of our Data & Feeds revenues come from proprietary data and solutions. Our customers are using this data to power business-critical activities in highly regulated environments where accurate, timely, trusted data is nonnegotiable. It is often deeply embedded in transactional workflows. Our breadth and depth are unmatched. Alongside proprietary data sources and exclusive licenses, we also have a network of more than 40,000 contributors proactively contributing data, continuing to enhance the value of our products through strong network effects. The result is comprehensive industry standard data that we are constantly updating. That puts us in pole position to take share and drive growth as customers are able to interrogate and analyze more data at speed using AI. As I said at the beginning of the call, our customers can see that our solutions are more valuable in an AI world. In the fourth quarter of last year, global investment banks and asset managers, all highly sophisticated institutions like Citi, Bank of America and Standard Chartered, signed GBP 1.9 billion of long-term data agreements with LSEG. These organizations are securing their access to our data for up to 7 years invariably in contracts that step up in value over time. And they span a range of different segments: global investment banks, commercial banks, alternative investment firms. We meet their needs and they are confident we will continue to do so across Workflows, Data & Feeds, Risk Intelligence and FTSE Russell. Only LSEG has this breadth of offering. It is a perfect demonstration of why these businesses are so valuable together. The demand for and consumption of data is accelerating, and we are facilitating that growth. The history of data consumption growth is the history of technological advancement, the Internet, fiber networks, mobile, the cloud and now AI. The chart on the left-hand side shows how the amount of data or messages coming through our real-time data feed continues to grow at pace, exceeding 15 million new data points a second in December. This represents a 4x increase in real-time data over our network in the past 10 years, a trend that we expect to continue. With our direct connection to nearly 600 exchanges and venues, and our ongoing investment in technology and capacity, we are strengthening our market leadership. I often call this business the market infrastructure for all market infrastructure. It is live data delivered over our own infrastructure. AI does not and cannot replicate or replace this. If anything, it creates more demand for this data. On the right, you can see the demand for our Tick History data, an evolving data set currently spanning 100 million instruments over 30 years. It's proprietary data that links today's price moves with those of the past. This is a critical point that people often don't get. This data is valuable because it ties 30 years of market moves to the present day. And with hundreds of billions of new data points added each day, without constant updating, this Tick History becomes less and less useful. We have the past, and we have the present. That is what creates the value. No one else has the past like us, and we are the leading provider of the present. Customers find this combination highly valuable with over 5 million customer requests a month. I'll say it again, AI does not and cannot replicate or replace this. It will just drive more demand, customer demand for data that is accurate, up-to-date and comprehensive, verified and auditable is significant. That is where LSEG sets the standard. And by making it easier for customers to access and consume this data through new cloud distribution channels or AI partnerships, we're likely to sell much more of it. And we are only at the beginning of that journey. Increasingly, customers want to use our data in AI applications, opening up a new distribution channel. We're embracing that through our LSEG Everywhere strategy, delivering AI-ready data to any environment in which our customers want to work. Since we last showed you this slide, we've added a new partnership with OpenAI, becoming the first financial data provider to enable customers to access their data through ChatGPT. You should expect us to enter into further partnerships in 2026 and beyond where there is customer demand and strategic logic. These channels have only recently become available, and we are seeing very strong customer interest and engagement. Over 60 financial institutions have connected to our MCP servers directly or via one of our AI partners, connecting hundreds of users. And we have a strong pipeline of customers awaiting connection. Many of these users are new users at existing customers, by which I mean the bank or asset manager already had an LSEG data license, but these particular teams or individuals were not users of our data, proof that our AI partnerships are increasing reach within existing customers. Our AI partnerships are also expanding our distribution footprint, attracting new customers through the accessibility and ease of natural language. Already hundreds of prospective customers have attempted to access our data via our AI partners. Since no one can access our data without an LSEG license, this is creating valuable sales leads. Once connected, customers are engaging with our data and content on an ongoing basis, driving rapid growth in data consumption through our AI partnerships. This is a great start to what we expect to be an important distribution channel for our data and also a natural mechanism for cross-selling. As we make more of our data available via MCP, the user, whether that is a human, a model or an agent, will naturally discover the full breadth and depth of our data across Data & Analytics, Markets, FTSE Russell and Risk Intelligence. We're moving quickly down this path, investing in our AI-ready data and making more of it available through MCP connectors and multi-cloud environments. We have a large pipeline of data coming to MCP, as you can see on the left. We're also supporting customers in their migration to cloud-based alternatives, and that is driving meaningful new sales and displacements. Platforms like Databricks and Snowflake are helping us close big new contracts and drive increased sales of some of our most popular products like DataScope. And we keep investing in expanding the data we offer, whether that's in low latency feeds, ETF data or private markets. Turning to the second pillar of our AI strategy, transformative products. The success of the migration to Workspace means our customers are now in a modern, modular, customizable platform where we enhance functionality week in and week out. That gives us a strong foundation from which to launch transformative AI-enabled products that bring speed, accuracy and conviction to customers' workflows. As a reminder, 70% of Workflows revenue comes from trader licenses and activity. These users, humans today, maybe agents tomorrow, need real-time data, a network community and integration with a range of pre- and post-trade tools. This is regulated workflow with transactional features embedded. And to address a question that comes up from time to time, what if the number of human traders is significantly reduced by AI, could that hurt our Workflows business? We don't see that happening. But also remember that over many years, our Workflows business has been moving away from a per seat model towards one focused more on data consumption or enterprise agreements. And also if the scenario is that human traders are replaced by AI agents, then each agent will effectively be a licensed LSEG customer. In an AI world of agent-driven workflows, we will have more users consuming more data. Workspace is getting better and better with hundreds of updates every year. To name a few recent enhancements, we extended trading capabilities through the expansion of Advanced Dealing. We streamlined banker workflows with the integration of DealWatch. And we enhanced our leadership in news with a dedicated app for Wall Street Journal and Dow Jones News. This is driving real, measurable improvements in engagement. As you can see on the right-hand side, investment management and trading users are accessing roughly 25% more applications than a year ago. Let's turn now to the Microsoft partnership. We made a lot of progress in 2025, and that pace of delivery continues to accelerate. On Workflows, to continue from the previous slide, our Teams-based collaboration tool, Open Directory, is live with accounts across 3 customer communities: FX, commodities and execution. And we have more than 50 accounts in our onboarding pipeline. We're also piloting natural language functionality in Workspace interoperable with Teams and other Microsoft products. And Workspace Deep Research provides extensive AI-driven research and analysis, leveraging the full power of Workspace data. We expect to roll out both AI tools in the first half. In Analytics, we've seen great traction and revenue growth since launching the API with over 50 customers adopting the platform. And just a few days ago, we launched Model-as-a-Service with Societe Generale as the launch partner distributing its own models through our API. We're seeing great progress in Data-as-a-Service or DaaS. We are accelerating the migration of data into the new integrated architecture and expect to have almost all data sets onboarded by the end of the year. This is increasing our speed to market for new products and driving significant customer demand to access these data sets, whether via Fabric or other platforms like Snowflake and Databricks. And last point, we have launched our Digital Markets Infrastructure powered by Microsoft Azure, another growth opportunity as tokenization takes off. Turning now to the final pillar of our AI strategy, deploying AI across our own business, accelerating innovation and improving customer outcomes. I've mentioned before that we are resolving customer queries much more quickly and efficiently through our adoption of an AI-powered question-and-answer application. In December, we made that tool available directly to customers and has had significant traction already, and it will only get better. Adoption of AI-powered workflows is also driving improvements in efficiency, quality and timeliness of data ingestion. We spoke about this at November's Innovation Forum, 9x faster content extraction, 52% reduction in data quality issues and 11% increase in productivity of our engineering teams. This all contributes to the ongoing margin expansion that MAP highlighted earlier. I'm going to turn now to our Markets businesses. You've heard me say this before, but the whole premise of LSEG is this. In financial markets, data has become infrastructure. Access to data is just as essential as access to trading infrastructure. That's why these businesses belong together. Electronification of markets, growth in data-driven decision-making and more sophisticated risk management are all blurring the lines between markets and data activities, deepening their interdependency. This is driving multiyear structural growth in our transactional businesses, delivering a 5-year CAGR of over 13%. The Markets business delivered further strong growth in 2025 with double-digit growth in clearing revenues across interest rate swaps, FX, CDS and repos. Tradeweb also extended its leadership in trading of interest rate swaps, increasing its share by 180 basis points. Our FX venues saw their strongest volumes ever. There's sometimes a misconception that growth across our Markets platforms just happens. Nothing could be further from the truth. The growth we're delivering today is the result of innovation and customer partnership going back years, often decades. We build solutions that solve customer pain points and meet their critical needs, and we become deeply embedded in their core businesses. In that vein of innovation and customer partnership, we're innovating rapidly in digital markets, building the transaction and settlement infrastructure our customers will need as they increasingly adopt digital assets and tokenize traditional asset classes. As you can see in the lower right quadrant of the slide, we are doing a lot in this space. But it is a big topic, so we will tell you more about it later in the year. Another good example of our innovation and partnership in Markets is our success in the clearing of OTC products. The growth in this business over the last 15 years is extraordinary, a threefold increase in member banks, a 200-fold increase in clients and tenfold growth in notional value cleared each year to roughly $2,000 trillion. We have become the global clearing destination of choice for interest rate swaps, FX and CDS. Now in partnership with 11 global banks, we're going after the opportunity in uncleared derivatives, which is roughly the same size as the cleared space. Our members and clients want to manage their whole book in one place, bringing efficiency to their capital and margin requirements and materially simplifying and standardizing processes. We are uniquely placed to do that given the assets we have built and brought together under one roof, and we're entering 2026 with really good momentum. Revenue in Post Trade Solutions