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Operator: Thank you for standing by, and welcome to ReNew's Third Quarter FY '26 Earnings Report. [Operator Instructions] I would now like to hand the conference over for opening remarks. Please go ahead. Anunay Shahi: Thank you. Good morning, everyone, and thank you for joining us today. We have put out a press release announcing results for our fiscal 2026 third quarter ended December 31, 2025. A copy of the press release and the earnings presentation are available on the Investor Relations section of our website at www.renew.com. With me today are Sumant Sinha, our Founder, Chairman and CEO; Kailash Vaswani, our CFO; and Vaishali Nigam Sinha, our Co-Founder and Chairperson, Sustainability. After the prepared remarks, which we expect will take about 30 minutes, we will open the call for questions. Please note that our safe harbor statements are contained within our press release, presentation materials and materials available on our website. These statements are important and integral to all our remarks. There are risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements. So we encourage you to review the press release and the presentation on our website for a more complete description. Also contained in our press release, presentation materials and annual report are certain non-IFRS measures that we reconcile to the most comparable IFRS measures, and these reconciliations are also available on our website in the press release, presentation materials and our annual report. With that being said, it's now my pleasure to hand it over to Sumant. Sumant Sinha: Yes. Thank you, Anunay. Good morning, everybody, and good evening, depending on your time zones. I'm glad to have you all on our earnings call for the third quarter and the first 9 months of fiscal 2026. The year 2026 has kicked off with good news on the macro front. As you all would be knowing, a few days ago, India and the U.S. have agreed on a trade deal. Apart from reducing the general overhang and uncertainty, this is likely to also open up the U.S. market again for Indian exporters and benefit the economy overall. This has also benefited the rupee in recovering some value versus the dollar. Additionally, the financing environment remains benign with interest rates on a downward curve. All this has enabled India's growth projections to stay above 7% in fiscal 2026 with roughly the same growth rate forecast by the Government of India for fiscal 2027 as well. Coming to our sector, we have also seen some recovery in electricity demand as growth rebounded sharply in December 2026, with slightly better numbers in January 2026 as well. Power demand is expected to rebound to normal levels in fiscal 2027. In today's call, while I will cover the updates for the quarter, I will also briefly cover the strategic path forward for us as a company. Turning to our highlights. Since December of last year, our operating capacity has increased from 10.7 gigawatts to 11.8 gigawatts. Given that we have also sold 900 megawatts during this period and adjusting for this, our portfolio actually increased by 19% or 2 gigawatts over the last 12 months. We continue to focus on optimizing our portfolio for lower execution risk, CapEx and more predictable cash flows. And hence, for our complex projects, we have decided to replace part of our wind of those projects with more battery energy storage systems, or BESS, and solar capacity. We have reduced, therefore, the wind capacity in our committed portfolio from 2.5 gigawatts to approximately 850 megawatts, effectively taking up now to 19.2 gigawatts, which is inclusive of approximately 1.5 gigawatts of batteries. This pivot enables us to lower CapEx, reduce execution risk as well as more accurately forecast our future cash flows owing to less volatility in the weather patterns. Coming to our financial highlights. Our adjusted EBITDA increased by 31% to INR 74.8 billion for the 9 months ending December 31, 2026, accompanied by an over sixfold increase on profit after tax. We also successfully raised $600 million through a bond offering and successfully refinanced our previous bond due in July 2026. The offering received demand in excess of $2 billion and we were able to reduce the interest rate from the earlier 7.95% to 6.5%, therefore -- thereby, saving approximately $9 million in annual interest expense. This was also the first bond issued through GIFT City. We also continued our capital recycling engine and sold another 300 megawatts of solar assets this quarter. Our manufacturing business contributed INR 10.8 billion to our adjusted EBITDA for the first 9 months. As a result, we have increased the lower end of the guidance range for both our adjusted EBITDA and megawatts for the year. We now expect to deliver INR 90 billion to INR 93 billion of adjusted EBITDA, of which our manufacturing business should contribute between INR 11 billion to INR 13 billion. We have also narrowed the range for our project guidance and expect to construct between 1.8 and 2.4 gigawatts in the fiscal year ending March 31, 2026. Lastly, and most importantly, ESG is at the core of everything we do. I am happy to report that we continue to outperform on our ESG commitments. We have received an A grade rating from LSEG and a score of 90.41 out of 100, effectively placing us in the top quartile globally. We have also received an A grade rating from CDP Climate Change and Water assessments for effective water management at our plants. Not only this, but we have also been able to get water positive certification for 2 of our sites. Turning to pages 8 and 9. I wanted to highlight that this year marks a significant milestone for us as we mark 15 years of our operations. We now have 3 mature businesses, comprising a utility-scale IPP business, a C&I business as well as our manufacturing business. Turning to Page 10. It is important to note the crucial strides ReNew has continued to take against the backdrop of a transaction. We have commissioned approximately 1.9 gigawatts, ramped up our manufacturing capacity and also raised $100 million from BII, British International Investments, to finance the cell expansion of our manufacturing business. Our C&I business is among the market leaders in this segment, and our portfolio has expanded by approximately 30% over the past year through contracts with marquee customers. Leverage also continues to trend downwards meaningfully, and we are already at approximately 5.5x levels for our operating portfolio, which is debt-to-EBITDA. Moving to Page 11, I wanted to spend some time highlighting our key strengths. While everyone knows the size and scale of our portfolio, both in utility-scale and C&I, over the years, we have developed in-house O&M and EPC capabilities. We have also secured connectivity for our entire portfolio, including for our letter of awards, with 5 to 6 gigawatts of spare connectivity on hand. This is an important differentiator as timely connectivity continues to be a key metric in the sector that we operate in. Moving to Page 12. It is important to note that we have been consistently growing our EBITDA at approximately 17% per year since our listing. We have managed to do this without issuing any new equity and relying on capital recycling, which has been more attractive for us. On Page 14, I would like to add some new elements that will be pivotal for both growth, predictability and profitability. We have derisked our product execution and improved predictability of future cash flows by increasing more BESS and solar in our portfolio and reducing the reliance on wind. This will enable faster execution and more predictable revenues given that we already have a 25-year PPA backing these tariffs. Our capital needs will continue to be fueled by a mix of internal cash generation and capital recycling, enabling us to improve returns. Lastly, and most importantly, we will now have increased focus on balance sheet strength and discipline and will actively look to reduce leverage even further. While we are now delivering profitable results, a focus on leverage and cost optimization should further enhance our returns and cash flows. Turning to Page 15. We have provided some run rate numbers based on the current configuration, gross and net of asset sales. We wanted to demonstrate that by selling about 1.6 gigawatts over a period, we can effectively reach a portfolio of 19.2 gigawatts without having to raise external capital, as well as reduce headline leverage, including under-construction projects, from the current 6.7x levels to under 5.5x. If we are able to do more asset recycling or farm-downs, we plan to use that extra capital to get the leverage and corporate debt down even further. Moving to business updates on Page 17. We continue to deliver on operating megawatts and now have an operating portfolio of 11.8 gigawatts, an increase of 19% adjusting for the 900 megawatts of [ asset additions ] during the last 12 months. Our overall portfolio is now 19.2 gigawatts inclusive of BESS. In the past 9 months, we have commissioned over 600 megawatts of wind projects and over 900 megawatts of solar. Turning to Page 18. Our manufacturing business continues to perform above expectations and has delivered an adjusted EBITDA of INR 10.8 billion in the first 9 months of the current fiscal. The business has an external order book of 900 megawatts. Our under construction 4 gigawatt cell facility is progressing well and we should see it deliver its first cells later this fiscal year -- later next fiscal year, actually. Our module facilities are producing over 12 megawatts per day and have produced 3 gigawatts this year-to-date, but our cell facility is producing over 5.5 megawatts per day and has produced 1.4 gigawatts this year till date. So far this year, we have sold 2.6 plus gigawatts of modules, of which approximately 1.5 gigawatts have been sold externally that has been used as part of our own operations. Turning to Page 19. Our C&I segment has done exceedingly well and is one of the largest C&I portfolios in the country. We have developed a strong partnership with global tech giants like Amazon, Microsoft and Google, as well as expanded our customer base across the country. Overall, 50% of our portfolio is with these tech giants. The business is also well placed to tap into upcoming business opportunities such as energy management services and supply of renewable energy to data centers. Now I will hand it over to Kailash to discuss the financial highlights. Kailash, over to you. Kailash Vaswani: Thanks, Sumant. Turning to Page 21. We continue to deliver consistent profitable growth. Since the same time last year, we have constructed over 1.9 gigawatt of projects, a 19% increase in operating capacity after adjusting for the 900 megawatts sold during the trailing 12 months. This year, so far we have commissioned 1.6 gigawatts of renewable capacity. Our revenue increased by 48% for the first 9 months of this fiscal compared to last year due to increase in megawatts and a meaningful contribution by the manufacturing business. Our adjusted EBITDA for the third quarter of this fiscal is also up, largely on account of gains from asset sales, scaling up of our manufacturing business as well as an increase in the operating megawatts. Turning to Page 22. Our headline leverage continues to decline consistently. We had reduced from 8.2x in December 2024 to 7x debt/EBITDA at present, and at 6.7x once you exclude the contribution from our JV partners, which are [ equity ]. On a trailing 12-month basis, the leverage for our operating portfolio was approximately 5.6x. Do note that our trailing month EBITDA is not reflective of the run rate EBITDA for these assets as many of these assets have less than 1 year of operations. We continue to pursue all options that will decrease our leverage ratio at the consolidated level, such as asset recycling, cost optimization and a reduction in our corporate debt. Turning to Page 23, which covers details of our financing and asset recycling. Recently, we issued a $600 million bond at a coupon of 6.5%, which replaces the earlier bond which was at 7.95%. This is the first one from India's GIFT City, making it a marquee transaction. This issuance received strong investor interest of greater than $2 billion and has also enabled us to save $9 million in interest costs annually in addition to withholding tax savings. Additionally, we also concluded sale of a solar 300-megawatt asset, taking our total asset sales for the year to 600 megawatts, through which we have raised a total of $275 million through capital recycling this year, including the $100 million that we raised from BII from our manufacturing business. Let me now hand it over to Vaishali for comments on ESG. Vaishali Sinha: Thanks, Kailash. Turning to Slide 25, let's look at the advancements in renew sustainability initiatives and targets. The global landscape for ESG in 2026 demands mandate reaction and demonstrable progress, and we are proud to be leading the way in the renewable energy sector and beyond. Starting with our recent ESG ratings. For the LSEG ESG rating [Technical Difficulty]. Operator: It appears we've lost connection with our speaker. One moment while we reconnect. Vaishali Sinha: Hello? Anunay Shahi: Yes, I can hear you, Vaishali. Vaishali Sinha: Yes. So for the LSEG ESG rating, we received a remarkable score of 90.1 (sic) [ 90.41 ] out of 100 and a grade placing us in the top quartile globally. We are ranked second among 346 companies in our sector, reflecting a strong 7% year-on-year gain and clear industry leadership. We also excelled in the CDP Climate Change and Water assessments. We received an A rating in the Climate Change Assessment, featuring us in the prestigious Global Corporate A List, and retained an A- rating in Water Security. Overall, we are ranked in the top 4% globally by CDP. Water stewardship is a core pillar of ReNew's environmental strategy embedded across our operations. We successfully initiated a water positivity pilot, certifying 2 sites as water positive. Our solar site in Ashok Nagar, Madhya Pradesh were certified as water positive, making it India's first water positive solar plant. These achievements underscore our commitment to setting new benchmarks for the sustainability -- for sustainability in the sector. Now turning to Slide 26, let's review our advancements across the 4 pillars of our ESG initiatives and targets. Under the environment pillar, we have achieved our target being -- a target of being carbon neutral by completing the verification for the fifth consecutive year for fiscal year '24/'25. We continue to remain aligned to our annual SPT targets, achieving an 18.2% reduction in Scope 1 and 2 emissions from the baseline in fiscal year 2025. As the country advances towards sustainable economic and inclusive development, our CSR initiatives have also evolved to strengthen the priorities of new India. Our initiatives have positively impacted over 1.7 million lives so far. A major highlight is our Project Surya, which is skilling 1,000 salt pan workers as solar technicians, with 720 women trained and over 200 all replaced in the sector, significantly boosting our gender equality and skill employment. Under governance, we are making strong progress towards our target to rank amongst the top 5 global energy and utilities company by 2030 across leading ESG rating agencies. This is reflected in an S&P Global CSA score of 84 and LSEG score of 90.4 and top-tier CDP ratings of A for Climate Change and A- as for Water. These results reflect our continued commitment to responsible and sustainable practices. I will now turn it over to Kailash. Over to you, Kailash. Kailash Vaswani: Thank you, Vaishali. Turning to guidance for the fiscal year ending March 31, 2026. We have increased the lower end of our EBITDA guidance range by 3% and now expect that our adjusted EBITDA will be between INR 90 billion to INR 93 billion. We now expect to construct 1.8 to 2.4 gigawatts, up from 1.6 gigawatts at the lower end of projects during the year, and generate cash flow to equity of INR 14 billion to INR 17 billion. We are also increasing the guidance for the adjusted EBITDA contribution from our manufacturing business to INR 11 billion to INR 13 billion. With that, we'll be happy to take questions. Operator: [Operator Instructions] Your first question comes from Maheep Mandloi with Mizuho. Maheep Mandloi: Okay. Just one question on the revised strategy, something that you talked about having more solar and BESS only projects going forward. Could you just talk more in detail about that, what drove that decision, so all the puts and takes there? And on the solar side, you have been manufacturing the modules yourselves. Are there any plans to also do something like that on the BESS side as well? Sumant Sinha: Yes. Thank you, Maheep. Yes. Look, so the reason we are basically decreasing the amount of wind in the portfolio is because when we bid out some of these projects, at that time, price levels were, for BESS, were significantly higher than where they are right now, and also for solar. So in general, with prices of BESS coming down substantially, the ability to firm up power through solar plus BESS has actually improved. And therefore, to get to the right solutions that are desired by the customers, we require essentially less wind from an overall new configuration standpoint. So that is one reason that the amount of wind has decreased. The second thing also is that, as you know, we've had experience in wind where PLS have been unfortunately lower than expected over the last 7 years or the last 5 years. And we don't know exactly when that trend will reverse. It may reverse next year, it may take a little longer. But fundamentally, the variability in wind is a lot higher than it is in the case of solar. And execution also in general, because a lot of the execution in solar is in Rajasthan where it's easier to get land, and a lot of the execution of wind is in sort of Deccan, Central India, which a lot of it is agricultural land, it's usually harder to get. And so therefore, to do a similar amount of capacity is easier in solar than it is in wind. And so for both of those reasons -- I'd say, all 3 reasons, which is related to change of price in BESS, change of the issue of wind variability and the issue of easier execution in solar, we have, therefore, tried to reduce the amount of wind in our portfolio going forward. And so in the close to about 7 gigawatts of now capacity of PPAs that we have, we have reconfigured those projects as we are allowed to under the terms of the bid, of the various bids, and we are now, therefore, trying to go for a higher amount of solar plus BESS. There is, of course, still close to 1 gigawatt of wind, but is down substantially from 2.5 gigawatts that we had earlier. So those are the reasons. As far as manufacturing BESS is concerned, it's not something that we've actively looked at seriously at this point. And the reasons are actually twofold. One is -- or I would use threefold. One is that there is no restriction at this point on imports of batteries from China -- or cells from China and you know that you can import at a much cheaper level than you can manufacture domestically. And so that is one reason. The second reason was that, on the technology front, technology moves a lot faster in the case of batteries. And so it just requires a lot more expertise to be able to get into the understanding of the right cell technologies and so on. And a lot of the cell manufacturing in the country, or in any country for that matter, is really driven by the EV industry. And so that's a market that we obviously would not be targeting for our BESS production, or a lot of it would have to go into that segment, which is something that we don't understand as well. And so that's why we haven't looked at cell manufacturing so far, or batteries and manufacturing so far. Maheep Mandloi: Got it. I appreciate that clarity. And then maybe just on the update on the take-private or the course since here, like in one of the slides you talked about the path forward here. Is that the strategy going forward, or should we expect more in terms of the path forward, or more talks on privatization here? Sumant Sinha: So Maheep, that's not something that we can really comment on, obviously, as you know, because that's a very specific topic and that, should there be something that requires to be commented on, that the company will make an appropriate disclosure at that time. Operator: The next question comes from Nikhil Nigania with Bernstein. Nikhil Nigania: Good to see the focus on reducing leverage and increasing solar plus BESS instead of wind. My first question was on the industry issues, which are broader, which is transmission project delays, and curtailment, both which are outside our control but are impacting the industry, are we seeing any directional improvement on those 2 aspects, or they continue to be a hurdle for us? Sumant Sinha: Yes, Nikhil, thanks for the question. So you know that, obviously, these are issues that have got now a lot of visibility because it's impacting the industry as a whole, and therefore, there has been a lot of discussion within the ministries, that is MNRE and MoP on how to deal with this issue. And there's a lot more focus on how to get transmission execution improved. And there are various things that the government is doing, which I can tell you about separately perhaps or you can also find out what's happening. And the same thing on curtailment. So essentially, in the case of curtailment, a joint committee has sort of been established between the secretaries of MNRE and MoP to look at how to deal with this issue and how to essentially look at this loss, which obviously accrues to us, but which should actually get borne by a broader set of stakeholders. So that is something that is under discussion right now. I don't know exactly which direction of where it will finally end up at or even how long it might take to get to the right -- to the conclusion. But certainly, there is a recognition that this is a loss, that is a systemic loss, and there is no reason for only the developers at the sharp end of the stick to be taking on this loss in our books. So that philosophy is accepted. What is their idea of dealing with this is something that the government is thinking through. And on transmission as well, they're working on a lot of different things to see how they can improve the transmission build-out. Nikhil Nigania: Got it. Just a follow-up on that, on the curtailment bit. Is it fair to assume where we have a GNA and not a T-GNA? There we are compensated by the DISCOM in case of curtailment? Sumant Sinha: Yes, that is the case. So for example, in our situation, of the total loss we've incurred on account of this combined issue, approximately about 30% or 35% we're getting compensated back because we had GNA -- a permanent GNA. So when you have a permanent GNA, you basically get -- you get paid based on your schedule, rather than on the power that you're supplying. And in the case where you have a T-GNA, of course, you have to take the loss on your chin, which is now what the government is trying to figure out how to socialize that loss a little bit more across all stakeholders. But in the case of GNA, we get compensated. Nikhil Nigania: Got it. Appreciate that. And one last question on the manufacturing bit, I mean, a good source of cash for us. On the cell manufacturing side of the cell, are we seeing any compression in margins or that continues to hold strong? Sumant Sinha: So far, it's held up. There was a temporary lull when -- post -- during the monsoons when inventories tend to build up a little bit and execution slows down. But margins have again picked up a little bit in this current quarter. And it looks like the demand is reasonably okay at this point. Operator: The next question comes from Puneet Gulati. Puneet Gulati: My first question is on the change in configuration with more towards BESS and solar. Would it be fair to say that, even unadjusted for risk, the IRRs are better than what you could get out of wind? Sumant Sinha: I would say not at the time of bidding. But what has worked out historically in solar, because of CapEx reductions, has been that people have ended up with higher IRR than solar, because CapEx has declined, sometimes more steeply than expected. We are seeing a bit of reversal in that right now, as you know, because people have bid very aggressive numbers in recent auctions and prices have actually gone up given what's happening in China and so on. So it's a little times dependent. But in general, I would say that solar has tended to give higher returns than wind on account of reduction in CapEx over a long-ish period of time. Puneet Gulati: Right. So for your projects, if you were to execute it with wind versus solar, you'll earn more out of it? Sumant Sinha: If you do it more with solar than with wind, obviously, look, what happens is that we look to optimize our returns on the configuration at all points in time, right? Now as I said, there are 3 reasons of shifting away from wind. One is just configuration optimization, because of the new capital costs that are now available in the market for BESS. So that is allowing us to get better returns than what we had assumed at the time we bid, okay? So that is basically what's happening. But when you tend to execute when the risks are higher, not just on the capital cost side, but -- and we've seen costs overall happening in wind more frequently than we've seen happening in solar because of the execution problems that I was mentioning. And secondly also, once the asset is up and running, then also sometimes we'll see that wind performance does not show up as expected, and therefore, returns end up going down. So I would say that those are things that you can't necessarily -- or you don't really model for necessarily, but those end up happening in real life. Okay? So -- and no, it doesn't happen in every case, but on balance, it can happen. And so therefore, in general, the view is that solar risk-adjusted returns are more steady than wind risk-adjusted returns are. Puneet Gulati: Understood. And of your overall capacity -- yes, sorry. Anunay Shahi: So I was just saying that if you see the presentation, on Page 15, and then we have the updated configuration on Page 41, so basically what has happened is with the fall in BESS prices and the new configuration, essentially our CapEx for the build-out is going down by around INR 60 billion. Whereas, on the other hand, the EBITDA is only declining by around INR 6.5 billion to INR 6.8 billion. So effectively, our EV EBITDA for the under-construction portfolio is improving a bit, apart from obviously having greater control of execution and more predictable cash flow. So even from a return perspective, because of where BESS prices have trended and solar prices have trended, it's more -- it's better for our returns. Puneet Gulati: Understood. And secondly, in your overall production or capacity, how much would be under T-GNA? And what sort of curtailment would you have faced in the third quarter? Sumant Sinha: In the current quarter. See, the T-GNA is -- it's not a fixed number. If you just ask for the last quarter, actually, some of our projects actually moved from T-GNA to GNA. So I can't give an exact number, but it's probably in the few hundreds of megawatts now. I think it was maybe close to 1 gigawatt earlier, now it's perhaps down to 400 megawatts, 500 megawatts, because 500 megawatts or thereabouts moved from T-GNA to GNA. But as you build new projects, it depends on the substation that you're connecting into. If that substation has not been properly connected at the back end through various other transmission lines to the rest of the national grid, then any project that connects to the substation faces or gets T-GNA. And then whenever those back-end transmission lines get built out, then that T-GNA converts to GNA. So it could be that a project is on T-GNA for a quarter or 2 quarters and it's some part of the new projects that you're building out. So there -- so that is the way it's sort of working. There could be 500 megawatts, 700 megawatts that are at any given point in time on T-GNA. Puneet Gulati: Okay. And on the T-GNA capacity for last quarter, how much would be that faced curtailment? Sumant Sinha: Anunay, do you have those numbers? Anunay Shahi: Yes. So Puneet, when we started the last quarter, there was roughly, as Sumant said, close to 1 gigawatt of capacity on T-GNA, out of which about 600-odd megawatts moved to permanent GNA. So currently, we have maybe somewhere 400 megawatts or a little below that which is on T-GNA. Sumant Sinha: And by the way, when something is on T-GNA, it doesn't mean that it's getting fully curtailed. It just means that there is some degree of curtailment, which could be 10%, 20%, something in that range. And that also depends on -- yes. Yes. And that also depends on the day and the demand and all of those things. Puneet Gulati: Got it. And lastly, you talked about your target leverage ratio at 5.5% for fully constructed portfolio. You're already at 5.6% for your operational portfolio. How much more do you want to bring your leverage down? Is there really a need to bring down leverage, once a portfolio is constructed, it should automatically be there? Or there is a general need to bring down a large leverage? Sumant Sinha: Kailash, you want to take that? Kailash Vaswani: Yes, I can take that. Anunay Shahi: One thing I'd clarify -- one thing I'll clarify, Puneet, sorry, Kailash, before you answer, is, Puneet, when we say 5.5x, it's the headline leverage. So whereas right now, it's closer to 6.5x, 6.6x. The intention would be to bring it down to that level over time. But yes, Kailash, please. Kailash Vaswani: Yes. I think, Puneet, so that's one clarification, and the other thing is that overall feedback that we have received and we also believe strongly in that, is that we need to have more accruals coming to shareholders than to debt providers. And in that context, obviously, bringing down leverage is the easiest way to do that. Because I think cost reduction, we have managed to achieve as much as we can, but I think it's just a headline debt number, which takes out the free cash flows to the firm. That's the reason why we'd like to bring it down. Puneet Gulati: Understood. 6.7x going down to 5.5x is what one should think about. Any target date in mind or year in mind? Kailash Vaswani: No. So I would say that, basis, whatever number crunching that we've done, I think, by between '28 to '30 time when we'll be able to achieve this. Operator: That does conclude our Q&A session and our conference for today. Thank you for participating, and you may now disconnect.
Roger Woods: Good morning, ladies and gentlemen. Welcome, and thank you for joining FSL Trust's Second Half and Full Year 2025 Financial Results Live Webcast. My name is Roger Woods, and I'm the Chief Executive Officer of FSL Trust Management, the trustee-manager of FSL Trust. We have announced the unaudited second half full year 2025 financial results for FSL Trust yesterday evening, and the relevant materials are available on our website, www.firstshiplease.com as well as on the SGX website. During this live webcast, we will discuss the Trust's activities and the operational and financial performance in the second half and the full year of 2025. After the presentation, we will take questions from the audience. Before we begin, please note that today's discussion contains forward-looking statements based on the environment as we currently see it and certain assumptions, which are subject to risks, uncertainties and external factors. The actual future results may, therefore, differ materially from our today's views and expectations communicated in this presentation, and you are advised to read the disclaimer in the financial results presentation. Please note that this live webcast, including the Q&A session will be recorded, and a recording will be available on our website from tomorrow afternoon. We start the presentation by looking at the operational and financial highlights for the second half of 2025 and the full year 2025 results. The tanker markets have been volatile with the changing trading environment, some sectors in the tanker market are also gaining as more vessels are placed on the sanctions list of various countries. Moving on, our fleet utilization during the second half was up 100% as all the vessels are all employed on period bareboat charters. On the financial side, we ended the second half with a net profit of USD 5.1 million and 12-month result for 2025 was a net profit of USD 6.9 million. Within these results, the profit was increased by the reversal of an impairment on vessels -- for 3 vessels of $3.7 million and also the gain on disposal of the vessel of $0.7 million. In the second half, the adjusted EBITDA was USD 2.1 million. We ended the 12 months with an adjusted EBITDA of USD 4.1 million. In terms of capital structure, the liquidity position of the Trust on the 31st December 2025 was $20.8 million. During the year, we made loan repayments of USD 4.1 million, so we're having 0 net debt. Taking a look on the operational page. Performance of the fleet on Page 4 of the presentation, the adjusted EBITDA for the Trust's core fleet, the specialized tankers decreased slightly when compared to the same period in 2024. We sold Clyde Fisher in February 2025. Moving on to fleet employment on Page 5. The Trust's contracted future revenue as at the 31st of December 2025 stood at approximately USD 17.1 million. We are pleased to confirm our vessels specialty seniority and superiority have been extended for periods from 5 months up to 4 years. On the next slide, you can see the individual ship employment going out further. As you will see, we have 4 vessels, which are employed until 2029. Moving on to the financial performance review. You can see that the development of revenue, the adjusted EBITDA and the net income over the last half years and in comparison to the previous periods. The impact of a smaller fleet is now being reflected in the revenue and adjusted EBITDA. In terms of financial leverage of the Trust, which is presented in the graph on the left-hand side of Slide 8, the trust had 0 debt at the end of year 2025. Ladies and gentlemen, this concludes the second half and full year 2025 financial results presentation, and we are now open for any questions you may have. Roger Woods: [Operator Instructions] We appear to have no questions from unitholders. We have, therefore, come to the end of the results webcast. Thank you for joining us, and we wish you a good day and look forward to speaking to you again at the next half year. Goodbye.