is growing double digits, we're adding new customers and the network is expanding. We're driving strong growth and building platforms for the future across our business. We've also integrated our products and platforms for our customers' benefit. This dynamic exists clearly in our data flywheel. The data we generate from our own markets infrastructure feeds into our D&A business. helping customers make better informed decisions when they trade, therefore, creating more data. Second, Workspace is becoming the fully integrated workflow through which customers can access many of our services, not only for all D&A data but now also for FTSE Russell tools, FX trading, LCH data and, in the next few months, Tradeweb. And we've established a powerful end-to-end ecosystem in FX, providing a front end in Workspace linking to the execution venues and straight through to our clearing business with FX hedging capability for Tradeweb and our data and benchmarking content adding incremental value along that trade life cycle. We have similar connectivity in swaps given the customer trust in the Tradeweb and SwapClear franchises. I spoke earlier about the strong demand we've seen for our multiyear data access arrangements. Those integrate services from across our business, from Data & Feeds, Workflows, FTSE Russell, Risk Intelligence and Analytics. And they demonstrate the competitive advantage provided by our full-service business model. As we've said before, big, sophisticated institutions want to do more with fewer partners. You can see that in the success of our LDA agreements. Through our unique model, we've positioned our business to have deep moats and highly recurring revenues in areas of growth. Our diversification across products, customers and geographies gives our business model an attractive combination of growth and stability that performs well in environments like this. Despite big swings in capital markets and the global economy in 2025, we continue to deliver strong and consistent growth, and we expect more of the same in 2026. So to wrap up, we have achieved another year of very strong financial performance, driving continued top line growth through significant investment in our products and a consistent focus on partnership with our customers. LSEG Everywhere and other innovations like Open Directory, Post Trade Solutions and our Digital Settlement House are establishing platforms for future growth. Through the transformation of our systems and the use of AI and other technologies across LSEG, we continue to deliver material operating leverage. And we are allocating capital in a thoughtful way to grow the business, drive innovation and return surplus capital to shareholders. We're very excited about the opportunities ahead of us. With our leading trusted data, ongoing investment in product and the strength of our customer relationships, we are very well positioned for continued growth. And with that, I'll pass to Peregrine for Q&A. Peregrine Riviere: Thank you, David. Before we start the Q&A, can I please ask you to restrict yourself to one question. We plan to wrap up at about 11:30. Hopefully, we'll get through them all. But if we don't, please follow up directly with me or Chris later today. Thanks. Operator: [Operator Instructions] And your first question comes from the line of Tom Mills from Jefferies. Thomas Mills: Thanks for the helpful new disclosures, and that's my question. At a recent conference, the CEO of S&P said of the AI LLM platform, I'd say that our clients are getting additional value by being able to use our data in more ways, more ways they use it, the more value it creates and the better opportunity for value-based conversation at renewal. And we talk to those customers. We've also seen really nice uptick in demand for add-ons and that's something that's helped with net new revenue. I think that ties in well with the content you provided on Slides 31, 32. But I'd be curious to hear, you touched on the point about improving the opportunity for value-based discussions at renewal. And any uptick in demand for add-ons that you're seeing via the partnership so far? David Schwimmer: Sure, Tom. Thanks. So for now, as you would expect, we are focused on adoption and just seeing the customers sign up and get access to this and seeing the usage grow. And that, as we mentioned on that Page 31, is growing very quickly, and we're really seeing a pretty significant and intense engagement there and, frankly, kind of day by day. So I think, over time, the really significant opportunity here is in the context of consumption-based pricing and really charging the customers over time for usage. And for now, we're continuing to focus on our, I'll say, traditional subscription model. But as we move over the course of the next year plus to more of a hybrid model, which is keeping the subscription, we think the subscription model is very attractive and very important, but incorporating into that the consumption-based pricing as well, that will be a very attractive way of capturing that kind of dynamic. And I mentioned this earlier in my prepared remarks, but the fact that you have a combination of humans, models and agents consuming this data, it's, I think, pretty intuitive for you all to recognize that when an agent or a model is consuming the data, they tend to consume a lot more of that data than a human might. And we've said in the past that humans barely scratch the surface of the amount of data that we have. So that's another angle here just in terms of as usage shifts to more AI-driven consumption, as we shift our model to more consumption-based pricing, we see that as a very, very attractive trajectory. Maybe actually just... Peregrine Riviere: Sorry, hold on a second. David Schwimmer: Just one other point I want to add, and I touched on this earlier, but I think it also answers your question, kind of captures this dynamic, which is I've described the AI models combined with the MCP server as a very effective cross-selling machine. And the model is not asking for data from a particular data set. The model is asking for answers to a question. And if that question can be answered by extracting data from multiple different data sets that we are making available through the MCP server, that is a great angle as well just for additional access, additional sales of additional data sets that the customer might not have originally known that we even had. So that's another aspect of this. Now on to the next question. Thank you. Operator: And your next question comes from the line of Hubert Lam of Bank of America. Hubert Lam: I just got one of them. So how should we think about pricing and ability to keep your customers? Will we expect more competition in the future from MCP? I assume MCP makes it easier for users to switch between different data providers. So would it be harder to raise pricing in the future? And would there be more risk on bundling data contracts now that users have more choice, more flexibility as to who they want to consume with? David Schwimmer: Hubert, so we see a very consistent pricing environment this year relative to last year. And I think it's about the quality of the data. If you think about the new AI channels and MCP as just another way of accessing the data, that's great for us. That doesn't mean that it is an environment where we're seeing incremental pressure on the pricing. The quality of the data remains the same. The, in some cases, proprietary nature of the data means that no one else has access to it. And so we see this as a way of accessing more users within existing customers and accessing new customers as well. And as I mentioned, from a pricing perspective, we're seeing a very consistent dynamic this year as we have seen last year and the year before. Operator: And your next question comes from the line of Arnaud Giblat of BNP Paribas. Arnaud Giblat: So my question is on capital returns. So you've announced a GBP 3 billion buyback. That pushes up your leverage ratio perhaps towards the end of the year towards 2.0x, 2.1x net debt to EBITDA. So how should we read into this? Are you still -- I suppose you are leaving yourself the opportunity to step in and do further bolt-on acquisitions. My question is just how are you seeing any potential dislocation in valuations in private markets? We've seen some significant shifts in public markets with data and software companies coming up quite a lot. Are we seeing the same thing in private markets? And perhaps does that create opportunities for you to step in, in the near term and add some more content inorganically to your platform? David Schwimmer: Thanks, Arnaud. Maybe MAP will touch on the first part of your question. I'm happy to take the second part. Michel-Alain Proch: Yes, sure. On the buyback, you're absolutely right. We have coined GBP 3 billion in order to do two things. First, having a true increase into the return to our shareholders on the basis of the inherent value that we see in our share. Remember, 2 years ago, we did GBP 1 billion; 2025, GBP 2.1 billion. And here, we're talking about GBP 3 billion. And by doing this GBP 3 billion, and you've made the calculation right, taking into account the dividend and the second part of the Post Trade Solutions, okay, altogether, this will bring us to 2x net debt-to-EBITDA by the end of 2026, so which will allow us to keep firepower for M&A that fit in terms of strategic alignment, obviously, and value. David Schwimmer: And Arnaud, to your question about sort of the state of the markets. Yes, there's obviously been some dislocation. There's clearly some stress amongst some of the private equity holders out there. And you should expect us to always be evaluating opportunities. And nothing to talk about near term, but as MAP mentioned, we are always evaluating opportunities that could make sense in terms of our both strategic fit and then attractive financial returns. And I think the buyback balances that appropriately in terms of an appropriate return to our shareholders while landing at that 2x net debt to EBITDA and maintaining the right kind of flexibility going forward. Operator: [Operator Instructions] And your next question comes from the line of Enrico Bolzoni of JPMorgan. Enrico Bolzoni: I had one on EBITDA margin, please. So it looks like you're clearly doing more than what you initially thought. I remember from calls 1 year ago or so saying that, at some point, EBITDA margin would reach a ceiling because, clearly, there's a need to reinvest in the business. And here we are with a new set of targets that actually guides us towards further improvement. So I was keen to hear your thoughts on whether you think this is just driven by the operating leverage and revenue accelerating, or you found more ways to cut cost. And perhaps, does this new target include any meaningful benefit from the deployment of AI within the organization? David Schwimmer: Thanks, Enrico. I don't think we've ever said that we were planning to hit a ceiling, but I'll let MAP address that. Michel-Alain Proch: No, no, but I understand what Enrico is saying. So just a reminder for everybody, we committed ourselves in November 2023 of an increase of margin of 250 bps. 2026 is the third year of this plan. We are delivering the 250 bps. And on top of that, we have 130 coming from our Post Trade Solutions. So 380 that we will have delivered for the period '24 to '26. Now what we've said is, going forward, because there was some question about what about after '26, that going forward, due to the operating leverage that the group has, I mean, building once and distributing many, obviously, this operating leverage, we can crystallize it into the margin or having a balance between the margin and reinvesting into future growth. And what you see, Enrico, is 150 bps by 2029 is exactly that. It's the balance between operational efficiencies that we are harvesting, our natural operating leverage, so plus-plus, okay, and the investment we make into talent and technology for future growth. And to answer the second part of your question, the answer is yes, you're right. We will crystallize in this 150 bps, you have indeed the financial consequences of what we do with AI within the company, particularly on our backbone and our -- and the ingestion of data. Operator: Your next question comes from the line of Andrew Lowe of Citi. Andrew Lowe: I have one on Tradeweb, please. Would you be willing to give an indication of how much the Tradeweb-generated data sets account for your Data & Feeds revenues? And then whether any of those data sets are exclusively distributed by LSE? David Schwimmer: Andrew, I don't think we have broken out and I don't think we intend to break out the amount of the Data & Feeds revenue that comes from Tradeweb. I can tell you that some of it is exclusive and some of it is nonexclusive. But I would also mention that, that is one of several different areas across the group, where we have very strong linkages between Tradeweb and the rest of LSEG. We've talked in the past about the benefits both to Tradeweb and to FTSE Russell from the usage in FTSE Russell indices of Tradeweb pricing, and that flows both ways. We've used -- I'm not sure we've talked about this in the past, but Tradeweb has benefited from some of our middle and back office functionality in India and in other places. We, of course, have the straight-through processing, if you will, from the Tradeweb swap execution facility into SwapClear. We've got the FX execution into Tradeweb. So a number of different areas. And then maybe the last thing I should just touch on is that over the course of the next few months, we will be plugging Tradeweb access into Workspace, which is yet another significant opportunity that should be particularly attractive for Tradeweb users. Operator: Your next question comes from the line of Ben Bathurst of RBC Capital Markets. Benjamin Bathurst: My question is on the new medium-term guidance where you're pointing to subscription business acceleration, which I think is like perimeter change versus the D&A revenue growth acceleration you've previously called out and are, in fact, restating again for FY '26. I just wondered, could you elaborate a bit on the decision to make that change and perhaps make a comment on expectations for D&A growth contribution to that total subscription business acceleration you're talking about? Michel-Alain Proch: Sure. So I mean, the reason why we're looking at the subscription business altogether is mainly for 2 main reasons. The first one is it's the same subscription model, okay, which are governing the 3 divisions. And the second, as it was presented in the slide, they are more and more intertwined. And we have true synergies in between the 3. LDA that David was mentioning at the beginning of the call is the obvious example. So now on the medium-term guidance and for the subscription business, I hope you got it from my remarks. What we expect in there is we posted 6% in '25, circa 6.5% in '26, going to 7% in 2027. And on this, obviously, D&A will be accelerating, too. I mean, just to be clear, due to the size of it, it's the main lever for this acceleration, for sure. And if I may just add one more thing, which is you see this slide, I don't remember it was 31 or 32, with this adoption of MCP. So you see that it's extremely strong and we are concentrating of usage. So for sure, AI can be an accelerator of this trajectory that I just mentioned. You see what I mean. But I mean, it is still the early days. We just switched on the MCP just before Christmas. So you see it's not a long time ago. So it's a bit early to size it. But for sure, it's in the plus category, if you want. Operator: Your next question comes from the line of Julian Dobtovolschi of ABN AMRO. Julian Dobrovolschi: You've mentioned that a large portion of your data sets are already available now via the LLMs such as Anthropic, Databricks and OpenAI and a bunch of others. I was just curious to know, what percentage of LSEG's total data universe will ultimately be available through the AI-native channels? And if there is a view to keep some of this fully in-house for various reasons? David Schwimmer: So I would expect that we are going to be making, and we've got a slide in here that touches on this, I would expect that we're going to be making as much of our data as possible available through these distribution channels and through MCP. And just to be really clear, the implication of your question is that we might keep some away to somehow protect it. But again, to be really clear, providing access to a model through MCP does not mean that the model then can get that data and never need it again. And so we can provide access through to MCP to a model and continue to protect and maintain the value and the integrity and the proprietary nature of that data. This seems to be kind of a common misunderstanding that people have. So we view this as a great channel to distribute our data, whether that's proprietary data, whether that's a linkage of multiple different data sets. And the fact that we are making it available through MCP, think of it as a very structured, disciplined gateway, and we can actually put our usage meter on top of that as well. So again, I understand your question, but I just want to make sure that I'm clarifying. There should be no misinterpretation of making data available to a model through MCP as somehow vitiating the value of that data or the proprietary nature of that data. Operator: Your next question comes from the line of Benjamin Goy of Deutsche Bank. Benjamin Goy: One question, please, on your LSEG data access agreements. You mentioned almost GBP 2 billion signed in Q4. But can you give a bit more qualitative color on these agreements, whether it was Q4 or more recently signed? Do you see any change in customer dynamics? Do you see put options or breakup clauses in those contracts now or basically same contracts as you had a year or 2 years ago? David Schwimmer: Yes. No sort of structural changes in these. We've talked in the past about how they can take a couple of years to put in place because of the way that we and our customers set them up. It takes some real top-down focus in organization and coordination and planning. But no, we view this as an increasing recognition by our big important customers of the value of the integrated offering that we are providing. They do have a line of sight not only into what we are providing today, but what we are building for them in the next couple of months and in the next couple of years. They are multiyear in nature. And I believe the ones that we have announced most recently tend to be out to 7 years. They all have extensions built into them as well. So I think it's just what you see is what you're getting here in terms of our customers really understanding the quality of our offerings and wanting to commit to that for many, many years to come. And I think just it's worth reiterating this. I understand some people might have had a little trouble hearing at the very beginning of the call. We have the most sophisticated financial institutions on the planet who have very rigorous risk management processes, very rigorous analysis of what their technology needs are, very clear understanding of their requirements. And they, after extensive work -- and I said, in some cases, these take up to 2 years. After extensive work, they are making decisions to, I used this phrase earlier, they're voting with their wallets to commit to consuming our data through our channels for the next, in many cases, up to 7 years. And so we think that is a pretty clear indication that these highly sophisticated institutions recognize the value of the content, the data, the workflow that we provide and recognize that, that is increasing in an AI world as opposed to decreasing. Operator: Your next question is from the line of Oliver Carruthers of Goldman Sachs. Oliver Carruthers: Oliver Carruthers from Goldman Sachs. Thanks for the very detailed presentation and the incremental disclosure. Very helpful. I think Slide 31 is really interesting around the growth in customers you're highlighting. In terms of those customers connecting to your MCP server, so that 67 number, I appreciate it's moving a lot, but can you give us a flavor of the types of institutions, investment banks, hedge funds, asset managers, who is using this? And any steer on the use cases would be really, really helpful. David Schwimmer: Sure. So it's lots of different kinds of institutions. Typically, we see smaller institutions moving more quickly. But in this case, we're seeing smaller institutions and large institutions. I'll give you one example. There's one very large institution that is using this service to evaluate, I'm not going to go into specific names, but to evaluate one AI functionality against another AI functionality. And the constant they are using is our data because they know the quality of our data and they know what to expect from us. So they are using us as the baseline and they are using that to make a decision as to which of the AI distribution channels they want to actually use. But that's just one example. And Oliver, as you mentioned, this is changing literally day by day. And we're kind of getting a running commentary from the team on how this is growing and how we're seeing increasing and expanding desire to access through this as well as incremental sales leads. Oliver Carruthers: As a very quick follow-up. You still own these customer relationships, even when it's not your own MCP, but even when it's a third party? This is a query tool they come to you, but you still own these customer relationships. Is that the correct way to think about it? David Schwimmer: Yes, it is. Thank you for asking that question. Let me be really, really clear about this. The way this works is that if you have a license with LSEG, you can then turn on access to LSEG via, for example, Claude or via ChatGPT. There's a little connector button when you pull up a certain window in these. And you have to flick that on to get access to LSEG data. You can only do that if you have a license with LSEG directly. And therefore, we maintain the ownership of the customer relationship we're contracting with the customers. Now when we talk on that Page 31 about over 300 prospective users, what we mean by that is that there are a number of prospective users who are using these channels to try to get access to our data. They're effectively knocking on our door through MCP. And they don't have an existing license. But the way this is designed is that we are informed of their interest. And so it's a great origination channel, it's a great sales channel for us. We then take those leads. Our sales team directly receives those leads and we follow up with those customers. Does that help? Oliver Carruthers: Yes. Very helpful. Operator: Your next question is from the line of Marina Massuti of Morgan Stanley. Marina Massuti: I have a question on the AI adoption given some of your peers have given numbers around the efficiency opportunity from internal AI implementation. Can you also provide a bit more color or be a bit more specific on how much of the current and future AI deployments contributes towards the 150 basis points margin expansion targeted in the medium-term guidance? David Schwimmer: Yes. Thanks, Marina. So we haven't put any specific guidance out there in terms of the efficiencies that we're seeing from AI. I did mention in my remarks, and on Page 36 you can see some of the stats, we are seeing meaningful improvement in productivity, in efficiency. We're seeing this in customer service. And then we are also seeing improved efficiency in terms of our engineers and our software development. We've seen up to this point, and this number is going up pretty regularly, but we've seen at this point, I think I can comfortably say, 11% efficiency in our engineers. So I would bake that into the numbers that MAP was referring to earlier in terms of continuing margin improvement in the business. But we haven't given anything specific around that. Operator: Your next question is from the line of Michael Werner of UBS. Michael Werner: Thank you for the long-term targets in particular. A question on LDAs. I was just wondering with regards to, a, the step-ups that you mentioned in terms of pricing, are they contingent upon certain deliverables? And ultimately, are these step-ups typically higher than what you see in kind of the base rate? And then also, how does MCP servers fit into those enterprise agreements? Is that already included? Or is that potential upside from a revenue generation or a client wallet share perspective going forward? David Schwimmer: Thanks, Michael. So every LDA is a little bit different. And some of the step-ups are a little bit higher than what the regular price rises would be. Some of the step-ups might be a little bit lower. They are all typically in the same general range unless there are, for example, commitments that we have made to add a specific new product or new capability. Or sometimes in these LDAs, the customer may be locked into another competitor product for a year or 2, and it takes them a year or 2 to get out of those and migrate on to ours. And there may be a step-up associated with that kind of migration. So everyone is a little bit different, but that gives you a sense of some of the different variables. To your second question, there is a defined perimeter around the LDA agreements in terms of effectively focusing on existing product, and it's well defined perimeter. And in the context of these MCP capabilities and this distribution and AI model consumption, that is, I think I can say with certainly, not included in the data access agreements that we have struck at this point. Michel-Alain Proch: Yes, yes. For none of them. David Schwimmer: Yes. So that is all incremental usage that's coming through these channels, that is upside. Operator: And this concludes questions on the conference line. I will now hand the presentation back to David Schwimmer, Chief Executive Officer, for closing remarks. David Schwimmer: Well, thank you all for your questions. Thanks for spending time with us this morning. I know it's a little bit longer than usual in terms of the presentation. We did feel there was a lot to get through. And to the extent you have any additional questions, please do not hesitate to get in touch with Peregrine or Chris. Thanks again.