Masaomi Gomi: Good afternoon. This is Gomi, Head of Investor Relations at Coca-Cola Bottlers Japan Holdings. Thank you for joining our full year 2025 earnings presentation for analysts and investors. Today, we are joined by our President, Calin Dragan; and CFO, Bjorn Ulgenes. Also with us are Executive Officer and President of the retail company, Alex Gonzalez; Executive Officer, President of the Food Service Company and Chief Business Strategy Officer, Maki Kado; Executive Officer, Chief Supply Chain Officer and Chief Sustainability Officer, Andrew Ferrett; and Executive Officer and Chief Human Resources Officer, Yuki Higashi. Following prepared remarks, we will be happy to take your questions. Simultaneous interpretation in Japanese and English is available for both today's presentation and the Q&A. Before we begin, please note that today's presentation contains forward-looking statements and should be considered together with cautionary statements contained in our presentation materials. With that, I'd like to turn the call over to Calin Dragan. Calin-san, please? Calin Dragan: Good afternoon, everyone. This is Calin Dragan. Thank you for joining our earnings call. And first, I will go over the key highlights of today's presentation. Please turn to Slide 3. 2025 was a fantastic year that delivered many remarkable results, increasing our shareholders' value. Business income exceeded our forecast even after they were revised upward twice during the year and reached JPY 24.5 billion, more than doubled than the previous year. Despite the challenging cost environment, we maintained a robust profit growth trend. Over the past 3 years, cumulative business income growth totaled JPY 39 billion. I would also like to highlight that this JPY 24.5 billion business income includes significant cost increases from external factors such as foreign exchange fluctuations and increased commodity prices. I would also like to emphasize that adjusted business income, excluding the cumulative impact of this factor since 2017 exceeded JPY 50 billion and reached a new record high. This clearly shows that our profitability improvement initiatives are delivering steady results. Building on the strong earnings performance, we revised our strategic business plan upward in August and announced the new Vision 2030. We set ambitious targets for key metrics and continued our commitment to further increase shareholder value. In October, we also announced an expansion of our shareholder returns. We view this positive cycle where we have consistently improved performance and enhanced shareholder returns to be one of our major achievements for 2025. In 2026, we will continue this positive momentum as a year of great progress towards achieving our ambitious long-term goals. This year, our business income target is JPY 35 billion. This marks the 4th consecutive year of earnings growth exceeding JPY 10 billion. At the same time, we will enhance shareholder returns, including a 20% year-on-year increase in dividends. And as the -- first year of Vision 2030, we will pursue profit growth and higher shareholder returns to further increase shareholder value. Now our CFO, Bjorn Ulgenes, will walk you through our financial results in more details. Bjorn Ulgenes: Thank you, Calin. Good afternoon, everyone. This is Bjorn. Please turn to Slide 5 for the full year profit and loss. In 2025, our profitability improvement measures and other initiatives proved successful. As a result, profits increased significantly following the previous year. Sales volume also performed well and outperformed in the market experiencing negative growth. Revenue remained broadly in line with the previous year and exceeded the revised plan announced in October. Price revisions improved wholesale revenue per case despite the impact of channel mix changes. Gross profit decreased by JPY 3.1 billion year-over-year. This was mainly due to a weaker channel mix and higher external costs. It also includes a onetime revenue decline linked to changes in Coca-Cola Japan companies marketing investment method. Business income increased significantly by JPY 12.5 billion year-over-year. This was mainly driven by top line growth and cost savings from transformation initiatives. Factors contributing to the profit increase will be explained shortly. Operating income and net income decreased from previous year. This was primarily due to an impairment loss of JPY 88.4 billion in the Vending business, recorded during the second quarter. EBITDA, a measure of cash generating profitability, rose by JPY 6.7 billion year-on-year to JPY 64.2 billion. Slide 6 shows segment performance. In 2025, the OTC and Food Service businesses supported revenue growth while the Vending business drove profit growth. In Vending, revenue declined due to lower sales volume from ongoing market contraction and the impact of price revision. However, segment profit improved significantly by JPY 6.1 billion. This was mainly due to transformation benefits including lower depreciation expenses associated with impairments and higher route productivity. In OTC, the market environment was challenging and volume declined due to price revision. However, growth in online and drugstores and discounters supported overall performance and full year volume remained in line with the previous year. Revenue increased by 1.7%, partially due to price revision. Changes in Coca-Cola Japan companies marketing investment methods had an impact which led to a decrease in segment profit. The Foodservice business achieved strong sales volume and revenue growth and earnings growth rate that was even higher. This was supported by expanded product offerings, activities to acquire new customers and price revision. Please turn to Slide 7 for the factors behind the change in business income. Starting from the left, we can see the impact of volume, price and mix. These reflect changes in marginal profit from commercial activities and contribute a positive JPY 8.8 billion year-over-year. The main factors were a negative impact of JPY 6 billion from volume effect, including channel mix, a positive impact of JPY 18.8 billion from pricing and a negative impact of JPY 4 billion from other factors. While channel mix deteriorated due to shifts in consumer trends, improved wholesale revenue per case from price revisions is steadily supporting results. Transformation benefits exceeded initial projections by a significant margin and reached JPY 6.9 billion. Major contributions came from commercial and supply chain with vending transformation, particularly exceeding expectations. Promotional expenses increased by JPY 0.9 billion year-over-year. Spending increased due to intensified activities to capture peak season demand and secure shelf space ahead of the October price revision. However, the increase was well controlled versus the initial plan through appropriate marketing investments based on market conditions and ROI. Manufacturing decreased by JPY 2.2 billion compared to the previous year due to cost savings at manufacturing sites and in the procurement process. Other costs increased by JPY 3.2 billion year-over-year. This was mainly due to higher outsourcing fees, logistics costs and vehicle and facility-related expenses, despite lower personnel expense. It also include special factors such as reduced depreciation following the vending business impairment and changes in Coca-Cola Japan companies marketing method. Commodity and utility costs increased by JPY 1.3 billion. Of this increase, JPY 1.4 billion was attributable to commodity market and ForEx rates, while utility costs decreased by JPY 0.1 billion. Next slide onwards is on commercial activities. Slide 8 shows sales volume performance by channel and category. Full year sales volume was flat year-over-year despite negative impacts from price revision. This was achieved by strengthening core categories, expanding sales space and executing effective marketplace. As a result, we outperformed declining markets. Wholesale revenue per case also improved across all channels following price revision benefits. By channel, sales volume for vending and convenience stores declined due to price revision. However, in Vending, wholesale revenue per case improved by JPY 90 year-over-year due to price revision. In convenient stores, profitability improved through higher wholesale revenue per case, disciplined control of rebates and promotion. Supermarkets, drugstores and discounters face challenging conditions, especially for large PET buffers due to price revisions and the cycling of the previous year's special demand. However, in the fourth quarter, we captured increased demand opportunities and achieve positive volume growth. Online and Food Service continued to perform well and supported overall volume growth. Online volume increased by 17%, driven by the channel exclusive labelless products and other initiatives. Food Service volume increased by 9%, supported by stronger Sparkling sales at restaurants and related initiatives. In the Sparkling category, volume increased by 5%, led by Coca-Cola and Coca-Cola Zero. Tea volume grew by 1%, mainly driven by Ayataka, which delivered double-digit growth last year following its successful full product renewal. Ayataka further grew by 2% with the launch and renewal of multiple products, including Ayataka Koi Ryokucha, sports, water and coffee, so volume declines due to the impact of price revision. Slide 9 shows market share and retail price trends. Our profitability focused commercial activities supported value share growth and maintain price premiums. Market share increased by 0.2 percentage points in total channel value share and 0.5 percentage points in volume share. Despite tough market conditions, our volume continued to outperform the market and contributed to positive value share growth. In Vending, the market remained challenging and value share declined. However, effective demand capture measures, including Coke ON campaigns, supported volume share growth, while wholesale revenue per case improved through price revision. In the OTC channel, value share declined due to volume decreases from price revisions and channel and package mix. However, in the fourth quarter, we capitalized on increased demand opportunities resulting in a 0.6 percentage point increase in value share, showing recent improvement. Our products continue to maintain the price premium relative to the industry average. In October last year, we implemented our 8th price revisions since 2022 and retail prices continue to show an improvement trend year-over-year. Slide 10 covers key topics in our 2025 commercial activity. Despite continued challenging market conditions in 2025, we implemented price revisions to improve profitability while enhancing competitiveness and achieving volume growth performance of the market. In 2025, in line with our profitability focused strategy, we implemented price revisions twice in May and October and work to maintain and improve shipment prices after the revision. The effects of these price revisions have materialized as planned and contributed significantly to profitability. Alongside price revisions, we flexibly controlled rebates and promotional costs. Through ROI-focused marketing activities, we work to contain costs and allocated resources to mid- to long-term growth investments. We have also announced ahead of the industry, our 9th price revision this March, targeting Green Tea products. This shows our strong commitment to further profitability improvements in an environment of rising industry costs. From a competitive perspective, we also delivered solid results. By strengthening core categories, expanding sales pace and executing effective marketing, our sales volume consistently outperformed the market experiencing negative growth throughout the year. Implementing these growth strategies within clearly defined business units has led to a more effective business operations and performance management, contributing to enhanced competitiveness and improved results. We are confident this will form the foundation for our mid- to long-term growth. Slide 11 explains our sustainability and human resource strategies for sustainable growth. For environmental and community initiatives, we invested in projects that reduce environmental impact in the future. This includes conducting road tests of large trucks using renewable diesel, a new generation biofuel contributing to decarbonization and demonstration projects that generate clean electricity from tea and coffee grounds, while using refurbished high purity CO2 as a manufacturing power source. At the Osaka, Kansai Expo, we implemented horizontal PET bottle recycling through bottle-to-bottle and introduce groundbreaking initiatives, such as the world's first vending machine powered by hydrogen cartridge. To strengthen human capital, we focused on recruitment, development and retention to enhance the pipeline at each stage to increase the ratio of female manager. As a result, we achieved our 2025 target of 10% female managers ahead of schedule. We also introduced initiatives to support dual-income households, shared parenting and flexible work style. These ESG initiatives have been highly recognized and our company has been selected for multiple indices. We will continue to advance our efforts towards achieving ESG initiatives, that supports sustainable growth. From the next slide, Calin will explain our 2026 full year plan. Calin Dragan: Thank you, Bjorn. This is Calin again. In our strategic business plan, Vision 2030 aimed at further increasing shareholder value, we have set ambitious shareholder return targets alongside profitability and capital efficiency goals, such as business income exceeding JPY 80 billion and ROIC exceeding 10%. We consider 2026 the first year towards achieving this Vision 2030 to be a crucial year. And as mentioned earlier, we positioned 2026 as a year of great progress towards achieving our ambitious long-term goals. We aim to further increase profits beyond the substantial growth achieved in 2025. We will also enhance profitability and capital efficiency with a focus on ROIC while further expanding shareholder returns in line with our Vision 2030. Our 2030 targets are ambitious. However, we are confident that steady profit accumulation will allow us to achieve them. With this conviction, we will move ahead with determination in 2026. Slide 14 outlines the strategic direction for 2026. In commercial, as a key initiative for achieving commercial excellence outlined in Vision 2030, we will further evolve the business operation structure for each business unit aiming to enhance competitiveness and profitability. We will strengthen our market execution through an optimized product portfolio and marketing plans while continuing to focus on profitability driven commercial activities, including price revisions throughout this year. We will also focus on further strengthening customer engagement, which is crucial for accelerating our growth strategy. Furthermore, through transformation, we will generate an annual cost savings of JPY 6 billion, while building a solid growth foundation for the future. Within the supply chain domain, one of our key pillars, we will continue to focus on strategies that achieve further productivity gains through the local production for local consumption model in both manufacturing and logistics, while strengthening demand-driven agile responses. Furthermore, in the back office and IT fields, we will further advance data-driven management. To strengthen our financial foundation, we will continue to strive for appropriate capital management and utilization aiming to improve capital efficiency, including optimizing our balance sheet. Through a steady advancement of these initiatives, we aim to achieve business income of JPY 35 billion, an increase of over JPY 10 billion from the previous year, with a ROIC of 4% or higher. Regarding the shareholder returns, we will increase the annual dividend per share by 20% compared to the previous year and complete the second year of our JPY 30 billion share buyback program by October. While aiming to achieve this ambitious 2026 targets, we also intend to realize the year the positive cycle embodied in 2025, improving performance and expanding shareholder returns. Now Bjorn will take you through the details of the 2026 earnings plan. Bjorn Ulgenes: Thank you, Calin. This is Bjorn again. Slide 15 shows the P&L for the full year 2026 plan. For 2026, we plan to achieve revenue of JPY 902.7 billion, representing a 1% increase year-over-year. While we anticipate a 1.5% decrease in sales volume compared to the previous year, due to the continued challenging market environment and the impact of price revisions on volume, we plan to steadily implement profitability improvement measures, including price revisions to achieve a strong improvement in wholesale revenue per case. Gross profit is targeted to grow by 4.3%, outpacing revenue growth driven by improvements in wholesale revenue per case from price revisions and other factors as well as controls and sales deductions such as rebates. For the 4th consecutive year, we aim to achieve business income growth exceeding JPY 10 billion, targeting JPY 35 billion. We will provide details on the factors driving changes in business income later. Operating income and net income are projected to improve significantly year-over-year, driven by increased business income and the cycling effect of the impairment loss on the vending business recorded in the previous year. EBITDA is projected to reach JPY 70.1 billion, an increase of JPY 5.9 billion as we steadily enhance our profit-generating capability. Slide 16 shows the P&L by segment. The Vending business is projected to achieve revenue similar to the previous year despite anticipating continued challenging volume trends across the overall market due to the impact of price revisions. On the other hand, we expect segment profit to increase significantly by JPY 9.3 billion as we accelerate the transformation of our Vending business, leveraging technology. This includes the effect of reduced depreciation expenses following the impairment of the vending business in the previous year, but even excluding this factor, we will achieve solid profit growth. For the OTC business, volume is projected to decline year-on-year overall, impacted by the challenging market environment and volume declines due to price revision, despite anticipating growth in the robust online segment. In contrast, we anticipate a 2% increase in revenue driven by improved wholesale revenue per case resulting from the effect of price revision. Segment profit is targeted to grow by 5%, exceeding the revenue growth rate through price revision benefits and optimal promotional investments focused on ROI and cost control. In the Food Service business, we anticipate strong volume growth of 3.5% driven by expanding product offerings to enhance customer proposals and the results of new business development activity. We aim to increase profit through top line growth. Please turn to Slide 17 for the factors behind the change in business income. We aim for an increase of JPY 10.5 billion year-over-year, driven by top line growth and the realization of transformation benefits. Starting from the left, we can see the impact of volume, price and mix. We target JPY 10.2 billion improvement over the previous year, primarily driven by the positive impact of price revisions, improving wholesale revenue per case while factoring in the continued trends in volume and channel mix. Cost savings through transformation will generate benefits across all areas; commercial, supply chain, back office and IT, aiming for a total profit contribution of JPY 6 billion. We will steadily advance this plan as outlined in Vision 2030. DME plans to increase its budget by JPY 1 billion from the previous year to further strengthen the growth foundation toward achieving Vision 2030, we will strategically execute marketing investments focused on ROI that drive mid- to long-term growth while taking market conditions into account. Regarding manufacturing, we expect to reduce costs by approximately JPY 0.2 billion through measures such as maximizing utilization rates and yield rates at manufacturing. Other costs are projected to increase by JPY 3.5 billion. Overall costs are expected to rise as we implement necessary investments and expenditures at appropriate levels to achieve Vision 2030. This figure includes the reduced depreciation effect associated with the impairment of the vending business recorded in the previous year. The impact of commodity prices and utility costs is expected to deteriorate by JPY 1.4 billion compared to the previous year, primarily due to foreign exchange impact. While the upward trend in cost is expected to continue, we believe we have been able to mitigate some of the cost increases through collaboration with the Coca-Cola Systems global procurement organization and our own unique procurement strategy. Now starting with the next slide, Alex will explain our 2026 commercial strategy. Alex, please go ahead. Alejandro Gonzalez Gonzalez: Thank you, Bjorn. Alex here. Slide 18 outlines our 2026 commercial strategy. In commercial, we will enhance competitiveness and profitability through business unit-specific operational framework. As pillars of our commercial strategy, we have established strengthened portfolio edge, ensure profitability focused commercial activities, strengthened relationship with customers and business unit-specific operations. Now let's move on to the next slide for a detailed explanation. Slide 19. In collaboration with Coca-Cola Japan Company, we will strengthen our portfolio age centered on the 3 pillars you see here. Establishing our core involved strategically focused on our core brands, enabling Coca-Cola Trademark to achieve robust growth last year and deliver one of the highest volume growth rates within the global Coca-Cola system. This year, we will continue implementing initiatives to expand our share in meal occasions and enhance our shelf presence. Additionally, Ayataka has achieved growth for 2 consecutive years since its full renewal 2 years ago. This year, its third year since renewal, we will implement price revisions while leveraging the competitiveness we have strengthened to capture demand. Starting this month, we have launched a campaign encouraging people to enjoy rice bowls with Ayataka. In Georgia, we will strengthen sales through campaigns at convenience stores and vending machines near workplaces, aiming to establish drinking habits in work settings and expand our customer base. For strategic new products, we will enhance sales by relaunching Karada Sukoyakacha W+ with a renewed focus on promoting its consumption during meals, responding to growing consumer demand for health and wellness. Additionally, for Ayataka Koi Ryokucha, we will broaden consumer choices in daily life by offering a diverse range of package sizes, meeting a wide variety of drinking needs. Minute Maid Zero Sugar Lemonade was launched in March last year as a juice beverage offering zero sugar and zero calories, capturing the growing health consciousness trend. Since its launch, it has been well received and has contributed to the expansion of the growing thirst quenching juice market. We plan to introduce new products and aim for continued growth across the entire series. To deepen connection with consumers, Coca-Cola will leverage FIFA World Cup assets to maximize drinking occasions. Furthermore, the Coke ON app, a key digital engagement tool, has surpassed 65 million downloads, contributing to the growth of repeat users. We will continue to evolve this platform. Slide 20 is on commercial activities focused on profitability. To maximize profits, pricing strategy will remain a key initiative this year. We will maintain disciplined commercial activities to generate the benefits from the series of price revisions we have implemented. Additionally, we will proceed as planned with the price revisions for green tea products effective for shipments starting March 1. This marks the 9th price revision for our products since 2022. Revision applies to approximately 10% of our total sales volume with the adjustment rate representing an increase of 6.3% to 12.1% of the manufacturer's suggested retail price. Price revisions remain a key measure for improving profitability and form the growth foundation supporting our sustainable profit growth. We will leverage the gain from our series of price revisions to implement strategic pricing approaches that adapt to changing environments while continuing to explore further price revisions. We will also focus on mix improvement and strategic growth investments, implementing profitability focused commercial activities from a broader perspective. We will strengthen sales of profitable small package products and high value-added products to strategically deploy optimal products and packages tailored to customer profiles and competitive environment and focus on ROI-driven marketing investments from a mid- to long-term perspective. By executing these initiatives, reliably under a strong partnership with our customers, we will achieve improved profitability. From Slide 21, we will now explain business unit specific operations. In the Vending business, we will enhance profitability and capital efficiency through technology-driven transformation. This year, we will accelerate the placement of new profitable vending machines. This will be achieved by introducing new targeting tools for placement locations, building a digital platform that combines vast amounts of data to gain insights into locations with promising profitability and revamping our operational processes to enable efficient and effective new placements. We will further enhance sales and operational efficiency by focusing on strategic assortment and flexible pricing and packaging strategy. Regarding assortments, we will improve the quality and precision of our initiatives. So just updating the AI engine of the assortment system introduced last year, while also sequentially rolling out measures to achieve optimal pricing and packaging tailored to each location, implementing this through ongoing testing. Additionally, as part of our digital marketing efforts, we will continue to strengthen initiatives on the smartphone app, Coke ON. We will implement individualized strategies based on usage patterns and sales data to acquire new users and increase purchase frequency. Furthermore, to strengthen the foundation of the vending business, we will work to optimize costs and capital investment by reviewing operational route designs, revising transaction terms, effectively utilizing equipment and prioritizing system investments focused on return on investment. Slide 22 covers the growth strategies for the OTC business and the Food Service business. In the OTC business, we will thoroughly execute market strategies tailored to each area and stores unique characteristics. We will focus on establishing core products as staples aligned with consumer needs, while aiming to expand shelf exposure, particularly for Sparkling and Tea. In convenience stores, we will pursue the development of customer exclusive products. We will also appropriately manage and execute promotional investments, including rebates based on ROI. Investment will be directed to our initiatives aimed at fostering buying habits, such as implementing digital-driven promotions and integrating retail media with in-store activation. Furthermore, focus on enhancing proposal capabilities through AI and strengthening comprehensive collaboration with customers to build a foundational -- for sustainable, high-quality profit growth. In Food Service business, we'll focus on expanding beverage consumption occasions by strengthening tailored proposals for each customers and building a strategic partnership with customers that leverage our strengths. We will optimize equipment and product assortment with a focus on profitability while also leveraging digital tools to stimulate demand. By concentrating on effective and efficient activities and creating drinking occasions, we will strive to expand business opportunities. I will hand it back now to Bjorn. Bjorn Ulgenes: Alex, thank you. This is Bjorn. Slide 23 outlines our initiatives in the supply chain and back-office IT. We will build a robust business foundation through a transformation to achieve Vision 2030. In supply chain, we will continue to enhance productivity by further promoting the local production for local consumption model in both manufacturing and logistics. This year, we will establish a new integrated logistics center, IDC, in the Kanto region, following last year's launch of such a center in the Kyushu area. Leveraging our accumulated knowledge, we will accelerate the reorganization of our logistics network, including the consolidation of product inventory and logistic hubs. Additionally, we will fully implement the new supply planning platform introduced by the end of 2025 as the foundation for our SOP process. By leveraging AI and utilizing detailed data and analytical capability, we will strive to further improve the process. Additionally, in the second half of this year, we plan to commence operations for new aseptic production lines at our Saitama plant,, which involves modifying parts of the existing production line. This will enhance overall manufacturing capacity in the country region. The back office and IT areas, we will further advance the standardization and streamlining of business process. We will also integrate various IT systems and data to drive data-driven management. Preparations for the future introduction of a new core system will also be undertaken. We will accelerate these initiatives by leveraging access to DX best practices within the global Coca-Cola system. Please turn to Slide 24. I will outline our financial strategy and shareholder returns. Each business unit will manage and enhance not only profitability, but the ROIC as well, which will lead to an improvement in the company-wide ROIC. We will also focus on executing capital investments with an emphasis on ROIC and on initiatives to optimize the balance sheet. ROIC improved by 1.8 percentage points year-on-year in 2025, reaching 3%. This year, we aim to improve it by at least another percentage point targeting 4% or higher. We will also focus on improving our cash generation capabilities, which serve as the foundation for expanding shareholder returns. While we have a JPY 60 billion corporate bond repayments due this September, we will consider borrowing and refinancing options while keeping an eye on mid- to long-term funding needs and considering balance sheet leverage. Our earnings power is steadily improving, and we will continue to allocate the generated cash appropriately between growth investments and shareholder returns. Regarding shareholder returns, we will expand them as planned on the Vision 2030. The dividend, based on our progressive dividend policy, we plan to increase dividends for the third consecutive year. This year's annual dividend per share is planned to be JPY 72, a 20% increase from the previous year that grew 13%. Furthermore, the share buyback program totaling JPY 30 billion. Now it is second consecutive year and implemented since last November, is progressing as planned and is scheduled for completion by the end of October. Whilst details for the 2027 program has not yet been decided, based on previous levels, we are considering a buyback equivalent of JPY 30 billion or more. Now finally, for the summary. Maki, please take it. Maki Kado: Thank you, Bjorn. This is Maki. Allow me to conclude today's session. Please turn to Slide 25. Once again, 2025 delivered outstanding results and proved to be a remarkable year. The growth foundation we gained through transformation pursued even under challenging conditions, combined with profitability-focused business activities contributed to increased profits and enable us to achieve significant progress. The substantial improvement in performance we have realized thus far provides momentum and confidence toward achieving our ambitious Vision 2030 goals. Furthermore, I would like to reiterate our strong commitment to enhancing shareholder returns and our track record of delivering results. To increase shareholder value, it is crucial to create a positive cycle by simultaneously improving profitability and capital efficiency while expanding shareholder returns. We believe that embodying this cycle represents a significant achievement contributing to the realization of Vision 2030. Moreover, based on our track record to date, and the outlook for 2026 and beyond, we are now setting a new target for business income in 2027 at between JPY 45 billion and JPY 50 billion. While this is an ambitious target, we believe it is achievable, given our track record and the steady progress of key initiatives according to plan. This further strengthens our commitment to the Vision 2030 goal of over JPY 80 billion in business income. To ensure the growth trajectory towards 2030 outlined here, the success of 2026, the first year of Vision 2030 is of crucial importance. By executing the strategy explained today, with unwavering focus, we will firmly achieve our 2026 business income target of JPY 35 billion and launch Vision 2030 with a strong momentum, aiming to further increase shareholder value. That concludes today's presentation. Thank you for your attention. Now we will move on to the Q&A session. Gomi-san please take it from here. Masaomi Gomi: Thank you, Kado-san. This Q&A session is intended for analysts and investors. Members of the media are kindly asked to refrain from asking questions at this time as a separate session will be held later today. [Operator Instructions] We will now begin the Q&A session. Operator, please proceed. Operator: [Operator Instructions] Ihara-san from UBS Securities. Rei Ihara: This is Ihara speaking. So I would like to ask one question. On Page 25, you were talking about like JPY 45 billion to JPY 50 billion for 2027, the return is also very strong in commitment in the tone. So I feel a confidence in the management here. But on the other hand, probably by looking through the length of the stock market, we were wondering the external environment is really harsh, but you have a very, very strong confidence. I feel that the communication is a little bit weak in here. So my question is when it comes to mid- to long-term plan, I know you are very confident, but what is the reason behind your confidence? I know there are something obvious to us, but there must be something that we are not yet realizing. I would like to understand where the confidence comes up from -- within your company? Masaomi Gomi: Thank you, Ihara-san, for your question. From the midterm mid- to long-term perspective, you would like to understand why you are confident about this plan? So Bjorn-san, would you like to pick up this question, please? Bjorn Ulgenes: Ihara-san, thank you for the question. So as you said, we are confident about the trajectory our business is on. And that's why we also thought it would be helpful for you to see a 2-year range so you can evaluate how we are progressing towards those strategic targets. And I think the root of your question, if I got the translation correct, is what's the source of the confidence? I think there are several things. One, we have a clear vision where we're going. We know our targets, we know our KPIs and the whole purpose is executing against that. Everything will stand and fall on commercial execution. And every day, we're seeing the 3-legged business unit approach we have or segments, as we also call them, continue to perform very well according to the job ticket they have been assigned. So that's the overall commercial part. And if we have time, maybe Alex and Maki can build on that. The second part is transformation. You saw very strong results for transformation in 2025, and we continue to build on that across the board, the Commercial business units, supply chain and back office. And three, you also see from the shareholder-related results that we're putting out there with the dividends, the share buybacks and the commitment to continue, so is the source of a very strong balance sheet. So overall, we believe these key fundamental elements will enable us to deliver our targets. Thank you. Alejandro Gonzalez Gonzalez: Ihara-san, Alex here. Just to provide a little bit more color on the business unit. I think to begin with Vending, clearly, we have over the last 3 years and particularly last year, driven a significant profit growth back to the strategic role of this business unit in Vision 2030. And we will continue to accelerate beyond the learnings of what we have captured until now. And again, back to the track record of delivering in a very challenging environment, we have been able to grow ahead of the market, indeed, the market growth. Particularly with Vending, we will move further into more granular growth looking at unlocking opportunities beyond the total Japan but really looking at where by subsegment closures and location level and unlocking and deploying the tools and the data-driven strategies back to placement back to how are we allocating the capital in the market and how are we driving assortment. But just to give you a color on Vending. Masaomi Gomi: Thank you, Ihara-san. So I hope that answered your question. Operator, please put through the next question. Operator: Next person with a question, SMBC Nikko Securities, Furuta-san, please go ahead. Tsukasa Furuta: SMBC Nikko Securities, Furuta speaking. So I have one question. So the concept behind the guidance for this term. So volume mix effect will be much higher than last year. So there is an impact of the price revision in last October and also deterioration of channel mix. And also -- so not many manufacturers announced the price division. So considering everything, how are you going to deliver on the plan for this term for 2026. Masaomi Gomi: Furuta-san, thank you for your question. So in the guidance for 2026, so there is a tough situation in the volume price mix and how we can deliver on the high target. Bjorn will answer the question. Bjorn-san please. Bjorn Ulgenes: Thank you, Furuta-san. So I think the essence of how we're going to deliver the plan is included in our waterfall. So let me try to put some context around it. One, we believe the Commercial profit will increase, which is a combination of what I said to Ihara-san's question around 3 business units executing their job ticket. And yes, as we also said, there are some challenges in the market with, for instance, Vending, not growing as fast as OTC and Food Service. But overall, we believe the combination of focused Commercial plans, price increases and a good management of our trade investments will deliver the commercial profit. When it comes to transformation, I think you would agree with me that we have delivered on our promise to change the business, and we will continue to do so across the board. This is not one specific business unit or function carrying the transformation. It comes from all the significant functions in the company, including IT. We're managing our investments, as you saw from the waterfall. Yes, there will be some increases in DME or marketing investments as we support the effect of the price increases and the channel mix. We are continuing the excellent track record in our manufacturing and our logistics to again, make sure we manage cost per case and in our investments. And we are offsetting a lot of the inflation we see coming through, especially on third-party outsourcing expenses and logistics in a good way to overall manage our performance. There is impact from a weaker yen that continues to hit the commodity basket. But overall, I think a very balanced way of achieving our 2026 guidance. Masaomi Gomi: Operator, could you move on to the next person with a question? Operator: Saji-san, from Mizuho Securities. Hiroshi Saji: I have a question for Slide 25. For next year's guidance, thank you very much for the next year's guidance. And this year, the next 2026, except the depreciation is JPY 6 billion, JPY 7 billion, profit has increased. By 2027, in that sense, the depreciation -- because of the impairment, impact will be shorter or smaller and the performance amount, I believe the amount will be increased, that is the forecast, I think. But what I'd like to ask is that for 2027, comparing with 2026, the transformation initiatives or what will be the differences for the 2 years? So what is the driver for accelerating the growth? What is your thought? Masaomi Gomi: Saji-san, thank you very much for your question. For next year, what are the factors that are going to increase the profit? And for this, I would like to ask Bjorn to take this question. Bjorn Ulgenes: Thank you, Saji-san. Excellent question. Let me try to give a little bit of context to it. One, on the commercial arena, as we have said earlier, our main focus is to execute the commercial strategies across the 3 business units with 3 different job tickets. And as you heard earlier, we are surgically focusing on leading on price and therefore, positive price mix that would be one of the elements. But secondly, also pick up the very important points that Alex had in his prepared remarks and also his answer to Ihara-san, data-driven profit growth. And as we keep on investing in Vending, but also an integrated finding, as you heard about earlier, and overall, in our tech-led transformation programs. All of this will start taking effect, we estimate, from 2027 onwards. So that will give us new insights that we either can't find today or will take a lot of time to develop. We will have them more at our fingertips. And that, again, will enable us to sell smarter and spend market. So the major changes are going to be primarily internally driven that we can control, but of course, also working, as I said earlier, striving for positive pricing. Hope that gives a little texture to your question. Thank you. Hiroshi Saji: So the transformation initiatives, the positive increment of the profit, so that will expand for 2027. Is that correct? Bjorn Ulgenes: Correct. Masaomi Gomi: Operator, please move on to the next person. Operator: Daiwa Securities, Igarashi-san. Shun Igarashi: This is Igarashi from Daiwa Securities. I have a question on the business units. So I would like to hear more about the sales activities, especially Food Service. And I'm seeing that you are having a lot of outcomes and success in the Food Service. And looking at Page 16, it seems in terms of sales, volumes is going up. So you have a positive outcome in this area. And what I have heard so far, it seems that you have expanded lineup and you have new customers that you have achieved as well. But to be more specific, what kind of success are you really seeing in the sales activities? And when we think about the Food Service right now, so the mix out of your total business is still small. But probably, if you have a great success here, you'll be able to expand it to other businesses? Would that be possible? That is my question. Masaomi Gomi: So your question is about Food Service business, about volume, sales, why is it really strong? And are we able to use the learnings to the other business areas, was another question. And I would like to ask Kado-san to answer this question. Maki Kado: Well, thank you very much for the question. This is Kado-san from Food Service. I would like to mention 3 points. First of all, looking at the past 2 years or so, I would like to say, basically, the foundation part has changed. What I mean by that is, for example, in the past, Bjorn, Alex, they have explained this already, but let me repeat. So we are using more data. So it's data driven than the past, and we're getting all the insights from the data. So we're doing that. And also, our sales members have a stronger skill set. So the capabilities are really being stronger. So we have been really improving the base or the foundation of our business. And I think this is the foundation for success in the couple of past years. And the second point I want to mention is, again, I have mentioned this before, but we have customers that are winning at. So we want to have a closer collaboration, a very strong relationship with these customers, and that's working as well and that is another source of our growth. And talking about the future, so how should we proceed in this way. I think what we have to do is we need to make sure that we have more customers that we can win with, we would need to have sales activities based on strong proposals. That will be our ultimate goal. So that's my third point. We have already been doing it; OTC, Vending team, we have been collaborating already. We have been changing information. Of course, we are sharing our learnings to them, and vice versa, are the learnings from OTC and Vending. So they have a long history in their commercial activities. They have really achieved lots of success as well. So from those teams, we are gaining lots of insight information as well. So it is like it is a vice versa, mutual relationship that's really working. And we want to continue to do that. Thank you very much. Masaomi Gomi: It is already time, but we would like to take one more question. Operator, please move on to the next question. This will be the last question. Thank you. Operator: Sumoge-san from BOA. Manabu Sumoge: Sumoge, from BOA. I would like to ask about the guidance. On Page 17 on your presentation, I would like to understand this. So in others, you said that you are factoring in the reduction of the depreciation from the Vending impairment. But I think other than that, we also have the cost elements here. So I would like to understand what are the other parts. And also, Kyoto has already put up some market investment because you have to secure the volumes since you have hiked the price. But I see your marketing expense is not going up that much. I believe that you are having very good control. So I know it's all in all a very positive trend. But is this feasible? My overlap to other questions, but I would like to understand about the marketing expenses? And also, what are the costs that are increasing? Masaomi Gomi: So you would like to understand about the cost elements on the waterfall chart. I would like Bjorn-san to answer to that detail. Thank you. Bjorn Ulgenes: Sumoge-san, let me try to give a little picture to you. First, let's start with the others part. So yes, correct, negative JPY 3.5 billion, but that includes the close to JPY 5 billion of the positive impact of the depreciation, correct. So what is happening inside here, we are having inflation as most other companies in Japan, for instance, of logistics and outsourced expenses and overall inflation in general. That's one element, sort of the cost increase part. The second part, we are also investing, as you heard me said a couple of times today and also Alex talked about in Vending, we are investing ahead of the curve to again reset of how we work with data and using technology level transformations going forward. And you've also heard in our prepared remarks late last year and for this year, we went live with an integrated end-to-end planning system, which again, demands investments for us to be able to reap the benefits later back to my answer to Saji-san earlier about what the future benefits that we're going to see from all of this. So, net-net, we're seeing cost increases but also investments ahead of the curve in others. When it comes to DME, we are surgically focused, Sumoge-san, on having an ROI when we invest in the marketing activities together with the Coca-Cola company, as you know. So this will depend on the customer landscape. It will depend on the channel and also the competitive environment where we commit to managing these expenses just like we do with every other expense in our P&L. Hopefully, that added a little texture. Masaomi Gomi: We have run over time. So we would like to close the Q&A session for today. All these materials will be uploaded to our corporate website. If you have any questions or feedback, please reach out to IR team. Thank you very much for your participation.
Operator: Good day, and thank you for standing by. Welcome to Deterra Royalties' December 2025 Half Year Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to the first speaker today, Mr. Jason Neal, Interim Chief Executive Officer. Thank you. Please go ahead. Jason Neal: Thank you. Good morning, and welcome to Deterra Royalties' First Half 2026 Results Call. I'm Jason Neal, MD and CEO of Deterra, and I'm joined today by Jason Clifton, our Chief Financial Officer. As you're aware, I've been a long-standing Non-Executive Director of Deterra and has stepped into the MD and CEO role only on an interim basis as a bridge to the next leader of our company, for which we have an active search process underway. In this transitionary period, it's been very much business as usual, and our team continues to advance various opportunities. It is our pleasure to report a strong half, and without further delay, I'm going to hand the call to Jason Clifton to take you through the highlights and some important details. I will conclude the call before the Q&A section with some of my reflections on the half year and the strategic orientation of the company. Jason Clifton: Thanks, Jason, and good morning, everyone. If you move to Page 3, you'll see we have delivered a record first half NPAT of $87 million and a first half dividend of $0.124 per share fully franked. This is a great result, which has been driven firstly by record sales volumes and strong pricing from Mining Area C; and secondly, by the profit delivered from the sale of noncore precious metals assets that were acquired as part of the Trident acquisition. We announced those sales in August and September last year and have used the $108 million proceeds received to date to pay down debt. Thacker Pass continues to derisk. Construction is well underway, and Jason Neal will add more on Thacker later. We have a very strong balance sheet with net debt at $149 million. We are well within all of our banking covenants and our target leverage ratio and that positions us well to execute on investment opportunities as they arise over time. Moving to Page 4. You'll see revenue is up 12%, driven by the MAC royalty. The sales of our noncore assets delivered an accounting profit of $8.4 million. A couple of comments on this. Firstly, you can see we have an effective tax rate of 24% for the half. That's because we had offshore tax losses that we were able to use to fully offset the tax that would have otherwise been payable on the profit on sale of those assets. Secondly, this amount has been included in our first half dividend to deliver $0.124 per share fully franked interim dividend. That is consistent with our previously stated payout ratio target of 75%. Moving to Page 5. You can see the MAC royalty revenue up 12%. Sales for the half were a record 68 million dry tonnes with a realized price of AUD 139 per tonne, which was up 5% on the first half FY '25. Moving to Page 6. Our operating costs were $8.1 million for the half. Within that number includes one-off costs of $1 million associated with the CEO transition. Half of that relates to cash-based contractual entitlements, and half relates to the expensing of share-based payments that stay on foot for testing into the future in accordance with those share plan hurdles. Offsetting that is -- offsetting that one-off is a lower headcount across the company, and that reflects the restructuring of our teams in both the Perth and London offices in the first half of '26. Finally, 1 half '26 saw a more normal level of external due diligence costs. 1 half '26 was $0.9 million versus $0.2 million in 1 half '25, and they support our business development activities. Those costs in 1 half '25 were very low as we were focusing on integrating Trident at that time. On Page 7, I'll provide an overview of the sales of noncore precious metals assets. These have generated $108 million in cash proceeds in the half, which have been used to reduce net debt. We have a further $13 million cash payment receivable in August 2026, and that is the deferred receivable from the La Preciosa sale. Page 8 shows the strength of our balance sheet. Net debt is $149 million at 31 December 2025. We are well within all of our covenants and have an average margin across our credit facilities of only 1.3%. We have $344 million undrawn capacity within our credit facilities. Finally, Page 9 outlines our capital management framework. And starting at the left-hand side, one of Deterra's competitive advantages is the quality and consistency of our cash flows from MAC. As mentioned, our balance sheet is very strong, and that provides a range of options to finance any potential new investment. 75% payout ratio at the half is consistent with our FY '25 dividends and continues to be the target going forward. That rate strikes the right balance between shareholder returns, balance sheet strength and investment optionality. And with that, I'll pass it back to Jason now. Jason Neal: Thank you. I'm going to take advantage of my only opportunity to address Deterra shareholders and prospective shareholders on the results call, as by the time we report full year results, I expect that we will have appointed our next Managing Director and Chief Executive Officer. We've had a strong half year financially based on another great period for the Mining Area C royalty. If you inventoried all of the royalty and streaming assets owned by all of the listed companies in this business, that is our peer royalty and streaming companies, our royalty on MAC ranks third by research analysts' estimates of net asset value. It was an outstanding foundation for a new company. The MAC royalty supports our dividend to shareholders, which is fully franked and targeted to be 75% of net profit after tax. We are a growth-oriented company, but how MAC supports that growth has not been by redeploying significant cash flows into new acquisitions. What MAC has provided is the ability to access bank debt capital at effectively investment-grade rates, which is a huge advantage for a small company. Our after-tax borrowing rate in the first half of 2026 was 3.6%. The first acquisition that Deterra made was Trident Plc in 2024 to target the Thacker Pass mining project in Nevada. We believe at the time that we were near trough prices for lithium and had confidence that there were value-enhancing milestones on the horizon. We also bought Trident Plc at an attractive multiple, in part, because the shares were quite illiquid and trading on the U.K. market where such a company lacks peers and can be somewhat orphaned by investors. The construction phase is a good time to buy a royalty because the acquisition price is typically better preproduction and the risks from that point to production are, for the most part, risks that impact the developer or operator. The royalty structure immunizes us directly from, for example, potential CapEx escalation and whether the OpEx matches the feasibility study. Our position, of course, is not riskless, but overall, it is a great time to make a bet. Shortly after our acquisition, the Thacker Pass technical report was updated to show an 85-year mine life, an improvement from 40 years in the prior report and outlined expansions for 160,000 tonnes of annual production, double what it's been in the prior report. But reflecting solely on the first half of 2026. We have seen significant derisking at Thacker Pass. This includes the important first draw on the U.S. $2.2 billion U.S. Department of Energy loan to support construction, which is a 23-year loan at U.S. T-bill rates without a spread. And the U.S. government has been given the right to a 5% shareholding in Lithium Americas, which is the operator, and a 5% interest in the Lithium Americas-General Motors joint venture that owns Thacker Pass. General Motors, of course, is not only a partner in the joint venture having contributed USD 945 million but also having offtake arrangements in place for lithium production. All of this is a very significant endorsement. We have also seen the lithium carbonate price indices increase from about USD 11,000 per tonne the day that we closed the Trident Plc acquisition to approximately USD 17,500 a tonne recently, much of that move in half a year. Altogether, a reflection of value appreciation of our royalty in Thacker Pass is that the share price of Lithium Americas has more than doubled from the day we closed the acquisition of Trident Plc through to today. So we're pretty happy with our acquisition and very much looking forward to first production, which Lithium Americas projects to be at the end of calendar 2027. When we bought Trident Plc, we got some other assets. One of those assets is a royalty on the PFS stage Antler copper project in Arizona, U.S.A. It is a smaller royalty interest, but we view copper as an outstanding commodity to be exposed to, and Arizona is one of the best jurisdictions for copper mines. For Australian shareholders, it is fair to say that owning copper in Arizona is like owning iron ore in the Pilbara. In the first half of 2026, the owner of Antler, ASX-listed New World Resources, was acquired by Kinterra Capital. A project being acquired by a more capable and better funded owner is one of the ways in which our underlying royalty assets can accrete in value. The final thought I want to offer to elaborate on the first half of 2026 is that we realize the sale on the noncore assets from the Trident Plc acquisition. As fun and profitable as it is to own gold assets in recent years, we divested the gold offtake agreements that came with Trident Plc. These aren't really royalties at all, but in a volatile market, they can pay similarly. They did not fit our portfolio and were always tagged for disposal, but we're happy to collect revenues until the disposal was sorted out. We sold those assets in the first half of 2026 to Vox Royalty at a price that we were happy with and which provided our shareholders with a 28% pretax return on those assets, factoring the value assigned in the Trident acquisition, the disposal price and the revenue received in the interim. So we paid USD 188 million for the purchase of Trident Plc. With that, we drew our bank debt to AUD 314 million as of December 31, 2024. We divested noncore gold assets for USD 82 million. So a net acquisition of Thacker Pass, Antler and a few other interesting assets was USD 106 million. The proceeds were largely applied to debt repayment. As of December 31, 2025, our drawn debt is now AUD 156 million. So today, we have AUD 344 million of undrawn debt and positioned to make further acquisitions opportunistically. This is a good point to reflect on our capital allocation, which can be summarized as continuing to pay a peer-leading dividend in the royalty and streaming sector, and having completed a well-timed acquisition and subsequent asset rationalization to add new core assets, and now having available capital to deploy in future growth. As I opened my remarks saying this is the only results call that I will be leading. I joined this company as a Non-Executive Director in 2022, attracted by the quality of our foundational asset and the opportunity to build significant shareholder value through growth. Thus far, we have delivered shareholders a very good return through dividends, but we have not provided a return through capital gains as our share price is not that different than the 2020 IPO Price. The royalty and streaming sector, which is dominated by North American companies, typically trades at a stronger value multiple than we have ourselves and has provided an outstanding shareholder experience overall, generating returns significantly greater than underlying commodity prices. That is the potential and the objective of this company, and I look forward to returning to the nonexecutive role in a few months and supporting our next CEO. Operator: [Operator Instructions] Our first question comes from the line of Glyn Lawcock from Barrenjoey. Glyn Lawcock: A couple of questions. Firstly, just on opportunities. I mean, obviously, you've sold the asset in the last half, but we haven't seen much on the other side of the ledger. When we caught up 6 months ago, I think the message was we prefer single asset acquisitions to corporate M&A or maybe buy an existing royalty versus creating one. What sort of -- how have things changed over the last 6 months? At the Board level, is that still the sort of -- what you're trying to achieve? And has the opportunity set changed at all? Jason Neal: Yes. So I would say that we have a number of irons in the fire, quite a few things that we're looking at. And honestly, there's a bit of a mix of everything. We -- I wouldn't say we're spending very much time looking at corporate acquisitions at this time. I mean never say never, but that's not the biggest focus. I would say mostly what we're looking at is where there's existing royalties that might come available and there, trying to find a competitive advantage because most of these have a number of parties that are looking at them. But we're also looking at trying to establish new royalties. I mean the evolution of the royalty and streaming space is that we're becoming more and more part of the conventional project finance ecosystem, and so we see a number of those opportunities as well. So... Glyn Lawcock: Okay. And so it really hasn't changed. I mean it's -- there's a mix of everything coming across the desk, and it's just about what -- where you can add the value and not overpay versus a peer, I guess. Jason Neal: Yes. The only thing I would say, though, is the environment in aggregate is more active than it was, say, 12 months ago. There's -- like there's a lot happening. We don't really compete with equity capital, but when equity capital is robustly available, I think, as it is in a number of parts of the commodity space, that capital is typically alongside us. And so there's companies that feel like they can get their complete financing solution done in this environment. And so there's probably more opportunities for us to be a part of that, so same sort of mix but a higher level of activity. Glyn Lawcock: Okay. And then just my second question is just thinking about cash returns, as you say. I mean, the capital return has been very minimal since it was listed, so it's all been about dividends. If we don't find anything suitable, like when do you -- at what level does that get to? I know your target gearing or leverage ratio is 0% to 15%. It's coming down. If you continue to pay only 75%, we're going to continue to deleverage. In the absence of buying anything, when -- at what level do you think we go back to almost paying out 100% of the MAC royalty to shareholders? Jason Neal: I don't think that going back to 100% is on the horizon. I don't think anybody should expect that. With 25%, that is retained, is being used, essentially to pay as part of paying down the acquisition facility, and then we have at least $300 million of dry powder right now. If we really tested it, we can have more. I mean that's the sort of capital that we think we need to have available to be invited to the processes or see the opportunities that are -- that we think are in the market. I mean, obviously, you might have seen the one that one of our peers announced recently. We're not quite in the $4 billion bracket, but there's quite a few things that are kind of more in the -- somewhere between $100 million and $500 million, and we want to make sure we're sitting at the table for all of those. Glyn Lawcock: Okay. But if we're sitting here in 12 months' time and we haven't paid anything -- we haven't bought anything, can -- you've used the 25%, so we end up in a leverage ratio closer to 0. Do we then go back or do we build cash? I'm just trying to think about the -- I know you could buy something and then this conversation is moot. Jason Neal: Yes. So I don't think we're going to get to the point where we're building cash. So yes, if we are unsuccessful in buying anything and that gets fully repaid, but I don't think we'll continue to build a cash balance at that point. But I would say -- I mean, I'd be really disappointed if we didn't have something down in the next in the next 12, 18 months of chasing opportunities. Operator: [Operator Instructions] Our next question comes from Lachlan Shaw from UBS. Lachlan Shaw: Just wanted to, I suppose, have a couple of questions around the portfolio. So obviously, you've realized good value from the sell down of the precious metal stream that came with Trident. On a go-forward basis, are you still open to portfolios that have, I guess, a mix of the streams that are core but also noncore like the sort of precious metal streams. And the second question, just around Lithium Americas. I guess, lots of good progress there in terms of funding and the construction is getting underway. How are you thinking about appetite to add further lithium specifically into the portfolio? Jason Neal: Sure. So on the second one, lithium is still an asset that we're looking at, and we see opportunities now and then. If we have something that fit the portfolio well, we can very easily do another lithium acquisition. We do think that we've got one of the very best lithium assets in Thacker Pass. On gold, so it's a bit semantical, but there is a structure. We didn't either acquire a gold stream or sell gold stream. It was an offtake agreement. It's not really a stream or royalty at all. It's a gold offtake, and there's a pricing mechanism, and around the time of gold sale and if gold is volatile, you end up getting a bit of a spread. It's not the sort of security that really fits well. It also causes a lot of accounting volatility for us. And so that was really the reason. It wasn't because we didn't like precious metals. If we got a precious metals royalty or stream as part of an acquisition and it fit the portfolio in every other way, except it's odd that we have a precious metal, there's a reasonable chance we might just keep them as part of the portfolio. I think royalty and streaming companies have typically been hoarders of assets. The reason that we don't spend a lot of time looking at precious-metals-heavy opportunities is simply because we have a competitive disadvantage there. The royalty stream space really got started with silver and gold assets. And those companies have become very, very large companies with large cash balances they're trying to deploy, better cost of capital than we may have. And I think if participate in this process, we'll probably just lose them. So we're just putting our resources in other places. But there's nothing against gold. So those have been great commodities and investors have done really well with our peer companies exposed to them. Operator: [Operator Instructions] At this time, there are no further questions from the line. Allow me to hand the call back to management for closing. Jason Neal: Great. Well, thank you, everyone, for joining us today and for the questions, and we're going to get back to work here. So thanks very much, everyone. Take care. Operator: For today's conference call, thank you for your participation. You may now disconnect your lines.