Natalie Davis: Good morning, and welcome to Ramsay Healthcare's financial results for the 6 months to 31st of December 2025. My name is Natalie Davis, and I'm joined today by Anthony Neilson, our Group CFO, who commenced with Ramsay in late November. After 12 months in the role, I'm pleased to report that we're making good progress on our key priorities. The refresh of our group executive is now complete, strengthening capability and supporting the acceleration of our multiyear transformation program. We remain focused on delivery against the 3 priorities I first outlined this time last year that are shown on Slide 3. First, disciplined execution of the transformation of our market-leading Australian hospital business. In the half, we've improved patients, people and doctor NPS, grown admissions with a focus on higher acuity and have lifted our theater utilization. Our second priority is strengthening capital allocation and improving returns across the portfolio. You will have seen last week's announcement regarding the proposed distribution of Ramsay's investment in Ramsay Sante to Ramsay shareholders. Subject to obtaining the relevant approvals, we believe this will simplify the group and enable focus on the transformation of the core Australian hospital business. We have also progressed the turnaround of Elysium by rightsizing the business for the current environment through site closures and reducing available beds. With Joe O'Connor joining as CEO in January, we expect the turnaround to continue to gain traction. Our third priority is evolving our culture to innovate and accelerate delivery. I'm pleased to say that our group leadership team is in place, strengthening capability and our patient and people NPS scores remain high across the group, reflecting the commitment of our teams and clinicians and the quality of the care we provide. Turning to the half year results on Slide 5. We reported 7.3% growth in underlying EBIT and 8.1% growth in underlying NPAT and that was driven by Australia. The Board has determined a fully franked dividend of $0.425 per share, up 6.3% and representing a 60% payout ratio of underlying earnings. Slide 6 shows the underlying performance across each region and the contribution to the funding group and the consolidated group results. Australia was the key driver, reporting underlying EBIT growth of 7.1%, supported by good activity growth, higher acuity, improved PHI indexation and cost management, which together helped offset the impact of the new funding mechanism at Joondalup Health Campus. The team at Joondalup have progressed a range of operational programs, including a focus on reducing agency usage, which has also helped to partially mitigate this impact. A lower underlying net loss from Ramsay Sante supported the results, reflecting growth in Sweden and performance actions in France that partially offset the government funding pressures in that market. Turning to the performance of each region and starting with Australia. Slide 8 lays out our 2030 strategy, where our vision is to innovate to be Australia's most trusted leading health care provider and to deliver long-term value for our shareholders through the 5 pillars of our strategy. Our strategy will innovate Ramsay. We will lead in local catchments, growing our services, patient care and relationships with specialists and GPs in communities around our strategically located hospitals; differentiate ourselves in priority therapeutic areas, including cardiology, orthopedics and cancer care; create One Ramsay advantages powered by digital and AI to capture the synergies enabled by our market-leading scale; connect patient and doctor journeys from hospital care to community-based care and work with our communities and partners to shape Australia's leading health care system for the future. We will measure progress with clear financial and nonfinancial metrics and early indicators include our patient, doctor and people NPS metrics, growth in admissions, cost efficiencies through One Ramsay advantages and revenue indexation that better matches cumulative cost growth. Turning to Slide 9 and through all the change underway, it's important to reinforce that our patients, people and clinical excellence remain at the heart of what we do and how we operate. We've leveraged Ramsay's strong reputation in clinical trials to launch a national Ramsay research and development network, supporting 23% growth in clinical trials activity in the first half. Growth in admitting VMOs and strong theater utilization contributed to good activity and market share gains. The changing environment in the delivery of private health care is creating opportunities for us given our strong and stable reputation and portfolio of strategically located and owned facilities. The proposed acquisition of National Capital Private Hospital is a clear example of this, delivering us access to an attractive catchment area where we're not currently represented and a hospital with a strong reputation for clinical excellence. Our focus on utilization across catchment areas has also seen some development projects postponed or reshaped with development spend now expected to be below the bottom end of the guidance range. We continue to drive cost efficiencies and maintain capital discipline through our Big 5 hospital initiatives, supported by pilot programs across the business. Following last year's review, digital and data OpEx remains on track to be at or below FY '25 spend. Turning to the Australian results on Slide 10. The business delivered top line and profit growth despite the impact of the new funding mechanism at Joondalup. Revenue from customers increased 8.2%, driven by a 3.1% increase in hospital admissions and improved indexation. Revenue from our private hospital portfolio grew 8.7%. EBIT margins, excluding Joondalup, improved by 40 basis points on the prior period, driven by higher activity levels and case acuity, increased theater utilization and improved PHI indexation relative to wage inflation. Looking at activity in more detail on Slide 11. Our core surgical admissions grew 5.7% with day admissions growing more strongly than overnight admissions. However, a higher acuity mix resulted in inpatient IPDAs increasing at a faster rate than inpatient admissions. We remain disciplined with our CapEx spend in Australia, where it's focused on projects with good returns and strategic value. On Slide 12, the major development projects in the half were the completion of Ramsay Private at Joondalup campus and the final phase of the expansion of Warringal in Melbourne due to be completed in the second quarter of financial year '27. We have 23 new theaters and procedure rooms scheduled to open in financial year '26, concentrated in major hospitals in key catchment areas. Development CapEx for the full year is now expected to be in the range of $170 million to $190 million, below our previously guided range, reflecting our disciplined approach to utilization and capital allocation. Turning to the outlook for Australia on Slide 13. In the second half, we'll continue to advance our multiyear transformation program in Australia. We aim to finalize negotiations on the Victorian and Queensland nurse EBAs by the end of this financial year. We will continue to work with our payers to recover both the gap created by cumulative revenue indexation below cost indexation and future wage inflation as well as innovating our funding to better support innovation in care models. We have one major PHI contract renewal due in the second half. We expect EBIT growth momentum in Australia to continue in the second half, driven by growth in activity in our priority therapeutic areas, revenue indexation, cost focus and partial mitigation of the impact of the new funding mechanism at Joondalup. We will continue to progress the proposed acquisition of National Capital Hospital, which is expected to transition into the Ramsay portfolio in the first quarter of financial year '27 and be EPS accretive in the first 12 months of ownership. Turning to the U.K. region on Slide 14. Both businesses operating in challenging conditions. The U.K. acute hospital business was impacted by NHS budgetary restrictions towards the end of the period. This was mitigated by a focus on high acuity and private work as well as operational initiatives. Elysium continues to face weak market demand from local authorities. The turnaround plan is underway and beginning to gain traction, including central cost reduction, agency reductions, site optimization and fee negotiation. Turning to the acute hospital business results on Slide 15. The business delivered 3.5% revenue growth in constant currency, driven by a higher acuity case mix, increased private pay admissions and tariff indexation. NHS admissions slowed and declined in quarter 2 as NHS budgetary constraints began to impact activity. Our continued focus on managing complexity and consistent operational excellence helped to mitigate the impact of lower NHS volumes. The result included backdated indexation. Excluding this impact, underlying EBIT margins improved 30 basis points to 9.3%. Turning to the outlook for the acute business on Slide 16. NHS activity outlook for the third quarter financial year '26 is expected to remain negative compared to the prior period. The U.K. hospital business will continue to focus on growing private volumes and driving operational excellence to help offset the NHS funding uncertainty, which we expect to prevail until the new NHS fiscal year. As the leading private provider to the NHS, Ramsay U.K. remains well positioned to support the U.K. government's objective to reduce elective surgery, outpatient and diagnostic waitlist when additional funding is anticipated to be made available in the new NHS fiscal year from the 1st of April with a strong pipeline of patients through its outpatient clinics. On Slide 17, Elysium has remained focused on its turnaround program informed by the recommendations of the performance diagnostic completed in the second half of financial year '25. Key priorities include site optimization, cost reduction and fee negotiation that better reflects the complexity of services we provide. This resulted in the closure of 163 beds at underperforming sites in the first half with 5 sites expected to be closed in the second half. A number of these properties have been put to market for sale. Turning to the outlook on Slide 18. Elysium's new CEO, Joe O'Connor, commenced in January and is leading the performance improvement plan. We expect the ongoing focus on the plan and the initiatives already taken in 2025 will see the turnaround continue to gain traction. Turning to Ramsay Sante on Slide 19. As announced last week, we are progressing the proposed demerger of Ramsay Sante via an in-specie distribution of our 52.8% investment to Ramsay shareholders. While this process continues, we remain focused on the performance improvement programs across the European business and particularly in France, which continues to face funding headwinds and broader market uncertainty. In the Nordics, the focus remains on continuing the performance momentum of the Swedish business and the turnaround programs in Denmark and Norway. Turning to Ramsay Sante's results on Slide 20 and the business delivered a 4.4% increase in underlying EBIT in constant currency, driven by a strong result from the Nordics region, in particular, the performance in Sweden. This was partially offset by weaker results in France, where the reduction in subsidies of EUR 20 million compared to the prior period and the inadequacy of tariff indexation continue to pressure earnings. Turning to the outlook for Ramsay Sante on Slide 21. Across Europe, the focus remains on cost control, efficiency and cash generation as well as continuing the performance momentum of the Swedish business. Activity growth in Europe is expected to continue in the second half, driven by day admissions, partially offset by the impact of a 3-day French doctor strike in January. The new contract at St. Goran commenced 5th of January 2026 for 8 plus 4 additional years on improved terms, which will assist the Nordics results. As outlined in detail in last week's announcement on Slide 22, we believe that the proposed demerger of Ramsay Sante through in-specie distribution will simplify Ramsay and enable both organizations to focus on transforming their respective businesses. We will update the market as we work towards the release of the demerger booklet and subject to receiving necessary approvals, currently expect to complete the in-specie distribution in December 2026. I'll now hand you over to Anthony to run through the financials in more detail. Anthony Neilson: Thanks, Natalie. Good morning, everyone. Natalie has already covered much of Slide 24. So I'll just highlight a few points, noting currency translation has impacted some of the movements on the P&L and balance sheet for this half. In this result, we have focused on underlying numbers given the large nonrecurring items in the U.K. region and Ramsay Sante in the first half of last year. Items excluded from underlying profit this half were $11 million negative impact on net profit and primarily relates to transaction and restructuring costs. There is a detailed reconciliation shown in the appendix. Underlying NPAT showed strong growth for the half of 8.1%, driven by activity growth across Australia and Europe, combined with higher acuity across Australia and U.K. and revenue indexation in Australia. There continues to be a focus on operational efficiencies across all regions to mitigate cost pressures. The underlying NPAT tax rate was 36%, slightly higher than last year. This reflects the impact of CVAE taxes in France, which calculated on turnover despite France being in a pretax loss position in the first half. The full year tax rate is forecast to be approximately 35%, reflecting a higher rate in Ramsay Sante. Operating cash flow on Slide 25 improved 16.9% to $350 million for the period, driven by the performance of Australia and lower tax paid than the previous corresponding period, which included the sale of Ramsay Sime Darby. Improving our cash conversion is one of our key priorities in all regions and we are all investing in systems and processes to strengthen cash collection and drive cost out and efficiency programs across all businesses. CapEx cash outflow increased from prior period, mainly due to development projects in Australia. I will touch on CapEx in more detail on Slide 31. Dividends paid increased 20%, reflecting the suspension of the dividend reinvestment plan for fiscal year '25 final dividend. Turning to Slide 26. Currency translation had a significant impact on the face of the balance sheet for this period to the tune of $84 million. Movements in working capital primarily related to Ramsay Sante and the timing of periodic true-up payments with the French government with advances repaid, reducing payables. Consolidated net debt is $5.1 billion and I'll show a separate breakdown between the funding group and Ramsay Sante on the coming slides. 