Mark Coombs: Good morning, everybody. Thank you for coming. Ashmore Group First Half '26 Financial Results. Anyway, so here's the overview. The market has done pretty well, and we've done okay as well. Generally, EM is doing really what we'd expect it to do, which is outperforming developed markets. We're at 82% of our assets outperforming in the 1 year, which is good. We're comfortable with that. Our flows have gone up, which is great. So 10% increase in assets under management over the half, which gets us to about $52 billion. Net inflows of $2 billion. Subs up 35%, reds down 39%. So things moving in the right direction -- or the other way around, 39% subs, 35% reds. Our statutory profits. Revenues are down year-on-year due to lower average AuM and reduced performance fees, which you would expect. We try and keep our costs as tight as we can despite inflationary environment. Our investment performance on our seed has been strong. That's delivered GBP 55 million of gains. PBT, up 64% to GBP 82 million. Diluted EPS, up 90%, basically, to 10p. Dividend per share, maintained at 4.8p. Strategic stuff that we're doing is working, which is nice. Equities AM continues to grow steadily as it has throughout the last 5 years, up 17% to $8.8 billion, which is 17% of group assets now. And local offices are also growing, up another 8% to $8.4 billion, which is 16% of group assets. Those two trends we expect to continue. Steady growth in those places. Macro for us is pretty good, and we think that will continue. So economic growth is pretty solid in the larger EM economies in particular, which is where we see the most interesting things going on. Pretty high rates and steady deflationary pressure being exported from China, we think, allows for further easing. Dollars, we don't think get any stronger from here. Geopolitics are a drama, but they've often been a drama and in some ways quite good for EM. And a lot of opportunities across the piece. So we keep thinking active as a way to go. Sitting on an index, you guarantee yourself a problem at some point. Update on the performance in particular. Obviously, dollar weakness -- dollar collapse isn't great, but dollar weakness is good for us. It's a tailwind. So good absolute returns in '25, better than DM, as I said. The indices are on the right. So ignoring us, this is just the indices. So the dollar was down 10%; the MSCI World equity index was up about 20%; and EM Equity was 30%; and Frontier, 40%. So strong equity outperformance. And then on global bonds. Global bonds were about 5% or 6%; external debt was about 12%, 13%; and EM local currency was about 20%; and corporate was just a little bit better than DM. So across the piece, index, no judgment required. Better year for the 12 months on December '25 in EM over DM. What else is going on? U.S. tariffs are what they are, generally inflationary and not positive for global trade. But what it has done is push intra-EM trade up quite a lot, and we see more of that coming. If anything, more intra-EM reforms and progress in terms of making stuff easier to do, which I think is great. Geopolitical risk has calmed down a wee bit until it hasn't. But a lot of the drama is out there and people are aware of it. Currency generally has underpinned equity and local currency in particular, and we're seeing that in terms of client appetite, too, continuing appetite for local currency bonds and for equities. Spread compression helps. Developed markets, I think we all know the problem, right? Lots of debt, fiscal deficits, politicians trying to issue paper to kick the can down the road, valuation is expensive and policy uncertainty. Just summarizing performance for you. We like to do this just to give you a sense. As you know, we split between global and local businesses here. These are the main themes. So the 1 year, we're up. 82% is outperforming, which is good. We're happy with that. The good news is we're also outperforming where we see most of interest in raising capital, which is in local bonds and in equities, both global equities and actually local equities. So that's good to have. So overall, as a group, we're now up above 80%; 3 years at 70%; and 5 years at 58%. That's a very strong recovery from '21 drops out. But this is not an issue. This is all salable. I think this is Tom. Tom Shippey: Thank you. Okay. So starting as usual with a high-level financial summary for the period: characterized by strong investment performance, continued operating efficiency and, consequently, strong growth in statutory earnings. Adjusted net revenue was 16% lower year-on-year, reflecting the impact of reduced average AuM levels and lower performance fees compared with a year ago given fewer asset realizations from the alternative vehicles in this half. Total operating costs marginally increased by 1% as we continue to focus on operating efficiently across the group's global network of offices. And variable remuneration was accrued at 32.5% of pre-bonus profit. Consequently, adjusted EBITDA of GBP 20.9 million delivered an operating margin of 31%. The combination of strong markets and Ashmore's investment outperformance mean that the seed capital portfolio generated pretax profits of GBP 55.4 million, leading to a 64% increase in profit before tax to GBP 81.9 million. Therefore, diluted EPS rose 89% to 10.1p per share. And excluding the seed capital returns, diluted EPS was 3.1p. The balance sheet remains well capitalized and highly liquid with excess financial resources of GBP 480 million or 67p per share. And finally, as Mark mentioned, the Board has declared an unchanged interim dividend of 4.8p per share. Looking at the local offices. During the half, we've continued to develop the network in key emerging economies. These businesses are exposed to high-growth markets and also provide real diversification. It's been demonstrated again in this period. Looking at each office in turn. Ashmore Colombia delivered 16% growth in AuM, reflecting strong absolute and relative performance in its listed equity strategies. During the period, the business broadened its product offering with the launch of a regional LatAm equity strategy and has been investing the most recently raised private capital in infrastructure debt and private equity. Ashmore Indonesia had a notable increase in new client flows as the broader market environment improved and retail distribution initiatives were implemented. In Ashmore India, the team's high-quality, long-term performance track record continues and the near-term focus is on deepening onshore distribution access for retail investors. And finally, while Saudi Arabia had some institutional redemptions early in the half, the business continues to diversify with the launch of a second private equity fund focused education and is also broadening its client reach through the use of digital distribution. In terms of the two newer offices, Ashmore Qatar is now fully operational, supporting the group's investment management capabilities in the region and deepening local institutional relationships. And regulatory approval for Ashmore Mexico is anticipated shortly, allowing the team on the ground to exploit the growth opportunity arising from recent pension reforms. Alongside continuing to build scale in the existing local operations, we'll continue to look for opportunities to expand this network over time. In terms of the aggregated financial performance. Management fees were broadly in line year-on-year while performance fees were lower, reflecting the successful realization of alternatives investments in Colombia and Saudi Arabia that generated performance fees of approximately GBP 7 million in the prior year. While asset realizations from the older private equity vintages are ongoing, meaning that performance fees are possible, the timing of these is inherently uncertain. The implementation of a consistent global operating model means that the local businesses achieved a 45% EBITDA margin and delivering increasing profitability as assets under management locally grow. Looking at the group's assets. The total of $52.5 billion increased by 10% over the period driven by Ashmore's investment outperformance, which added $2.6 billion and net inflows of $2.3 billion delivered across both global and local businesses. Subscriptions increased by 39% year-on-year to $5.7 billion, reflecting higher client engagement levels over the course of '25, an increasing recognition that EM is outperforming the attractive absolute and relative valuations on offer, and therefore, a realization that global portfolio allocations need to change. The subscriptions was broad-based and includes both the funding of new client mandates, notably in equities, external debt and blended, and existing clients increasing allocations across the group's range of fixed income and equity strategies. Client demand was also geographically diverse with equity flows from European clients and Asian clients allocating to sovereign fixed income strategies. There are also encouraging signs that U.S. investors are now considering reallocating away from their home market. Reduced redemptions also contributed to the net inflow with a 35% decrease year-on-year to $3.4 billion in the half. Indeed, this is the lowest half year redemption level since 2010 and reflects the latter stage of what has been a reasonably lengthy EM flow cycle. Looking forward, Ashmore has started 2026 with a healthy client pipeline, reflecting the positive market environment of recent years, the outperformance being delivered by Ashmore's active investment management and a growing realization by investors that emerging markets warrant a higher allocation. The caveat as ever is that the timing of funding can be uncertain. Turning now to revenues. The year-on-year decline of 16% is attributable to a 3% lower average AuM level and reduced performance fees compared with the level delivered from asset realizations a year ago. Net management fees were 9% lower year-on-year at GBP 62.1 million with the movement attributable in roughly equal measure to the average asset level, an FX headwind from a stronger sterling and an average fee margin that is 2 basis points lower than a year ago. The year-on-year movement in the management fee margin is entirely due to the full run rate impact of flows in the prior year period, i.e., the 6 months to December 2024. The reported margin in this half of 34 basis points is unchanged compared with the 6 months period to June '25 and was broadly stable over the period. Management fee margins at the investment theme level were also relatively stable with the exception of alternatives, where the first half margin was impacted by the return of higher margin capital to investors, coupled with the investment cycle of recently raised private debt capital that is not yet earning full run rate management fees. On a pro forma fully invested basis, the alternatives margin is approximately 110 basis points. As mentioned, the first half performance fees of GBP 0.8 million are lower than the prior year period. I continue to forecast up to GBP 5 million of performance fees in the current financial year excluding any contribution from alternatives realizations in the second half. And finally, other income of GBP 4.6 million increased due to the generation of transaction fees in the period. I would expect this source of revenue to revert to more normal levels in the second half of the year. In terms of operating costs. We continue to operate an efficient business model globally, and total operating costs of GBP 48.3 million were broadly consistent with the prior year period. There was a modest increase in salary costs to GBP 16.1 million, primarily reflecting recruitment in the group's local businesses, including the establishment of the new office in Mexico. Other operating costs were reduced by 2% to GBP 10.9 million notwithstanding the preparations for moving to a new London head office at the end of fiscal Q3. The VC accrual of 32.5% is consistent with the prior year range of 30% to 35% and in absolute terms means a charge of GBP 19.8 million, 1% higher year-on-year. As in previous years, realized life-to-date seed gains of GBP 14.8 million and interest income of GBP 6.8 million are included in the calculation of the VC accrual. Given neither life-to-date gains nor interest income are included in EBITDA in this period, this has had the effect of reducing the operating margin by approximately 10%. Looking to the second half, there will be a slightly higher noncash depreciation charge reflecting the cost of the new London office lease. But overall, I expect full year non-VC operating costs to be approximately twice the first half level of GBP 29 million. The group seed capital program is now well established and has meaningful scale to support the diversified AuM growth and deliver attractive through-the-cycle returns to shareholders. Seed investments now have a market value of GBP 391 million with mark-to-market valuations in the period benefiting from both positive markets and Ashmore's outperformance. In addition to the GBP 391 million, the group has made commitments of GBP 81 million to funds in the alternatives theme, which are likely to be drawn down over the next few years to facilitate growth in Ashmore's thematic private equity and private debt strategies. Given that many of the current seed investments have delivered positive returns and provided appropriate scale to funds, I would expect the successful realization and recycling of existing seed investments over the coming periods to largely fund these additional commitments. While the primary goal of seed investments is to support growth in third-party client AuM, over time, the program has also delivered meaningful profits to shareholders. In this period, the impact was a GBP 55.4 million gain, of which GBP 9.6 million was realized in the 6 months. In terms of new investment activity, a total of GBP 38 million was invested in the period to support growth in private equity strategies, notably in the Middle East, and to establish new funds, including the regional LatAm equities product I mentioned at the beginning. Realizations of GBP 47 million were achieved principally through matching client flows into ceded equity strategies and following the return of capital by alternative vehicles. On a life-to-date basis, these realized investments have delivered GBP 14.8 million of gains. Finally, on the P&L. Interest income of GBP 6.8 million reflects lower average cash balances, in part, reflecting the incremental seed investment activity in recent periods and prevailing short-term interest rates compared with the prior year period. The effective statutory tax rate of 13.6% is relatively low compared with the guidance of approximately 22%, largely due to mark-to-market equity gains on the seed book not being subject to U.K. corporation tax. On an operating basis and taking into account the geographic mix of the group's profits, the effective tax rate remains around 22%. Turning to the balance sheet. Ashmore has total financial resources of GBP 573.6 million, which compares with its total capital requirements of GBP 93.3 million. That means that the group continues to operate with a meaningful level of excess capital, equivalent to 67p per share. The balance sheet remains highly liquid with GBP 261 million of cash at the period end, and approximately 2/3 of the seed capital investments are in funds with frequent dealing opportunities. The group's cash position is, however, relatively low with the recent levels given the seed activity. And from a cash flow perspective, the first half typically see significant payments related to the prior financial year, namely, the final ordinary dividend paid in December and employee variable compensation paid in October. Additionally, in the last 6 months, the EBT has purchased shares worth approximately GBP 14 million. Operating cash generation tends to be stronger in the second half of the financial year, and total cash will continue to depend on the balance of seed capital investments and recycling achieved. And with that, I'll pass you back to Mark. Mark Coombs: Thanks, Tom. Thank you very much. So outlook from here. I think things are pretty supportive actually from what we're up to. Absent some global war, I think things look pretty good. So on the right, we just talk a bit about bond yields and also how equities are doing. And if you look at the bond space, those 3 lines are CPI, so inflation, real yield and actual yield. And as you can see, real yields are really pretty good in terms of EM. You've got positive real yields, inflation low, if anything, declining, but let's say, worst case, flat. So there's plenty of room for EM to cut rates. But even if they don't, you've got nice positive real yields. And so we're seeing that in terms of client demand to buy local currency and local currency bonds in particular. And then on the equity side of things, after about May, June in the year we've just had, significant index outperformance over the S&P, and if anything, started at the end of Q1. And we would expect that should be able to continue. Although there has been, as I say, a significant performance to this point, but the EPS story is still good and recovering in EM. So as EPS improves, share price performance tends to continue to follow it. In terms of policy and things for the year ahead. Yes. China is obviously China and definitely going to continue to export deflation, which may give other challenges, et cetera. But that is definitely the game. So inflation should remain low in China and they should export deflation, so relatively stable growth. They have one thing probably now that they still have to fix and they're struggling to fix, which is the property market and generating sufficient youth employment for these large numbers of people coming out of university every year. But it's feeling relatively stable in terms of their outlook from here. This is one of those years that's a big election year for EM, which tends to provide reasonable opportunities for us. Everybody lies to get elected and EM is no different from anywhere else. And so I'm looking through the noise. It tends to be quite a good time to take some risk through the first half of this year. The trick is don't get carried out in a lot of bad headlines and start acquiring risk -- subject to price, of course, but start acquiring risk at pretty good prices midyear with a view to election tending to usually be back end or mid- to back end of the year or late half 1 through to late December time. So a lot of LatAm elections. And that tends to be, as -- as I say, we've quite like years like this. We tend to get a little bit of negativity around headlines and then you tend to get a chance to buy risk. So we quite like years like this. This tends to be a good time for us to add risk to make quite a lot of money in the year after. The only thing against that is if nobody lies or nobody says anything controversial. But I think we are going to get some noise around LatAm elections in particular. Monetary policy, I think, is going to get looser. As I said, high real rates and inflation under control, so I would expect to see rates continue to get cut in most places. I don't really see dollar strength being a drama. You're going to get moments of strength but you're going to get generally a selling trend. Just huge net liabilities in the U.S. and everybody is so long on the dollar. And the way people are talking to us about what they want to buy, it's mostly nondollar assets. So it's noise around the edges, but it's the right sort of noise in terms of dollar softness. And the policy mix plus what the Fed is up to, I think, is going to continue to do that. And then AI is going to be deflationary, probably. I suspect you're going to get bottlenecks around the ability to turn massive spending into actual productivity gains. You're going to get bottlenecks in terms of the kit being available when you want it, where you want it. But at the margin, you would expect it to be deflationary. So that's kind of the macro outlook. Summary from where we're at. A reasonable half for us. It's a good market. We outperformed. Flows are better, so increased AuM. That's nice. Flows will be two ways for a while. It always happens like that. It comes down, then it kind of bubbles along, then it goes up. So we're at a point where we should see gradually drop -- this was a huge drop in redemptions. Redemptions never go to 0. So you'd expect to see redemptions fly around a bit but generally lower. The trend is lower. And subs, definitely, given what we're seeing in the pipeline, you'd expect to see that to continue to improve. Staff profits have been up. That's good. What we're doing strategically in terms of growing the local businesses and equity businesses, that's continued since '22 all the way through. We expect them to continue to grow and to change and particularly those things. And then macro, I think, is pretty good for us. There's a relative value story but there's also an absolute value story. So that's the broad picture. Very happy to take questions. I'll actually do that. I think that's right. I don't want to make -- I've realized I'm already standing up. Well, that was easy. Thank you, Mike. Let me help. Michael Werner: Mark, just two questions, please. First, really good progression in fee margins over the past 6 to 12 months. Are you guys still guiding to on a like-for-like 1 to 2 basis point decline, I think, it's every 12 to 18 months? And then on the second question. Really, as you mentioned, redemptions coming down, subscriptions up. How does that pipeline feel in terms of your ability to kind of repeat what we saw in Q4 in terms of flows of around $2 billion or so ex the liquidity? Mark Coombs: Do you want to deal with the first one? Tom Shippey: Let me do the first one. So yes, as you know, the basis point every 12 to 24 months is the best guess having taken out the things that we can calculate that have driven any other move in terms of mix or size of product, et cetera. That feels like it's about right, but it's still a best guess. The market is still competitive. There is industry-wide pressure on margins. We think we're in a relatively protected part, but we're not immune to the competition or the margin erosion by osmosis. Where people get a good deal somewhere else, they tend to come to us and say, can we get a better deal? So that basis point also feels about right. But as we've seen in this period, things can stabilize depending on mix and the retail flow and what we're getting in the locals, et cetera. Mark Coombs: Yes, exactly. It's a best guess. I mean, as the local business gets larger and as the equity business gets larger as a percentage, that kind of helps because fixed income tends to be priced generally cheaper. Huge sweeping statement around the world. And alternatives tend to be priced higher, too. So as all those things are growing, that all helps. And the other question was? Tom Shippey: On the pipeline. Mark Coombs: Pipeline, yes. The pipeline is, I think, the last time we spoke, it's probably better than the last time we spoke. There are more people -- it also tends to feed itself a bit. As people see this happen, they tend to sort of start saying, oh, maybe we should do better than that. Unfortunately, everybody follows somewhere. So pipeline, I would say, is better than the last time we spoke. If the pipeline was 10 at a screaming raging bull market, everything is fantastic, and it's 1 when the Russians invaded, it's probably 5. And last time we spoke, it was probably 3. Again, I'm hoping I said it. I meant to say that if I didn't. Reds will be -- fundamentally, they're trending lower. There's no question. But individual clients will have things they want to be doing. So you can't really -- that's a huge drop in reds. And so we thought, well, isn't that nice? But I wouldn't guarantee that drop every time. Yes, looking at the mic. Great. Self-help, I love that. Laura Gris Trillo: This is Laura Gris Trillo from Jefferies. So I guess on the back of Mike's question, I'm just wondering in terms of the differences you're seeing in the pipeline for institutional versus intermediary channels and also in terms of new client mandates in EMD versus top-ups. As I understand, top-ups are normally like easier to come around because clients need to do due diligence. And my second question is on the local platforms. I've seen you have had a drop in revenues year-on-year and also a decrease in EBITDA margin. So any context on that would be very helpful. Mark Coombs: Do you want to do the second one? Tom Shippey: Should I do the second one? So yes, that's entirely... Mark Coombs: I might forget the first one. Tom Shippey: Yes, okay. I'll remind you when you're ready to go. So on the locals, the drop in revenue and the margin, entirely due to fewer performance fees. So we realized some assets in LatAm and in the Middle East at the beginning of the '25 financial year. It's about GBP 7 million in total. That's in the first half. So underlying management fee is broadly in line. And the margin, that sort of mid-40s to 50% is kind of where we would expect the aggregate to be and growing hopefully from there as scale comes through. Mark Coombs: And then on flow, I think you're talking about institutional over retail and existing client over new, and I guess, by product set. So in terms of institutional over retail, it's mostly, I would say, yes, we're seeing flow in retail kind of begin to move a bit. And retail is often ahead of institutional, but it's not dramatic. I would say steady retail interest in equity, and that is a mixture of U.S. and other. Sporadic retail interest in local currency and some in investment-grade dollars. But if retail -- again, if 10 was everybody was crazy and happy and delighted and 1 was they never did anything, I think retail, we're kind of still 2, 3. There's a lot of retail still sucked into the U.S. market. Institutionally, it's definitely, I would say, a stronger pipeline. And then I think the second part of the question around that was around the split between new clients, new target type things and existing top-ups. Using the last quarter as an example, it was about 50-50, I think. Is that about fair? But I would say the top-up clients are the ones you feel you'll -- again, fortunately, we have a bunch of clients who we've had for a while. And a lot of them are still at 1 out of 3, having gone in '22 or '23 from 3 down to 1, let's say. A lot of them are still at 1 but we've just seen some of those start to go back to 2, just beginning, I'm talking about. So it was 50% roughly of what happened in Q4. And it was a few people going back to 2. But they're not in any way -- not that many people either. New client activity is the rest of it. And I would say the pipeline is more new client than top-up at the minute, and it's more geared to equity over fixed income at the minute. But that's the kind of general statement that will be proved wrong in 6 months' time. But that's just my sense of the last couple of few weeks of conversation and RFPs. Does that cover all the questions? Laura Gris Trillo: Yes. Mark Coombs: Great. Thank you. David McCann: Dave McCann from Deutsche Bank. A couple for me, please. So first of all, on the variable comp ratio, 32.5% for the first half. Would you say that's a good guide to be using for the full year and thereafter? Or if not, is there a sort of a better guide you'd have there? Secondly, do you have any update on the performance fee guidance for this current year? Sorry, you may have mentioned it. I might have missed that. And then lastly, one for Mark. Obviously, there's quite a lot of asset flow coming to the industry, as I'm sure you've observed. Do you think this is sort of realistically addressable for you as an active manager? Do you think there's a case that this money stays and can you address that? Or is this realistically money you can't really touch because they've gone passive. That's all they're ever going to be. Just curious on your thoughts on that. Tom Shippey: Do you want me to answer the first two? Mark Coombs: Yes. Tom Shippey: So VC at the half year, always an accrual percentage. As we talk about every year, we top it up or we reduce it once we know what the full year result has been. So if we continue to deliver the strong levels of outperformance, we'll need to pay the investment team. There could be upward pressure on the 32%. If it falls off in the second half and the 12 months has not been as good and the distribution team doesn't continue to deliver the flows that we've seen in the first half, maybe there can be some downward pressure. It's an accrual at the half year. It gets determined by the remco in July once the full year numbers are known and understood. If you want an estimate for the full year at this point, 32.5% is as good as anything. But it will change come July. And then on the performance fees, I thought I made it clear. The guidance I gave in September was for up to GBP 5 million. The guidance I'm giving now is up to GBP 5 million, absent something being realized somewhere in the portfolio of private equity assets that delivers a fee. Mark Coombs: And then the passive question. Some of it is permanent. I mean some of it, people will say, well, I'll just do passive. They definitely get a bit of that. Fortunately, for what we do, some of it isn't very well replicated by passive indices. But there are some people who are just obsessed with cost and will take sort of index drift from passive even if they haven't really thought it through. Money through consultants tends to not do that because the consultants have done an enormous amount of work in this because their initial thing is we should sell passive to some extent. Although, of course, they want a business. So they don't want to completely kill active so they can choose between managers. So some of it is permanent, I would say, particularly in the fixed income space, in the larger tighter spread stuff. Some of it is definitely a first thing to just throw the cash in before they find a manager. And I think that's always been true. For us, that's more of an issue for us -- again, this is a big generalization, but more of an issue for us in fixed income, I think, than in equities. Not that there aren't indices in equities and passive things to do, but just what we're doing tends to lend itself better to active. And we're taking market share from other actives. So we are in a different place than we are perhaps in some of the fixed income strategies. I don't know if that covers it. Rae Maile: Rae Maile, Panmure Liberum. I suppose the only question that hasn't been asked about pipelines and flows is geography. Is there any sign that the Americans themselves are realizing they're a bit too long the dollar? Mark Coombs: No, not really. I mean, well, that's not quite true. A little bit of retail. I mean Americans love equities. So we've seen a dribble now. I think I hopefully said this earlier. There is a bit of a dribble of American retail capital into the equity products. Nothing in bonds. And then institutionally in the States, not really. Again, a bit of equity. I mean there is a bit of an equity pipeline, but the pipeline we have is there's some U.S. but it's mostly non-U.S. There's some but it's mostly none. So they haven't gone, it's time to have less America. That whole story of getting them from 100% America to 90% America in the 90s, we're back in that game again. Nobody gets fired for losing a lot of money in buying the wrong American stock, but they will get fired if they buy Ukraine and Russia invades. But I think the conversations are still there, but the retail story is picking up. And the retail tends to be a leader. Institutionally some, but not a big wall yet. Anybody else? Okay. Well, thank you very much for coming. Happy to chat, if that makes sense. And we're hoping to see you again in 6 months. Hopefully, we'll have even better numbers. You never know. Thanks very much, everybody. Thank you.
Operator: Good day, and welcome to the Macmahon First Half '26 Results Conference Call. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. I would now like to hand over to the conference call host, Macmahon's CEO and MD, Mr. Michael Finnegan; and the company's CFO, Ms. Ursula Lummis. Please go ahead. Michael Finnegan: Thanks, operator. Welcome to the Macmahon 2026 First Half Results Presentation. I'm Mick Finnegan, and with me is our CFO, Ursula Lummis. Thanks for joining us today. We appreciate your interest in Macmahon and the opportunity to present our half-year results during this busy period. We'll run through the presentation lodged on the ASX this morning, and then we'll be happy to take your questions at the conclusion of the presentation. Beginning with the financial highlights on Slide 2, I'm really pleased to say Macmahon has delivered a strong first half with healthy growth in revenue and earnings. This continues our demonstrated track record of growth sustained across our Mining and Civil Infrastructure businesses. In fact, Civil Infrastructure is increasingly a key contributor to revenue and earnings, and today's results further validates our decision in 2024 to acquire Decmil, marking our reentry into the civil sector. Achieving this earnings performance is an important milestone. And before I go to the numbers, I wanted to take this opportunity to thank the entire Macmahon team across Indonesia, Malaysia and Australia for this outstanding achievement. Group revenue was up 11% to $1.3 billion with underlying EBITDA up 10% to $200 million and EBITA up a strong 17% to $91 million. This places us well to achieve our full-year guidance, given our expectation of a stronger second half. The business continued to generate strong underlying operating cash flow, which was up 17% to $190.5 million for the half, in line with the EBITDA growth. Free cash flow after tax, interest and capital expenditure was a robust $39.3 million after paying the final FY '25 tax together with FY '26 provisional tax. The strong cash generation allowed further reduction in debt levels and brought the gearing down to a modest 17%, providing increased financial flexibility. We expect strong cash flow generation to continue in the second half, which has supported our decision to increase the interim dividend to a fully franked [ $0.0095 ] per share. The increase is a result of sustained improvement in earnings we have been able to deliver, our confidence in that continuing and the appropriate allocation of capital through the business. Validation of that appropriate capital allocation is a continued improvement in ROACE. At 21.2%, it was a further improvement on the 30 June 2025 result and up significantly on the 17.5% in the previous corresponding first half. Once again, this reflects our strategy to diversify the business and have a balance between leveraging our balance sheet to differentiate our proposals and continually improving our ROACE to above the 25% target in time. Rounding out this slide, we have entered the second half with a strong order book of $5.1 billion, with a strong tender pipeline at $25.6 billion, which around 50% is expected to be awarded within the coming 12 months. Slide 3 summarizes the key operational and financial highlights for our Mining business. Mining operations remain our biggest business by both revenue and employee numbers and has delivered revenue and underlying earnings growth at an improved margin. In Surface, we concluded a 3-year extension at with Byerwen for $792 million, with a 2-year extension option that could see this increase to $1.32 billion. There was also a 7-year extension at Langkawi in Malaysia, highlighting the strength and long-term nature of our customer relationships. The Surface Mining pipeline remains robust with $9.6 billion of opportunities being pursued, of which $5.6 billion is currently expected to be awarded in the next 12 months. And this is obviously an enviable position, which allows us to be more selective. Underground also recorded new awards in both Australia and Indonesia, supported by a strong pipeline of $8.1 billion, with $3.5 billion currently expected to be awarded in the next 12 months. This pipeline underpins the strategic objective of achieving $750 million of revenue in Underground operations by the end of FY '28. Over to Slide 4 on our Civil Infrastructure business, which has performed well with strong half-on-half revenue growth, which represented 23% of the group's first-half revenue, putting us well on track for our stated revenue diversity goal. The business delivered revenue, earnings and margin growth with revenue of $307 million and underlying EBITA of $19 million. These numbers were up 61% and 67%, respectively, which was an outstanding achievement and represented a contribution to total group EBITA of around 21%. Underlying EBITA margin was 6.2%, an improvement on the 6% achieved in the previous corresponding half. There has been a steady stream of new work secured across a diversified portfolio of project types. The $500 million of new awards demonstrates excellent momentum and the division's capability across resources, government and renewable infrastructure sectors. Pleasingly, subsequent to December '25, Decmil has started moving to the larger packages, as can be seen with the award of the Western Angeles Bulk Earthworks. The tender pipeline reflects robust growth prospects with just under $8 billion in opportunities, of which over $5 billion is expected to be awarded in the next 12 months. Again, this is a carefully screened pipeline to include credible opportunities for the business with a disciplined tendering approach aligned with Macmahon's tendering guidelines. Slides 5, 6 and 7 recap our key projects across Surface Mining, Underground Mining and Civil Infrastructure, including some of the new work won during the half. The tables outline key projects, the tenure, cost curve profile and related commodity exposure. I really don't intend to go through this list now, but I'm happy to answer any questions in the Q&A or if we see you in-person in the coming days. Slide 8 illustrates the diversity in our revenue across several market segments. While our work is concentrated in Australia, the company has a strategic objective to increase Indonesian operations across our core sectors, targeting 15% to 20% of group revenue from this region. Importantly, we have been diversifying our service offering and moving further into the higher-ROACE businesses in the underground mining and civil areas. Revenue diversification by commodity demonstrates meaningful exposure across multiple commodities, and we expect this to improve in focused areas given the intentional broad mix of our pipeline. The business is well diversified by client, including Tier 1 global and Australian miners. Moving on to Slide 9 on people and safety. Macmahon now employs over 10,000 people across operations in Australia and overseas. While the group's TRIFR has continued to reduce since FY '21 as the workforce has grown, sadly, one of our valued Macmahon employees passed away at the Fosterville Gold Mine in December 2025. This event is subject to an ongoing investigation. The safety and well-being of our people remains the highest priority across all levels in the organization with a focus on promoting a culture of awareness and continuous improvement. Mental health and the well-being is also vitally important. I'm pleased to say we believe Macmahon is a leader in our industry with our Strong Minds, Strong Mines program. Mental health is embedded as a core workforce priority, and we recognize that psychological well-being directly contributes to operational safety and team effectiveness. We continue to invest significant resources in developing our workforce capabilities through the Macmahon Winning Way Leadership program and our Emerging Leaders program, providing expertise and leadership capability through all levels of the organization. And finally on people, our commitment to promoting diversity in our workforce is progressing. We've achieved 4.3% representation of First Nations employees across our Australian operations, and just under 20% of our Australian-based employees are female. Importantly, we have achieved an 11% reduction in Australian-based female employee turnover between December '23 and December '25, which we hope is a result of our inclusive culture, creating an environment where women choose to build their careers with Macmahon. Business sustainability is an ongoing objective for Macmahon. Slide 10 outlines some of our sustainability-related activities and metrics. We have prepared a voluntary stand-alone sustainability report, along with our annual report for many years now. I won't go through the detail on the slide now in the interest of time. However, some items to call out during the half include progressing our AASB S2 implementation, which strengthened governance systems and disclosure preparation and establishing a preliminary Scope 3 baseline in preparation for future disclosures. The company has also established the Macmahon Advisory Committee on sustainability to strengthen our activities in this area. I'll now hand over to Ursula to discuss the financials. Ursula Lummis: Thank you, Mick. Good morning, everyone, and thank you again for joining us today. I'll begin with a quick overview of our half yearly financial performance on Slide 12. Mick highlighted the first half result was another strong performance for the business. While this is an outstanding achievement, this slide illustrates that this first half result is not an outlier, but demonstrates a sustained track record of achievements in all key financial metrics. Revenue has grown from $810 million in the first half of '22 to $1.3 billion in the first half of FY '26, representing sustained revenue growth and diversification across the business. Underlying EBITDA has similarly progressed from $139 million in the first half of '22 to $200 million in the first half of '26, while maintaining healthy margins. Underlying EBITA has demonstrated particularly strong momentum, growing from $47 million in the first half of '22 to $91 million in the first half of '26, almost doubled. Return on average capital employed has been a standout, progressing from just below 13% in the first half of '22 to over 21% in the first half of '26. This improvement reflects ongoing strong growth supported by a focused and disciplined approach to capital management and demonstrates our progress towards our return on average capital employed target of greater than 25%. Looking at the profit and loss on Slide 13 to recap, revenue increased 11% to $1.3 billion, driven by the new awards in our Civil Infrastructure and Underground Mining Operations in both Australia and in Indonesia. This strong top line performance reflects the successful execution of Macmahon's diversification strategy, which has significantly grown the company's addressable market and expanded our service offering. Underlying EBITDA grew 10% to $200 million off the back of the strong revenue growth, together with operational improvements across the business. Underlying EBITA growth of 17% to $91 million is reflective of the strong growth performance in projects with reduced capital employed, resulting in lower depreciation expense but a higher return on average capital employed. The EBITA margin of 7% was driven by the award of this new work together with the operational improvements across the business. Net finance costs decreased to $15 million from $17 million in the previous corresponding period, reflecting the improved debt management. Following the debt restructure in June '25, the effective borrowing costs reduced to 6% as of the 31st of December 2025 compared to 6.7% for the comparative period last year. This improved borrowing costs, combined with the lower net debt levels, reflects our focus on capital and cost discipline in the business. Underlying net profit after tax, excluding amortization, grew 17% to $55 million. This excludes adjusting items of $6.7 million, comprising the share-based payment expense of $2.5 million, customer contract amortization of $2.9 million and the Software-as-a-Solution payment of $1.2 million. Reported net profit after tax was $48 million compared to $30 million in the first half of '25. With all tax losses across the group fully recognized, the effective tax rate was 30.8%, which we expect to continue going forward. The half year dividend was increased by 73% to [ $0.095 ] per share fully franked, equating to a payout ratio of 37%, in line with our recently increased dividend payout ratio range of 30% to 45% of underlying earnings per share. The net debt waterfall chart on Slide 14 steps out our major net debt movements in the last 6 months, drawing out the free cash flow generation and the reduction in net debt. Net debt reduced from $162.5 million at June 2025 to $144.1 million in December, driven primarily by strong EBITDA performance and continued discipline in capital expenditure. Underlying operating cash flow was $190.5 million, with a strong cash conversion for the first half of 95.2%. We expect these strong operating cash flows to continue into the second half. Free cash flow was $39.3 million after interest and tax of $54.6 million and net capital expenditure of $96.6 million. Important to note, though, is that the taxation included estimated final tax payment for FY '25 of circa $20 million. Our capital expenditure forecast for the full year remains unchanged at $245 million with a greater weighting to the second half period. Over to the balance sheet summary on Slide 15. The main outcome of the strong cash generation can be seen on Macmahon's balance sheet with gearing reducing to 17% and the net debt to EBITDA dropping to 0.36x. It goes without saying that our balance sheet finished the first half in a very strong position with solid liquidity and low stable gearing. Cash and available banking facilities totaled $539 million, providing substantial operational flexibility and headroom for growth and capital deployment opportunities in line with our capital management approach. Our diverse borrowing facility also provides flexibility and access to capital across multiple funding sources, as you can see. Again, we are pleased with the return on average capital employed reaching 21.2%, progressing well towards the upgraded strategic target of greater than 25%, as I've mentioned earlier. I'd now like to hand you back to Mick before we open for questions. Michael Finnegan: Thanks, Ursula. Let's move straight to Slide 17, where we talk about increasing revenue diversification and the reduction in capital intensity across the Macmahon business, culminating in improved ROACE, which we are now starting to see. These metrics go hand in hand, and they insulate our business from volatility and exposure to the cycle, whilst also providing an improved blend of key financial metrics, resulting in growth in returns to shareholders and free cash flow. Our target has been to transform the business to a more equal contribution across our Surface Mining business, our emerging Underground business and our Civil Infrastructure business. This has evolved to also include growing our Indonesian operations to contribute 15% to 20% of group revenue, up from current levels of around 10%. Our journey demonstrates this strategy is clearly working. Going back, our revenue mix was dominated by Surface Mining with low capital-intensity services representing just 11% back in 2018. Today, in the first half of 2026, that mix has fundamentally shifted to 51% Surface Mining and 49% higher ROACE services. This business mix evolution will continue to be driven through our increasingly diversified pipeline, where ROACE services now represent 63% of our opportunities pipeline as at the end of the first half of 2026 compared to just 22% in FY '18. Our ROACE has improved to over 21% in the first half of '26 as a result of this diversification. Our increased ROACE target to over 25%, up from our previous 20% target reflects the opportunity we see to continue this diversification. This brings me to our work in hand and tender pipeline on Slide 18. Macmahon's current order book stands at $5.1 billion. This includes recent contracts awarded by Rio Tinto in January '26. But as with our usual practice, excludes extensions and short-term civil and underground churn work. And this is typically around $100 million to $150 million annually. The order book brings FY '26 revenue already contracted to $2.5 billion, putting us in a very strong position to deliver on our revenue guidance for the full year. The order book runoff is also robust with work in hand for FY '27 already at $1.7 billion and $1.1 billion for FY '28. This excludes scope growth on existing projects, potential extensions and variations to current contracts as well as the churn I mentioned a moment ago. Our tender pipeline has increased to $25.6 billion and is consistent with our strategic target of achieving increased diversity in the business and further driving improvement in our return on average capital employed. Around $14 billion of this is currently expected to be awarded in the next 12 months. This is an enviable position and allows us to be selective, and our team remains very focused and motivated to convert the right opportunities. Slide 19 reiterates our message around capital management at Macmahon. Our priorities remain unchanged and include maintaining a resilient balance sheet and liquidity, retained growth funding flexibility and increasing returns to shareholders. The charts on the slide show our record against these objectives. Our performance has been strong across all 3 objectives since the refocus on capital-light growth in 2022, '23. Debt has been trending down. Strong earnings growth has been reflected in increased earnings per share, and we have increased returns to shareholders through increasing dividends and dividend payout ratio. With this continued improvement, we have increased the interim dividend to $0.095 fully franked, which at a payout ratio of 37.1% is approximately in the middle of the newly increased dividend payout range of 30% to 45%. I'd like to conclude with Slide 20 on our priorities and guidance for FY '26 before we break for questions. Our priorities for FY '26 are focused around progressing to our long-term growth and diversification targets. These include growing Underground to over $750 million and the Civil Infrastructure business to $1 billion revenue enterprise by the end of FY '28. In parallel, we want to increase the contribution from Indonesia across the 3 core sectors to 15% to 20% of group revenue, albeit this might be a slightly longer timeline. Our ROACE target was recently increased to exceed 25%, and we'll work hard to achieve this as we have with other metrics in the past. The outlook for FY '26 remains positive, underpinned by a robust order book of $5.1 billion, secured FY '26 revenue of $2.5 billion and a strong tender pipeline of over $25 billion, providing confidence for future growth. We, therefore, expect continued strong performance in the second half of FY '26 and have reaffirmed our FY '26 guidance of revenue of $2.6 billion to $2.8 billion and underlying EBITA of $180 million to $195 million. Now with that, I'd like to hand back to the operator to open for questions. Operator: [Operator Instructions] And your first question comes from the line of James Lennon from Petra Capital. James Lennon: Well done, great results. Two questions from me. Firstly, just on the margin. Are you able to give a bit more detail around what's driving that margin improvement, I guess, for the segment? I mean, obviously, the Civil was a great outcome, but also surprised to see such a good uplift in the Mining side. So if you could talk a bit more about the margin, that would be great. Michael Finnegan: Yes, for sure, James. Thanks for your note. You're right, the margins in Mining, I think, probably were a little bit better than what was been expected externally. But internally, with Fox League coming off, that wasn't great for us. So that was actually dragging down results. And the reality is the new OpCo model we've rolled out, I think it's starting to gain traction, and we've seen efficiencies achieved through the result of that going out and the teams being the and been able to focus more on their specific activities. So we've seen a number of projects in mining perform a lot better. If you recall last year, the first half of last year, Underground underperformed. We corrected a few contracts really stepped up performance. That performance has held. And now we've seen that translate through into Surface Mining. Added to that, we had a bit of luck with some of the seasonality, James, and there wasn't any start-ups, which can tend to drag margins down. So there's a few things like that as well. But predominantly, it's underlying performance and execution of the team, they've done a fantastic job. We're not at the 8%, though. We expect to see Mining at 8%. So there's still some benefits to come there. They'll come with scale in Underground and also continued improvement on execution, but we're on the right path. James Lennon: Great. Okay. And just in terms of the Civil side, as you're increasing the size of the contract, is that expected to have any sort of benefit for margins or not really? Michael Finnegan: We've always said, James, as I think you'll probably recall, Civil will be between 5% and 7%, probably on balance around 6%. Typically, resources Civil is closer to the 7. The government renewables is between that 5 and 6.5. So the blend should come out from 6. As we get scale, I would hope to do better and push the blend towards 7%, but we don't want to -- we just want to manage expectations at the moment. And if we say 6 from Civil and then as we've always said, 8 from Surface, 9 to 10 from Underground and 1 or 2 points more across all 3 in Indo, we'll hit the targets that we're after predominantly at [ Safra ]. We actually target exceed 25. But for the time being, back to the question you asked around Civil, if we hold 6 as an expectation, we'll always be striving for better, of course. And not at the expense of the clients. We want it to be through better ways of doing things and good execution. James Lennon: Great. Okay. And just lastly on the working capital, that's sort of been moving around a bit, I guess, with program starting up, et cetera. What's the sort of rate going forward, do you think for net working capital? Michael Finnegan: I'll hand to Urs. I mean one of the things I just wanted to highlight before I do was we're really pleased, and I know I'm forcing this in, so I apologize. But that free cash flow of $40 million that you saw this year, that actually included $20 million of tax from last year. So we paid provisional for '26, which will be what we do moving forward, paid provisional for the year that we're in. Obviously, this year, we had to pay that, and we paid retrospective tax. Now we're fully paying a full taxpayer in Australia. So that's thrown it out a bit, but I'll hand to Ursula to give you the detail, James. Ursula Lummis: James. So if you look at our history, James, you'll see on the first half, our working capital management, our cash conversion always goes down generally. But I think one of the useful things with this OpCo model that is working quite effectively is each MD is focusing on their -- one of their targets is to get that working capital up to the 100%. So if you look on a half on average, we do the 85%, maximum 90%. And then for the full year, we get to the 100%. So you'll see with this half, it's improved to that 95%, and we do expect that then to go back to the 100% for the full year. So it really is a factor of having all the MDs now focusing on their divisions and bringing their working capital up, optimizing it for us across the whole board. Michael Finnegan: And of course, James, when there's a start-up, that builds a bit of working capital in whatever period that's there as you get into payment terms. But I think Ursula is on the money. If you assume 90% to 100% on average, a bit lighter in half 1 at the moment. And then once we get to steady state, it should be flatter, but that's what we're after. Operator: [Operator Instructions] And your next question comes from the line of Gavin Allen from Euroz Hartleys. Gavin Allen: Just a quick one for me. So you did talk about sort of $14.4 billion up for grabs in the next 12 months, which is a mountain of prospect. Just curious about how we think about your win rate expectations in relation to that number in the context of you being selective. So what does success look like on that front sort of 12 months from now? Michael Finnegan: Yes, absolutely, Gav. I mean it's an interesting one because if I break it down in that $14.5 billion that's due in the next 12 months, $5.6 billion of that's in surface. Two of those were already preferred or negotiating, and they've got some good models around capital. It all fits within our future-looking forecast for CapEx. So that obviously, we should secure those. The other that's probably, I'd say, 1 in 3 on balance there in Surface. In Underground, that's 3.5 due in the next 12 months. There's 2 that are imminent where we're either preferred or sole sourcing and negotiating. So I'd like to think those are secured. Beyond those, it's probably, you'd say, 1 in 2, 1 in 3. And then in Civil, maybe a little bit more competitive, Gav. That 5.3 that's going to be awarded in this next 12 months. I'd say it's probably between 1 in 3 and 1 in 4. Gavin Allen: Yes. And that Civil site is starting to show up in bigger size packages for you? Michael Finnegan: Absolutely, yes, for sure. That's -- we can't shy away from the fact that, that's where we need to put that business. We put it out there, and we need to do it. And the team are doing a good job. And I think we're starting to build the credibility out in the industry and the sector with the clients and that they're moving us towards bigger panels and bigger projects. Now we've got to start securing them, of course. Operator: [Operator Instructions] And your next question comes from the line of Cameron Bell from Canaccord. Cameron Bell: Just wondering if you could make -- I suppose, could you expand on the CapEx indications for the second half? Like where you're sort of roughly allocating that money towards? Ursula Lummis: Yes, sure. So for the second half, we said we'll stay with the 245. So it's about $145 million. If you look when we guided in the beginning of the year, there was about 35 of new, and we've incurred about 15 of that. So there's still roughly about $20 million of new capital or growth capital to go into the Underground projects primarily because as you know, Civil is light capital mostly rentals. And then the rest is just sustaining, which holds up the depreciation. Cameron Bell: Okay. Sure. And then I guess kind of an extension of that, so presumably, you've got a bit of spare kit floating around -- given some of those contract conclusions. Does that just roll into this massive near-term tender pipeline? Michael Finnegan: Yes, absolutely, Cam, particularly in the underground. Obviously, I mean, with Genesis coming off, we sensed that it was a long process. So we were never at a point where we thought it was 100%. So we kept the pipeline warm and our people, our IP and the fleet we retained there and that we've got sitting elsewhere will be redirected to that new work for sure. If we can optimize some of that new CapEx and we don't need it, we will. But equally, we want to be good partners to the new clients, but it certainly won't exceed the budget. Operator: [Operator Instructions] There are no further questions. I'll hand back over to Mr. Finnegan for closing remarks. Michael Finnegan: Yes. Thanks, Gavin. Look, I appreciate everyone taking the time. I know it's an incredibly busy period. If anyone does have any questions, please reach out to us. And if we're seeing you on the roadshow over the next 2 or 3 days, we look forward to seeing you. And if we're not and you'd like to, please reach out to us, we'll make time. We appreciate everyone's support. We know we've still got much to do and the team is committed to it. So thanks, everyone. Operator: That does conclude our conference for today. Thank you for participating. You may now all disconnect.
Grace Chen: A very good morning, ladies and gentlemen, and welcome to CapitaLand Investment's Full Year 2025 Results Briefing. On behalf of the team at CapitaLand Investment, thank you for joining us today, both in-person as well as online. My name is Grace, Group Head for Investor Relations and Communications, and I'm going to be moderating today's session. I think firstly, please note that this session is being recorded, and we will begin first with management's presentation, followed by a Q&A session. So with that, let me hand the time over to Paul, who will start the session with financial updates, and then we will follow by business updates from quite a few of us; Andrew, Kishore and Kevin before Chee Koon concludes this outlook. Wei Hsing Tham: Good morning, everyone. Thank you all for joining us. It's a pleasure to see so many of you. It's a good turnout. I know there was a lot of anticipation about other announcements, and we've been taking a lot of questions. All I can say is my favorite one so far has been in terms of M&A, has there been anybody that we have decided to swipe right on. So it must be a Valentine's Day thing. My only response to this is please save all your difficult questions for Chee Koon. Okay. Let me just very quickly go through our full year results for 2025. Maybe just some key highlights to start. First off, I would say it was a very challenging environment last year, and it was very uneven recovery for us across different markets. But we did see quite a number of positive signs, which I think is what we, as a management team, are at least excited over in the coming year of 2026. Funds under management, up $7 billion or $8 billion, 7%. Fundraising went very well for us last year. We had our best fundraising year, and Andrew is going to share a little bit more about that, almost double from the year before. Fee growth, up 6%. This is where we are relentlessly focused on, particularly on the fund management fees. Result of that was slightly better operating profit, up 6%. We consider up 6%, somewhat steady growth rate for us, and we think this is something that we can keep a rhythm on. I think most importantly is this is somewhat turning a corner from us -- for most of you who have been following us would know that operating profits have come down over the last few years. This year, we're seeing an uplift, which we're very excited on. We had some capital recycling. We have less assets left on the balance sheet. So this number will continue to slide down, but it's still continued momentum as we move to an asset-light model. And then we did make a lot of effort last year, thanks to [indiscernible] and our IT team on really AI and digital initiatives, and we're starting to see the fruits of that labor come through. And we believe that will help us for the future, both in terms of cost, but more important, in terms of being more forward-footed in how we look at AI and digital initiatives. Financial performance for the year. So as you know, we look at it in 3 buckets. We look at it as our core operating performance, which is really the core part of the business for us, portfolio gains from sales and divestments and revaluations and impairments. So starting on the left, you can see we are at $539 million this year for our operating performance. This is up 6% year-on-year. I'll go through a little bit more in detail on the specific verticals, but we had strong contribution, particularly from the listed funds last year. We expect that momentum will likely continue going into this year. Profitability for the fee segment did come down slightly, and that was really us investing for the future. We've made hires and more investments, particularly between -- behind private funds and the lodging business. And because of that, profitability has come down slightly even though revenues are up materially in some of these segments. The real estate investment business, which is our ownership stakes in the REITs and funds, we saw good performance here, really driven by 2 things. One was lower interest and operating costs as that has come down, but also stronger operating performance from our units. Most of you who follow CICT, Ascendas. Just between those 2 REITs, we have $5.5 billion invested in that -- in them. Those 2 units together with our India Trust and CLINT turned in very good performances, and that helped drive up some of our performance. That was offset by a decline in -- from assets that we had already divested. So as we divest assets, that will come down a little bit. But that number overall improved. So from an operating PATMI perspective, sort of this mid-single digits is about the right growth rate without any special catalysts. We could keep this as a run rate growth quite easily. Portfolio gains, down 80%. That was expected. Most of you know the year before we divested ION Orchard to CICT. That was clearly very good for CICT, but it was also good for us on that divestment year. Last year, we didn't have any big chunky divestments to make up that difference. We did see good gains from India and from Japan divestments. That was offset by losses from China divestments. So we divested about $1 billion worth of China assets on a gross basis; on an effective basis, about $700 million. That was sold at a discount between 10% to 20% of book value. So on average, about 13% discount to book value, that offset some of the gains that we got from the positive sales out of Japan and India. And then the last bit is revaluation and impairments. This is the big adjustment for us. This was actually very similar to the year before. We saw valuation drop in China, offset by Singapore and India doing well. In particular, and there is more information in the slide pack. China valuations were down $545 million and Singapore and India up. The rest of our countries largely flat or neutral. So on an overall basis, we are down a fair bit in terms of total PATMI, but really, it's mostly noncash elements, which is why we kept our dividend at $0.12 for the year. Specifically on where we are most focused on, which is really on our fee business and fee business contributes about 60% of our business -- of our operating profit usually. As you can see, starting on the left-hand side, listed did well, up 8%. This is on the back of transactions across many of our REITs, investments, divestments and also the addition of the contribution from Japan Hotel REIT as part of our SC Capital acquisition. So good growth there and continues to be good margins. Margins down slightly year-on-year. As mentioned, we are investing heavily behind growing our private funds business. On the private fund side, very good top line growth, up 24%, partly from the contribution of Wingate and SC Capital, as the M&A has added to our growth platform and capabilities, but also very much organic growth as a lot of the second follow-on funds for our private funds business has come. And Andrew and Kishore are going to talk a little bit more about the organic growth potential here. We expect that we'll continue double-digit growth across this segment. Commercial Management, flat year-on-year, but better operating profits. The team did a good job of optimizing the platform and cutting costs. So we did see a nice uptick in margins for the commercial management. We would expect commercial management to generally grow at a low single-digit range. This is meant to be really a supporting vertical for our private funds and our listed REITs. And then finally, lodging management, which Kevin is going to talk a little bit more about in terms of where we believe the long-term growth potential is. Clearly, last year was a little bit of a softer RevPAR growth year compared to some of the preceding years we've had, but the team has still done an excellent job in terms of new signings. We hit a record there as well. And I'll leave Kevin to share a little bit more. But overall, as you can see, margins generally about flat on average behind solid performances from listed and commercial and then the investing for growth for private funds and the lodging segment. So the other part of our earnings, about 40% of our earnings, as mentioned, comes from our real estate ownership business, where we own stakes in REITs and funds and on balance sheet. As you can see, the different portions. On the listed funds, there is some adjustment because as most of you know, we deconsolidated Capital and Ascott Trust the year before. So the numbers move a bit. I wanted to share a little bit more articulating why our listed funds component has come down, partly because I know a lot of the analysts, a lot of you cover us from a REIT perspective and the REITs are doing well. So the REITs DPU are doing well. And actually, on an operating performance, actually, our REITs did contribute plus $20 million to us in terms of uplift. Where the challenge comes is because from an accounting perspective, and I would blame all the finance and accounting people here, and I include myself in that portion, the challenge is we have to account for a lot of the mark-to-market and FX at the REIT level. So because of that, with the Sing dollar strengthening, we did see some movement in terms of the contribution as we account for it on our books, and that offset a lot of the gains we had from the operating contribution. So this one, we think, will move up and down. But from a cash flow perspective, so from a group, we actually take a lot of those dividends in. From a cash flow perspective, we still had a very strong year. But that is why on the listed funds, we get a little bit of movement. The other component, obviously, being we have a slightly lower stake in 2 of our REITs year-on-year, Ascott Trust and CICT, we have a lower stake, partly from the distribution in specie and the sale of REIT units down. But overall, we would expect this part of the business, assuming that our REIT stay the same, we expect this part of the business to grow. On the private funds, slightly positive. The negative drag for us was China performance. A number of our China funds, which make up more than 40% of our fund -- private funds exposure, that came down. But overall, it was positive because it was offset by some of our new funds, [ credit ] India, which have done well and our sponsors stake in those funds are contributing more than some of the preceding funds before that. So similarly, on the private funds, assuming that the year holds out, we would expect this to be flat, if not positive. Finally, on the balance sheet. On the balance sheet, this is the one that we will expect a continued downtrend on. Actually, the numbers this year kind of surprised the team and myself. This is before interest impact. So as we divest assets, we get a lot of savings from lower debt as we pay down debt. This is an EBITDA number, so this is before debt. But on the balance sheet side, as we sell assets, this is naturally going to come down. And that's the intent. This balance sheet number should eventually move down. The improvement this year was partly because of the deconsolidation of CLAS. So we had some changes on treatment. And actually, the team had a fair bit of operational savings as we've been running a cost program to try and improve operations. So that's our real estate investment business, overall ownership. I would say the outlook for us in this area is we expect it to be largely flat. Even with divested assets, we don't expect this to necessarily come down. And then finally, on the balance sheet, where we have investments. So listed funds, a slight decline last year. I'm sure a handful of you will ask us why we didn't do a distribution in specie this year for our listed REITs. We are generally -- we have come down in terms of holdings, we're at about 20% right now generally across our REIT. We're fairly comfortable in this space. We don't necessarily have a need for the proceeds. So we're not divesting down any of these stakes at this current moment. And because of this, we think we are well hold at this level for a while. But in the longer run, we do think it's unnecessary for us to hold at 20%. We expect that will come down over time. In terms of the private funds, we've gotten slightly more efficient. As you can see, our private funds have grown. Our allocation in terms of capital has come down slightly, about $5.2 billion. This is intentional. We expect we will get more and more efficient for the new funds, we will hold lower and lower stakes. And this for us, improves our overall returns. And then finally, on the balance sheet, as most of you know, we have about $4 billion worth of assets left remaining. This has come down slightly year-on-year. We've divested from the balance sheet about $400 million of China. So of the $700 million effective, some of that came from funds and about $400 million from China. The intention for us is to accelerate that going forward this year. We did take a little bit. Obviously, we've marked down on a fair value perspective. Our China value is down a fair bit. We also took some losses this last year on divestments. We expect to pick up the pace this year on China divestments as we move to being more asset-light and generating higher recurring fee income. And this, obviously, some of you may have seen the announcement. Obviously, we did a C-REIT listing last year. And then there was an announcement recently that we have another filing for another C-REIT listing. So we are trying to grow this business. If you have more questions, I think to Shyang who is here, will be happy to take and share a little bit about that later on. But we do think this is part of how we're going to recycle a little bit more efficiently and be able to generate at least a better return for CLI from our China holdings. And then finally, just on the balance sheet. As you can see, we have a very healthy balance sheet, 0.43x in terms of debt equity ratio. The bottom left, we have a lot of debt headroom for growth. And so this is intended to be for organic and inorganic opportunities. And because of this, we think we're in a strong position for acquisitions and investments. Maybe the only other thing to -- two things to highlight. One, interest costs came down year-on-year, 4.4% to 3.9%. I think that our Treasury team has been working hard, and we've been very thankful that rates are coming down. We expect slight improvement in terms of interest cost savings this year, not necessarily a big shift because Singapore rates have come down quite a fair bit already. But we do think from a group profitability, interest cost savings will save us a little bit this year. And then on an operating cash flow basis, as you can see, we're still generating -- even though profits are down, we're generating more than $900 million in operating cash flow, and that's why we have the comfort level to continue with the $0.12 dividend distribution this year. So that's it on our financials. I'll save the time for questions later. Just very quickly to highlight on two of our verticals before I pass the time to Andrew. The first is operationally on our listed funds. Our listed funds had a good run last year. And I would say a good run from sort of 2 areas. One is, obviously, profitability was up. But actually, the most important thing to us is actually on the left-hand side is shareholder return to our REIT investors. As most of the REIT CEOs, we talk very often to them as having the fact that we have $8 billion invested in the REITs, their share price matters to us a lot and so did their dividends. So the REITs, particularly our S-REIT handful, even though we've got REITs now across 8 different listed funds, our Singapore REITs did a fantastic job last year, generating 15% to almost 30% returns. So we're very excited with that. Obviously, it's good for shareholders and us as the sponsor as well. As you would have seen, there was a lot of transactions last year, almost double the volume the year before. And we think that, that growth this year should continue, particularly given the interest rate outlook looks flat to somewhat downward trending. We think that's positive for our REITs business. The only other thing I'd like to highlight on our REIT is it's not necessarily just about growth. As I said, it's about shareholder return, and it's also about trying to find a way to improve the DPU. We had some active portfolio reconstitution. Obviously, some of the big REITs did fundraising, but we're actually also very proud of the fact that CLAS and CLINT were very active in managing their portfolio. CLINT's maiden divestments last year. We mean chasing [indiscernible] before he joined in terms of divestments. And we think this is important because we want the underlying portfolios of the REITs to do well. So seeing that churn and improving the quality of the portfolio actually for us is very important. So we're very proud of the REIT's performance last year. In terms of commercial management, commercial management, as I mentioned, is a strong steady fee income stream for CLI as a group. But more importantly, for our REITs and funds, it is a key driver of the fund and REIT performance. I would say the team last year, particularly if you look at CICT, you look at Ascendas REIT, you look at even our China Trust, we would think that there were very credible operational performances, which drove whether it was occupancy or NPI. And this for us is really one of the key reasons this vertical is so important for us. Stabilizes values, obviously, drives capital values up for the funds. And then also for us, this fee income stream has been an incredibly valuable, steady, resilient driver for us and contributes more than $100 million in EBITDA for us. So on this front, we expect this will continue slow, steady growth and will be a key value proposition for us in the growth of new REITs and funds. And with that, I'm going to pass this over to Andrew to talk about our private funds. Cho Pin Lim: Thanks, Paul. Good morning, everyone. Thanks for coming. I'll take a couple of slides to talk through our private funds business. Those of you who were here 6 months ago for our first half results may remember our Northstars. And the Northstars are very important for us as an organization because it charts the course and direction of where we want to go. Now private funds, I think, occupies two of those, I think, 5 or 6 Northstar points that I raised. The first is always $200 billion in funds under management. That's a big Northstar for us. The second is the growth and evolution of our private funds business to match the success and the strength of our public funds business, right, to get that equal sized bicycle of balance and stability. Now in order to do that, I think private funds is threefold. You need to be able to design and manufacture good products. You need to be able to raise capital in pursuit of those products. And obviously, you need deployment to be able to earn your fees at the end of the day. This is what it's all about. So let me talk about the first two, the product design and the capital raising. So let's look at capital raising. As Paul mentioned, last year, we had a good year. Overall, the markets for capital raising improved. Sentiment was better, I would say, from 2024, interest rates started to stabilize, most markets passed peak rates, appetite to deploy into real assets returned. In the overall space, I think Asia Pacific raised about $27 billion across all of the GPs. We raised $4.9 billion in total equity. That's about a 15% market share, and it was a substantial improvement from our market share the year before. So on that front, I think we are punching at or above our weight, and we are starting to capture an increasing share of the LPs and what they are looking for, what they are seeking in Asia Pacific. 85% of our investors came from APAC region. We'll talk a little bit about the products they came into at the next slide. We introduced 12 new LPs onto our register. And if you look at the supplemental materials, you'll see that a large part of this is now very balanced, and we had a big growth in our insurance LP base, which is an incredibly sticky, resilient, unique group of capital providers for us. So we're very happy about that. If I turn over to deployment, we raised $4.9 billion. We deployed $7 billion in total FUM last year. And deployment is important because, as I said, it convinces investors that you are able to find the assets that suit each of these strategies that we are talking about. And obviously, when you deploy, you start to earn your fees. And as Paul mentioned, we rose our FRR from the private funds by 24% year-on-year. That is obviously on the back of deployment, which then translates into fees that we are earning. So all of that, I'm confident will take us down into improved margin, improved EBITDA margin growth and so on and so forth, which you saw earlier. So I think we are well on our way. And I think the private funds business, the Northstar of -- heading towards $200 billion and also achieving a better balance between the public and private funds is well underway. So let's turn to what is it that we were busy doing in order to raise that capital and deploy that capital. Before I turn it over to Kishore, I'll talk about our lodging and living space and our logistics and self-storage space. As you know, we are investing into 3 key thematics: Demographics, disruption and digitalization. I'll talk a little bit about demographics, which is lodging and living and our disruption, which is logistics and self-storage. On the lodging and living side, lots of evidence to support thematic growth and interest. Leisure, travel, intra-Asia is at an all-time high. We all see the targets that the Japanese authorities have set in terms of attracting over 40 million tourists a year and so on and so forth. Singapore Tourist Promotion Board equally incentivized to bring tourists here, and we are very well positioned to attract and capture that trend. We've closed CLARA II last year. This is a USD 600 million fund. And already in a short period of time, just over a year after the fund closed and entered into deployment, we are over 50% deployed. As a result of that, we are planning a second fund this year. This is, again, one of our major regional funds, APAC Living, which we intend to launch in 2026 to continue to build on that momentum. I should add that CLARA II is the second of a successful series of lodging-related funds. So this again speaks to our ability and our confidence in being able to deliver product that suits the thematic that we have identified as key and investable for Asia. Turn across to logistics and self-storage, highly disruptive thematic. We all know supply chains are being rewired. We all know that folks are pursuing second order, second option, nearshoring, friend shoring, not relying on necessarily the lowest cost option, but options that deliver reliability and options for supply chains. We have one fund that is doing really well. This is the Southeast Asia Logistics Fund launched just a couple of years ago. That's a $400 million fund. Last year, we deployed 36% of that fund, which Harry was able to do into new geographies, Vietnam, Thailand, of course, Singapore. The logistics fund anchors off a very interesting product, which is what we call an OMEGA. OMEGA is a highly sophisticated automatic self-storage and retrieval logistics asset, highly proprietary, and this is the only fund that has access to that in Asia Pacific. That's again a $400 million fund, 36% deployed last year. Extra Space Asia, another very interesting thematic, playing on the back of folks who are emerging into middle class, which is fastest-growing demographic segment in Asia. As we expand and we accumulate wealth, urban spaces at the same time are shrinking, right? We all can see evidence of this. And so self-storage becomes an extension of your living space where you are -- you have stuff you can't quite afford or don't want to throw away, but you don't want to have it hanging around your house as well. And that becomes a very sticky product that some of us were customers, myself included, find very difficult to give up once you sign up. And so that's a very fast-growing, highly fragmented, highly operationally intensive business. We have a $570 million fund. Last year, Pat and her team triggered the 85% deployment release mechanism, which essentially means if we deploy 85% of that fund, we get to raise more capital. And that again is on the cards this year, another regional fund product that we are targeting to use to raise more capital into a very interesting thematic. We also have a regional APAC logistics fund planned, building on that momentum that Harry has earned with the SEA Logistics Fund. Before I turn it over to Kishore, I want to just take a note to highlight the operating platforms that sit under each of these products. The fact that CLARA II can rely on our in-house 100% owned world-class lodging platform, the fact that Harry's Fund can rely on Ally Logistics Properties to produce a proprietary product in OMEGA and the fact that APAC -- sorry, Extra Space Asia has one of the few operating platforms that has the footprint across most of the Asian markets is no coincidence to us. Because as we've said before, real estate going forward, in our opinion, is going to be increasingly tied to operational excellence. The ability to invest into assets or I should say, the ability to explain to our investors that we are investing into assets because of our ability to understand how to sweat the asset best, and that's the way to deliver alpha for LPs. You can no longer rely on interest rates and cap rates and interesting financing and engineering solutions to get you to your returns. We would much rather sit in front of our LPs and explain why, ALP, why Ascott, why Extra Space Asia can deliver that 14-plus return for you because we know the asset better than anyone else, and hence, you should leave your money with us and park it with us. So for us, I think the way forward is very clear, thought leadership, presence on the ground to locate and find the best assets supported by the best-in-class operating platforms in each of these thematics. And we are on the lookout for more such platforms as our LPs have also told us. It's a theme that resonates very strongly. And this is why this product location, theme and platform is a recipe in our opinion, to grow our private funds business. I'll stop there and turn it over to Kishore to talk about very exciting growth of our alts space. Kishore Moorjani: Thanks, Andrew. Good morning, everyone. Good to be here. So picking up on the platform thematic that Andrew was just talking about, let me touch on credit in 3 things. One, what do we actually have on the credit side? Secondly, how do we define credit because I think that's important. Thirdly, some of the funds and how we're progressing on that. So Credit is not a new initiative at CLI. We've been at this for over 6 years now. Arjun, who runs the credit business for us has been in the seat for 6 years, building this business out. In the platforms, we have forward invested by acquiring Wingate, LXA and bringing in the IP and the capabilities that we need to scale that business. So we're not expecting LPs or investors to take a bet with us on an adventure we're going on. We have put our capital. We've brought in that capability and that skill set, and we're saying now back us on it. So if I look at our credit team, we have 60-plus people in that team today, right? This is not something new. We have 60-plus people, 25 years of average experience across the senior team. And if I count the experience of what CLI has done and what Wingate has done, we have deployed over $10 billion in credit investing. So this is something that is a team that is experienced, that's established, that is now sort of building that out and scaling that within CLI. So that's -- firstly, it's not a new initiative. It's something that I think we're talking about much more, and we're scaling much more significantly, but we've been at it for a long time. Secondly, I think it's very important to think about how do we define credit because the headlines around credit and private credit in particular, have not been very flattering recently, right? So for us, credit is defined very simply. We only back -- real estate-backed underlying assets. We're doing asset-backed investing. We're only doing senior lending in that space. We're only doing it in geographies where CLI operates. So we're not going -- we are not going to be -- credit is not going to be the business that takes CLI into a new country. We're going to follow in that because we have the expertise of CLI. We go and participate in a different part of the cap structure. We're only doing it in developed economies where the legal jurisdiction works. So think Australia, Korea, Japan, Singapore. Again, no adventures because we're being a lender here. And most importantly, I've been asked this question a few times, we are not lending to any CLI assets, right? So this is third-party unrelated where we have the expertise. And why is that important? Because in credit, every once in a while, when you make an investment, things don't work out. When things don't work out, we know exactly what to do because we call our team in Australia, in Korea saying, we need to lease this building. We need to sell this asset. We need to finish the construction, and that expertise lies in-house. When you have that piece in credit where you know what to do if things go wrong, then I think it's a very different skill set. And so that's where the headlines around private credit are very different than the credit that we're investing in, which is in things that we know where we're an equity investor. And if you've been an equity investor through our REITs or through our private funds or through our balance sheet, we know how to run, operate those assets very differently from someone who's being smart in looking at spreadsheets, but if something bad happens, doesn't know how to operate. So we're very unique from that standpoint. In terms of on the credit side, what are we doing? So obviously, the Wingate funds continue to build and scale. Our Wingate senior debt fund crossed AUM of AUD 300 million late last year. So we're very excited about that. They've had a flagship Wingate Investment Partners product. They've now got the senior debt product to add to that offering. That's mostly going into the Australian market, and we're selling there because it's an A dollar product. Our ACP Fund series, our Fund I has now been fully returned to investors with a very, very attractive return. We were above what we had indicated as a target return. ACP Fund II will close imminently, do its final close imminently. That is oversubscribed at this point in time. So we're very excited about that continuing and that scaled significantly from where fund was -- Fund I was. So we're very excited about that and continuing to grow that ACP series on a broader Asia mandate across real estate credit investing. And as we look at how do we now take this origination platform of finding, evaluating and understanding interesting opportunities, we're thinking about what the distribution of that needs to look like. And that distribution is simple. We've been selling into institutions as LPs for some time through ACP. Wingate has been selling into individuals for some time, and you will see us doing that more across our flagship products and across a Singapore product that we've listed here that we intend to launch. And you will see us doing a lot more with insurance, as both Andrew and Paul touched on. Those are the 3 important segments. And to all 3 of those investor segments in credit, we are offering a fixed income alternative. This is not an alternative asset class with high returns and high volatility. This is largely positioned as a secured underlying asset with low volatility and sleep well at night returns, right? Similar to, in many ways, what we've done so successfully with our REITs, owning marquee high-quality assets. So that's what the credit business is focused on overall. On the opportunistic side, let me touch on one quick thing on there on the data center side. So again, unbeknown to many people on an aggregate, we have about 800 megawatts of operating and under construction data center capacity. So we sort of kept this, I'd say, we haven't advertised it significantly. But with that comes a lot of operating understanding and capability. So what we're doing with that data center business and some of those assets sit in CLARA, some of those assets sit in CLINT, some sit in our private funds. But on an aggregate basis, we understand those assets really well. And in data centers, you have to follow customers, contracts and power, right? So because of our capability, we understand what those requirements are. So we're taking that, and you'll see us create within data centers going from what is a niche real estate asset class to, again, an operating platform. As Andrew said, the value in real estate asset classes, the market is clearly telling us this is in the underlying platforms and the value you have the ability to add through that platform and the intellectual capacity and the IP that you get by owning that. So that's exactly where we're going, similar to what Andrew talked about in lodging and in logistics, we're doing the exact same thing across credit, and you'll see us do the exact same thing in the first half with data centers around building that up in a platform that follows our key customers. So with that, I think I'm turning it over to Kevin to talk about lodging. Soon Keat Goh: Thanks, Kishore, and good morning, everyone. Let me just move the slide. Okay. Maybe just to set the context, whatever I'm talking about here, especially the numbers, they're all asset-light. There's no real estate in here, right? And an asset-light business is generally valued not based on the NAV of the business, but as a multiple of EBITDA, right? So you think about it and you look at the comps, it's anywhere between 15, 20x EBITDA. If you look at the growth of the business we've been signing management contracts, franchise contracts, and this gives us very good headwind or -- tailwinds to really write the earnings. If you look at the signings that we have done for the year, about 19,000 keys. We acquired -- we did, I think, 2 recent M&As, right, with Oakwood and with Quest. With Oakwood, it was 15,000 keys; with Quest, it was 12,000 keys. So the organic engine that we are building is outgrowing the M&A acquisitions that we have done in the past. And for every 10,000 keys that we signed on a stabilized basis, the latest numbers that we have is actually about $35 million of fees flow in. But depending on the mix of those keys, whether it's in developed markets, developing markets, high ADR, low ADR, resort -- city, it can range anywhere between $20 million to $35 million. Now you do the math