67% of the consolidated group's floating rate debt in the second half of this fiscal year '26 is hedged at an average base rate of 3%. We have provided both the funding group and Ramsay Sante summary balance sheets in the appendix, so you can see the group results, excluding Sante. Turning to the Funding Group performance on Slide 27. Underlying NPAT grew 5%, which was driven by good growth in Australia, partly offset by a lower contribution from the U.K. U.K. margins were impacted by higher costs and lower occupancy at Elysium. Elysium cost efficiency initiatives began to gain momentum late in the half with continued focus on these initiatives in the second half. Total financing costs, including lease costs, increased 1.3% in constant currency due to higher average base rates and a small increase in drawn debt during the half. Moving to the Funding Group debt and leverage on Slide 28. Given the separate funding arrangements of the Funding Group and Ramsay Sante, looking at the group's consolidated leverage is not a meaningful metric. The Funding Group shows leverage, excluding Sante and is 2.22x, within our target range of less than 2.5x and interest cover remains strong. Fitch has recently reaffirmed its BBB- investment-grade rating for the Funding Group. We have adequate liquidity in place for the purchase of the National Capital Hospital in FY '27 and leverage is expected to remain within our target range of less than 2.5x. During the period, we successfully refinanced our key syndicated debt facilities, extending tenure and reducing our margin by 30 basis points. While base rates are increasing, our weighted average cost of debt has declined 20 basis points since 30th of June 2025, reflecting the refinancing of our facilities at these lower margins. We remain reasonably well hedged with 65% of our debt hedged at an average base rate of 3.65%, which is below current spot rates for the second half of the year. Moving to Ramsay Sante's debt position on Slide 29 and it remains well supported by its own separate funding arrangements with tenure extended significantly over the last 12 months. The business has EUR 391 million of liquidity available with leverage of 5.3x and the company is focused on improving cash flows and driving cost out and efficiency programs to reduce leverage over time. Turning to Slide 30 and our focus is on improving capital management, cost discipline and cash flows across the group. First, we are improving capital allocation and returns. A range of programs are underway to recycle capital into higher returning projects of the business and lift utilization of existing facilities and assets. In the overseas business, we will drive capital discipline and focus on maintenance projects and the optimization of service and assets. Second, we need to strengthen both operating and investing cash flow. We have multiple initiatives in place to improve working capital with revenue cycle management, cost out and efficiency programs being a key focus. We are also reviewing capital spend and we'll be pushing all these initiatives harder. In the near term, our priority is maintaining our leverage and our credit rating at current levels. Looking at capital expenditure in more detail on Slide 31. Our focus is on capital discipline with CapEx modified for the current environment with both U.K. and Ramsay Sante spend lower in local currency. Group CapEx increased $27 million between periods in constant currency terms due to higher Australian development CapEx with focus on development projects increasing procedural capacity in Joondalup and Warringal. We have reduced the full year CapEx range to between $755 million to $795 million, which is $40 million below the previous range to reflect the lower spend. I will now hand you back to Natalie to talk about the outlook. Natalie Davis: Thanks, Anthony. So to recap briefly, our strategic priorities remain clear: transforming our market-leading Australian hospital business, strengthening our capital discipline and improving capital returns across the portfolio and evolving our culture of people caring for people to innovate and drive performance. Our financial year '26 full year results are expected to reflect the following: in Australia, we expect continued EBIT growth momentum, driven by increased activity in priority therapeutic areas, revenue indexation, cost focus and partial mitigation of the impact of the new Joondalup funding mechanism. In our U.K. hospital business, we expect NHS activity in the third quarter to remain negative compared to prior period due to NHS budget constraints for the remainder of the U.K. fiscal year ending 31st of March. Ramsay U.K. remains well positioned to support the U.K. government's objectives to reduce waiting list and has a strong pipeline of patients through its outpatient clinics when anticipated additional funding is made available in the new NHS fiscal year from the 1st of April. For Elysium, we'll remain focused on improving performance and expect the turnaround to continue to gain traction over the second half. In Europe, we expect activity growth to continue in the second half, driven by day admissions, partially offset by the impact of the French 3-day doctor strike in January. Our net financing costs are forecast to be $590 million to $610 million and our underlying effective tax rate is expected to be approximately 35%, given the higher tax rate in Ramsay Sante. Group CapEx guidance has been reduced with spend in the second half to be lower than the first half. Finally, the dividend payout ratio for the year is expected to be 60% to 70% of underlying net profit after tax and noncontrolling interest. Overall, I'm very proud of the progress we have made and the commitment of our team members to providing excellent care for our patients while we transform and strengthen the business for the future. And with that, I'll open up to questions. Operator: [Operator Instructions] Your first question comes from Lyanne Harrison of Bank of America. Lyanne Harrison: Congratulations on a very strong result for Australia. What we saw compared to the results, the first quarter results that you mentioned at the AGM, we certainly saw an acceleration of growth, both at revenue and EBIT in the second quarter. What are your expectations as we are in third quarter now and then for the fourth quarter as well? Can we expect that revenue growth and that EBIT growth to continue to grow at a faster rate? And what would be supporting those? Natalie Davis: Thank you, Lyanne, and thank you very much to the whole team in Australia for really focusing on growth and performance momentum over the half. I think what we've guided to today is really looking at year-on-year EBIT growth momentum continuing throughout the year. I think it's important to remember that there is seasonality in Australia in some of our businesses, it works the other way. So we do tend to have a lower EBIT result in the second half because of January when a lot of doctors are on holidays and we don't do as many surgeries in the business as well as Easter has a smaller effect. So what we're guiding to is the year-on-year EBIT growth momentum will continue and we're not saying anything more specific than that. Lyanne Harrison: Okay. And as a follow-up, you've renegotiated some of your PHI contracts over the last few months and with some good fee increases. Can you comment on -- we've seen PHI premium increases in the vicinity of -- it's going to be about 4% or a little bit more from April of this year. How will those increases be captured in the fee terms on the contracts you've already negotiated? Natalie Davis: Thank you for the question. And it's been very pleasing to see that Australians have kept up their private health insurance coverage even through significant cost of living pressures. I think the minister when he approved the latest round of premium increases acknowledged the very significant cost increases and cost pressures that the private hospital sector is facing. And we would expect those premium increases to be passed along to private hospitals to cover those cost pressures. And the minister has talked about the benefits payout ratio having decreased over time since COVID and his expectation that, that would increase. And so we will be talking to all our private health insurer partners to ensure that the revenue indexation we receive on an ongoing basis reflects our genuine cost pressures. And those pressures are real and they will continue into the medium term. Operator: The next question comes from Andrew Goodsall at MST Marquee. Andrew Goodsall: Just a focus on the U.K., if I may. I guess just with Elysium, just obviously, you're doing some performance improvement there. But just wondering whether you can see that as a permanent resolution to something that might be more structural? And then secondly, on U.K., just I saw that the NHS has got this idea of a sprint to the end of the financial year with additional elective surgery, but that's not reflected in your comments. So just wondering what your thoughts were there as well. Natalie Davis: Thank you for those questions. So focusing on the U.K. and I'll take each business separately. With Elysium, we completed last year a very significant performance diagnostic and the team has gone about implementing that under the, first of all, the leadership of Nick Costa and now Joe O'Connor since he joined in January. We see a very significant improvement potential for Elysium from the current performance, which is very weak. We have focused a lot over the last 6 months on cost reduction. So central cost reduction. We've now done 2 phases of reducing FTE in that business. We've focused on reducing agency costs. And importantly, we focused on decreasing the number of available beds. And the demand that I think we've experienced throughout the half has probably been weaker than we originally expected. And so you see we've closed 163 beds in the half and we will continue to look at potentially site closures and putting properties up for sale to make sure that the services we provide really match the demand from the sector. However, having said all that, we see significant potential for us to turn around the performance and to continue focusing on both the top line through providing high-quality services for very complex patients and making sure that our fees reflect the quality and the complexity of the service we provide, improving our conversion rates, which we have improved in the half, but there's more opportunities to do that when we get a referral to making sure that we convert all of those referrals and continuing to focus on costs and we continue to see more potential for that. So we continue to be confident that, that turnaround is continuing to gain traction and we saw an improvement in performance towards the end of the first half. On the U.K. and what's happening with the NHS, we're certainly seeing -- from the end of the first half, we're certainly seeing a step back in activity across our hospitals. A number of our hospitals have activity management plans in place. In some cases, where those plans have been in place, we have managed to get effectively separate contracts to fund further activity above that activity plan level. But overall, as we said, we expect negative NHS activity in quarter 3 and then we're well positioned when we anticipate there'll be more funding provided from April to grow