and you multiply it by the EBITDA earnings, we're adding a couple of hundred million of value to the enterprise with 19,000 keys of signings. And that is going to recur every year because the engine of growth is already moving and churning that amount of signings every year. Now the other thing that I want to address is really the growth. Now you look at the 2020 numbers, we're only at $150 million fee income. Today, we're at $350 million. You saw earlier, Paul's like, although we grew only by 2%, but on a look-back basis, 5-year CAGR is about 15%. Now the reason is because a lot of times, the signings and the construction schedules are quite different from project to project. So we get growth spurts, sometimes we grow 20%, 30%; sometimes we grow 2%, 3%. But on a look-back basis, I think on average, we do expect this kind of growth rate going forward. Now the other good news is we've been talking about a $500 million target. If we look at what we have today in the back, and these are recurring fee income, $350 million, and I add on what we already signed but not open, we have exceeded that $500 million target, right? So when do we cross that $500 million mark, it really depends on how quickly we can get the properties to open. We try our best to support the owners, the properties to open as quickly as possible, but sometimes it's a little bit beyond our control, right? But rest assured that these are backed by signed contracts and they will open. So those are kind of like the bigger pictures, the valuation, the organic engine of growth, the value creation that we are giving to the business. The other one is really on our operations, right, and how we are thinking about the future. We believe that this business should operate at 30% and above EBITDA margin. Today, we are operating below that. If you look at [ Slide ], we're operating at about 23%, 24%. And that's deliberate because if you look at some of our strategies, we are doing things that we never did before, right? We're doing Resorts, Branded Resi, Social Living, Franchising, F&B, MICE, Wellness. And this segments actually opens the market a lot for us. Many years ago, we used to sign 8,000 to 10,000 keys a year. Now we are signing 19,000, why? Because we have all these opportunities open to us. And we are operating below where we think the EBITDA margin should be because we are investing in capabilities to build support for franchisees, right, to have people who are able to manage resorts well, to open our distribution channels. We invested in our own loyalty program just in 2019, just a couple -- 6, 7 years ago. We started with 0 members. Today, we have 8 million members, and we're targeting about 10 million members this year. The distribution as a whole, we're distributing about 60% of our business direct to our properties. So you cut off all the middlemen. And I think that's what a lot of owners are looking for. And we're going to strengthen that distribution even more and be able to win deals from our competitors. So the one last point I want to leave you with is that today, I would say over 90% of our properties are with unrelated third parties, right? So that's actually a good validation of our capabilities to the market. And we have about 30% of our signings from repeated owners, means owners who have 1 project with us, 2 projects with us, they're happy with our performance, and they're giving us more projects, right? So that is helping us actually grow a lot faster in terms of reputation, brand recognition and confidence from the owners to sign more with us, right? So happy to take questions later, but I just want to leave you with these 2 slides. I'll pass on to Chee Koon. Chee Koon Lee: In the interest of time, why don't we get everybody up here, and then we can do the Q&A. And I'll just give me some time to say a few things. Thank you all for coming. The thing -- I mean, thank you all for all the presentation. We made the decision to go on the asset management journey in 2021. I mean, at that point in time, interest rates was high and then China started to slow. That was the basis of how we wanted to raise our private funds. I mean we were razor focused, and I think you could see the turnaround in terms of our fundraising machine. The key criteria that I set for the team was that the way we can start to see real success is you see re-up for our private funds and oversubscription. And that's coming through. And I must say that I'm quite confident in terms of what we are looking at in terms of the pipeline of deals and the fundraising activities for the private fund side. So I would say that we have built enough capabilities in the team and enough product capabilities to be able to do that. If you take a step back, I mean, if you think about what are the key strengths for CapitaLand, one is really our -- today, our REITs platform. It's not just the fact that it's there. But if you look around the markets today, our REITs trade quite well, actually offers a platform for many LPs, GPs, investors that have sometimes difficulties in finding liquidity and creates conversations. And if you can find liquidity in a way that makes sense where we can find -- where we can acquire assets, provide them liquidity, and that's a good way to get them to support us in terms of the private funds growth. So that's number one. The second thing is really the operating platforms that we have built up over the years from Ascott to self-storage to logistics, our understanding of real estate and give us the ability to build up the few verticals that allow us to build the momentum for fundraising. It's not easy as what Andrew said, if you're going to get people to just raise money to just invest in real estate unless you have something more to offer. And it's really because of the investments in the operating platforms that allow us to build that momentum. I mean the private funds journey took some time. It's the same way when -- more than 10 years ago, when we decided to go on the asset-light business for Ascott, early 2010, 2013, we decided to start to grow very aggressively on the management contracts. And you saw what Kevin has presented, asset-light, the fee income growth, the embedded earnings and the multiple that one can apply to the EBITDA that we are creating. So that's the focus that we have as a group in terms of growing our fee income, our asset-light business. That's the reason that why we decided to make the switch. So that's point number one. Point number two, I think all of you or many people are coming here today expecting some announcements. I had received a number of WhatsApp correspondence from friends, media, analysts. Maybe I'll just summarize. Our ambition is to grow to a $200 billion FUM business. Organically, based on the engines that we have, whether it's the REITs, the private funds and the lodging business, I think we should be able to grow $150 million to $160 million. We do need M&A. And in the last 12 months, you see our names appearing in different news, whether it is a platform in Korea, a listed entity in Australia, a listed entity in Hong Kong, hospitality platform with European origin. And more recently, the name that Shyang mentioned is but all of you are asking. Not all the news are correct, okay? But we are definitely actively looking at deals and M&A will form a big part of what we want to do. We will look at deals that make sense. It must make strategic sense, as I have said. Culturally, things must work. And at the end of the day, we need to be able to pay a fair price that makes sense to all investors. That's what I want to say. If it's not accretive, it doesn't make sense, it doesn't build long-term capabilities that can allow us to drive new funds capabilities, drive ROE. It's going to be very difficult for us to stand in front of our investors to explain why we want to do a certain transaction. And of course, there are people who are thinking if you're going to do any transaction, are you going to do any fundraising? I think Paul in his capital management slides, have shown you that we do have sufficient headroom to be able to do deals on our own. I think that's the part that I just want to assure you that we are not here to pursue any M&A just for growth, just because we want to hit the $200 billion target. We are careful in the end. If we are happy with the $160 billion target organically that we can do that can deliver very high ROE, we are happy with that. And I'll come and explain to you that I feel to find a good M&A target. But if we can really find a good M&A target that can -- that's highly accretive that all investors will support, I will present that to you. So I just want to assure you that we are not deal junkies. We want to do good deals that really helps to build the long-term capabilities for the company that can drive share price, okay? So I thought useful to take the elephant out of the room. And I apologize for some of you rushing here to want to hear other announcements. Sorry, I do not have, but I thought I would just want to give clarity in terms of the principles that we look at in terms of the deals that we evaluate. And I can't stop the media or the market from speculating. But it's a good thing, right? I mean we're actively looking at deals and still having the discipline to make sure that we want to do things that make sense for all investors. Thank you. Grace Chen: Thank you very much, Chee Koon. And we obviously, we have the team over here for questions. We have Ervin joining us on the panel as well. So you guys know the drill for those of us who are here in person, I see the hands up already, and I've been -- I got a WhatsApp message to say who's going to go first. So please state your name and the organization you represent and hang on, I'll come to you. And for participants joining us online, likewise, there's actually a Q&A function. Please also state the name and the organization that you represent. So the person who chopped the first question. Mervin, can we have a mic? I must say keep to two questions, keep it brief so that we can accommodate as many questions as possible. Mervin Song: Mervin from JPMorgan. Yes, congrats on the core PATMI performance. I thought it was quite good given the challenges you faced. Maybe we can go to Slide 14, the FUM potential. Maybe you can run through potential FUM that you could raise this year based on the planned funds that you're launching. Second question is in terms of China. Share price is down quite heavily, I presume, mainly due to the write-downs, noncash. Are we past the worst? Or would there be further write-downs in China? And for the $3 billion of on-balance sheet assets, what's the implied NPI yield based on valuation? Cho Pin Lim: I'll take part of the first question on FUM. I'll turn it to Kishore as well to talk about alts. So you saw, Mervin, that we had a couple of regional flagship products in the pipeline. I just want to say, first of all, that it's a reflection of where we are as a GP as a house, right? We wouldn't -- I would say we wouldn't be in the position to talk about a regional living fund, a regional logistics fund. And I say -- I definitely can say we won't be in a position to talk about anything on credit 12, 18 months ago. So we are -- first point I want to make is we are on this journey. Now this is a multiyear journey, and we're confident and we're actually quite pleased with where we are, as Chee Koon alluded to. So when you talk about regional flagship products, you are looking at minimum third-party raises of roughly $500 million, okay? Eyeball that as a number, that's a number we target. You double that because you add leverage to it. So your FUM, if you will, should be at $1 billion or there or thereabouts. So these are the 2 flagship products that we are comfortable talking about now because we are confident we think we can get this out this year. This is the launch, not necessarily the raise and the close, right? That's also a multiyear journey. We also have Extra Space Asia, which I talked about. And we're getting more confident by the day that self-storage as an investable asset class in Asia is getting increasing traction just because of the reverse inquiries, the inbound that we would like to think we have helped to generate with the success of Extra Space Asia. People are starting to understand why this is an interesting asset class for Core/Core+, sticky, resilient customer base. And if you know what you're doing on the operations side, you can actually be confident about growing the platform. So those are the two, I think I'm comfortable talking about now maybe turn to Kishore to talk about alt. Kishore Moorjani: Sure. So on credit, similarly, the ACP II fund, that is, I would say, just very high visibility. We're engaged with investors. We're in the process of effectively closing that out. I'd say certainly within Q1, some of the investors may slip into early Q2. So that's very certain, right? We know that's happening. ACP III on the back of that will come out second half of this year, back half of this year. So the pipeline, the originations for that, very strong momentum. So ACP II will close. III likely, I'd like to see us have a first close before the end of this year. So very high visibility. Wingate continues to grow. The senior debt fund, as I said, is picking up momentum given the world we're going into. I actually anticipate we'll see stronger flows into the Wingate senior debt fund. So again, very high visibility on that. Things where we've invested a lot of time that will bear fruits in the second half of this year. I would put both our SGD product, which we expect to launch in that camp and our data center product in their camp. Again, as I said, those are not new initiatives. That's not a 0 to 1. That's places where we're already operating, where we're already investing. We're now bringing that out in a slightly differentiated, more focused product for investors. So on both of those fronts, very, very good momentum. High visibility to hopefully beat the numbers on fundraising that we had this year -- last year. Chee Koon Lee: Yes. Just to add on, I'm very actively involved in conversations with LPs, family offices. There's actually a lot of demand for some of the products that we are creating and some people are asking us to cocreate products for them. And that's why I am actually quite optimistic. I mean, this time last year, I wasn't quite sure because the fundraising momentum was -- we had big plans, but we are not sure in terms of where things could be. There were still changes in terms of personality. And then we went on the road and spent a lot of time with the investors. But given the feedback, given the products that we are creating and a lot of this and also conversations with our LPs, I'm actually a lot more confident in terms of where our private funds team will be able to achieve over the -- at least -- I mean, early conversations just for the start of the year has been very, very encouraging. Wei Hsing Tham: I'll take the other two questions. On the China revals component, so this year, the China revals on average from a portfolio viewpoint was about down 5%. But that was quite a range depending on the asset class. China office was the hardest hit for us, office and business parks, less so in some of the other sectors. So we took a bigger write-down partly because of the vacancy in some of those buildings, which ties to your second question. Because of the vacancy in those buildings has come down as we've had some tenants in the offices and business park move out, it has brought down the NPI numbers for those buildings. So I would say most of the NPI for the assets we're talking about range between 3% to 5%. As we can fill up that occupancy, that should drive the NPI up, hopefully, to get us to, I guess, a stronger, more 4% to 6%, 4% to 7% type level. We hope the worst is behind us. But I think when we've looked at China over the last several years, obviously, we've taken write-downs over the last 4 years, and this was a bigger write-down than most years. I think it's a little bit hard for us to predict whether there will or will not be anymore. Certainly, the team likes to think that our hope is that the worst is past us. But as we continue to expect negative reversions and occupancy is still weak for some of the asset classes, we do think there could be some movement up or down over the next 12 months. Cho Pin Lim: I just want to add to that before I turn to Chee Koon. It's not all doom and gloom on China. Now as Paul correctly characterized, China is -- there's a lot happening exogenously that we are having to deal with, right? There's little we can influence in terms of geopolitics, consumer sentiment, et cetera, et cetera, and Tze Shyang is well versed in this. But as a senior team and as a group, we need to sort of make do with the cards that we are dealt. So what are we doing? As you all know, again, one of the Northstar destinations is China-for-China. And last year, we launched our first C-REIT. C-REIT is trading really well. It's been well received. And as Paul mentioned, this year, we've registered for a second C-REIT, taking advantage of what the Chinese regulators have acknowledged is something they need to focus on. They need to be able to provide retail investors, savers in China with something that is a proven asset class globally, stable, visible, sleep at night distribution yields rather than speculative real estate in China, which we all know they are completely allergic to right now. And that plays to the C-REIT market. And that, again, I think, plays to our ability to provide assets for them that are nothing wrong with them intrinsically. They're great assets. We run them well. We just need to find the right price point where the market says, this is great for me. I can get that distribution yield, get that saving in place. And so in the ability to demonstrate to the market that we've launched one C-REIT doing well, sleep at night, here comes another one that is larger in size, more sophisticated, integrated development. You start to see this ability to accelerate our China-for-China play, even in the midst of what is a very difficult political macro environment for China. China is a huge savings base, in part driven by the fact that sentiment is down. People are not spending because they're worried about the future. When they're not spending, they want to save. They need something to save in. And I think I can think of nothing better in the equity side than a REIT, as we all know, from our own savings here in Singapore. So much of our wealth is tied up in the S-REIT market. So I think this plays to our strength. And if we execute well, we can turn what is an uncertain environment into something that is positive and part of the growth story for the group, which is China-for-China. So it's not -- yes, it's not great. Yes, I know you guys are waiting for the inflection point and for us to come out and tell you that there's not more bad news. Honestly, as Paul says, we can't tell you that because as you know, events are happening very regularly, and they happen come out and left field very often. What we can do as a team is just to respond as quickly as we can and stay focused on what it is we're trying to pivot towards, which is China-for-China. Chee Koon Lee: Just to add on, the -- we've created a master fund last year and then the C-REITs. You will see us continue to do that. Because of our long history in China, ability to operate, manage reputation-wise, we actually have a lot of inquiries from capital partners to actually give us more capital to grow the asset management business in China. A lot of competitors in the market today in China have exited in one way or other, actually position us quite nicely to grow the China business using a lot of domestic capital, using a very capital-light manner to grow the business. Yes, I mean, we do have balance sheet exposure to China from the original CapitaLand days. I mean, where we use the developer's mindset to put very heavy balance sheet to grow, which is not the case anymore. And I mean, I don't want to keep revisiting saying that these are all the things that have worked well for CapitaLand, but it is what it is. But the important thing is what do you do? You want to be able to recycle the capital and invest it to grow the fee business, the asset management part of our business, being very capital efficient, raising third-party capital so that the fees that we are earning will be very -- it's like a coupon clipper for investors that invest with CLI. Perpetual capital save, the fees are there. You don't have to worry about the volatility of the real estate market. And that's what we are transforming the business model into, right? I think the rest of the other parts of the world, we have done that. In China, we are doing the same. We are doing -- raising a lot more third-party capital. And I think that the potential for us to build a big FUM business in China using third-party capital is there. We just don't need to use so much of our own money in China. So that's the guidance. I just want to make sure that the team understands as we execute the strategy is to use less of our own money and to grow the business in China, grow -- make it a fee business. Mervin Song: Sorry, on the -- sorry, on the private credit side of things, $2 billion plus on the property side, private credit, $1 billion plus to be this year is realistic, I presume you hire a big time here to deliver. Kishore Moorjani: I'd like to see us get ahead of that $1 billion, but watch the space. Grace Chen: Xuan? Xuan Tan: Xuan from Goldman. First question is on cost savings. The $5 billion seems a bit low versus previous $50 million target. Can you walk us through the initiatives? And secondly, on strategic M&A, if you go do one with a significant overlapping capabilities, how confident are you in realizing cost synergies? And what will you be doing differently? Second question, if I may, on lodging. So if this business is valued on multiple, then EBITDA is actually more important than keys and revenue. So if I look at your revenue target, EBITDA should grow more than that given operating leverage. So my question is really on time line. When can we expect that to come through? Wei Hsing Tham: Okay. I will do cost savings. So the cost savings number related just to our AI digital initiatives. So overall, the group target is still to get to $50 million in cost savings. I think we are tracking fairly well. We've made some progress this year in terms of increased efficiency, streamlining some of our operations. We're still moving into that next year as we start outsourcing some parts of our work using a little bit more AI and digital initiatives. I think we'll be able to update a little bit more by midyear in terms of progress as we can see sort of full year savings. But the goal is still to get to $30 million to $50 million savings on a run rate basis by 2027. Soon Keat Goh: Should I take the lodging question? Okay. So... Wei Hsing Tham: Okay. So maybe on the cost savings for M&A. So obviously, we've done two M&A in the last year. SC Capital, which was only at 40%, so it's been largely run independently. For Wingate, which was 100%, we have started integrating those operations. And we are starting to see that capability sharing. So Kishore has now got a lot of Australian sourcing capability, not just for the Wingate funds, but also for ACP II and ACP III in the future. And so we're starting to see some synergies there. Given that, that has only been in operation for about 8 months, we have yet to be able to actually count the value of how much there is. But when we look at it, I think it's easy for us to estimate that sort of 10% to 20% is a reasonable saving levels for us in this particular aspect. I think if we were to do a broader M&A, it would depend on how much overlap there is. And if we look at our corporate costs, which based on the slide there, you can see we're still sort of about that negative $55 million, which is not true corporate cost, but has a mixture of factors there. We would think of that as, in theory, where we would get the most savings from in terms of overlap. So that's what we're driving to. We have done no estimates in terms of overlaps for maybe what you are looking for. But we do think that reasonable cost savings when you look at overlapping operations, if it's -- in the case of, say, something like Wingate, we think 10% to 20% is quite reasonable. Certainly, we hope to do more if there is more overlap. Chee Koon Lee: Just to add on, I have done a number of M&As in my career in CapitaLand from Ascott days buying Quest, buying the hotels platforms and then subsequently, the merger with Ascendas-Singbridge. I would say that so far, all the M&As that we have done, we have been able to grow top line. We have been able to create synergies. And I think that's -- that will be the principles that we take -- whichever M&A that we do, it has to make sense. There is no need for duplication of resources. Of course, we want to make sure that we do things properly. When we did the merger with -- the big merger with Ascendas-Singbridge, it was on the basis of a best person for the job. Some of you may recall when we announced the transaction, very quickly, we talked about the org structure. We want to make sure that things could execute. And for some of you who may remember on the day when we completed the Ascendas-Singbridge transaction, the next day, we talked about how do we put together the Ascendas Hospitality Trust and the Ascott Residence Trust. It's a question of the discipline. I mean you just need to make sure that if you are committed to do a deal, how do you work out your entire plans, how do you put the people in place? How do you create the synergies? How do things make sense? I think we have enough track record to be able to demonstrate that we always maintain the discipline in doing transactions. Soon Keat Goh: So just last part, we are absolutely with you in laser focus in delivering EBITDA. If you look at our total key count, it's 176,000 currently, just over 100,000 is operational. So we have another 60,000-plus in the pipe. So the ratio of pipeline to operations is actually quite high. And that suggests that we have a lot of opportunity to gain operating leverage. Now if we look at the construction schedules of the projects we have signed, we do expect a lot more properties to open in '27. And if you give them a year to ramp up, we should be able to get a good healthy boost in fee income in '28. And we do expect by '28, maybe '29 to be operating at a more stabilized level of about 30%, 30-plus percent. Grace Chen: Can we go to Derek first? Yes, I think his hand was up. Derek Tan: Derek from DBS. I'll just ask two questions. So, if I could go back to China, right? Could you give us a sense how much have you written China since the start? Are you at 10% to 12% down? And maybe to ask the question another way, if you put an asset in the market now, do you think you can transact at book rather than going through the C-REIT route? That's the first question. Then my second question is on the ACP Fund II. I'm just curious, could you give us a bit more color in terms of returns that we expect? I always thought that for private credit and credit, you'll be playing in the field where you are either junior debt or a bit more risky or you're lending to corporates that could not get traditional funding type of scenarios. So when Kishore mentioned that you're looking at very senior debt kind of investments, very safe. Just wondering whether it's your landscape or competitive landscape to financial institutions and how you stand apart. So I may be totally wrong, but if you can give us more color, right? Wei Hsing Tham: So on the China valuations over the last 5 years, we've written down about $1.6 billion on our China values. It works out on average to about a 12% drop in valuations. But that's really an average. Obviously, there's been a wide range. For some of the assets, they have gone down 20% to 30%. Some of them have actually barely moved because they are very strong performing assets. In terms of would we be able to sell into this market in this price, I think it's very asset specific. If you ask us right now, certainly, there are some assets that would go out at current value. Some may, if we are fortunate, even get a slight gain. But I think depending on how the market outlook goes over the next 3 to 6 months, it will give us a better sense of whether there is an additional discount that we need to take. I think last year, we took -- as I mentioned, we took an average 10% to 20% discount. We are actually quite willing to take some of these discounts if it gives us an ability to do what Andrew was mentioning, and that is really recycle it into a renminbi fund. If you ask us to take an adjustment to the valuation, but it generates long-term recurring income, that's certainly something we would look at and consider. I think for us on the go forward, we know we have a little bit of weak spots in parts of the portfolio, but we are very much focused on making sure that, that operating profit and that fee income stream grows. Kishore Moorjani: So in private credit, we're not coming for DBS' business, just to be clear. But look, it's a good question. Firstly, we're not doing anything on corporate, right? So it's always real estate, always asset-backed. Why does the opportunity exist? There are many cases where for regulatory reasons, a bank struggles to do a certain type of lend. In construction and transition financing, we understand the underlying assets much better. So our ability to provide financing into that is greater. It's faster very often than in financial institutions. We're clearly not cheaper, right? The end return to your questions that we're looking at in our private credit products is going to be between -- net to investors between a 6% to 10%, right? We hope we can outperform some of that 10% at times, but this is not a 15%, 20% IRR business. It's generally transition, so it's shorter duration, 1, 2, 3 years. We're not doing 5-, 10-year loans because anybody who's taking that cost of capital for a long period of time, it's not sustainable, right? But let me perhaps bring that to life through an example. So we did a transaction late last year, we're about to do our second one in Australia, Sydney specifically in prime Sydney residential neighborhood, financing a developer against completed stock. They got very expensive financing, construction financing, which is a business we understand because of Wingate. And they're now slowly selling out the -- they held on to some stock. They're slowly selling out that stock on a completed basis. On that, they're quite happy to take our capital at probably a 7%, 8%, just to give you directionally where we are. We will lend that on a 60% to 70% loan-to-value. So it's not very high LTV, firstly. Second, we may selectively use some leverage on that, probably 50% back leverage, but we control the entire loan stack. So you're right that our end participation may be junior, but we control the entire stack. So we're not sitting there at a syndication table with 6 lenders if something goes wrong. If something goes wrong, the senior is actually looking to us saying, you guys go resolve it and work through it, right? So on something like that on a levered -- on an unlevered basis, we may be 7%, 8%. On a levered basis, we get to 10%, 11%. Net of fees, we're comfortably at 8% or 9%. And on ACP, that's sort of the 10% or just over 10% net is kind of what we're looking at. On the Evergreen in SGD, that will probably be safer. That will probably be more like a 6%-odd return. Grace Chen: Let's go to Rachel. Lih Rui Tan: This is Rachel from Macquarie. So a few questions from me. I think, firstly, you spoke about interest cost savings. Could you give us some guidance for interest costs in FY 2026? My second question is on divestments. I think you have done $1 billion. So any outlook on the divestments for this year 2026? One last question on commercial side. Any risks you see in your portfolio? I know it's stable growth, but this year, do you see any risk in your retail portfolio? And there are some office assets out for sale, which is very sizable. That's good for CLI. Any thoughts about whether you will acquire them? Ervin Yeo: I think we've always been consistent in terms of our retail portfolio, especially in Singapore. It's supported by fairly controlled supply, right? And we've been conscious on the trade mix. So our reversions, we think, is consistent over time. Last year, it's about 7%, just under 7% and this is consistent. And we measure the business, I think you know by now by occupancy costs, and we look at this across different trade categories. So we think that the business this year will continue to be fairly resilient. Now there's going to be RTS opening at the end of the year. Our malls are not at the northern part of Singapore, but we are getting a presence there via the management contracts that we signed in Zoho. So I think the retail business should remain fairly consistent. Our office performance for the assets have also been strong, also supported by relatively managed supply and all this is in contrast to China where the massive oversupply. So I think any opportunities are on the table, we have various vehicles that we are always looking at it. We will be the first part of call. And if it makes sense, it makes sense. Wei Hsing Tham: In regards to interest cost savings, so in terms of absolute interest costs, this one might move up or down depending on how divestments and investment goes. The truth is I personally, and I'm sure plenty of our bankers here too, hope that we end up borrowing more as we have more investments to do. So the absolute cost may go up. But I think in terms of basis points, we're at 3.9%. The year before, we had at 4.4%. I think we can see it coming down maybe 10, 15 basis points on average. In terms of divestment target, certainly, this coming year, we would like to do more than we did last year, particularly for China. So there will be an effort to try and accelerate that. And we hope over the next 6 to 12 months, we will be able to beat that $1 billion quite comfortably. Grace Chen: Thank you. Maybe we go to Joy. Qianqiao Wang: Joy from HSBC. Two questions. First of all, you held back share buyback last year in view of sort of acquisition pipelines. How long do we expect that process to be as you evaluate large-scale sort of acquisitions? And on the same token, as you evaluate this process, what does that mean to your bolt-on strategies and smaller platform acquisitions? Does that go through BAU? Or will that be on hold as well? Second question is more on operating platform. I think Andrew talked about buying more exploring operating platforms. Can I assume that the end game is eventually to exit through an IPO for these type of platforms? And if that's the end game, where are we on your various sort of operating platforms? And when can we expect potential exit? Wei Hsing Tham: So on the share buybacks we did, obviously, in 2024. We were quite active in 2025, and I think it holds same for 2026. We believe that there are a number of both organic and inorganic opportunities for us to invest behind and sponsoring new funds organically or sponsoring our REITs as they grow is still priority #1 for our capital allocation. Priority 2 is really growth for inorganic opportunities. I think we look at a range, as Chee Koon mentioned, we've been associated with quite a number of deals in the market. And we continue to look at a number of them. And I would say since there is -- there are opportunities in the market, we are conserving capital to a certain degree for these opportunities. In terms of time line, I think that's hard for us to pin down. We believe that the opportunities are very readily available in the market in the different segments and including bolt-ons that we look at. So I think from that viewpoint, we are still working on the basis that there will be more organic and inorganic opportunities for us to use our capital for. Chee Koon Lee: We are positioning the company for growth. So actually, we are seeing quite interesting opportunities, whether it is organic or inorganic type opportunities, it could be smaller, it could be bigger, but positions us very well and allowing us to grow the fee income on a more sustainable basis. And that's why we are conserving some of this capital to give us that optionality. Janine is extremely busy. We need to prioritize all kinds of deals, what makes sense, what's the -- give us the best bang for the buck -- the different verticals hits are also looking at optionalities as well. So that's what I want to say. We are actually seeing interesting things happening in the market. Cho Pin Lim: Joy, very quickly -- Chee Koon talked about optionality. I think that's the beauty of platforms. If you have platforms that are strategic in nature and are sought after, you can do a lot of things with them. You can keep them to generate more fee income vehicles down the road as you produce vintage 2, vintage 3, vintage 4, vintage 5 or you could put it together with a fee vehicle and then do something with that. And I would say the option spectrum exists with all of our platforms, the ones that we have minority investments in, the ones which are strategic, commercial management, lodging management, which are so intrinsic to our business today. Obviously, the consideration set is different. But to your basic question of whether or not you can use them as part of a securitization package or monetization package, the answer is absolutely yes. But obviously, we take a view as to what is the best cost of outcome for us as a group, right? If it's something that's so intrinsic to our business and we see a much longer horizon and the ability to generate more and more fee income vehicles downstream, then it's something that maybe we decide to keep a little bit -- some of it but not release it. But the obvious -- the reverse is also true. Chee Koon Lee: We are today very much an investment house. So you can be sure that if we grow the platforms, I mean, I think some of you may be alluding to whether it's the Ascott platform, it could be some of our platforms in India. If there's an opportunity for us to consider strategic option to list it independently because some of the values are not best captured being the listed vehicle or we can give you a lease of life that can get better valuation in certain markets listing it one way or other, we will consider it and use it as a chance to unlock capital properly capitalize it so that it can compete in the various markets or in the verticals. So all these are optionalities that we are looking at. At the end of the day, we need to grow the platforms properly, how do we unlock value, how do we create the most value for our shareholders. Grace Chen: Let's come to this... Cho Pin Lim: Sorry, relevant to [indiscernible] point, it's all EBITDA, right? We want to generate multiples on earnings. If the platform is an intrinsic part of that ability, that narrative to generate the maximum earnings multiple, then that's where I think it becomes a key consideration. It was not quite ready yet. It's still a bit subscale, but it's a key part to the thought leadership and the ability to think about how to design products, then I think that's better helped onshore because we won't realize maximum value for that. Sorry... Grace Chen: Yew Kiang, over here. Yew Kiang Wong: Yew Kiang from CLSA. Two questions from me. First one is on M&A. How much are you willing to push gearing up to fund M&A going forward? And what kind of IRR targets or targets -- return targets do you have in mind? And also, are you okay with near-term dilution on such M&A? Second question is on China. If you take in all your China assets and you divest it, let's say, we carve out today at book value, how much will this lower your current gearing? Wei Hsing Tham: Okay. I guess that's me. Okay. So China assets for us are about $7.5 billion right now. If we were to carve them out, that would bring us down into a net equity position or net cash position because we actually only have debt of about $5 billion, $6 billion on the books. That assumes that it is all sold. I don't think to be fair, it is a likely scenario for us, partly because we look at these -- a lot of these is our sponsor stakes in a number of funds. I think your first question, though, in terms of how much are we willing to earn. We put this on a slide specifically to show how much debt headroom we're comfortable with. And I think we are comfortable spending additional $6-odd billion gets us up to a 0.9 type gearing. The truth is we are quite comfortable in that range, particularly now as we are divesting assets and as Tze Shyang and the team make efforts to lower our China exposure, we will actually get additional capital back. In the longer run, the truth is we're quite happy at this 0.4x, 0.5x. It's probably about right for us. But we can afford a spike up if there is a deal worth doing. And obviously, with that type of headroom, as Chee Koon mentioned, it's very unlikely we would need to raise equity. And then we would expect it will come down as we divest our stakes of the balance sheet assets. We are putting more money behind private equity. But because of our efficiency ratio, as we enhance efficiency, the truth is we don't really need much more than the $5 billion that we already have in the private funds. On average, our holdings in the -- because of the legacy assets and the legacy funds, our holdings are more than 30% on average. In the new funds, we hold 10%, 15%. So actually, we could double our private funds and not require more capital there. And then similarly, on the REITs, over time, that stake will come down. So I would say from a debt headroom viewpoint, we're very comfortable doing anything in the $6 billion to $8 billion range even. Cho Pin Lim: Yew Kiang, you remember you were around when we did Ascendas. We took the up to, I think, 0.83x, 0.86x with a commitment to bring it back down again, and we delivered on that without issuing new equity. So I think we understand the playbook, and we know what is important to shareholders. Grace Chen: We're going to take a few more questions because we're nearing the 10:30 mark. Let's start with Terence, right? Sorry, Brandon. Brandon Lee: Brandon from Citi. Just two questions. The first one is, if you look at your fourth quarter event fees from private funds, right, there was a very nice $30 million number there. Can you guide us on what that is? And is that what we could see if more private funds were to have an exit over the next couple of years? Wei Hsing Tham: Sorry, Brandon, can you direct me to where you're seeing that figure? I don't think -- we didn't have any event fees -- standout event fees for the private funds in the fourth quarter. So if we did that, it's great. But no, so I would just say though in general, on our private funds, our private funds activity, we do have a little bit of fees, but it's very small in terms of event driven. We're not expecting carry from any of our funds in the near term. So we wouldn't expect that. I think actually, the strength of the figures that we have for the funds business is it's been largely recurring income, both from the listed side and from the private side, and that will continue to go at sort of the same growth rate we would expect going forward. But we wouldn't expect very much in terms of event driven from the private funds. Brandon Lee: Okay. Maybe I'll check my numbers later. So the follow-up is more on your dividends of $0.12. So would you guide the market using your core operating PATMI on a dividend payout standpoint? Or would it be more useful to use the operating cash flow? Because if you were to look at this $540 million and if you can assume that it can grow at 6%, the payout is actually close to 100%. Wei Hsing Tham: Yes. So our payout ratio is high. And actually, enough it ties to the question on share buybacks. There are different ways we can return capital to investors. I think when we look at our operating cash flow, which is the metric that we track more closely in terms of making sure that we have funds, the operating cash flow is more than $900 million because we have a very strong fee business that consistently generates income, and then we have all the REIT dividends that come in. So we look at the operating free cash flow as the more critical measure for our own internal capital management. And then we look at the operating profits as a guide to what we are willing to or what we think is about the right level to return to shareholders. We could have used the money to some degree, some of it for buybacks. We have chosen to keep our dividend stable at this level. We think it is a level that we can comfortably maintain given the trajectory we are on. Certainly, at some point, we hope that we grow faster and we're able to increase the dividends. But at the current payout ratio, we're quite comfortable. Grace Chen: Okay. We'll take a couple more questions because we do have one online question as well. Let me go to Vijay first. Unknown Analyst: I just have two questions. Firstly, again, on M&A, sorry for harping on it. You have two targets, $200 billion as well as asset allocation to different geography. Suppose if a big M&A acquisition comes, that fits your $200 billion target, but doesn't fit your geography target in terms of exposure to China or U.S. markets. How would you react to that in that kind of a situation? My second question is in terms of your private funds, do you also mark-to-market your private funds on an annual basis? If so, there was there a gain or losses? Was this the reason for your reduction in balance sheet exposure towards private funds to $5.3 billion to $5.2 billion? And also -- sorry, that's my question. Wei Hsing Tham: Okay. So I'm not sure if I caught that right on the private funds reduction. Part of the reduction was too. Some of the funds are starting to come back. So for instance, as Kishore mentioned, our ACP I, our first credit fund actually has returned capital. So some of that has come down, and it generated a 15% return, which also helped our earnings. So we have some funds that are returning funds. We also did have a little bit of markdown from the China funds component, which also lowered the stake -- the value there. So actually, there was a fair bit more movement down, but we also invested in new funds as well. So that's how we came out of the balance. I think most importantly for us is just that the capital efficiency on that improved. We were -- we are investing less into the new funds than we were previously. Chee Koon Lee: If we are looking at an asset management platform, we look at the quality of the teams, whether it has a strategic difference to us to be able to raise funds and -- on an ongoing basis, whether we can create new products out of that. So if you ask me, I am less sensitive to where the FUM is from. I mean, even if, let's say, a certain entity has some allocation to China that can help to strengthen our China FUM on a fee basis without us increasing a lot more capital allocation to China, we will look at that. And if -- let's say, there's a fee business that we can buy in the U.S. And the question that we need to ask ourselves is you buy a team in the U.S. today, can the team and together with us actually help to turbocharge the growth in the -- if we are not so sure, then we may not do it. So I think the issues are complex, but I just want to highlight that we are looking or platform basis, we are looking at platforms that help to generate and drive our fee business. So we are not looking to buy a, for instance, a developer and asset heavy business. That's not our business model anymore. And that's what we are trying to reduce our balance sheet exposure on all the hard assets, and we should have less stakes in the GPs. And over time, as what Paul mentioned, we want to be able to also, in an organized fashion, reduce our stake in the REITs without affecting the share price of all the various REITs that we have strong holdings for. I mean, why we want to do something to affect the returns to our unitholders. So I hope that gives you clarity in terms of how we look at M&A. Grace Chen: Terence? Terence Lee: This is Terence from UBS. I have two big picture questions. First one, so APAC Real estate is an underallocated space. And given that 2025's performance for many asset classes have been positive, especially on public equities. I guess APAC PERE is even more underallocated now so than before, such that the rebalancing itself, I think, should see LPs knocking your door. So I guess, is it fair for us to expect that the organic fundraising for private funds should be better on a year-on-year basis for 2026, i.e., more than $5 billion. And the second question, I'll just go to it. Andrew, I mean, towards the Northstar, a question on fundraising and distribution. The U.S. is making all assets accessible to people's 401(k)s. For us, I think platforms like Ascendas, [ S-REIT ], they actually have access to our dominant SRS funds, and they're already distributing products from the likes of Blackstone, Hamilton Lane, et cetera. So do you see Singapore's retail wealth channel as a blue ocean market? And Andrew, you already said we already are investing quite a bit of our money into S-REIT so far. Cho Pin Lim: These are great questions. Thanks. So the short answer, and I'm looking at [ Alan ] here, is yes. We want to build on this momentum. The anecdotal evidence for '26 is that allocations to real estate, real assets in general in Asia have gone up 15% to 20% for the reasons you mentioned. So if we are going to continue to punch at or above our weight in capital raising, yes, it stands to reason that if we raised $4.2 billion last year, that number has to go up by -- at least by that percentage amount. Obviously, it's going to be incumbent on the strategies and the strategies need to make sense, which is where the product design, ability to have folks on the ground who are telling us what investors are looking for, what is interesting in terms of real estate, having the underlying platforms to sync all that together, all very intrinsic to being able to successfully do so. So that's question number one. Question number two is around the wealth channels. So you hit on a very good point. Last year, we made very good strides in insurance. And we've also identified high net worth as a key component of a rounded distribution platform. Institutional, we started off with decently. Insurance, we've identified and we've made some very strategic hires in the capital raising side of the house to be able to speak the very specific language that insurance companies use when they talk about deployment and what their specific requirements are to be able to put out product that makes sense for them. And we've done a very significant insurance mandate that we hope to share with you in the not-too-distant future, which then leaves high net worth. High net worth is a relatively young channel for us. We took a big step forward last year with Wingate, which is essentially a high net worth shop. And I think with Kishore's help, we can learn from how Wingate has developed that very high-touch channel, as you know, it's a very different way of servicing your client, but it can be very sticky capital and your fee cards are very different in nature. So again, it's a specific language, a specific skill set. We've got Yvonne here who comes from that part of the world, both as a customer as well as a proponent, I guess. So she knows how to reach out to these folks. She knows how to target products and design products that make sense to them, including potentially reaching out to U.S. high net worth. Although I will say that, that's probably a bridge to be crossed at some point in time in the future. I think the lowest hanging fruit for us, and Kishore can add to that is certainly, there's enough wealth in Asia and even here in Singapore, there's plenty of it for us to use the strength of the CapitaLand name, the brand, the comfort it provides, the assurance of integrity, the assurance of governance that these investors look for when they make such investments. There's enough for us to do here without thinking further afield at this point in time. Kishore Moorjani: Yes. I can -- sorry, if I can add to that on the wealth side, it's a really good question, Terence. And with Yvonne inside the tent, I think that gives us the ability to go understand and create the right kind of product. But the thing that I find really interesting is given our REITs, the familiarity with the wealth channel of our brand is very, very high, right? So while every global alternatives or private capital firm is trying to move from institutional investor raises to wealth, for us, that path is, I think, a lot easier because the REITs have done a great job of attracting that wealth capital. Secondly, in our home market here, the -- this is a big wealth hub. If you look at the numbers over -- from 2018 to 2030, the wealth channel grows from $800 billion of assets to $1.5 trillion of assets in Singapore. What's going on with the SGD strength to be able to offer products in that, I think, is very important. It's something that we're very, very focused on. The second thing is when we do that, it's the question that got asked earlier from Joy, we do that with platforms where unlike a private equity firm, we are not investing in these platforms and then putting them up for sale in 3 or 5 years, right? We're an aligned investor. Even in our REITs, we own 15%, 20%. We might bring that down, but we own a big cornerstone stake for a long period of time. So that in the wealth channel as well as in the insurance channel gives investors a clear alignment, which is very different from a traditional GP, which is putting up 1%. Grace Chen: Okay. Maybe we go to Goola. Goola Warden: Goola from The Edge. I've got only two questions, right, Grace. So the first one is on the next China C-REIT, which you haven't spoken about much. Is it the Raffles City portfolio? And if it is -- I mean it's the same question. And if it is what are the -- what's the occupancy of the office building like the office part of it? That's the first question. Second one is, you don't have a real data center operating platform in the way that may I use the word Keppel has. So would you be interested in one? And would that help -- I mean, you talked about operating platforms that help you design new products. Will that help you be more focused in your data center strategy? Those are just the two questions. Puah Tze Shyang: Yes, we are planning to launch our second C-REIT this year, probably late second quarter, early third quarter. We had one infrastructure C-REIT launched to assets, and then we are looking to launch another one. One of the assets that we have filed in our prospectus is a Raffles City at Raffles City Shenzhen. It has a mall. It has an Ascott service apartment, and it has an office. Specifically, the office in terms of occupancy, I think it's a high handle coming to 90%, so it's stabilized. Cho Pin Lim: Goola, just to add, okay, go back to C-REITs and the question on why this is good for us in China. The initial class of C-REIT approvals was restricted to certain asset classes, which excluded office. This batch of C-REITs, the Chinese regulators, the CSRC has now relaxed the requirement to allow for commercial assets, which if you think about our portfolio and our legacy funds and this whole China for China pivot opens up the aperture for us to accelerate that pace of pivoting from our legacy U.S. dollar product to China-for-China, including public, private -- including public vehicles, including private vehicles. So I don't want to put the cart before the horse and get overly excited, but the pieces are in place as you always are on us on how quickly can we pivot this China -- get the momentum going. And to us, this is a very sizable and meaningful development that the regulator has done, which allows us the opportunity to do so. Puah Tze Shyang: If I may add, the Chinese regulators... Goola Warden: What is the valuation versus your book? Puah Tze Shyang: Also for the first C-REIT, we had an IPO price of CNY 5.7 per unit, and it's now trading at CNY 6.9. Price over NAV is CNY 1.21. I think the first quarterly results, we are 3% above underwriting. So it's doing well. The -- I just wanted to add to Andrew's point, I think the regulators are -- they are aware that liquidity is available in the market. And through a recognized and trusted REIT product, I think a lot of liquidity can flow back into the real estate. As we can tell in the last few years, there has been a departure of, say, foreign buyers from the market that has affected transactions. Transactions are much lower than before. But with the last 3 years and this infra C-REIT becoming more and more known into the market, the ability of CSRC to introduce a commercial C-REIT, which opens up the mandate to include office, hospitality and retail. And by definition, integrated assets really opens up for us, our entire portfolio to be able to see -- to be C-REITated. Given that the trading -- the BUs are also tight or tighter than the private market, it really represents a huge opportunity for us. Ervin Yeo: And what underpins all these assets are Goola is operations, right? Everyone knows about the office market in China is challenging. I don't think you can find many office assets in China that are REITable. Why Raffles City Shenzhen is able to go in is, one is a mixed development. Second is in Shenzhen is a good location. It has a benefit from Hong Kong tourists. And also because we are a Singapore brand name, there's a bit of added gloss, right? So if we are able to host the HQs of Chinese tech companies and American tech companies, and they're happy to be with us. And Raffles City Shenzhen, ASML is there. They exited SOE building to be there. Previously, one of the Chinese tech companies, HQ was there also and then after the Amazon came in. So it is fairly resilient among other office assets. Kishore Moorjani: Goola, on your data center question, it's a really good question. Thanks for that. So I would say in the few months I've been here, I think data centers is a great example of somewhere that CapitaLand focuses on execution, but does a bad job of promotion, right? So we have 800 megawatts in existing operating or under construction assets, right? We understand customer needs and demands really, really well. We are now looking across that universe as data centers itself has evolved from a niche real estate asset class to a deep operating capability asset class. We're looking at that with customers and with investors. You'll see us in the next few months form that into an operating construct and focus on very specific markets. So if I take India as an example, we are -- we have delivered and are delivering nearly 240 megawatts of capacity. That I think, puts us in the top 5 in the market in India, right? Small size, but we're also delivering in India the first ever liquid cooling, direct-to-chip cooling asset in the country. If you're going to put an NVIDIA GB300, you can't have air cooling. You need to have direct-to-chip cooling. So we're going very specific in that because the scale with these customers is massive, and we'll pick our spots through an operating platform, and you'll see us grow it in that form. Not -- rather than trying to be all things to all people in data centers, we'll pick specific markets where we have strength and go very, very significant, very large there. Puah Tze Shyang: Sorry, Goola, I just wanted to add a couple of points for the commercial C-REIT, just to be complete. There are a couple of things that is going well for the commercial C-REIT side. Number one, it took us 2 years to prepare for the first IPO, for the second one is likely to take 6 months. The regulators are picking up the pace and allowing for a more expedited process. That's number one. Number two, in the first infra REIT, it was only retail. As I explained, the mandate has opened up. That's really good for us. And the third, the regulators are picking up all the pain points from the first 3 years. And for the commercial C-REIT, one of the key breakthroughs is that there is no more reinvestment obligation. This came up in the past year's analyst questions. So the commercial C-REIT does not require sponsors who inject assets to reinvest back into China. So that's really a big breakup. Chee Koon Lee: And the important thing is we are very focused in making sure that the first C-REIT product is well received, trades well. So the second one will be well received. You want the vehicle to trade well to be of significant size then it can really be a vehicle to take out many of the assets that we have in China at pricing that is attractive. So that's why we are very focused. I mean some of these things requires us to invest time, energy, resources to build up all these platforms and optionality and after that, you can execute. Because if you don't lay out this foundation, then you're always held ransom by the market. So I thought you just to clarify that point. Grace Chen: Let's take a question online from Derek Chang. I think -- yes, the question is, thank you for sharing some guidance on core PATMI growth. MSD, I think it means mid-single digit. Will you formalize such guidance in the form of forward-looking disclosures in view of what MAS or SGX is seeking and today's share price reaction? Wei Hsing Tham: So we do have, I think, on the summary slide, sort of the guidance or the expectation that we think this sort of run rate for us is fairly sustainable from -- on two aspects. One is we would expect fund management revenue growth to continue to be double digit, similar to this year. But we are still investing in the future. And for us, that means recruitment. It means in the case of our lodging platform, more marketing, more advertising costs. So because of that, even though the revenue growth may be stronger, particularly for the funds, we do think sort of a mid-single-digit growth for the core operating PATMI is a reasonable way forward, barring any catalyst events, whether it is extremely good fundraising from the team or M&A or other transactions that may skew that number. But otherwise, at least in the near term, that's a realistic growth number. Going forward, we hope to accelerate that. The goal has, as you have most of you know has always been to get to a more double-digit growth rate and a double-digit ROE target. But at least for the near term, we think our current run rate is about right. Grace Chen: Okay. Thank you. I think we've more than crossed the 10:30 mark. I think we'll end today's session. Thank you very much for joining us this morning and for your continued support as we shape the future of CLI. There is actually a refreshment served for friends who are actually here. And if you have got any further questions, please feel free to reach out to the Investor Relations team or better still just speak to them directly, okay? On behalf of CapitaLand Investment, we wish everyone good health, prosperity and happiness. Thank you, and have a good day.
Willem Fransoo: Good morning, ladies and gentlemen. Thank you for joining us on the earnings call for Barco's Full year Results 2025. My name is Willem Fransoo. I'm heading Investor Relations at Barco. I'm in the room today with our CEO, An Steegen; and our CFO, Ann Desender. They will guide you through the presentation. And after the presentation, we will open up for questions. So I would like to give the word first now to our CEO, An Steegen. An Steegen: Yes. Thank you, Willem, and good morning, everybody. Let me start with a summary of the full year results for 2025. And as promised in our guidance, we delivered profitable growth for '25. Sales landed at EUR 964 million. That is 2% up compared to 2024 and 4% up if you compare it at constant currency. The main contributors to the growth came from Entertainment, which was up 11% and from the EMEA region, which was also up 11%. We faced some headwinds in the U.S. with tariffs and a weak dollar. We saw slightly lower orders. In general, we see a new trend actually shorter order cycles because since the shortages, the supply shortages are now out of the way, we see shorter order cycles and also more book and turn. So that was one reason. The other one that we had by end of '24 also some preorders for the Encore 3, which didn't happen at the end of '25. Now we also had a very successful launch of our HDR by Barco Cinema, premium cinema offering. This basically reinforces our Cinema as a Service and also helps us build recurring revenues in our cinema business. So in cinema, thanks to HDR by Barco, we are moving away from a onetime projector sales to a recurring revenue stream over the lifetime of the projector. In EBITDA, we landed at EUR 125 million, which is 13% of sales. This was definitely supported by a very strong product mix. That, of course, was offset with the impact of tariffs and currency. We also basically had disciplined execution. So we basically resulted in an OpEx spending 4% below last year. What is also very important to mention is that in '24, we had a onetime one-off income, EUR 10 million income from a sale-leaseback from our building in the [indiscernible]. So if you take out this nonrecurring part in '24 and you count in and you take out for a second, the EUR 8 million impact that we see from the FX from the currency, the EUR 7 million from the tariffs, then you could say that in recurring EBITDA, we grew about EUR 30 million. And that is a very strong representation of our business performance in '25, our very strong product mix as well as our disciplined execution. In earnings per share, we basically increased the earnings per share to EUR 0.85. That's 20% up year-over-year. We returned EUR 120 million to our shareholders, EUR 44 million of that was coming from the dividend. The other EUR 81 million by the end of '25 basically was what we paid back in our 2 share buybacks that we did in '25. Also for this year, the proposal is to increase the dividend to EUR 0.55 per share, and we also are proposing to cancel 6% of the outstanding shares, which is, of course, more -- giving back more value to our shareholders per share and also basically building up earnings accretion for the future. Now for the outlook '26, we expect as well top line as EBITDA growth for the full year, excluding currency effects. We see the growth again skewed to the second half. I say again because this is really a typical behavior that we see at Barco, more growth in the second half of the year, and we also expect some more currency effects in the first half. We also reconfirm our long-term guidance as we communicated at Capital Markets Day in October. And with this, I'll hand it over to Ann Desender for more financial details. Ann Desender: Good morning. Starting with orders and sales. So as indicated on group level, excluding or at constant currencies, our sales has been growing by 4% year-over-year and orders getting closer also to last year at constant currencies with below 2% versus the year before. When also indicating additional 2D orders, indeed, we do see with a normalizing of supply chain speed and no longer supply chain constraints that we do see that the order to sales conversion is getting faster and that indeed also customers do tend to order a little later or we have the lack of preorders, it like that. From a regional perspective, EMEA had double-digit growth both in orders and in sales growth. When you look to the divisions and more on that later on, then we see that Entertainment is here in a position, call it like that. The Americas reported growth minus 3% sales year-over-year if we exclude currencies getting in line with the year before. And order intake was indeed challenged and that in particular in the second half. A couple of things were explaining that currency, of course, has an impact 3% on a full year basis. We had a larger cinema order being shifted out and which is to the tune of about EUR 20 million, which we could now already sign up for and we have been able to book now in January '26. We did see impacted by tariffs and impacted by what's going on in the U.S. lower and delayed government spending that has in particular an impact on our business in control rooms and in Healthcare diagnostics in particular. And then after a strong first half in Surgical, we did see lower signing of contracts or renewal of contracts in the second semester, which then indeed if you look first semester, second semester [indiscernible]. APAC top line landed in line with last year, minus 2% reported in line if we see that at constant currencies. Our order book landed at EUR 493 million. Also there are some translation effects on that. So we'll see how that evolves going forward. And if we compare it to the year before, the year before, we had some preorders on newly launched products and the biggest one there was Encore 3, which we then were able to deliver all in 2025. We included here again like we normally do the waterfall on our EBITDA from one year to the other. But this year, indeed, in particular, pointing out a couple of, I would say, headwinds, which have been compensated by the headwinds coming from indeed currency effect coming from tariffs. Tariffs so the extra tariffs which we pay and that's primarily on projection coming out of Europe, which is to the tune of 15%. And then also with respect to Healthcare, we had some '25. The gross impact which we have been able to mitigate it via the price increases for the half of that. Now what we single out here is the gross impact on the tariffs and then on FX. Then together with the -- and then the red block, so to speak. So last year, other income included a nonrecurring gain on the sale and leaseback. So we add up those 3 blocks to get to EUR 30 million, which we then did offset to come to an increase in our profit and profitability. So this thanks to higher top line, 4% top line growth continuing actually throughout the year on a better product mix with the new products which we launched with more software, with the impact of our factory footprint and cost mitigations, which we can do there. And then with a tight cost management indeed, we've been able to lower R&D as we had many product launches prepared in '24, which we then have in '25. So we could get our R&D then back in a more normal range of 12.6%. Sales and marketing G&A in line with the year before, but getting there to a tight cost control. So combined, OpEx, 4% lower than the year before, sales up 4%. So that brings us to the 13% EBITDA margin. Taking you further down to the net income. So starting indeed from this EBITDA, EUR 125 million. Depreciation, some higher has all to do with the further uptake of Cinema as a Service in our portfolio now also including HDR in there, some increase. The cost containment we've been able to do and the cost down was already started in '24 where we indeed had some higher restructuring costs in there, but that yielded and was more than returned, call it, into an impact of the OpEx in '25. Effective tax rate, we've been able already since many years to manage that well and get at this 18% effective tax rate and with that landing at an earnings per share of EUR 0.85 and up 20%. This is before even, so that's another uptake to be expected, the impact of the diluted shares as this has to be formalized via the Annual Shareholders' Meeting to approve this in April upcoming. Free cash flow for '25 landed at 6% of sales, which is nominal EUR 57 million. Starting from a gross operating cash flow, which increased to EUR 24 million year-over-year. We did see a slight increase, 1% up of working capital, which has to do actually with some lower customer advances on bigger contracts, which also has to do with the fact that inventories while staying flat year-over-year, this includes also some impact of our Cinema as a Service business, where we have that's expressed in the contracts in progress about EUR 10 million, which is included in there. DSO landing at 65 days, which is below the average days which we pay our suppliers. So that's what we want to see. So this is at 70%. Inventory turns being -- so inventory flat year-over-year has some slight improvement to 2.2x with further opportunities to improve. Our capital expenditures landed at EUR 38.5 million. The main ticket items in the Cinema as a Service as well as then the manufacturing automation and footprint included in. Net cash landing at EUR 186 million at year-end, which is about EUR 73 million lower than year before, up in there, of course, the free cash flow of EUR 57 million, but then combined returned more than EUR 120 million to our shareholders in the form of dividend and share buyback. When we look finally to the nonfinancial KPIs, sustainability KPIs, very glad to report a very big uptake and further improvement actually. Eco-labeled revenues or revenues of products with an Eco and Eco score A or better have further improved to 67%, up 8% versus the year before and with that also surpassing the target which we have set. It primarily comes down to the fact that all of the new products which we launched have that Eco-labeled. This is on a broader scope also including the scoring of software and services very so glad with the 67%. By coincidence then also our employee engagement score landed also at 67%, up 76%, saying up 3% year-over-year and also with that also overachieving the target which we had. Headcount at the end of the year, 3,253 colleagues at year-end, which is about 3% lower than 2 years ago, flat or in line with the year before. Customer Net Promoter Score, which we measure throughout the year and in particular, 2 surveys twice per year then actually where we take all of the recommendations too hard for it like that, and that is really yielding off. Net Promoter Score landing at 60, 6% improvement compared to the year before and constantly actually getting above the target, which we set for ourselves. In there also saw a very nice improvement driven by product quality, which is, of course, key to us and to our customers and also the aftersales service and the NPS on services, which landed at the top score. With that, I hand it over back to you, An, to give a little bit of more color on the different divisions. An Steegen: All right. So I'll start with Entertainment. So a very strong profitable growth in Entertainment coming from both business units, double-digit sales growth like on average 11%. So we also saw a very strong profit growth, 27%. And of course, there, it's the top line leverage because of the strong top line. We saw an 8% gross profit growth coming, of course, from a good product mix and volume. In Cinema, we saw growth spread out over the year, and we also saw growth in all regions. There, we have, of course, the lamp-to-laser replacement wave as well as the push for premiumization in cinema theaters. This drives our growth and also basically with a capture rate of far more than 60% drives our leadership position in the cinema market. In '25, we also closed some large frame agreements, and that is, of course, good for revenue visibility in the future as well as reinforcing our installed base. As I mentioned before, we had a very successful launch of our HDR by Barco premium cinema offering. So with this one, we basically deliver more image quality, deeper colors, more contrast to our exhibitors. And for Barco, it really positions us again as a frontrunner in technology leadership in cinema. In '25, we basically installed more than 50 systems, and we have more than 100 systems in the pipeline for '26. Now what is extremely important, again, for HDR by Barco that it shifts our business model from a onetime projector sales to a recurring revenue stream. This recurring revenue that is based on annual license fees, box office sharing, licenses coming from content creation or content integration in the postproduction houses, also managed services. And by doing this, we basically provide a recurring revenue stream over the 15-plus years lifetime of these projectors. So this is a very important shift in business model for our Cinema business, which will, over the lifetime of the projector also create much more value for Barco. Now when you look at the total contract value of all the HDR signed contracts that we have already, that basically totals up to EUR 89 million, which is also, again, a sign of the acceleration we are doing towards recurring revenue. In Immersive Experience, also there, we saw a very strong growth in EMEA and APAC, our new platforms, that is QDX, our 3-DLP flagship high-end projector as well as our mid-end 1-DLP 600 projectors are doing very well in the market. In 3-DLP, we continue to basically be the market leader. And in 1-DLP, we are really stepping up and gaining market share. And then, of course, also, we had a very successful launch in third quarter of Encore 3, our image processor. And again, there, that is boosting sales as well as profitability but also it reestablishes our leadership position in the image processing market. So in general, for Entertainment, a very strong momentum and profitable growth in '25. And with all the new platforms that we're coming, we foresee that we can basically continue this strong momentum in '26. Then I'll move to Enterprise. So in Enterprise, we basically show stable profitability throughout a quite complex year to say it in that word. That was basically the strong or the stable EBITDA was driven by a strong product mix and of course, also disciplined execution. In Meeting Experience, we see very stable growth in EMEA and the Americas. In APAC, we still face quite some competition. We're still very much the market leader in the agnostic wireless BYOD space. And what really differentiates our products there is the fact that we basically are interoperable. We're agnostic. We basically also are license fee model and it's very secure platform. And this really differentiates us from the more standardization you see in general going on in the video conferencing market. But on top of our wireless solutions, we basically also released now and are expanding our portfolio and we released our first room system solution that is called ClickShare Hub. We released that in December last year. We see already quite some interest and traction. I was at ISE last week, and there was quite a lot of enthusiasm about our ClickShare Hub. We're also shipping and are already installing devices in the field. And what's also important to say is that, that room system, so ClickShare Hub is now certified by Microsoft. And this allows us to basically tap into the larger ecosystem and channels from Microsoft, which will basically also expand our reach moving forward. Towards '26, we foresee even more form factors on this new platform, video bars, also a BYOD version on a similar platform. So more basically devices of this family will be launched throughout '26. For control rooms, we basically saw growth of control rooms in EMEA and in APAC, especially in the utilities and the energy market. In control rooms, we are still very much in the transition from hardware to software, where our Barco CTRL platform is very critical for the future of control rooms. We did face challenges in the U.S., delayed government contracts. We also faced some fierce competition in LED walls in the Middle East. That's also why last year, we changed actually our LED strategy in control rooms. We basically are now partnering up with major LED wall suppliers, and we are delivering our proprietary and high-performing LED image processing. This way, we can still offer the complete LED solution, but in a much more profitable way. So in general, in Enterprise, complex macroeconomic environment here. We could deliver stable profitability here, but the momentum towards '26 with all the new platforms that we have is basically giving us a lot of confidence that we can basically deliver growth in '26 in both of these business units. And then Healthcare. So in Healthcare, we saw mixed results. So we -- in Diagnostic Imaging, we saw growth in EMEA and in APAC that really reconfirms our leadership position that we have in Diagnostic Imaging. We also saw very strong growth in pathology, but that was, of course, offset by challenges in the U.S. where we saw slower orders coming in because of government delays. We saw impact for tariffs and currency. And that basically resulted that we have a lower EBITDA. So we landed at EUR 26.5 million, which is 22% lower. So it's 10.1% of sales, but 22% lower than last year. In Diagnostic Imaging, we are also basically further expanding our offering with software applications. One that really got a lot of traction in '26 was SlideRightQA. This is basically where we improve the efficiency of technicians in the pathology lab and also the quality assurance in the pathology lab. So that is really getting a lot of traction. We have more of these applications coming. In Surgical, we started with a strong first half, but we see -- we saw contracts expiring in the second half, which as typical again in Surgical, it takes time to be designed in and to replace those contracts. We also basically changed our organization in Healthcare. We merged the Surgical part together with Diagnostics to leverage basically synergies, synergies as well in the platforms that we deliver as in the go-to-market. But we also basically moved the entire ownership of our Modality business, which is really in a very cost competitive commoditizing market. We shifted the ownership now completely to our Suzhou Healthcare hub in China. There, we basically have value engineering in China as well as local component sourcing at our production. And this is the way that we can compete with our Chinese competitors that we have in Modality. Also for this year, we have quite a few software-based products. So again, flagship products coming out. One of them are the 3D displays that we are going to launch now for presurgical analysis in the eye and in Surgical. We have the voice control brilliant assistant Surgical display and then NexxisCube, which is our mid-end version for mid-end operating rooms of our network in the operating rooms. So in general, we basically can say that we have very strong foundations in Healthcare. We have a leadership position in diagnostic display. We are really stepping up our efforts in adjacent market as well as in software. And of course, for '26, it is extremely important that we turn around the U.S. market and that we leverage the synergies between Surgical and DI and really become very cost competitive with our Modality efforts in -- coming out of China, Suzhou. All right. So with this, I'll come to the outlook. And before I go there, I just want to do a very quick recap of what we said at Capital Markets Day. So this is our innovation strategy. Very simple. It's based out of 3 layers. It starts with visualization. This is our production and display technologies where we really, really improve the performance through our advanced and proprietary image processing. Then we have the connectivity layer where we transport video and audio data from the source to any type of display. And then more and more, and this is, of course, where Barco's legacy truly shines. But more and more, we are adding software applications, AI use cases to these offerings. This way, we will improve the product -- the efficiency, the productivity of the operators using our systems. But for Barco, this also means that we can step more and more into recurring revenue. AI, you see coming back in all of these layers. We're using it in visualization to improve our image processing. We're using it in connectivity to add edge compute for real-time computation in our applications. And of course, we're using it also to deliver applications that support the workflows of the people that use of our end users. So with that, the key priorities for Barco are all around expanding in our core markets, how do we do that? Completing the strong track record that we have already in our portfolio, high-end products, flagships where we set us apart from the competition as well as mid-end products which are more price competitive. We're also stepping aggressively into new adjacent market. And again, we lead premiumization in cinema with its HDR by Barco as a key enabler. Second pillar is that we focus more and more also on software and AI workflows. This is to help our end users, but for Barco also to step more and more in recurring revenues. And of course, as we have a very good track record, we will also basically optimize our capital allocation. We continue to look in inorganic growth with M&A. And we basically have also our return, our capital allocation and the return programs through dividends and share buybacks to our shareholders, which brings me to the outlook. So as we said already, it's hard to predict how the macroeconomic trends are going to evolve. But assuming that there is no major deterioration in the macroeconomic trends, we foresee growth as well in top line as in EBITDA at constant currency. We foresee that for the full year, but we basically the growth is going to be skewed to the second half of the year. It's a typical thing that we see year-over-year at Barco, but also we see some impact from the weaker dollar in the first half of the year. We also want to reconfirm our long-term guidance that we basically communicated at the Capital Markets Day. Just as a reminder, we basically see there also continued shifts from CapEx to OpEx. We guide for a EUR 1.1 billion revenue, 15% EBITDA and 15% recurring revenues by '28. And then last but not least, the Board will propose a dividend of EUR 0.55 per share, which is up EUR 0.04 versus last year. We also completed, as we mentioned before, 2 share buyback programs, the one completed in July that was for EUR 60 million. The other one completed end of January for EUR 30 million. The Board of Directors will also propose to the general assembly to cancel 5,575,000 shares, which is approximately 6% of the total outstanding shares. And again, this will deliver more value per share and also earnings accretion moving forward for all our shareholders. And with this, I'll hand it back to Willem. Willem Fransoo: Thank you very much, An and Ann for this presentation. I think we are ready to go into Q&A, and I see some of you have already raised hands. So first question is for Alexander Craeymeersch. And I will allow you to unmute yourself before asking your question. Alexander is from Kepler Cheuvreux. Alexander Craeymeersch: Yes. So I just had a small question on the Healthcare segment. So the challenges in the U.S., you mentioned tariffs, but that would imply that's a short-term effect. But then when you look to the outlook, you look rather cautious even on Healthcare. So I was wondering why don't you think it's short term? Or do you think it's more like structural that this is also related to the cuts in Medicaid and stuff like that? An Steegen: Yes. Thank you for the question. So you're right. So the tariffs impact was something that happened in the first months where we still needed to basically reallocate our flows from our factories, China to Europe to really basically mitigate the impacts of tariffs. So there, we don't foresee that, that is going to get worse in 2026. We also see in Diagnostic Imaging really getting traction with the new products with the software. So there, we basically see definitely growth potential. In Surgical, also there, new products are coming out. But as we've mentioned already before, it takes time to replace contracts that were finished. It's a very long design in time that you see in Surgical. And these are typically long framework contracts, which basically are for quite some amounts, and that takes time to replace them. Here again, we also want to with the synergies and the merger between Diagnostic Imaging and Surgical. We want to leverage synergies in go-to-market. Just to give you an example, where in Surgical, almost our entire Surgical business is going through OEM business and very limited through distribution. In Diagnostic Imaging, that is just the opposite. So we have much more going through distribution than through OEMs. We're trying to basically see if we can leverage some of that discipline that we have in Diagnostic Imaging also to Surgical. And that's also a structural change that will take some time to basically get there, but that is where we're focused on. And besides that, of course, leading the path in Surgical with new products with innovative products that sets us apart from the competition is also a continued focus for us. And then the last one is Modality. There, it is a commoditizing business and with strong Chinese competition. So there, we will fight at the same level with our hub in China, where we are going to make sure that we are coming out with cost competitive products that also help actually grow our profitability in the future. Alexander Craeymeersch: Okay. So if I can just have one add-on question. So look, the margins compressed quite a lot in H2. So the question I would have, what part of this margin compression is short term and what part is structural? Ann Desender: The impact which we saw on the margin from tariffs is gone. So that's nonrecurring. So that will be an upside over there. So that has a primary impact and then it comes indeed currency, we do foresee some impact still in the second semester if currencies stay like they are first semester. If they would stay like they are, it would be the same level as we have in the second semester of '25. So we'll see where that goes. But aside from, I would say, the impact from FX, which did have an impact on Healthcare in particular, that if it stays the same impact still second semester, not anymore in the first semester, not anymore in the second semester. As we have quite some new products also coming out and that will then evolve over the year as such, that's another [Technical Difficulty]. Alexander Craeymeersch: Okay. So what I hear is that basically Healthcare margins should recover in 2026. Looking at the consensus today, with the EBITDA margin standing at around 13.5% if the consensus, you actually would expect that if Healthcare margins basically recover that you would end up closer to the 15% mark. So just wondering whether... Ann Desender: We don't guide on the divisional level, as you know, of course, let's call it, back in the right direction. We can cancel that one. Willem Fransoo: Next in line is Stefano Toffano from ABN AMRO. Stefano Toffano: So I had a similar question actually to my colleague. Let me maybe perhaps phrase it differently. So it seems to me -- I understand that '25, lots of headwinds, the tariffs, low visibility. But it seems that a lot of that is already in the books and you do have quite some more visibility also given the new product launches. Why does, again, an outlook so qualitative, if I may ask? It still feels like you should be able with what you're seeing today to be a little bit more concrete on your outlook, if I may be so free. Then maybe -- sorry, I ask another question. Maybe also then on the Entertainment because it seems that you're extremely confident that the strong momentum will continue. HDR, how much potential does that have over the next few years? And maybe a last question then is simply on the working capital. Where do you see that normalized by the end of this year? An Steegen: Yes. So maybe on your first question again, are we too cautious on guidance? We've learned to be cautious, to be honest with you, with all the macroeconomic effects that we've seen over the last years. We definitely have a lot of structural activities going on that are going to improve, especially then in Healthcare, our profitability. The timing there is something that we have to see. So when exactly are the new products going to be introduced, the lead time it takes into the market. And again, especially here, I'll repeat myself in Surgical, especially in Surgical, that lead time is quite long. The other thing is also basically gaining back the confidence in Modality to make sure that we have the cost competitive products, which we have, but also basically stepping up there and basically opening up the doors there again. It's something that takes some time. These are all structural positive things, but the timing there is something that we're building up this year and then also going into the next years. On the HDR, thank you for asking that question because, of course, the extra value that we are going to create for Barco over the lifetime of an HDR projector is very significant. If you compare it to a one-off sales, we basically can quote numbers between 8x and 10x for Barco over the lifetime of that projector. And the good thing about that one is also that it's recurring revenue. So you don't sell 1 year and then for 15 years, you have no revenue coming in, like one-off projector sales typically is. Now you have that recurring revenue building up over the years to come during the lifetime of the projector. So that is why this is such an important switch in cinema because, again, the lamp-to-laser replacement wave is now 35% and there's still a way to go, and that will still take years basically to get that completely upgraded. But after then, these projectors last quite long. So for Barco, it's important that we basically are coming up with that new business model, which HDR by Barco allows us to do now. Ann Desender: Maybe to complement before I can take the question on working capital, with respect to the expectations on Enterprise in particular. So we are very happy with the first success we do see on the ClickShare Hub, but how fast that will pick up and then evolve over the year, that's a little early in the year. And that also in part explains why we are not more specific on the uptick. But indeed, the bigger uncertainty remains what we've seen and what we've learned over the past years on the macroeconomic side. With respect to working capital, yes, we want to get that back to the 12%, actually, call it like that. Yes, the contracts Cinema as a Service, which is a great investments actually and yielding into long-term results and profitability has some impact also on free cash flow on CapEx and also on contracts in progress included in working capital, but we have more opportunities to lower inventories in particular, and that's what we do want to go after. Willem Fransoo: Okay. Thank you, Stefano, for the questions. Next is from Guy Sips from KBC. Guy Sips: My question is related to the ASP of ClickShare. So first on pricing power versus and product mix. ClickShare sales declined again in 2025, while competition in APAC intensified. Can you elaborate on how ASPs evolved across regions? And to what extent mix effects at conference versus bring your own device versus the new ClickShare Hub supported or diluted the ASP levels. So I want to know the impact of the room system transition on ASPs, while ClickShare shifted from a bring your own device only model towards Microsoft certified room systems. Should we expect structural ASP uplifts from this repositioning? Or will increased bundle pricing pressure from the Teams Rooms ecosystem limit ASP expansion? Ann Desender: Overall on Enterprise, actually, we foresee a further uplift of the -- or containing and no down on EBITDA margin likewise on gross margin and which is the combined of everything. When you say -- we saw indeed a lower sales over '25, but this is primarily, of course, because room systems market has grown faster than the agnostic play. And we only had our ClickShare Hub towards the end of the year. So that did have an impact where the average, I would say, ASP has on the agnostic is gradually indeed some lower with going into the new offerings, which we will do with being more, I would say, some hardware more into the bundles that will have an effect. But yes, I would say volume and uptake of sales will on its own also have a positive impact on then where we target for the gross margin. An Steegen: Yes. And maybe to add, so also in 2025, indeed, agnostic market was declining. We definitely kept our market share. It's not that we did massive discounts on our ClickShare that we had in the market in '25. We did not do that. And regarding the new wave, so the ClickShare Hub, so this is basically priced in a competitive way. Again, there, the volumes should also help maybe a slightly lower margin on these products to be competitive there. We'll have also differentiation built into our ClickShare Hub which again are features that we ported from the agnostic version in there, which also will differentiate us in the market. Yes. So in general, we believe that is going to help us to basically position the ClickShare Hub very well in the market as of now, basically. Willem Fransoo: Next question is for Kris Kippers from Degroof Petercam. We will to the next and next is the Marc Hesselink. Marc Hesselink: So first, I want to get back on the guidance of the margin improvement. So you're not looking on the divisional level, but maybe then from a gross margin and from an OpEx indirect cost level. I think if I read you correct in the previous statements, there should definitely be some upside to your gross margin given less impact of the tariff and all the moving parts. I think in '25, you also made a very good cost control on the OpEx level. So if you look at those 2 buckets, is it -- does it mean that indeed for the '26 period is predominantly gross margin and less on the indirect cost? Or am I missing anything? Ann Desender: Well, the gross margin, indeed, yes, we have. And so in that sense, and OpEx management, yes, like we did in the previous years, actually, yes, we're also swift on that one. So I would say before further increased top line growth as being concerned, so to speak. We are also, I would say, selective on the investments of quality, having a strict control on that being that, yes, we do continue and invest into our road maps. We are not holding off to that. But then yes, we do offset with further automation, with further process optimizations, simplifications. I would say, yes, there's always further room for improvement. Also AI helps us on that to, I would say, make sure that we also further work on cost efficiencies to allow the selected investments and full speed ahead, which we do and maybe to name 2 more, I would say, big investments planned versus prior year is on the completion of the portfolio for ClickShare further along and then actually on HDR and go-to-market, call it a little bit more marketing-related spending. Marc Hesselink: Okay. That is clear. Then the second question that I had is on the Entertainment division, clearly performing very strongly, I think the top line as well as margins. But especially looking into cinema, yes, you also see that the market for cinema is not great. And I know you have a different dynamic. It's a replacement cycle and anything. But just in your discussions, I mean, do you see any feedback on that, that the cinema owners are having those issues with attendance and that kind of levels? An Steegen: So I think the Cinema business and getting people to theaters depends on a couple of things. It depends on good content, but it also depends on good technology that gives the audience an experience that you don't have at home. It is proven there is a period that movies would first be released off streaming, not go to the cinema theaters. And there are analysis made that basically say most of the revenue coming from a movie comes from blockbuster weekends. So from opening weekend for blockbusters. So that is still a trend that studios really stick to. So if you look at the combination of the 2, a good content slate, and we know for '26 that is going to be a good content -- there is going to be a good content slate as well as having new and remarkable technologies that can really draw the attention. And we are very positive on our HDR by Barco because from everybody, if it's now from the studios, the exhibitors or from the audiences, this is really a wow effect. And this draws people to the rooms where we have HDR by Barco installed. So that's one positive. And the other one, as you mentioned, of course, we're still far from done from the lamp-to-laser replacement wave. And this is, of course, a cycle when the when the projectors near their end of life, you have to replace them. They extended already the lifetime of some of these projectors during COVID. So this is just happening right now. So that's why we are very confident about our cinema growth this year and the coming year. Ann Desender: I can confirm on that. And indeed, as you point out or the question is that if the latest, I would say, discussions with customers on that, it's certainly not that they are slowing down versus the plans which they had or in the replacement or, I would say, for the large frame agreements we have there and then the call of orders in there. So that is continue. We don't see a slowdown. Marc Hesselink: Okay. Okay. Good to hear. Maybe a final quick question is, you mentioned shorter lead times because of normalization of the supply chain. And then you say, okay, you're seeing a back-end loaded growth. I mean I just want to really get clear on the visibility because I think if lead times are shorter, it can also be tricky a little bit on the visibility. Like it could be that the lead time is shorter, but it could also be that your client is just a bit more hesitant because he doesn't know, right? So how -- what kind of discussions do you have to have that visibility beyond, let's call it, the near-term order book? An Steegen: Yes. Ann Desender: What we do see is in the latest discussions over the last semester, if an order is placed, that they do also expect a very fast delivery on that. So that is not only, I would say, you don't know larger order book, which mean more visibility. An Steegen: But it is a fact that in general, the trend is changing. Orders are placed much later, more book and turn. There is a change in behavior. You could say they wait longer and then will they cancel it, yes or no. But it's also because of projects. So where in the past, actually partners typically, you could deliver your products when they were ready and they store them until they had the supply of all the other suppliers to start a project. They don't do that anymore. They don't put anything in their warehouse anymore. So you have to basically keep your goods until they say it's ready to go and they start the project. So you see all these trends changing, and I agree with you that, of course, limits the visibility. And also for us, of course, we need to make sure that our production that we can deliver on time. Will that slow down? No, I don't think in general, when they need it, they need it. Of course, slowdowns you'll have because of macroeconomic effects. Has that anything to do with shorter lead times or longer? I don't think so. Then just it's -- yes, it's the macroeconomic effect that starts playing in. But it is a fact, and it's something that we need to learn to live with that, that is more and more becoming a reality. And yes... Ann Desender: An important one, of course, first half, second half, along the fact that we typically have a higher sales in the second semester than the first semester is indeed, if currency stays at this level, reported sales will have an impact in the first semester. So that is where -- that's also one of the, I would say, reasons why we guide for a more skewed sales growth in the second semester. An Steegen: But again, our fourth quarter is always the best. So this is not any different this year. Willem Fransoo: Okay. Thank you for these questions. Maybe trying once more with Kris Kippers. Kris, I can see you're still muted maybe now. I see you are unmuted, but we still don't hear you. So maybe we will -- you can type it in chat. Meanwhile, if any other investors in the room have additional questions or analysts, please go ahead. I see a question from Trion. I will allow you just a moment. Trion Reid: I just had a question about the shareholder returns. I mean you increased the dividend, which is obviously welcome. You did the share buyback that's just finished, but no mention of a new share buyback. It'd just be interesting to get your view on why not? Or could we see more cash returns upcoming? An Steegen: So at this moment, I think we need to be returned EUR 120 million to our shareholders over the period of last year until end of January. At this moment, we still have active discussions, and we need to basically also see where we are spending our capital moving forward. So we have some CapEx expenditures in our factories, for instance, here in Kortrijk and in Italy where we're upgrading. That's one. So we need to, of course, keep cash for that. And we still have active discussions right now also regarding M&A. So at this moment, this is the immediate priority that we basically hold off and basically see what comes out of that. And in due course, of course, if things do not pan out, we can always consider another share buyback at the right time. But at this moment, those are our priorities. Trion Reid: Very clear. And just one -- sorry, one last one. On the Entertainment business, as you mentioned, very strong in '25, especially in the second half and especially with regards to the margin. Just wanted to be sure that there was no sort of one-off or something special there that this margin is kind of sustainable into '26 and beyond? An Steegen: No, no, no. For cinema, it was very linear and spread out over the year. The only thing that we had in IX was the Encore 3 that launched in Q3, but that is now a steady income stream also moving forward. So there was nothing so special. Ann Desender: Structures really besides Cinema Immersive Experience with the launch of the new products, we really did very well, which comes also with higher margin improvements but also worked on their OpEx and could lower the investments done or which were more upbeat in the previous year on R&D and could get that to a more normalized level after the launch of those products. So that is a structure -- so is that okay for you Trion? So making the bridge [indiscernible] so on the OpEx savings, how structural is this the measures which we did on OpEx are indeed structural. That doesn't mean that we can continue on that path with respect to the further reductions. But it's not that it was a onetime, I would say, OpEx lowering that all of a sudden came back. An Steegen: Yes. And the second question is about our Microsoft collaboration and certification for ClickShare, if there is any impact on the business in '26 already and since we started and launched in December. So yes, again, this was a very good launch. We see a lot of positive comments. We had a very important trade show ISE in Barcelona last week with a lot of momentum building around our ClickShare Hub. We have already a couple of hundred installed in the field right now and basically all these devices are connected. We are getting live feedback on those, and they're doing very well. Also regarding our Microsoft relationship, we have to say we really appreciate the collaboration that we have and have during this development with Microsoft. They helped us a lot. We kind of aligned our stars with Microsoft, and they're helping us actually also in their ecosystem, thanks to their ecosystem, we can broaden actually our go-to-market. So in general, we see a very positive momentum around that. Willem Fransoo: Okay. And then we have a follow-up question from Alexander Craeymeersch. Alexander Craeymeersch: Just following up on Trion's question here. So you mentioned that Entertainment margins should be sustainable at that 18% margin. Enterprise is probably also sustainable at that margin. Healthcare margins should recover. So the question that I actually still have is why only guide for 15% EBITDA margins by 2028? I understand that you conservative and that you want to be cautious. But at the same time, it doesn't make much sense unless there's something structural in the margins downwards. An Steegen: No, there is nothing more structural than we said before. And I do look, let's look at it quarter-by-quarter. It's with a special focus on Healthcare, that recovery in the U.S. that we need to see. And of course, also the structural improvements with the new products that we have in Healthcare, it will just take a little bit longer to basically get those in the field and in the market. But we'll monitor this quarter-by-quarter. And if we see positive progress, then we are going to be the first one to hear about that. Operator: I see no other hands raised. So last chance to raise your question. Otherwise, we will be closing the call. So thank you for all these questions. Thank you for your attention today. The recording of this earnings call will become available on the website later today. And I would also like to draw your attention to our annual report, which is also published today as one of the first companies on the Belgium market. And please go have a look on our investor portal to find stories and insights on all the divisions and business lines of Barco. So for now, we will leave it here. Thank you for your attention, and goodbye. An Steegen: Thank you. Have a good day. Ann Desender: Thank you.