our business over there. Andrew Goodsall: And just a quick one for Anthony. I appreciate you breaking up the Funding Group debt. But just with the refis, just if you had any sort of separate costs associated with that and if they were taken through the P&L? Anthony Neilson: Anything was small was in the nonrecurring items for that. And we did take some items capitalized into the balance sheet. Operator: The next question is from David Low at UBS. David Low: Natalie, if I could just start with Joondalup. So you're quite specific as to the headwind there. We can back calculate from the comment about 40 basis points better. But just wondering relative to your expectations there in terms of the headwind, whether anything has changed, whether you've been able to mitigate it more than expected. Natalie Davis: Yes. So last year, we talked about the new funding mechanism at Joondalup Public and the expected impact that would have. We also said we would partially mitigate that impact on the campus itself. And we have continued to do that. And I would say that the mitigation is in line with what we're expecting. And there's a number of things we've done there. We've worked to increase activity with the government. WA like many states across Australia, experienced a very strong flu season. And so we had additional capacity that has been funded at the beginning of the financial year in that flu season. But we're also continuing to work on our operational initiatives and there's been a big focus, in particular, on reducing agency at Joondalup, which we successfully at the end of the half, ran what we call a professional pathways program. And that program attracts nurses out of nonhospital sectors, so sectors like aged care into the hospital system. We had a very successful recruitment drive. And I think around 50 nurses have started with us at the hospital, which will enable us to reduce agency at that hospital. We also -- last week, we also had the pleasure of opening Joondalup Private. So that's the expansion of the private facilities. It's a very significant expansion. It creates for the first time, dedicated private theaters in that campus. And we're now focusing on ramping up the growth in the private part of that hospital. So overall, I'd say the mitigation that we expected is on track and as we thought. David Low: Okay. Perfect. Look, the other question I had was, I think certainly, the revenue growth in Australia was a positive surprise. Just wondering, we can see the activity that you've broken out there and back calculate price increase. But within the activity, is mix a positive driver there? And can that trend continue on into this calendar year? Natalie Davis: Yes. I think what we saw in the half was pleasingly a focus by our teams on higher acuity work. And you can see that in the activity numbers, so not just in admissions, but in EBITDA growth. And the fact that our EBITDA growth was in line with admissions growth, I think, has driven that positive mix benefit. It came through on both surgery, but it also came through on some of our medical admissions. And so that's something that continues to be a focus for us. We're very focused on utilizing our theaters as much as we can and thinking about our theater utilization in terms of catchments so that our major hospitals are very much focused on attracting high acuity work. And then some of our smaller day centers and smaller hospitals can then attract the lower acuity work. And so we're trying to really optimize the way we're thinking about our portfolio within catchments to focus on mix. David Low: Okay. Great. So it sounds like that can continue as a positive trend second half... Natalie Davis: It will continue to be a focus for us. Operator: The next question is from Craig Wong-Pan at RBC. Craig Wong-Pan: Just wanted to understand about the Australian CapEx. The guidance there has been revised and your comments about being disciplined on CapEx. Just wanted to see if you could provide any comments about how we should think about the run rate of CapEx going forward? Natalie Davis: Thank you. So what we're really doing and I just explained, I think the catchment thinking that Stuart Winters, in particular, who's our new Chief Operating Officer, is bringing to the business. We're continuing to really focus on existing theater utilization, but we're also really thinking through our portfolio and how do we -- for example, in Lake Macquarie catchments, we opened Charlestown, which is a day surgery that was operationally separately managed to Lake Macquarie, which is our big hospital there. They're now all under the same leadership, and we're now developing a catchment strategy across that. The other thing that Stuart is really focused on is thinking through how do we better use the physical infrastructure that we have in our existing hospitals to be able to add procedural capacity effectively and efficiently. And I think St. George is a good example of this where we're doing a development and we're effectively taking existing space within the hospital that's an ICU and converting that into theater space, which is linked to the existing theater complex. And we're moving ICU into an area that was full of beds that were not being utilized. So what we're trying to do is, as we've said over the last year is focus very much on procedural capacity, adding beds by exception and utilizing the existing assets that we have within a catchment fully before we're increasing procedural capacity. So you'll see very selective and strategic developments from us going forward. We're not yet guiding to next year on that. Craig Wong-Pan: Okay. And then I just wanted to move to the clinical trials research and development network that you talked about. Could you just provide some more details around that and specifically the benefits that the Ramsay Group gets from having that network? Natalie Davis: Yes. Thank you. It's a small part of our business, but it's one that we're all incredibly excited about. So with clinical trials, we have traditionally run a site-by-site model and we had around about 20 sites that were providing capacity to doctors who wanted to do research in our hospitals. To give you an example, it's very common and important in cancer care. So a lot of patients when they're coming for treatment to their doctors are looking for the latest chemotherapy drugs and treatment. And if we can provide access to clinical trials, we can provide actually leading treatment for patients. And we can also ensure that we're attracting doctors. And we can actually see that doctors who do clinical trials with us actually have a higher NPS with Ramsay. So it's a small part of the business at the moment. I think it has a significant potential and it's important to reinforcing our core hospital business because it does mean that we can provide leading care to patients and also attract more doctors to working with Ramsay. Craig Wong-Pan: Okay. Makes sense. And then just my last question, one for Anthony. The comments you made about improve or having cash conversion as a key priority. Just trying to understand what you're focused on here just about faster collections or something about like claims? Yes, could you just give some color on what you're trying to do there? Anthony Neilson: Yes. Thanks, Craig. Yes, look, definitely, receivables improvement is a big driver that we have there in the revenue cycle management, looking at all of our systems and processes, both from an Australia and an international perspective to get the days debtors down and the improvement through the billing cycle and cash collection, accuracy of billings, all of those sorts of things are a big driver that flows straight through to the bottom line if we can improve that working capital position. Operator: The next question comes from David Stanton at Jefferies. David Stanton: Impressive 5.7% growth in Australia in surgical admissions. Firstly, bottom line, what's driving that? Is it the market growth at that level? Or do you think you're taking share? And if so, how is that happening? Natalie Davis: Thank you, David, for the question. We think we're probably taking market share at the moment when we look at our growth relative to the market. I don't know if there's more market statistics coming out tomorrow, so we'll see how that goes. I've spoken previously about the focus we're doing on growth across our hospitals. So over the last 12 months, we've been providing to all of our hospital CEOs data that's very easy for them to use, which enables them to do a few things. First of all, it looks at every therapeutic area by doctor and it looks at theater utilization. It gives an indication of profitability of that work. It also gives an indication of to what extent is that doctor canceling lists and what period of time do they let us know if they are canceling a list because the more time we have, obviously, the more we can then fill that theater with other work with other doctors. The other data set that we're giving to our hospitals is around catchments and more data around the specialists in that catchment that do work with us and don't do work with us as well as the GPs and the ones that are referring to specialists who work in our hospitals and other GP practices that are not. So that's been new. It's all in one place and it enables our team, therefore, to go and have conversations with doctors where we know we need to increase their utilization. And it also enables us in terms of our business development managers and our GP liaison offices to be much more targeted around where they're spending their time to be able to attract new doctors to come and work with Ramsay. And I think the other thing that's been helping us over the last 6 months is obviously this very strong clinical reputation that we have, but also our stability as a very strong business with ownership of our hospitals. And I think that's also been helping in the current environment to attract more doctors to come and work with Ramsay. And we're continuing to really focus on how do we improve and strengthen our doctor proposition and our proposition in our therapeutic areas that we're focusing on. David Stanton: Understood. And is it fair to say, given your previous commentary that with these upcoming EBAs, you believe that they'll more than likely be covered by the increases in PHI premiums? Or what should we be thinking there? Natalie Davis: So we continue to see wage pressure out into the medium term and that's coming through from public sector nursing EBAs and we have to be competitive to be able to attract the nursing workforce that we need in every state. The one that we are negotiating at the moment is in Victoria and that's obviously against the backdrop of a very significant public sector EBA increase of 28% over 4 years, but significantly backdated to November, December 2027 calendar year. So we expect continued pressure on wages across Australia. And we will continue as we negotiate with private health insurers to cover that cost pressure and it's very genuine it's being experienced by the whole sector in terms of the revenue indexation that we're receiving. In some cases, we have now got dynamic -- what we call dynamic indexation in place. There's 3 contracts where we do this and we're talking to more health insurers about this. And what that basically does is once we agree the first year indexation, the second and the third year indexation in the contract are linked to externally referenced cost benchmarks. So that those cost pressures when they're genuine and they're sector-wide will be reflected in our revenue indexation. And the importance of that apart from ensuring that we're paid fairly is also freeing up management time to actually look at the structure of these funding agreements, the way we're providing care and innovating our care models and innovating the funding to support that. So that's the opportunity for us to work with our private health insurer partners to really innovate the proposition for Australians for private health care. David Stanton: Very clear. And finally from me, we've talked to -- or you talked -- or the company talked to digital upgrades. Can you give us sort of an update on spending options and timing potentially? Natalie Davis: Thank you. So we've been in a bit of a reset, I think, on digital and data transformation. And as we said last year, while we did that, we focused on effectively maintaining and even possibly reducing the spend in that team. We've now got Dr. John Doulis, who's joined us as our Chief Technology Officer. John comes from HCA hospitals in the U.S., which I would say is one of the leading hospital health systems when it comes to thinking through how to really use technology and digital technology to drive better patient experience, team experience and business outcomes. So John joined in early November. He's now at the point where he's got some very clear priorities for where he's going to work with the team on. And they're very much aligned with the Big 5 initiatives that we've been talking about in our hospitals. So they're very much linked to operational improvement. The top 3 are really around revenue cycle management and in particular, upgrading our patient admin system or