Julia Chao: Ladies and gentlemen, good afternoon. This is Julia Chao from AUO's IR department. On behalf of the company, I would like to welcome you to participate in our 2025 Fourth Quarter Financial Results Conference. I have four executives joining us: Paul Peng, our Chairman and Group CEO; Frank Ko, our President and Group COO; James Chen, our Senior VP of Display Strategy Business Group; and David Chang, our CFO. The format of today's meeting is this. First of all, our CFO will go over our 2025 fourth quarter financial results and provide you with the outlook for Q1 2026. Then our Chairman and President will share with you our business updates and our outlook. Then we will proceed to questions and answers. We have collected questions from analysts previously. We will address these questions in the first part of the Q&A session. After that, if you still have more questions, we will open the floor for you to post more questions. So that is the agenda for today. Now before I turn over to David, I would like to remind you that all forward-looking statements contain risks and uncertainties. Please also spend some time to read the safe harbor notice on Slide #2. David, please. Po-Yi Chang: Ladies and gentlemen, good afternoon. I would like to go over our financial highlights for the fourth quarter and also provide you with an outlook for Q1 of 2026. First, let's look at the income statement. Our Q4 revenue reached TWD 70.1 billion, which was roughly flat compared to the previous quarter. Thanks to the depreciation of the NTD against the dollar, we saw about a 3% positive impact. For display, due to the traditional off-season, shipment volume dropped, but our revenue only slipped by about 4%, which was less than the usual dip in Q4. As for Mobility Solutions, strong demand in Mainland China's automotive market and better product mix pushed the revenue up by about 9%. For our Vertical Solutions, since some industrial and commercial display customers pull in orders earlier this year, they experienced inventory adjustments in Q4. So our revenue dipped slightly by 2%. Again, it was less than the usual Q4 drop. Overall, all three business pillars performed in line with our expectations for the quarter. Moving on to our gross profit expenses. Q4 gross margin rose to 10.7%, up by 1.1% from last quarter besides the favorable exchange rate. Better product mix in display and a higher share from Mobility Solutions helped boost our margins. Both Q-on-Q and Y-o-Y wise, AUO's gross margin kept improving showing our transformation strategy is starting to pay off. Q4 OpEx ratio went up to 13.4%, up by 1.2% Q-o-Q. This is mainly because Q4 is the peak season for securing automotive orders. So we spent more on upfront project costs, plus with better overall profitability in 2025, we increased employee compensation, which pushed up expenses. The expense ratio was 13.4%, which was slightly higher than expected. We will keep tight control going forward. Our short-term goal is to bring down to 11% to 12% and midterm target is 10%. Q4's OP margin was negative 2.7%, about the same as last quarter with an OP loss of TWD 1.9 billion. Non-op income was about TWD 4.8 billion, mainly from the disposal of our Hsinchu plant, which we've completed the ownership transfer. So after related costs, we recognized a net profit of TWD 4.7 billion. Our net profit was TWD 2.88 billion, and EPS was TWD 0.38. For the entire year of 2025, EPS was TWD 0.9. Now let's look at the full year results. 2025 revenue was TWD 281.4 billion, roughly flat from last year, but the revenue structure changed. The combined share from higher-margin Mobility and Vertical Solutions rose from 38% in 2024 to 43% in 2025. Meanwhile, display share dropped from 56% to 52% during the same period. This optimization in our business mix drove up our gross margin. In 2025, net profit attributable to owner of the company was about TWD 6.8 billion with EPS at TWD 0.9. Now let's look at the balance sheet. Q4's cash and cash equivalent was TWD 55.6 billion, about the same as last quarter, which is a healthy level. I'll explain the cash flow in more detail on the next page. Short- and long-term loans dropped to TWD 109.1 billion, and the gearing ratio fell 6.5 percentage points to 32.6%. With our transformation strategy, capital investment is coming down and shifting to asset-light investments. More stable operating and free cash flow in addition to funds from selling the Hsinchu Plant will help us reduce debt and interest expenses, further optimizing our financial structure. Inventory at the end of Q4 was TWD 36.2 billion with inventory turnover at 52 days, both at the same as last quarter, still at a reasonable and healthy level. For cash flow, Q4 operating activities brought in about TWD 2.9 billion. Depreciation and amortization for the quarter was TWD 7.6 billion. Investment activities brought in about TWD 3.3 billion, including TWD 3.8 billion in CapEx and TWD 6.8 billion from selling the Xsinchu L3C Plant. Financing activities saw a cash outflow of TWD 9.2 billion, mainly using the asset sale proceeds to pay down TWD 8.7 billion in loans, optimizing our financial structure and lower interest expenses. This slide shows the revenue breakdown for our three main business pillars. Display was hit by the off-season and weaker demand for consumer products. So its share dropped by 2 percentage points from last quarter to 50%. Mobility Solutions benefited from Mainland China's automotive market peak and better product mix. So its share grew by 2 percentage points to 29%. Vertical Solutions stayed at 17%, basically flattish from last quarter. Now I'd like to share our outlook for Q1 2026. For Mobility Solutions, due to fewer working days and seasonal factors, we expect revenue to drop by a high single-digit percentage points compared to Q4. For Vertical Solutions, based on our current business situation, we expect revenue to be flat or slightly down from Q4. Lastly, for display, Q1 is usually the off-season, while some customers are starting to stock up for upcoming sports events. Fewer working days and memory shortages mean that we expect display revenue to drop compared to Q4. This concludes my presentation. Thank you. Julia Chao: Thank you, David. Next, our Chairman will have a business update and share with you our business outlook and strategy. Shuang Peng: Ladies and gentlemen, good afternoon. It is such a happy occasion that we get to meet with you face-to-face. Q4, as our CFO said, our revenue was a bit better than expected. There were a few reasons for this, including stronger customer demand and favorable NTD, our Q4 revenue was about the same as Q3, and we posted OP loss. However, thanks to non-op income from disposal of a facility, our net profit for Q4 was TWD 2.88 billion. Let me sum up 2025. With issues like tariffs, NTD appreciation and capital market competition in Mainland China, it was a year with a hot start, but a cool finish. Originally, we expected steady growth each quarter, but the second half didn't go as planned. So our total revenue for 2025 was TWD 281.4 billion, up by 0.4% from 2024. Thanks to structural changes, our gross margin improved by 2.9 percentage points, showing better profitability during our transformation. As a result, in 2025, we successfully turned losses into profits. Our overall financial structure remains solid. In Q4, inventory was TWD 36.2 billion with 52 days of inventory turnover, and our gearing ratio dropped to 32.6%, much lower than last quarter. So we are in a healthy position. For 2026, we are cautiously optimistic about the market. However, there are still lots of uncertainties. including memory shortages and price hikes, ongoing tariff discussions and geopolitical tensions. These are things that we need to watch out for. But we still believe our revenue stands a chance to gradually increase this year. Starting from July last year, we've been telling everyone that our company will be operating based on three main pillars. The first in the middle is display, which has been our biggest investment and asset for almost 30 years. Going forward, we hope display will generate profits and cash flow to support the growth of our mobility and vertical solution businesses. The second pillar is vertical solutions, mainly led by ADP, focusing on smart retail, smart health care, smart education and enterprise solutions. In addition to our commercial and industrial displays. Today, our ADP President, Tina Wu, is here. Tina, please say hi to everyone. Tina took the helm at ADP last year. We are expecting solid growth for ADP ahead. The third pillar is Mobility Solutions. With BHTC joining us, we've moved up to not just Tier 1, but also made big progress in smart pockets, which will be a major focus for us going forward. We believe AMSC and Vertical solutions together will be key growth engines for AUO going forward. We will show you that the revenue and gross margin for each of these three pillars separately going forward. Starting from this year, each pillar will be measured on its own performance. The idea is for each business to focus on its own strengths and advantages, but also create synergy as a group. So we are hoping to maximize our overall results. We will use these financial numbers to keep ourselves accountable and share them with all the investors at the same time. As David just shared with you, for the past three years, we have seen that there are three pillars involved in terms of revenue. Our goal is that by 2030, Mobility and Vertical Solutions together to make up 70% of our revenue. These two pillars have shown steady growth and stable margins, unlike the more drastic ups and downs of the display business. So we are hoping to focus more on improving profitability of our entire company. Last year, our gross margin rose by 2.9%. That's real progress and shows that our efforts are paying off. Next, I want to talk to you about micro LED. Most of the products you see on site today are micro LED displays. For example, the screens here are projections, but if they were switched to micro LED, you wouldn't have any visibility issues. The brightness and color of micro LED displays are excellent, and the images are super clear. Please check out our products on site later if you have time. Before I begin, I would like to introduce the products that our executives are holding, these watches are made of our company's micro LED displays. Even from a distance, you can still see that they are very -- they really demonstrate clarity. Micro LED offers excellent visual effects, including brightness, color and wide viewing angles, which is why it's chosen for premium wearable devices. The commercialization of the smartwatch proves that AUO's micro LED technology is already in progress, not just a concept, not just in exploratory stage. Since 2018, we've showcased micro LED applications in wearables, large TVs, automotive displays and transparent screens, among others. Moreover, AUO has started volume production in all of these areas. Why are we so confident? Our confidence comes from years of technical accumulation. We can produce not only standard shapes, but also free form, flexible and even stretchable displays, which are all in mass production. There are three key factors. First, we master critical processes and technologies. Second, we support various scenarios and sizes. Thirdly, and most importantly, we have built a complete ecosystem. Therefore, we have advanced from the first generation to Gen 4.5 facilities. This progress brings greater generation power and significantly reduced costs. As a result, it has enabled wider applications. Micro LED also plays an important role in AI systems. Speaking of AI, AUO has four main arrows or strategies, which I will explain in detail. First of all, we have products and smart services in place. For example, smart cockpits, ADP smart displays, AET, intelligent manufacturing and circular economy carbon management. These make up part of our AI portfolio and services. AET and Smart Manufacturing, which operates under the name of ADT in Mainland China. It has become an expert in circular economy and carbon management and AET was selected as an ESCO partner by the Ministry of Economic Affairs. In Mainland China, its revenue has doubled in recent years. It has also gained strategic investment from strategic investors for the first time last year. This shows that investors have recognized the value of our smart manufacturing services. The second strategy or arrow is our cloud AI and infrastructure. The third strategy focuses on Edge AI, specifically human AI interaction and physical AI, which are closely linked to our product applications and smart services. The first arrow is our smart products and services. The second arrow is Edge AI and then Cloud AI infrastructure as well as Physical AI. Each pillar has its own application scope. Next, I will explain how we apply AI beyond products and services, including three more technical areas. First, micro LED for CPO and optical communication, especially in AI data centers, where energy efficiency is crucial and computing capabilities are also vital with energy efficiency taking an important -- increasingly important crucial role. Optical transmission is replacing copper and our micro LED CPO will be vital for short distance transmission in AI server racks. In AI data centers, if we cannot reduce power usage, energy demands of data centers will become extremely high. So the shift from copper to optics means that our micro LED CPO technology will play a very important role. And our micro LED CPO features high bandwidth and low power consumption. As data center architectures undergo systematic transformation, this technology allows us to control power and heat dissipation more effectively. Micro LED CPO plays a crucial role in enabling sustainable development in the environment. The opportunity is the shift from copper to optical transmission. The system consists of optical communication modules positioned alongside the AI chip, including transmitters, receivers and ASICs. For AUO, we have invested in Ennostar, a company specializing in micro LED and its subsidiary, Tyntek, which focuses on photonics for the receiving end. AUO is capable of integrating the entire optical communication modules system. In the future, these optical communication modules will inevitably transition to glass-based production, an area where we have a cumulative 30 years of expertise. Combined with our advanced mass transfer capabilities for micro LED, we are confident in our ability to lead in this field. In fact, we have already produced demo samples and are currently discussing commercialization with our customers. The second difficult area is low earth orbit satellite, LEOs. Without connectivity, intelligence cannot be achieved in mobile applications. Satellite signals are essential for smart mobility, and we provide the receiving terminals. Given that our satellite antennas are thin, lightweight and transparent, they are ideal for mobile platforms for mobility vehicles. This time, at CES, we showcased a satellite antenna integrated into the sunroof of a vehicle. The antenna combines glass RDL and RFIC into a single unit. Despite this integration, the antenna remains extremely thin, lightweight and transparent, allowing for excellent signal penetration. As a result, it ensures reliable signal reception even while the vehicle is in motion. More importantly, it is thin and transparent. It's designed -- this kind of design means that low power consumption and no need for extra cooling is possible. The final strategy is the AR glasses. We focus on waveguide technology, not on computing power. As we have accumulated rich experience in waveguide technology, it is crucial for the last mile of AI visual output. We also play a key role in AI glasses, enabling lightweight and comfortable AI eyewear for long-term use. Our technology combined with the light engine makes extended wear possible without adding too much weight. So in summary, AUO's four AI strategies include three product areas and service. We believe that AUO plays a crucial role in these areas, having invested years in R&D and actively discussing various levels of implementation with our customers. Many of the showcased items on site are already in projects or entering volume production such as micro LED for smart watches and micro LED applications outside of vehicles. So we take this opportunity to explain face-to-face to you our progress and plans. For a more hands-on experience, please visit our live demo area. For example, the micro LED tree here combines various micro LED possibilities at CES. For example, people ask if it could be purchased immediately because these applications are mature and ready for the market. So this concludes my report. Hoping that this has given you a better understanding of AUO's past, present and future. If you have any questions, we can discuss later. As we are going to enter into the spring festival in just a few days, I hope to take this opportunity to also wish you a happy and prosperous Year of the Horse. Next, I would like to turn over to Frank to provide you with more details on our three business pillars. Fu-Jen Ko: Thank you, Paul. Dear investors, partners and journalists, good afternoon. As Paul just explained, he talked about AUO's overall business strategy and our focus in the AI ecosystem. Now I will walk you through the status of our three main pillars as well as our short, mid- and long-term outlook and growth targets. Now let me first spend a bit of time on our display business outlook and strategy. Our core business, as you know, is LCD panels. Besides TVs and IT products for leading global clients, we're also providing more high-quality panels. And as Paul mentioned, advanced display technologies. These support our two new pillars, Mobility Solutions and Vertical Solutions, which are at the heart of our shift towards solution-based displays. On this slide, you can see our focused product directions. However, to start off, let me talk about the industry from a supply and demand perspective. This year, from the supply side, we think the panel industry will keep producing rationally based on demand through 2025 and 2026. So supply should stay pretty stable. On the demand side, 2026 TV demand is being driven by sports events. In Q1, we've already seen brands ramping up their orders, which has pushed up prices a bit. This year, we've also seen a memory material shortage, which could push brands to plan and promote bigger TV sets. Therefore, average TV sizes are likely to keep growing. For IT products, there is a new wave of replacement after the pandemic, plus Windows 10 reaching end of life, which will drive replacement demand. But the industry is a bit worried about rising memory and other component prices as well as material shortage of memories, which could impact IT demand. In this situation, we are staying focused on using our core technologies and key capacity to meet customer demand as the market changes. For high-end products like the mini LED, et cetera, we've always been very strong. Now the industry is focusing more on energy-saving displays. We're actually the first in the world to use LTPS for 1 Hertz panels, which is a big deal for AI PCs, AI notebooks, which need more efficient components. This is a major advantage for AUO. We're also adding value with system integration in our display business like privacy protection and touch integration. These are well established with our clients. We've been increasing the share of our products with our clients, boosting our overall value. That's the direction for our core display business. As for the growth engine micro LED for the display segment, Paul has already explained it very well, so I won't go into details. But I would like to add that micro LED isn't just a growth driver for consumer displays. It's also moving into mobility and verticals, powering smart cockpits in vehicles and new immersive AI applications in vertical markets. So under this trend of micro LED plus AI, AUO is in a great position. To sum up, Q1 is usually a slower season for panels. Even though clients are stocking up for sports events, few working days and supply chain challenges remain that our display revenue will likely drop from last quarter. For the entire year, we will keep focusing on profitability and stable cash flow. Now let me update you on Mobility Solutions. The biggest thing from last quarter to this quarter is AMSC. You will start hearing more about our new company, AMSC, AUO Mobility Solutions Corp. It was set up on January 1st. It combines BHTC and AUO's Mobility's business into one company. The main goal is to deepen post-merger integration and synergy while focusing on the future of our mobility business. AMSC made its debut at CES this January, showing the world our positioning and product focuses. Our growth focus is built on three core strengths: Display HMI, automotive computing and smart vehicle connectivity, making AMSC a future partner for automakers and automotive OEMs in smart cockpit solutions. The slide shows what we presented at CES. On the left is a smart dashboard, combining CID, cluster and passenger information display into a seamless interface. This shows our real integration capabilities after the acquisition of BHTC. At the same time, we showcased our domain controller, zonal control, which enables AI services like real-time diagnosis and smart air conditioning, one of BHTC's strength. In the middle of the slide, here, it displays a transparent micro LED with automotive AI computing to power an immersive interactive car window. We also demonstrated features like voice, gesture, street view tagging and AI interaction, demonstrating all kinds of future mobility services. With AI in the air, we are creating the best possible user experience. Just imagine as self-driving becomes common and robotaxi services grow, what will people do in the cars? Besides moving from point A to point B, there will be more in-car services. That's where our mobility service displays comes in. We are offering the best solution for these scenarios. On the top right, as Paul mentioned, to make sure that we can provide global services, we need seamless worldwide communication for mobility providers. That means we have to connect from the cloud to the car. Therefore, we showcased a glass substrate-based satellite antenna developed with a partner from design, manufacturing to integration with the sunroof, the demonstration showed carmakers that we have a complete setup. Of course, at CES, besides showing of AMSC's offerings, we also brought micro LED applications into all kinds of different fields. At the bottom of the slide, on the left, there is a 42-inch AI interactive translation system. So you can see those transparent displays next to the tree. We demonstrated AI applications alongside micro LED technology at CES. Basically, we took the smart interactive window idea from the slide and put it into retail and business settings for AI interaction. For example, at customs or hotels, when you need to communicate in different languages, if someone doesn't speak English, you can use this AI real-time translation technology. At CES, we showed this by letting customers from different automotive OEMs, how they could order in their own language, and they found it super useful. On the lower right, we showcased a 64-inch transparent micro LED display. It can be set up at a stadium, transparent stadium window. So spectators could interact and see information about players and the game in real time. They could even place bets or buy snacks right there. These are all examples of how micro LED and AI can be used in new smart retail and service scenarios. The hands-on experience at CES garnered us a lot of accolades from the visitors. People were saying that we were the must-see booth. We couldn't bring everything back to show you here, but we did bring the brightest one. This micro LED tree, it is very gorgeous, isn't it? If you have any new ideas, let's brainstorm together, micro LED is ready, including all the AI solutions that people need. Now back to AMSC's outlook and strategy. Let me break down the numbers. In 2025, AMSC's total revenue is up by 17% from 2024. That's actually higher than the high single-digit growth we predicted in July. The main reason is the benefits from our BHTC acquisition. We are integrating faster with BHTC and seeing more results. We've also landed more big orders for display HMI from major clients in Europe and the U.S. In addition to these markets, we are also doing pretty well in Mainland China and emerging markets in 2025. Looking ahead to 2026, the global automotive market should be about the same as last year, about 90 million vehicles. At the same time, the number and size of displays in each car will keep growing. But honestly, the growth is starting to level off. Therefore, AMSC has to be ready to keep creating more value and push for double-digit CAGR growth. This slide shows AMSC's core business. AUO used to be a Tier 2 panel supplier. But after two years of integration, our core business is now what you see here, Display HMI, which means cockpit HMI with all kinds of display technologies like LCD, micro LED and mini LED and more integration of mechanical parts allow us to offer high-quality custom design and manufacturing for international automotive OEMs, which is a big reason for why we acquired BHTC in the first place. The results speak for themselves. By combining the strengths of both companies, AMSC team landed several major deals last year. These deals were what AUO couldn't have won alone, especially in North America, we've done really well. That's why we talked about expanding production in Mexico last quarter. It's all because of these new orders. Speaking of our core business Display HMI, I would like to explain how AMSC is getting ready to keep adding value to our offerings. Our goal for AMSC is to combine innovative display technology from LCD to micro LED and keep pushing forward. By integrating our SI capabilities and system capabilities plus computing and wireless connectivity, we're always making our products better. Of course, the market is giving us strong impetus too. At this year's CES, you can already see how the trend of so-called Physical AI is becoming a big deal, especially in V2X. In the past, people talked about software-defined vehicles. But today, it's all about AI-defined cars. So AMSC is basically offering a hardware solution for AI-defined vehicles. With this kind of product value increases, we can expect the value of AMSC's products to jump from just the value of a regular panel to a smart cockpit solution worth more than 10x as much. Now how does this strategy show up in our revenue? Let me give you a reference point. If you look at the AMSC's revenue in 2025, more than 40% is already from display HMI. Thanks to the new orders we've been getting over the past few years, the proportion of new orders is even higher, especially from the Display HMI segment. So we are seeing this value increase and the share will keep growing. Also, the smart cockpit solution, we've been working on for years is shipping this year. The unit we show at the event here is going to be adopted by a commercial automotive OEM in Taiwan in Q2 and more partners will join in the second half of the year. Our strategy is to use this commercial technology platform to get certified, prove our solution works and then expand overseas. At the same time, we will work on entering the much bigger passenger car market at the same time. Talking about the short term. In Q1 this year, because of fewer working days and seasonal effects, revenue from Mobility Solutions will drop compared to last quarter by a high single-digit percentage points. However, looking ahead to 2026, since we've been getting new orders every year, way above the year's revenue, we estimate that Mobility Solutions will still achieve a low teens annual growth rate in U.S. dollars. Next, I would like to explain our outlook and strategy for Vertical Solutions. In 2025, our Vertical Solutions revenue grew by 9% compared to the previous year, which is lower than the high teens growth we anticipated back in July. The main reason is that the energy business was affected by policy and demand was really weak in the second half of the year. So the annual revenue dropped by more than 40%. However, if we exclude the impact from the Energy segment, the Vertical Solution BG's revenue actually increased by 21% compared to 2024, mainly thanks to the growth in smart retail and the inclusion in AD Link's revenue starting from Q3 last year. So our core business focuses on display-centric solutions led by ADP, while solar and smart manufacturing are grouped under green solutions, including AET and ADT technology service in Mainland China. Over the past few years, we've integrated new ventures and acquisitions. ADP has been transforming into an international solution provider, focusing on vertical fields like retail, health care, education and enterprise services. Let's look at the past quarter. Last December, our health care team of ADP joined the Taiwan Healthcare ESMO Expo. The slide here shows on the top left, ADP leveraged 3D display technology combined with partners to launch a 3D microscopic surgery imaging solution, which works with surgical robots like da Vinci. On the right, we teamed up with AD Link and a medical startup to create a navigation-guided ultrasound system. It leverages ADP's core imaging and visual strength plus Edge AI computing technology from AD Link to help doctors enlighten their workload during surgery. The solution has garnered a lot of attention at the expo. Down below, you can see our most popular product at the event. It is an AI-powered diagnostic solution for traditional Chinese medicine, including pulse diagnosis as well as tongue recognition. They basically digitize the classic diagnostic methods of traditional Chinese medicine. The system is already being used in leading medical institutions, including China Medical University, Taipei City Hospital and Maran TCM clinics worldwide. ADP has now become a key driver of smart TCM in Taiwan. Looking ahead, our Vertical Solution BG is leaning into ESG opportunities and implementing Edge AI for future growth opportunities. For energy saving solutions, AUO has partnered with E Ink. We are showcasing the aecoPost product here on site. And we're also displaying our own cholesteric LCD HiRaso, which are perfect for outdoor wide temperature e-paper displays. It makes ADP a provider of energy-saving display solutions for all environments from outdoors to indoors. This year, our cholesteric LCD displays HiRaso and ESLs as well as price tags are being used by McDonald's in New Taipei City for improving energy efficiency and sustainability. As for AI empowerment, ADP's investment -- AUO's investment in AD Link is a key focus for the future. We are already collaborating with AD Link in entertainment and health care, and this will be a major growth driver from 2026. Looking at Q1, Vertical Solutions revenue should stay flat or dip slightly. For the entire year of 2026, smart vertical, including AD Link and Green Solutions will grow. And the overall Vertical Solutions revenue in U.S. dollars could reach 20% annual growth. Lastly, to sum up, looking ahead at 2026, the display industry will see a healthier supply and demand balance. We are focused on improving profitability and cash flow. For AMSC, we will keep pushing for new business growth and gaining new project awards. This year's revenue in U.S. dollars is anticipated to grow by low teens. Our goal for the next few years is to maintain double-digit annual compound growth. For Vertical Solutions, the target is over 20% annual growth in USD terms this year and to keep up double-digit CAGR in the coming years. Of course, there are lots of uncertainties this year. So our team will closely monitor developments and opportunities. This year marks AUO's 30th anniversary. The management team is committed to steady operations and building a sustainable, profitable business structure for AUO's future growth. We hope that this framework and greater group synergy will help AUO open new tracks for competitiveness and lay out the next growth engine for the next 30 years. Thank you. Julia Chao: Thank you, Paul and Frank, for your sharing. Now we will address the questions that we collected from analysts before the meeting. The first question is financial related. Could you provide an update on 2026 depreciation and CapEx? Will there be a significant decrease in CapEx and depreciation in the coming years? David, would you please? Po-Yi Chang: Okay. I'll take this one. For AUO, the depreciation in 2025 was TWD 29.8 billion, about the same as what we estimated last time. We expect that depreciation and amortization in 2026 to be around TWD 28 billion. As for CapEx, it was TWD 18.2 billion in 2025. And currently, we estimate 2026 CapEx will not exceed TWD 20 billion. Moving forward, the company will focus our CapEx resources on Mobility, Vertical Solutions and micro LED development for panels. As we mentioned last time, our CapEx strategy is shifting from heavy capital investment to a more asset-light approach. So in the mid- to long term, both CapEx and depreciation should gradually decrease year-by-year. Thank you. Julia Chao: Thank you, David. The next question is about display market updates and outlook. What are the TV monitor notebook end market demand in Q4? And what is our view for Q1? Moreover, will memory price increases and shortages affect end market demand? James, would you please? Chien-Pin Chen: Good afternoon. In Q4, which was the peak promotion season, TV set sell-through was in line with anticipation. In terms of quantity, there was a slight decline of about 2% to 3%. Thanks to strong sales of large size like 85-inch and above TVs in North America, sales grew by around 32%. In Mainland China, although the government trading schemes effect weakened a little bit and the numbers dropped slightly. The average TV size purchase has increased to over 68-inch and even 85- or 100-inch models are selling really well. Therefore, overall, TV shipment area in Q4 was up slightly by single digit and inventory levels were pretty healthy. In the first quarter, we are seeing two big sports events coming up, the Milan Winter Olympics and the World Cup in the U.S., Canada and Mexico around June and July. Because of that, customers are already stocking up early. So Q1 supply is a bit tight. That's also pushing TV panel prices higher. With these events, we expect that TV sales to pick up in the first half of the year. For TVC outlook for the first half of this year looks pretty positive. Now on the IT side, Q4 last year performed better than expected. The pause in device upgrades of Windows 10 triggered a wave of replacements. And we also saw some memory shortages in Q4. So customers pulling orders and stocked up early. Overall, notebook shipments in Q4 grew about 8% Y-o-Y. Looking at Q1, memory shortages and price hikes are still an issue. Even CPUs are starting to get tight. The main challenge this quarter is whether customers can get all the parts they needed -- they need, and if production schedules can go smoothly as they plan. As customers are already reacting to the rising memory and CPU prices, laptop prices are being adjusted at the end market with 10% to 30% increase in end prices currently. We are keeping a close eye on whether this will impact demand going forward. Since the price rise is pretty significant, we will keep working closely with our customers to manage supply and demand. Hopefully, even with tight memory supply in Q1 and Q2, we can still deliver good results. Thank you. Julia Chao: Thank you, James. We will now open the floor to take questions. [Operator Instructions] Unknown Analyst: I am Dana from UBS. I have two questions. First, regarding AI. You mentioned that some products are already in mass production and some services are being offered. How do you see the overall AI revenue contribution or growth target going forward? Secondly, there's a lot of discussion about advanced packaging. What is the company's view on the future trends for fan-out PLP, RDL or glass core substrate? And what role does AUO see yourselves playing in the industry? Unknown Executive: Thanks, Dana, for the questions. Actually, besides just selling display panels, most of our other products already have AI applications built in different -- just to different degrees. So if you look at Vertical Solutions and Mobility Solutions, those definitely include AI. However, if it's just a stand-alone panel, then no, because that's not a system. Another key reason that our gross margin has improved is not just our product mix and transformation, but also our leadership in AI applications at our facilities. Since 2015, we've been driving smart manufacturing. And over the years, we've seen significant reductions in labor, utilities and other indirect costs. This has helped us stay competitive in large-scale manufacturing. At the same time, we have also spun off this expertise into two services companies, both of which are growing nicely. One is AET, which is focused on circular economy and water management and is quite established in Taiwan. The other is ADT technology service in Mainland China, which turns our hardware expertise into selling know-how in Mainland China. As I shared with you earlier, we've been attracting international strategic investors who see our growth potential and are willing to invest. So while I cannot give you an exact AI revenue number, basically, except for standalone panel sales, you will see AI in almost all of our hardware and services. As for glass core, Frank, about the Fan-out PLP process and the potential and development path of using glass substrates for advanced packaging, including RDL and TGV glass core VIH formation for AUO also, we've previously shared that AUO has been building up a broad set of technical capabilities and preparations in this area. We've conducted fundamental studies on technologies such as RDL and glass core structures. We've also been working closely with advanced packaging companies, customers and partners in optical communication-related fields. These collaborations include joint development efforts, technical exchanges and even co-defining the next wave of products and future directions. So our thinking is that these processes require heterogeneous integration, especially in optical communications, like Paul just mentioned with CPO. This is where it really comes together. When AUO started developing micro LED processes, we built up integrated manufacturing. Because of our micro LED strategy, our core strength in optoelectronics have grown, which is crucial for the next wave of CPO technology. Our main idea isn't just to do the process. We want to create system-level modular products. For example, CPO is more of a module product, not just RDL for packaging. Therefore, things like glass antennas or CPOs are about using RDL and glass core processes to make meaningful products, especially for new solutions needed in AI and LEO satellites. Julia Chao: Are there any other questions from the audience? Okay. We'll address Derek's questions first and go to Brett later. Hong Ji Yang: Everyone Derek from Morgan Stanley. I have two questions. First, about our mid- to long-term margin trends. Since display business still has some ups and downs, but the swings are smaller than in the past decade. The other two business segments are more stable and their share is increasing. For example, by 2030, when your pure panel business is down to 30% as a share of your revenue, what do you think the company's overall gross margin will look like? Second, regarding AI applications, if we narrow it down to the three products of the four arrows -- of the four strategies that Paul mentioned earlier, micro LED, CPO, LEO satellite antennas and AR glasses waveguides, what's their current revenue contribution, and what do you expect in 5 years from now? Unknown Executive: Thanks, Derek, for the questions. On that chart I showed earlier, Vertical Solutions plus Mobility Solutions are anticipated to make up over 70% by 2030. For Display, direct sales to external customers will be about 30%. But we also expect another 10% to 20% of our revenue to come from internal customers. This means that display will help drive growth in the other two segments. So if you add them all up, Display could account for around 40% to 50% of our total revenue. However, as our external sales drop, we will focus more on profitability rather than volume since we won't be chasing big volumes anymore. Instead, we will work on growing the other two segments. Of course, we hope profit growth will accelerate. As for the 2030 gross margin, it's very hard to give a long-term number now. But looking at our transformation over the past few years, our margin improvement is speeding up. Last year, our net profit was in the positive range, though some of that was from non-op income. In the future, we aim for positive profits from our operations, and we hope our past capital investments to generate strong cash flow. When it comes to free cash flow, we also want to give back to our long-term shareholders. This will create a positive cycle for the company's operations. That's why we are focusing more on profitability instead of revenue growth. Revenue may not grow super fast, but profit growth should look -- should pick up speed. As for the other three AI-related products, CPO is still in the development stage. Currently, the industry expects CPO for optical communications to mature in 2 or 3 years. So it is not contributing to our revenue yet, but we are already involved in industry alliances and leveraging our group strength to play a key role in the future. And we are also creating synergies across the organization. For the transparent antenna, this is the first time that we showcased it, and it's already impressed a lot of automotive OEMs. They think it's the right solution, so commercialization should speed up. We have been developing satellite antennas for a long time. Therefore, we have the process and mass production capabilities. As for waveguide application in AR glasses, we've already been working on nanoimprint technology for a while, and it's pretty mature. We're working with customers on different projects. And within the next 2 to 3 years, these should start contributing to revenue. The key is what we are -- is that we are well positioned in AI and future growth areas. And we should be able to keep up with the trends and bring in more new businesses. And these new revenues should come with stable or even strong margins. So this should be able to boost our margins. Julia Chao: Brad from BoA, please. Brad Lin: I have two questions. First, about this year's outlook. We've seen TV demand is better than expected lately, especially with all the sports events driving restocking. Paul mentioned earlier that you expect TV growth this year. But does that already factor in the possibility that TV demand might soften in the second half? In addition, besides the memory price hikes possibly affecting demand, gold prices have been very volatile and mature foundry prices are also rising. If driver ICs face similar issues, should you stay optimistic about the second half margin because of mix improvement or be more cautiously optimistic? That is my first question. Sorry, that was a bit long. Can I go on? Okay. My second question is about CPO with micro LED. We know that CPO is a big trend, but most current solutions use indium phosphide or gallium arsenide lasers. How does your micro LED solution compares to laser-based ones? And how is your engagement and validation with optical communications and AI system companies since they need to get involved early. That's all from me. Unknown Executive: Thank you, Brad, for the questions. Frank already covered the full year outlook in his remarks. So all the factors have already been factored in, including TV price adjustments. For IT, we are being very cautious about memory shortages, which could dent demand, and rising memory prices will also take a toll on the industry. It's not just about memory, PC boards and metals are also getting more expensive, which will push up costs and eventually push up end prices. We are watching closely to see if this will impact end demand, and we're being very cautious. Overall, we still expect growth each quarter. In addition to display, our mobility and vertical solutions are both expected to see double-digit revenue growth this year, as Frank stated in his remarks. So we are confident about sequential growth. But we are tracking all these external factors weekly and adjusting as needed because rising material costs will squeeze profits. And if we can't absorb them, we will have to pass them on. As for micro LED versus laser, micro LED is more for short distances like rack-to-rack or server-to-server connections and lasers are used for longer transmission. The applications are different. However, right now, VCSELs are more mature. But for massive data transmission, server-to-server and rack-to-rack and where power consumption is extremely huge. That's why everyone is pushing for optical communications to move into this space. Even though the distance isn't as long, it's enough for data centers. That's why there is so much focus on optical communications and micro LED playing a key role. Plus with FAU, fiber assembly units, you can boost bandwidth and lower power consumption for data center links under tens of meters. Unknown Analyst: Becky from Yuanta Securities. Thank your for taking my question about Mobility Solutions. The management had a pretty positive outlook. Could you share more details about important new projects this year and next and their contributions? Secondly, for verticals like retail, education, enterprise, health care, et cetera, which end market is growing fastest? Fu-Jen Ko: Thank you for your questions. For the first question, the most representative Mobility Solution projects last year and this. As we mentioned, every year in the past few years, the new projects that we secured, projects that will contribute to AMSC's future revenue to our three years down the road have always been much larger than the same year's revenue. This is a key reason that we can keep forecasting double-digit growth. Last year's big highlight was getting a manufacturing base in North America or more specifically Mexico post the BHTC acquisition. While we are working on the integration of the two companies, we are integrating AUO Display expertise with BHTC's mechanical control technology, allowing us to partner with automobile OEMs to submit strong proposals. There's a big trend here. Two years ago, everybody talked about digitalizing the cockpit, removing all the knobs and buttons and going for full touch. That boosted our panel value, and we benefited. However, safety concerns remained. Leading governments to require physical controls again. Therefore, combining physical controls with displays is now a very important core capability of AMSC, and it's driving momentum in our proposals to automotive OEMs, especially with our North America and Mexico operations. Thanks to USMCA tariffs, our North American orders last year were multiple times more than the previous year. That is a product trend plus a tariff-driven result. As for verticals like health care, retail, enterprise and smart manufacturing, which one is growing fastest? I can provide you a reference point based on industry data. Smart retail is leading the pack with annual growth rates over 20%. ADP has invested actively in this area, not just with industrial panels for kiosks and post systems, but also with ESG solutions. Products like aecoPost, EcoTech and Edge AI solutions are key to tapping into smart retail's 20% plus annual growth. These are also crucial for AI adoption, as Paul mentioned earlier. The second fastest-growing vertical is digital transformation in smart manufacturing, which is what our two new companies, AET and ADT focused on. Globally, companies need to balance their digital and AI adoption with ESG considerations. Our solutions aren't just in Mainland China or Taiwan. Actually, we've seen great results in Southeast Asia, too. For example, ADP and AET helped Taiwanese partners with digital ESG transformation in Vietnam. So this is the two growth drivers that I would like to share with you. Julia Chao: Thank you, Frank. In the interest of time, our investor conference concludes here. However, ours SOPs, including transparent micro LED smart cockpit, cholesteric LCD HiRaso and the aecoPost e-paper signage at the entrance will stay on site for a while. Feel free to check them out and our staff will be there to explain to you. If you have any other questions, please feel free to contact us after the event. Thank you all for your participation. We'll see you online next quarter. Thank you.