PAS, which is very outdated. That will enable us to speed up our revenue cycle management system and also improve accuracy in that system. The second one is around workforce and introducing a smart rostering system. That's something that will free up a lot of time around nurse unit managers who spend a lot of time on rostering at the moment with 3 legacy systems. It's a pretty manual process. It will also give our team more flexibility. And the third one is thinking through how do we use technology to really track prosthesis and consumables as they're being sourced into our hospitals and used in our hospitals and then charged to private health insurers. So very clear priorities and we'll continue to keep everyone updated as to our technology road map. Operator: The next question comes from Davin Thillainathan at Goldman Sachs. Davinthra Thillainathan: Just wanted to think through the Australian business and your revenue growth that you're demonstrating there. I think in the first quarter, you did a growth that was about 6.5%. And then in the half, that stepped up to 8.2%. So clearly, some better momentum happening in that second quarter. Now my understanding was in the first quarter, you had benefited from some high flu admissions and I wouldn't have expected that to continue. So perhaps could you talk through any sort of material changes that occurred over the second quarter to allow that level of growth to step up, please? Natalie Davis: Yes. So that is true. So we do benefit in that July to August period from winter flu season and that was a particularly serious flu in terms of the impact it had on Australians right around the country. So we did see more medical admissions and longer length of stay associated with those admissions. But as I've said, we continue to experience good growth through the half. And I think that really was a continued focus by our hospital teams on recruiting doctors and utilizing theaters. And you also would have seen in the results, we also shared that our public work increased a little bit. Some of that was at Joondalup, but some of that also was in New South Wales. So that continues to also be an area of focus. So I don't think there was one thing I can point to, to say it was due to that. It's a focus for us and we really continue to focus on that going forward in every major hospital and catchment that we have. Davinthra Thillainathan: Great. And my next question is on your CapEx, which you have lowered in Australia. I understand part of that is clearly you're utilizing your existing facilities better. But just thinking about other changes you've made with CapEx delivery. As an example, I noticed that your Joondalup CapEx was also lower than your budget. Could you perhaps talk through any other changes you're making on the actual delivery of all these sort of growth initiatives? And perhaps is that what's sort of helping that CapEx lower as well? Natalie Davis: Yes. I think Joondalup was a very well-delivered project. We had a good delivery partner there and it was delivered on time and on budget, actually slightly earlier and that's hard to do. So I think that was a really good example of working well with a delivery partner. But most of the decrease in our guidance on CapEx is really about us as a leadership team, myself and Anthony, who are in the capital forum that we've described in the document, really stress testing with the teams around do we need to do this development proposal and do we need to do it right now and really encouraging the teams to, first of all, focus on utilization before bringing business cases to us. So it really is more that rigor around the way we're approving capital projects. Davinthra Thillainathan: Yes. And my last one, just trying to understand the sort of digital and data spend in your P&L. I think you had about $90 million in FY '25. Can you sort of help us understand what was spent in the first half and what the expectation is for FY '26, please? Natalie Davis: Yes. I think we've said before that digital and data spend will be at or below, if we can, that level of last year and we've said that we're on track. We're not going to split that between halves. Operator: The next question is from Laura Sutcliffe at Citi. Laura Sutcliffe: Firstly, on the U.K., is the volume headwind that you've seen in the third quarter enough that you could potentially end up with revenue in the second half being flat or going backwards versus the first half? Or do you still expect that revenue to grow in the second half over the first half in the U.K.? Natalie Davis: So we're not guiding to revenue in the U.K., but I will make a few comments. We do -- as we've said in the release, we do see NHS activity being negative in the third quarter. And then we're well prepared as we anticipate new funding to come in, in quarter 4 to grow NHS activity. But we're also focusing on acuity. So acuity EBIT, and that's supporting the results that you've seen in the first half. And the team is also focusing on growing private and that includes both self-pay and our agreements with private health insurers. So all of those factors we'll be focusing on. And of course, remembering seasonality in the U.K. is the opposite to Australia. So we see a weaker summer over there, which impacts the first half. Laura Sutcliffe: Are those activities you just mentioned the mitigation activities that you were mentioning earlier? Or is there a bit more to the mitigation piece? Natalie Davis: Yes. So the mitigation is around growing our private work. So we focus very much on NHS work in that business, but we are putting more and more focus on private work, which you can imagine is more profitable for us than NHS work. We are focusing on acuity of mix and we're also focusing on operational efficiencies and cost mitigation. We'll be stepping up the cost focus as well given the uncertainty on the NHS funding front. Laura Sutcliffe: Okay. That's clear. And then secondly, looking at some of Sante's reporting and the proposed distribution, could you tell us if any of the mechanics around change of control there would potentially leave you in a position where you had to make payments to Sante or others? Natalie Davis: So as Anthony explained today, the Sante debt is nonrecourse to Ramsay Health Care. And so the debt that we hold as the Funding Group relates to Australia and the U.K. businesses. So when you think about the separation of Ramsay Sante from Ramsay Health Care, in this case, Ramsay Sante is already a separate listed entity on the Euronext. It already has its own governance structure. It has its own debt structure. And so the approvals will be happening mostly in the Australian context around our shareholders and putting proposals to them through a scheme of arrangement around thinking through whether there's value to Ramsay Health Care shareholders from effectively holding these 2 entities separately. And we do think that there is a strategic logic and it's quite strong logic around effectively Ramsay Sante is an independent entity focusing on their strategy of integrated health care in European markets and Ramsay Health Care really focusing on the priorities that we've laid out today and in particular, the continued transformation of the Australian business. So I think it's important just to understand that there's -- the debt of Sante is nonrecourse and there's no guarantees from Ramsay Health Care. Laura Sutcliffe: Okay. I just thought I would clarify because the potential amount they mentioned in their documents is quite large. Operator: The next question is from Steve Wheen at Jarden. Steven Wheen: I just had a question with regards to the Victorian EBA. We've seen your offer that you've provided to the nurses. Just trying to understand what the reaction to that offer has been and whether or not you're getting recognition from the PHIs as to that step-up that happens sort of in the back end, I think, of '28, where you're mimicking what happened in the public EBA in Victoria? Natalie Davis: So we're in the process at the moment of negotiating the Victorian EBA with the unions and with our team. And so I won't be commenting today on how that negotiation is going. Steven Wheen: Okay. Then can I ask a bit of an extension of the EBA question, which is you've mentioned in your presentation from an outlook perspective that you're attempting to close the funding gap from payers from the cumulative gap from payers versus the cost inflation. Can you talk to how that is possible? I mean, I can see with the arrangements that you've got in place already that you're covering current inflationary pressures in FY '26, but how do you claw back some of those historical underpayments from the insurers? Natalie Davis: Yes. So I think the discussion that we have with our private health insurer partners and this is a discussion that's really happening, you can see at a sector level in regards to private hospital viability. But overall, the premium increases that have been approved for private health insurers over the last 5 years since COVID have not fully been passed through to private hospitals and that benefit payout ratio has decreased over time. Now we believe that those premiums that Australians pay should be passed on to hospitals and the hospital sector is experiencing very genuine cost pressures. And so that is the discussion that we have with our private health insurer partners. And we've experienced, as I've described, an improved level of revenue indexation, but we haven't yet managed to achieve that closure of that cumulative historic gap. And that is a challenging discussion, but we will continue to strive to achieve that. And quite often, as we're entering into new contract renewals for a number of years and looking at partnership opportunities and talking about dynamic indexation in the outer years, that is the opportunity for us to work through that cumulative gap because you can't really agree to dynamic indexation unless the base is correct or the base is corrected over time. So it's a challenging discussion, but it's one that we continue to have. Steven Wheen: Okay. Great. And just some points to confirm. The coverage that you're getting from the insurers at the moment in FY '26, how much line of sight do you have for that coverage to extend beyond FY '26 relative to the EBAs that you've put in place? Natalie Davis: So we always -- when we negotiate with private health insurers, we always look at the -- effectively the cost pressures that have been effectively locked in through EBA arrangements, but we also do forecast out what we expect EBA pressure to be. And if for some reason, the EBAs end up being at a higher level, we will always go back to the private health insurers to discuss that. I think the dynamic indexation that I was describing is a way that, that becomes a very fair discussion because it's referenced to external benchmarks, which really do show whether there is genuine industry-wide cost pressure in the system. Steven Wheen: Okay. So knowing what you know now, you can still say that your PHI coverage extends into FY '27? Natalie Davis: No, that's not what I'm saying. I'm saying there's a series of contracts that we have with private health insurer partners. We're in the process of negotiating one at the moment in the second half. And so it's a rolling process. In some cases, we have existing contracts in place, but the 3 examples I've given on dynamic indexation that's in place in the outer years. But in others, we have contracts that will come up for renewal in the next year or 2 and we'll have to renegotiate that as well. So it's a dynamic process. Steven Wheen: All right. Maybe could you indicate how many of the insurers are on these -- I mean, you said 3, but are they the big ones? Or are they the more smaller ones? Natalie Davis: Yes. We've said before that the 3 that we've got at the moment are not the major insurers. Steven Wheen: Okay. Last one for me. Just with regards to the Joondalup offsets, was there any evidence of that in first half? Or are we expecting that sort of more second half and beyond? And then in addition, is there any way we could sort of get a better understanding of the sequencing of data and digital because obviously, the key point for the stock at the moment is the turnaround in margins in Australia and that can be a bit distorting unless we know what that sequencing looks like between first half and second half? Natalie Davis: So the Joondalup mitigation, I've described in, I think, a previous question. So we're on track in terms of what we planned for Joondalup. In the first half, there was a benefit from public activity, which was due to the flu season and the pressure that was putting on the health system in WA. We then obviously, over the half, focused on putting in cost and operational initiatives, including that focus on agency reduction, which we recruited that group of nurses into Joondalup around November, December, takes a period of time, obviously, for them to be trained so that we can reduce agency spend. So we're continuing to focus on it and the flu impact won't be repeated in the second half, but you'll see other operational initiatives having more impacts like the one I've just described. The digital and data OpEx, I think what we've said is this year is really one of a reset. We're keeping that spend in line with the current year or less. We're very much -- John is really focused on his priorities and developing that road map going forward. We're on track overall for the year. And we really do understand as a management team that we're aiming here to get year-on-year margin growth in the Australian business. And so we will think about very much the digital and data investments we make, ensuring that they're connected to operational initiatives that have payoffs so that we can then reinvest in further digital investment as it's required. But understanding that over time we are all focused on improving the performance of the Australian business. Operator: The next question comes from Saul Hadassin at Barrenjoey. Saul Hadassin: I'll try and stick to 2 questions. First one, Natalie, just you mentioned, I think, at the AGM that theater utilization had improved by about 1% in the first quarter of fiscal '26. I'm just wondering if you had any comments about where that went in the second quarter of the fiscal year? Natalie Davis: Yes. I thought we had given you that number and it was -- we've given you a 12-month rolling number. 130%, so 1.3% in the last 12 months in terms of theater utilization. So that's on Slide 9. Saul Hadassin: Sure. So the assumption being that it's improved into the second quarter versus the first? Natalie Davis: So we're seeing overall improvement in theater utilization and that's including the impact of new theaters that we've opened over that time. So obviously, as we increase admissions and IPDAs, that fills the existing theaters, but then we open capacity and we have to fill up that new capacity as well. So the 1.3% improvement over the last 12 months, I think, was a very strong result given that there was a very large number of new theaters opened in that time, 16 new theaters. Saul Hadassin: Sure. And then just a follow-up. I note in the presentation of the wholly owned funding group result that labor costs and contracted costs on a constant currency basis was up 6%. I just wanted to see whether there was any disparate growth rates between the U.K. and Australia in that? Or is that reflective of sort of both regions in terms of their labor cost inflation? Natalie Davis: I'm going to pass that one to Anthony. Anthony Neilson: Yes. Thanks, Saul. Look, there's nothing materially different. It's largely reflected between both regions with similar numbers, give or take, in the wages. Operator: The next question comes from Sacha Krien at Evans & Partners. Sacha Krien: Just a bit of an extension to one of the earlier questions. It looks like you've removed the reference to revenue indexation being greater than or equal to labor cost inflation. I'm just wondering if anything has changed on that front. And I think your labor cost growth in Australia was circa 7.8 or something like that? Natalie Davis: Yes. So the 7.8, I think you're referring to is the growth in the total labor dollars. And so that includes both activity and wage inflation as well as any mix impact. And activity was in the region of 3.1, excluding the impact of Peel. So you can get a sense from that as to what's happened with wage inflation and similarly on the revenue line in terms of Australian revenue and that level of implied indexation, noting that there's always a mix impact as well. Sacha Krien: Yes. But does that previous statement around '26 and '27 still stand? Natalie Davis: So I think what we said in the last statement was saying is a leading indicator that the revenue indexation was in line with cost indexation and that continues to be the case in the half. So we're definitely experiencing improved revenue indexation relative to both what we paid historically and relative to cost indexation. But as I've described on the call, it's an ongoing focus for us and we need to continue to make sure as we renew contracts that we're taking that. Sacha Krien: Yes. I guess I'm just wondering, I think that statement previously applied to '27 and I can't see it unless I'm missing it. So I mean, are you suggesting it's maybe been a little bit harder to close the gap than expected? I'm just trying to [indiscernible] if anything has changed. Natalie Davis: I think you're reading into something that wasn't there in the first place. So that comment at the AGM was in relation to the performance in the first quarter. It wasn't an outlook statement into F '27. Sacha Krien: Okay. And then second question, just on the U.K. I'm just wondering the proposed NHS tariff increase, I'm just wondering if there's any scope for that to be increased as we've seen in previous years given some of the award wage increases that have come through? Natalie Davis: Yes. So I think that is a good question. So we saw effectively the tariffs being guided to 0%, 0.03% in the U.K. That reflected broadly speaking, a 2% assumption on wages in the U.K. in the health sector, offset by an efficiency assumption of about 2%. I think a few weeks ago, we've seen a wage number come out of the NHS that's more likely to be around 3%. And so historically, when that's happened, at least over the past 2 years, we have seen effectively a backdating tariff increase. It may not be the full amount of the difference. It's not guaranteed. So Nick Costa would say that there have been some years where that hasn't been played back and backdated. So we have to wait and see. But in the past 2 years, there has been an adjustment if wages have been higher than what has been assumed, but we don't know yet. Sacha Krien: Okay. Can I sneak one more quick one in on the U.K.? Just in terms of the NHS activity, are you expecting a full rebound into '27 given some of the -- I mean, I guess, the government's recommitment to sort of closing or reducing the waitlist and using private hospitals to do that? Natalie Davis: I think it's very hard for all of us to really know. It depends very much on the budget in the U.K., therefore, the budget that gets given to the NHS. As you know, this government has previously been very clear that their election priority is to reduce waitlist and that there's a very important role for the private sector to play in doing that. And we are the largest provider of NHS services in the U.K. So we are well positioned, but it's very hard for us at this point, I think as it is for everyone in the U.K. to be certain of what will happen. It really does depend on budget outcomes and political outcomes in the U.K. Operator: The next question comes from Andrew Paine at CLSA. Andrew Paine: Congrats on the results. Just wanted to circle back to Elysium. Really just wanting to know if you think the current performance there is leading to a shift in your longer-term plans for that business? Or do you think you continue to focus on adjusting cost base and keep things like growth CapEx on hold? Natalie Davis: So for the moment, the posture is that the focus is on performance improvement. So any growth CapEx is on hold, continues to be on hold. And the focus very much is on making sure that we're managing costs and managing the services we provide to the local levels of demand. There's also a focus in the turnaround around thinking through how we actually improve the offers that we're providing into the market. So we've previously called out neuro as an area where we think we need to reposition our services towards a slightly lower complexity, lower acuity cohort where there's a bigger demand pool. The team is also focused at the moment on bespoke packages. And this really is, I think, somewhat unique to Elysium because we have a very, very good reputation of providing care to very complex individuals. And so in a number of locations, we are talking to local authorities to take individual patients with very highly complex needs. And those packages are developed with pricing that's commensurate to the effort that we need to put and the care that we need to put around those individuals. So I think we have more work to do in the future around thinking through how do we strategically position our services in the market. But very much at the moment, the focus is on turning around the business and continuing to gain momentum from that in the results. Andrew Paine: That's great. Yes, that makes sense. And just another quick one. Just any numbers you can give us around the expected contribution of National Capital. I know you said it's expected to be EPS-accretive in the first 12 months, but if you can give us any numbers, that would help. Natalie Davis: Yes. At this point, we're not giving out any numbers. So we're very excited about welcoming the NatCap team to the Ramsay family. That will happen, we think, around the end of July. At the moment, we're in the transition planning period, but it's a very attractive catchment area with high rates of private health insurance. It has a great leadership team in place. They have a good reputation with doctors and they have -- they do work in the complex therapeutic areas that we do and they have a very strong relationship with the Canberra Health Service. And so NatCap is very much a hospital which is very akin to some of our major and very successful hospitals around the country. Operator: The next question comes from David Bailey at Morgan Stanley. David Bailey: The Joondalup headwind was about $14 million. So I'll just touch on an earlier question. How much was the benefit from lower digital and data spend in the first half? Natalie Davis: So as I've said, we're not giving any half guidance on our spend. So we're on track to basically maintain or slightly lower our spend on digital and data for the year, but we're not providing any specific guidance on the half. David Bailey: Okay. But it says in the pack that it was lower. How much lower was it? Natalie Davis: I'm not providing any specific numbers on digital and data. David Bailey: Okay. Fair enough. Okay. In terms of the commentary around PHI increases, it sounds like it's offsetting wage inflation at the moment. You made the comment that participation is still holding up, but there is a significant increase in the proportion of exclusionary policies, which looks to be a drag on utilization. If we think into fiscal '27, if price is matching your cost inflation and there is potential for lower utilization on the fact that people are downgrading their policies, do you see a situation whereby you can grow your EBIT margins at 60 basis points implied by guidance and potentially 100 basis points at the top end? Natalie Davis: Thank you for the very detailed question. I think when we look at private health insurance coverage in Australia, what we have seen is downgrading, as you've just mentioned, particularly from gold into silver and bronze policies. But the overall rate of hospital level coverage is staying at around about the 45% level. Now the significant impacts of that downgrading are being felt in particular in maternity and mental health that are only available on that gold level coverage. And that has probably a very significant impact, particularly for younger people looking at whether to take up private health insurance because those 2 features are important. And so we're very much a strong participant in the sector-wide discussion that is going on around how do we maintain the proposition for Australians around affordable private mental health and maternity level coverage. And I won't be going on specific -- any specific guidance on margin in the outer years apart from saying that it's our focus as a management team and we're making progress. The transformation is underway and we will continue to focus on lifting the performance in the Australian business with all the challenges that we're facing, but also the opportunities that we have as Australia's largest private health care company. David Bailey: And just one final one for me. Just the Fair Work Commission work value case, just the status of that and expectations around potential further wage increases duration and from when they could potentially be implemented as well? Natalie Davis: So that at the moment, the fair work value case is before the Fair Work Commission. So we're also waiting to see where that eventuates. We are expecting, I think, a level of phasing to any increase that is approved in there. So -- and I previously said at the moment, when you look at our wages, we are above award wages. And we, therefore, expect that and the combination of phasing really to mean that the pressure from that in terms of sector-wide and our wage pressure will be more in the outer years rather than in the short term. So I think that might be the last question. Operator: And it was the last question, if you'd like to make any closing remarks. Natalie Davis: Thank you. Well, I wanted to thank you all for joining the call and for a really great set of in-depth questions on our business. As you've seen in the results, I laid out 3 very clear priorities for Ramsay Health Care and we are well underway in terms of the work we're doing as new group executive leadership team to really capture the potential of Ramsay Health Care and we look forward to engaging with you all on that journey. Thank you. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.