Ignacio Artola: Hello, and good morning, everyone. Welcome to Fagron's Full Year 2025 Results Webcast. I'm joined today by our CEO, Rafael Padilla; and our CFO, Karin de Jong. We will open the floor for questions at the end of the session. And with that, I will hand over to Rafael. Rafael Padilla: Thanks, Ignacio, and good morning all. We are very pleased to report another outstanding set of results with full year revenues reaching EUR 952 million. This translates into a 9.1% organic revenue growth at constant exchange rates, driven by all regions and segments. Profitability increased 10.9% to EUR 193 million, which represents a margin of 20.3%, 30 basis points higher than in 2024. Main contributors were our operational excellence initiatives and a positive sales mix. As you already know, during the year, we also accelerated our M&A efforts and announced 12 transactions across our regions and segments, always maintaining a disciplined approach. Additionally, we have proposed a dividend of EUR 0.40 per share, reflecting a 14.3% increase compared to last year. Looking ahead, in 2026, assuming no major changes in current market conditions, we expect mid- to high single-digit organic sales growth at CER and a slight improvement in profitability year-on-year. Going on to the regions. In EMEA, we had a solid performance. Brands and Essentials benefited from underlying demand, improved availability and our diversified footprint, while compounding services was supported by demand in both sterile and non-sterile compounding as well as new customer wins. In LATAM, we benefited from strong execution in Brazil. Innovation and targeted commercial actions supported growth. We have also received clearance from the Competition Authority, CADE for the acquisition of Vepakum. Finally, in North America Pacific, we continue to see strong underlying demand. Brands and Essentials improved on the back of operational improvements and availability, while Compounding Services continued to benefit from demand trends in both health and wellness and hospital outsourcing. Also, very happy to share that our expansion projects in Wichita and Las Vegas are progressing as planned. Turning to M&A. Our strategy remains consistent. We acquired businesses we know well, often partners where we can strengthen local positions, enter new markets or expand product capabilities. During 2025 and year-to-date, we announced 12 acquisitions across all regions and segments as well as completing 2 further deals we had announced previously in '24. As you would have noted, most of the deals we announced in '25 have already been completed with Injeplast, Amber and Vepakum pending completion. We all remain disciplined and have a clear integration playbook to capitalize synergies in an 18 to 24 month period, being the key levers, procurement, portfolio breadth, operational and commercial synergies. And with that, Karin, for the financial review. Karin de Jong: Thank you, Rafa. Good morning, everyone. And let me walk you through our full year 2025 results and share more details about our 2026 outlook. In 2025, revenue increased 9.2% on a reported basis to EUR 952.2 million. In organic terms at constant exchange rates, the group grew 9.1%. Gross margin increased by 30 basis points to 62.6%, supported by sales mix and procurement and manufacturing savings. Operating expenses increased to support volume growth. At group level, our profitability expanded 30 basis points year-on-year to 20.3%, demonstrating our improved operational capabilities and synergies from acquisitions. Moving on to the next slide. The bridge shows our revenue development for the full year. EMEA delivered 4.2% organic growth at CER, supported by broad-based demand and contributions across segments. Latin America delivered 14.1% organic growth at CER, driven mainly by strong performance in Brazil. North America Pacific delivered 10.8% organic growth at CER, supported by compounding services and continued progress in Essentials. M&A contributed to reported growth, while FX was a headwind. On the right side in the table, you can see the nonrecurring items. They were limited at EUR 0.3 million, mainly acquisition-related costs, partly offset by an earn-out release. Depreciation and amortization increased, mainly reflecting purchase price allocations from acquisitions. And the financial result was a cost of EUR 28.6 million higher than last year. This was mainly driven by an increase in currency differences of EUR 1 million due to volatility of the U.S. dollar throughout the year. The remaining is spread of the different categories such as interest on leasing and other financial costs. The effective tax rate was stable at 22.2% versus 22.3% last year. And as a result, net profit increased to EUR 91.5 million and earnings per share increased to EUR 1.25, a 13.6% increase on the prior year. Moving to EMEA. So revenue increased to EUR 355.1 million with 4.2% organic growth at CER, supported by underlying demand and the contribution from acquisitions. REBITDA increased to EUR 77.9 million and the margin improved to 21.9%. The margin improvement reflects operational excellent benefits and sales mix. And as highlighted by Rafa, we also strengthened the region through acquisitions. Turning to LATAM. Revenue increased to EUR 183 million with 14.1% organic growth at CER, partly offset by FX. Performance was supported by strong underlying demand and new product launches, particularly in brands. Brands revenues this year represent 38.1% of LATAM's total revenue, an increase of 360 basis points. REBITDA increased to EUR 33.6 million with a margin slightly higher at 18.3%. The margin in the second half of 2025 was 19.2%, reflecting the seasonality effect in this region. We also made progress on M&A execution, firstly, with the completion of Purifarma, and we also received CADE clearance for Vepakum and expect that to complete soon. Injeplast is still to be completed. Moving to North America Pacific. Revenue increased to EUR 414.1 million with 10.8% organic growth at CER. Brands and Essential performance remained strong and was mainly supported by improvements in product availability and supply chain. Compounding Services remains strong despite the absence of GLP-1 shortages during the second half of the year. The higher operating expense is mainly related to the need to accommodate the growing volumes coming from high market demand, while REBITDA margin expanded by 20 basis points to 19.7% as we continue to improve our operational excellence activities. We also expanded the business through the acquisitions of CareFirst and UCP and also including entry into Australia through Bella Corp. Looking at our cash flow now. A high level of cash conversion remains as one of the main strength of our business model. Operating working capital increased by 10 basis points to 12.1% as a percentage of annualized revenue. Operating cash flow increased by 41.3% to EUR 155.3 million. Normalized CapEx adjusted for one-offs ended at 3.1% of revenue, in line with our guidance. And lastly, free cash flow conversion reached 65.3%, reflecting continued discipline on CapEx and working capital. Our net debt evolution for the year shows a modest increase to EUR 283.3 million, reflecting acquisition and investments during the year. Despite this, leverage improved with net debt to EBITDA at 1.2x, and we remain well below our internal threshold of 2.8x. This keeps sufficient headroom to pursue opportunities while maintaining a prudent balance sheet. Finally, our outlook. For 2026, assuming no significant changes in market conditions, we expect a mid- to high single-digit organic growth at CER. We also expect a slight year-on-year increase in profitability with the second half expected to be stronger than the first half. CapEx is expected to remain at around 3.5% of revenue, excluding one-off projects, and our midterm guidance remains unchanged. And with that, I will hand back to Rafa for the conclusion. Rafael Padilla: Thanks, Karin. 2025 shows again the resilience of our business model consisting of predictable growth, strong cash generation and continued progress on quality and operational excellence. We also accelerated M&A in a disciplined way and are now heavily focused on integration and value creation. This performance builds on a long-term track record with EPS growing at around 9% CAGR since 2017. We remain confident in the underlying drivers of our end markets and in our ability to deliver the midterm targets. With that, let us open the line for questions. Operator: [Operator Instructions] The first question comes from Michael Heider from Berenberg Bank. Michael Heider: Congrats on the strong execution. I have 4 questions, please. First of all, your growth accelerated in the fourth quarter in North America, so in the U.S. market, despite a stronger headwind from the GLP-1 revenues. Can you give us a little bit more light on what were the main drivers here, please? Rafael Padilla: Yes, sure. Michael, thanks for confirming the results. We're also very happy. Regarding the U.S. growth, you see that has been across all the segments. Of course, we're starting with Anazao where we have the headwind. The core business also grew. So that shows the resilience of the business, of course, and the trend we have spoken also in your last conference of the prevention and lifestyle products. B&E was also -- we also saw good results ahead of our own expectations as well. We have been improving our operations and supply chain. As you also know, we also discussed this one. And then regarding FSS or the hospital outsourcing, we also explained during our Q3 trading update call that at that time, we're adding the EUR 25 million extra capacity that door-to-door, right? Therefore, in Q3, we had the lesser growth at FSS, hospital outsourcing. And with the visibility we have, we would see a strong Q4. Thanks a lot for the question, Michael. Michael Heider: And then secondly, on the capacity expansions, can you elaborate what -- where the focus is in 2026? And how much CapEx can we expect on that? Rafael Padilla: Yes, sure. That's a very important question for this year and also for 2027 because here, we have announced -- last year, we announced the expansion across the street. That's the new capacity that we're getting will be online during 2027. What we explained in Q3 was an extra capacity added wall to wall, so upgrading the current facility to support growth. And for 2026, as we also have explained many times, there is this new opportunity for us as the B2A where a 503B can compound for a 503A, that would be the same as we have here in the Netherlands with the [indiscernible], where a compounding center can compound for other compounders. And of course, as we can understand, the sterile products are the most important because of the difficulty made and all the quality requirements needed and investments. Of course, therefore, we see a good opportunity for us, of course, at the B facility in Vegas, but also at the B facility in Wichita because now we started bringing the portfolios together, having R&D cost, quality control cost, streamlining also the operational part on our [ 503s ]. Karin de Jong: Yes. And maybe to add on that on the financials for the expansion project. So we had 3 projects, the Las Vegas expansion, the Wichita expansion and the Netherlands. In total, roughly EUR 73 million expansion CapEx. In 2025, the amount spent was limited to a couple of million. And then for 2026, we expect to spend approximately 75% of that amount and the rest in 2027. The timing, however, is depending on ordering and billing. So it could deviate a bit. However, it does not indicate any delay in timing. So we remain on track to complete the investment in 2027, which was in line with the original plan. Michael Heider: All right. Then on the -- on your tax rate, it was stable in '25 versus '24. Now looking at your acquisitions, do you think there will be an impact going forward? So maybe with more exposure to the Brazilian market that we have to expect a slightly higher tax rate going forward? Karin de Jong: Yes. So we were around 22% this year and last year. We are funding part of the Brazilian acquisitions in the U.S. to mitigate a bit this risk. So we expect a slight step up, but not a major one going forward. Michael Heider: Okay. And then last one, just generally, I mean, you had a fantastic run on acquisitions with 12 acquisitions announced. Do you see any limits to that on your capacity to integrate so many acquisitions? Karin de Jong: Yes. Indeed, we did a number of deals in 2025. They were all spread across the different continents. So we have a global coordinator. So we have an M&A lead, and we have the regional teams that are responsible for the integration, and they are supported by the global back office and roles such as finance, tax, treasury, IT. The plan -- so the integration plan is already prepared during the acquisition process and discussed with the area leaders and executive leadership team to accelerate the integration as of day 1. So important levers, as Rafa mentioned, for the synergies are the procurement and the product breadth, and we have an experienced team to execute on this. So we are very confident that we are well prepared to integrate the acquisitions. Operator: The next question comes from Stijn Demeester. Stijn Demeester: Ignacio congrats on the results from my end. I have 3. In your outlook, you guide for a slight profitability improvement. I think we are all banking on somewhat lower margins because of the dilution of Purifarma. Does it mean that you see cost synergies in Brazil more positive versus earlier? Or has it to do with an offset from higher-margin acquisitions such as Vepakum and maybe a bit of light here. Then the second question, given the strong underlying growth in the U.S. Compounding segment, will there be a point in the next quarters where you will be pushing against the limits of your capacity in Wichita before the new capacity provides additional headroom in 2027? And then, related to the previous question, it was indeed a very busy year for your M&A team. Could you imagine that at one point, there is a change in your capital allocation policy, whereby you would, for example, for a buyback over M&A considering your sufficient free cash flow and your underlying valuation at this point? These are my questions. Karin de Jong: Yes. Thank you, Stijn. Maybe to start with the guidance on profitability. So yes, in profitability, we indeed saw a nice step-up in 2025 with 30 basis points, which was driven by operational excellence, the operational benefits and innovation. While acquisitions are expected to have a modest dilutive impact in 2026, as synergies are realized, we anticipate a slight improvement in profitability versus 2025. We also expect a stronger second half compared to the first half, reflecting the phasing out of the GLP-1 headwinds, as you all know, and the integration of newly acquired businesses. And maybe to break it down per region, LATAM. LATAM will have a small dilutive impact due to the acquisition of Purifarma. This will be partly offset by Fagron. So from H2 onwards, we expect synergies to start contributing to margin improvement at Purifarma. If we look at North America, North America will be slightly impacted by the UCP acquisition, though the overall effect on the margin development is expected to be limited, and North America will continue to benefit from operational leverage and operational excellence initiatives. And therefore, we expect a margin improvement in 2026. And EMEA, I said, delivered a very strong performance in 2025, and we anticipate to be broadly in line with that or slightly improve compared to 2025 in 2026. So that's basically on your first question. Rafael Padilla: Sure. On the second one, as well. You are totally right. And this is also what we explained during the Capital Markets Day last year that Wichita is coming to its max capacity. Therefore, we are at least EUR 25 million extra capacity for '26 and the first semester of '27. And then during 2027, we will see the new capacity going online. As we said, we are totally on track for timing and also on budget. So that's good to remark. And of course, we have the Boston facility. And this one is giving us the possibility to capture the underlying trend that we see in the hospital outsourcing. And that, as you know very well, is because of the high-quality standards that are being asked in the industry and also the B2A opportunity that we see now, that's when I repeat myself of the first question, when a 503B can compound for [ 503A ] mainly on sterile products. Karin de Jong: Last question on the capital allocation. So our capital allocation is focused on growth. organic growth and inorganic growth. And indeed, we had a very good year on M&A in 2025. We have a solid pipeline to continue that M&A strategy. We see opportunities in the different regions, in the different markets, and we want to be able to act on those. So for now, our capital allocation strategy will not change, and we are focused on that growth. We did have a small dividend and a small dividend increase also, and that's reflecting of the strong performance we had on our cash flow and our earnings. Operator: The next question comes from Thibault Leneeuw from KBC Securities. Thibault Leneeuw: The results. First question is with respect to EMEA and the compounding services. You reported 1.9% organic growth at CER. You talked about volume growth in sterile and non-sterile business. So does that mean that there was some pricing pressure? That's the first question. Rafael Padilla: Yes. Thanks, Thibault. And what we have explained, if you recall years ago that -- how normally -- and it's, of course, that situation, the Netherlands is accounting for more than 90% of this performance. So how does it work? There is a product portfolio in compounding. We have the product portfolio, the biggest one in the whole industry after so many years, of course. And some of the bigger compounds are getting registered, so then we cannot sell. This we explained, if you remember in 2021 at that year. And then this means also that we introduced new compounds, and we also registered some of them. So it's a dynamic portfolio. So all in all, you see that the almost 2% demand comes from this dynamic portfolio, some products coming in, some products coming out. And also, as we explained, I believe it was last year also, there was one question regarding this topic is that prices in this market are somehow flattish. So therefore, you see that all the growth that you see from compounding services in this region comes from volume. Thibault Leneeuw: Very clear. And maybe as a small follow-up, maybe it has been explained in the past, but would be gentle to remind me is for North America, the Compounding Services there, when you look at the growth outlook, has there some price increases been included in the long-term outlook of like the low to mid-double-digit revenue growth? Is there some price increases included in that? Or do you basically assume stable prices in that outlook? Karin de Jong: Yes. So we -- historically, where growth in the U.S. and maybe in Compounding Services is driven by volume. So we are capturing market share, and that was historically the case. Currently, we see that it's more volume than price, but price is a very small part of that growth level, and that's also embedded in our growth numbers going forward. Operator: The next question comes from Usama Tariq from ABN AMRO ODDO BHF. Usama Tariq: Congratulations on the strong results. I have just 2 questions initially. The first being, could you clarify on the cash outflow expected, especially with regards to M&A in 2026. So you've already indicated the CapEx. Does that include it, but that's I think that is only with regards to the expansion CapEx. So any pointer on the amount of cash you expect with regards to M&A next year? And secondly, do you see any impact with regards to the Trump health care plan? I do understand that Fagron is outside the insurance policy-based mechanism, so 80%, 90% cash settled. Do you still see some positive or negative impact in the short to medium term because of policy changes? Karin de Jong: Starting with your first question, indeed, the answer that I gave on the previous question was related to the expansion CapEx. So if we now break it down with regards to the acquisition, so at the end of 2025, there's EUR 14 million at the balance sheet to be paid. And on top of that, as you know, we announced a number of deals in 2026, which also resulted in a cash out. And the cash out in 2026 is around EUR 80 million for those 3 acquisitions. So there are 3 additional acquisitions pending closing. That's for Vepakum, Amber and Injeplast, and that's roughly around EUR 70 million. So if we combine those amounts, then it's the EUR 150 million and the EUR 14 million that was still open. So that's EUR 164 million that has to be paid. And if we annualize the EBITDA of the acquisitions and look at pro forma net debt to EBITDA, including those, we would still be between the 2 to 2.5x net debt to EBITDA. So within our sweet spot and below our internal max of 2.8x. So we have sufficient room there, but also on the liquidity side, as you know, we have a new facility at the end of 2025, the U.S. notes for USD 125 million. So on the liquidity side, we're also good to continue our M&A strategy. Rafael Padilla: And for the second one, Usama, you are totally right. So there is no action on the policy because our business is out of pocket. So totally right. Operator: The next question comes from Frank Claassen from Degroof Petercam. Ignacio Artola: Okay. We'll try to add Frank. Let's continue with the Q&A. Operator: The next question comes from Eric Wilmer from Kempen Research. Eric Wilmer: I wanted to press a bit on the profitability guide, which indeed screens a bit confident perhaps. I believe your largest 2 acquisitions last year, which should add 5% of sales had a margin profile below the group, which you will now need to implement. And I hear what you say with regards to the H1 profitability commentary this year. But at the same time, I always had the impression that your Dutch compounding business is margin accretive which I believe saw a bit of a tougher Q4. So are you actually anticipating a change regarding the latter? And do you also see further room with regards to further operational efficiencies? Maybe some color on the latter as well to help understand the qualitative margin bridge from '25 to '26. Karin de Jong: Maybe indeed to start. So the acquisitions overall have a modest dilutive impact. We added the Brazilian Vepakum because we have CADE approval, so competition clearance for that acquisition. So that's added. That acquisition is above group average EBITDA levels. So that compensates partly for the dilutive impact for Purifarma. And then overall, the acquisitions, some are below, others are above. So in general, if you sum it all up, it's below group average. However, we do anticipate synergies coming in as of H2 on the back of the plans that we're having. So that's one on the acquisitions. If we look organically, we do expect to see benefits from the strategy that we initiated on operational excellence initiatives. So we already see that translated into procurement savings, so better gross margins. We see operational leverage coming through, especially in the U.S. where we continue our growth path. So on the back of that, we also expect the business, excluding acquisitions to make good progress in 2026. Ignacio Artola: Well, let's end the session. Thank you very much for your participation today. I will remain at your disposal should you have any further questions. Thank you very much, and goodbye. Rafael Padilla: Thank you. Karin de Jong: Thank you. Rafael Padilla: Bye-bye.
Louis Schmid: Good afternoon, and welcome to Swisscom's Full Year Results Presentation 2025. My name is Louis Schmid, Head of Investor Relations. And with me are our CEO, Christoph Aeschlimann; our CFO, Eugen Stermetz; and Walter Renna, CEO of Fastweb + Vodafone. Let us now start the meeting with the agenda for today on Page 2. As you can see, Christoph presents the first 3 chapters: achievements, where he dives into some of last year's highlights commercially, operationally and financially; strategy update, where he presents Swisscom's framework, lead, innovate, perform to grow free cash flow; and the review of our business in Switzerland, covering achievements 2025 and our focus 2026. Then Walter Renna, CEO of Fastweb + Vodafone, reviews our business in Italy. He will talk about the integration of Vodafone Italia and the industrial performance of our Italian business and its plans going forward. After Walter's part, Eugen Stermetz, our CFO, will present the financial result 2025, including the guidance 2026. And in the wrap-up chapter, some final remarks from our CEO, Christoph Aeschlimann. After the presentation, we will move directly to the Q&A session. With that, I would like to open the meeting and hand over to Christoph for his part. Christoph Aeschlimann: Thank you, Louis. Welcome to our 2025 results presentation. From my side, I will directly move to Page #4. So 2025 was quite an eventful year for the Swisscom Group, both in Switzerland and Italy. We put in place a new lean group organization, put in place a new group-wide sustainability strategy and for the first time in over 10 years, we have confirmed that we will vote at the AGM for a dividend increase of 18% to CHF 26 per share. Despite the integration of Vodafone Italy and the new debt financing, we were able to maintain a sector-leading credit rating of A2, which I'm very pleased about. We achieved strong results both in Switzerland and in Italy. In Switzerland, we were voted strongest telco brand according to Brand Finance. We won all service tests, both in shop hotline and on the network side. And with beem, we launched a successful new B2B connectivity portfolio. The highlights in Italy are obviously linked to the integration of Vodafone and Fastweb, where the integration and synergy realization is in full swing and ahead of plan. We also announced a round sharing agreement with Telecom Italia a couple of weeks ago, about which Walter will talk a bit more in detail. Another major milestone in Italy was also the alignment of the go-to-market portfolios. So while we still have 2 brands in Italy, with Fastweb and Vodafone, the B2C product portfolio has been completely aligned, and we have exactly the same offering on mobile and on wireline under the Fastweb and the Vodafone brand, which creates a great momentum in the market. Now moving on to the next Slide #5. We can see an overview of the net add trends, both in Switzerland and in Italy. I think we have a stable development in Switzerland. If you look at the postpaid side, we had plus 44,000 net adds in Q4, bringing us to 185,000 net adds on the mobile side, pretty stable performance throughout the year. Whereas on broadband and TV, we were able to improve the negative trends we had in Q1 and Q2 to still slightly negative in Q4 with minus 4,000 and minus 6,000 but very much improved compared to Q1 at the beginning of the year. If you combine the broadband evolution on the retail side with minus 29,000 with the performance on the wholesale side of plus 37,000, you can see that overall, we have a net positive effect on the broadband penetration in Switzerland. On the fixed voice side, we have the usual mobile fixed voice substitution, which continues and which we expect to continue also in 2026. On the Italian side, I will start with the broadband picture. So you can see that the wholesale side we have a very pleasing performance with Q4 being roughly at the same level as Q1 after a bit weaker Q2 and Q3, with a total of plus 221,000 net adds. And also on the retail side, we were able to substantially improve dynamics in the market with continuous slowdown of the B2C erosion over the 4 quarters, bringing us also to a net positive effect of plus 37,000 net adds in the market. On the mobile side, we have a slightly or a different evolution. As you know, we are executing a strategy change in the market and moving from a value to -- from a volume to a value strategy on the B2C retail side. And you can see some of the net add effects in Q4. So we have -- Walter will give you a bit more details on the execution of the strategy. So far, it goes exactly according to plan, and we are pleased with the results. The negative net adds are basically linked to 3 effects. We -- as you know, we have increased front book prices, which led to a slightly lower order intake. We are aligning back book pricing to front book pricing, which created some incremental churn effects. But the most -- so this brought us a bit more negative net adds on the B2C side. But the most important effect is actually the slowdown of TM9 contribution on the B2B side, where most of the SIMs of the TM9 government contract have been onboarded until Q3. And in Q4, there was no more growth coming from that contract. So now you can see mostly the negative B2C contribution in the overall numbers, whereas in Q1 and Q2, 3, there was still a positive counterbalancing of the TM9 ramp-up in the overall numbers. On Slide 6, you can see that we have achieved the guidance with a stable operating free cash flow in Switzerland and also stable operating free cash flow in Italy despite the transition year and many moving pieces in Italy. This is something we are especially pleased about. And Eugen will deep dive in great detail into the financial numbers. So I will not go through the revenue numbers on this slide, but we will do this later in the section of Eugen Stermetz. So I move on to the strategy update. I will go directly to Page #8. I think after the stability or transition year of 2025, where our main goal was to provide stable free cash flows, both from Italy and from Switzerland, we are now ready to grow free cash flow on the group level. We will do this with several means. We have a proven strategy and now a new scale in Italy. We will continue to invest in best network and services. We will continue to innovate mostly in security, AI and cloud. And we will, of course, perform in the market, striving to be the #1 customer choice in both countries, continue our transformation, both in Switzerland and in Italy to remain a high-performing organization so that overall, on the Swisscom Group level, we can generate growing free cash flows in this year, but also in the future. One word around our strategy. We have a proven strategy framework that we put in place a couple of years ago. It is centered around 4 pillars. First and most importantly is to consistently delight customers by providing best experience, best network, best hotline and great shops or shopping experience, I think this is really the key cornerstone of our success in both countries, while at the same time, constantly innovating and delivering new products and services to the market, being it in the core mobile or fixed but also in adjacent markets around energy, insurance or entertainment and TV services, which allows us to also be competitive in the future. And as you know, telco is also under price pressure. So achieving more with less and constantly driving operational excellence, delivering better quality service at higher automation rates with higher digitization is one of our key focus also to achieve further cost savings in Switzerland and in Italy. And at the same time, we are constantly upskilling our employee base so that we can continue to improve the overall performance of our employee base going forward as we have really high transformation work going on with the digital and AI transformation driving a lot of the change going forward. Overall, with this strategy, we can deliver on the group ambition. As you can see on Slide #10. We want to be a trusted leader in the digital life of our consumers and in the business of our SME and corporate customers. This is based on a couple of key cornerstones. As you know, we are very adamant on having the best networks because we do believe that either on the IT side, but also obviously on mobile and fixed side, you need the best networks as a basis of providing or having satisfied customers, both in B2C and B2B. On the B2C side, we are very much focusing on a premium positioning on the telco space. We have a multi-brand offering, trying to segment the market in the right way, whereas on the B2B side, next to the premium positioning, we are also focusing very much on a comprehensive telco and IT product portfolio centered around security, cloud and AI next to connectivity. Wholesale helps us in both countries to increase the utilization of our infrastructure assets. To get more out of the infrastructure that we are building with -- by leveraging additional brands, reselling our connectivity in different market segments. Overall, this will lead to rock-solid financials, leading to a long-term value creation based on stable free cash flows from the Swiss business, growing free cash flows from synergies in Italy, and this will allow us to deliver an attractive and growing dividend in the future years in line with free cash flow evolution. Next to delivering higher dividends to our shareholders, we obviously do not forget our bond investors. We also focus on a strong balance sheet, good rating and continue to delever the Swisscom Group balance sheet. Now one part of leading in both markets is also having the required scale to make the necessary investments. And you can see this on Slide #11, we have now achieved #1 or #2 position both in both markets and in -- both countries and both markets, mobile and fixed. I will not go through all the numbers. I think they're quite clear on the slide. But this allows us to have the relevant scale to drive investments in both countries and continue to improve customer experience. And we also have a very well-diversified revenue mix, both in Italy but also in Switzerland between the different segments, B2B, B2C and wholesale but also between telco and the IT side, which continues to grow in both countries. And I think this is an important aspect going forward also for the coming years, positioning Swisscom and Fastweb + Vodafone as the integrated comprehensive telco and IT player, delivering sovereign infrastructure and products to our corporate customers. On #12, you can see our ambition on leading on the network side. So you see that in 2025, we continue to build out FTTH in Switzerland and also increase our coverage in Italy. So interestingly enough, we have exactly the same FTTH coverage in both countries, at 56%. Our target in Switzerland is to continue the FTTH rollout and reach 60% coverage by year-end, with still the same ambition 2030, roughly 75% to 80% and our long-term ambition 2035, when we end the fiber rollout, of roughly 90% fiber coverage. In Italy, as you know, Open Fiber and FiberCop continue to roll out FTTH. This also increases the Fastweb + Vodafone FTTH coverage. If everything goes according to plan, the target is to reach 65% FTTH coverage in Italy by end of this year and roughly 90% at the end of 2030. Next to the FTTH side, we also continue to roll out 5G in both countries. So we also have exactly the same 5G+ coverage in both Italy and Switzerland standing at 89%. We target roughly the same percentages for next year with 91% coverage in Switzerland and 92% coverage in Italy with the long-term 2030 ambition of roughly 95% 5G plus coverage. In both countries, we are constantly winning network tests, demonstrating that we do indeed have the best networks for our customers. Networks is the basis of what we do. But obviously, you also need to sell and service our customers. So investing in service excellence and sales excellence is an important aspect of our strategy of delighting our customers. So in both countries, we continue to invest in our customer loyalty programs with Happy in Italy or Swisscom Benefits in Switzerland. These programs are highly appreciated by our customer base. And we will continue to add value to these loyalty programs going forward. We also continue to invest in our sales and care network to make sure that on -- it is of high quality, highest excellence but also expanding the footprint as we will see a bit later, especially on the Swiss side. We also have many or multiple brands in both markets, which we intend to continue to use as it is an important aspect of tiering the retail market and being able to offer premium products up to like the no-frills offering in the budget segments of the market. Next to networks and sales and service excellence, an important aspect of the strategy you've seen, is to continuously innovate and bring new products to the market. I think Swisscom and Vodafone and Fastweb are innovation powerhouses. We never stop bringing out new ideas and new products to our customer base. At the moment, the most important aspects of these innovations are centered around network renovation internally to make sure that we have state-of-the-art networks in the core in Italy and in Switzerland, and then a lot of it is centered around AI and cybersecurity, making sure that our customers cannot only connect but also connect securely. So this is done through the beem offering in Switzerland, for example, which we launched in the last year. And in both countries, we invest heavily on the AI side to provide sovereign AI infrastructure to the market. Next to this, we also expand our cloud and application offerings. And especially in Italy, we are focused on the energy market, which is liberalized, which allows us to grow on that side. And you have seen that we have already managed to win over 100,000 customers, which is an excellent result and very pleasing, also encouraging for this year as we expect quite a lot of growth coming from the energy space also in 2026. So you can see innovation is really at the core of Swisscom in Italy and in Switzerland, and we will continue to focus and invest heavily in these topics as we believe that this is the only way to constantly bring more value to our customers and also generate new revenues and compensate in some form or the other, the price erosion that is happening on the, let's say, classic connectivity in mobile and the fixed space. Another important topic everybody talks about is obviously AI, and we cannot conclude this analyst presentation without talking about AI. So AI has many important aspects. One of them is obviously generating new revenues with new product offerings. So for this, we have offerings in both markets that allow us to sell professional services, helping our customers using AI and implementing AI solutions. So we have offerings both in Italy and Switzerland to do this. We help customers working on LLMs, on new models, on tuning models. We rent model as a service, or we go up to the infrastructure level where we have an NVIDIA infrastructure in both countries, allowing to run AI workload in a sovereign mode. So you can really see that on the B2B space, we cover the full value chain from consulting up to infrastructure to really help our customers use this new technology. And hopefully, for us, this brings new revenue for the company. We also use AI internally for 2 purposes. One is delivering a better customer service at a lower cost, being it in network or in customer care, for example, but also to drive up and cross-selling churn reduction, churn prevention and stimulate sales with the right message at the right moment for the right customers so that we can trigger the best conversion rate in upselling and cross-selling and customer value management or customer base management, around which we are experimenting a lot with AI initiatives to drive sales in our core market segment, mobile and fixed. So we have overall 3 elements on the AI, which are important: driving sales on our existing offerings; becoming better and more efficient; and selling new AI dedicated services to our B2B customers, but also in the B2C space. Last but not least, on the innovation side, I want to talk about sustainability. Sustainability today, from my point of view, is not optional, but it needs to be very well integrated with our group strategy. So we really want to be at the forefront of sustainability because we believe that it not only is obviously good for the planet, but at the same time, it also helps us to drive business performance if we take care of our environment, but especially if we also take care of our society, about suppliers, employment conditions and act with the right governance. Especially behaving in a trusted, ethical way, which from our point of view, is absolutely mission-critical for our brand positioning in the market and being able to sell to our customers digital services like cloud, cyber or AI services, which are rooted in a deep trust that we treat the customer data in the right way, which is very tightly linked to behaving in the right way from a governance perspective. So you can see that the ESG topics tie very neatly together with our business strategy and is really sort of underpins or helps us to drive business performance by, at the same time, doing something good on these dimensions. So we are committed to continuing our path. For the first time in the history of Swisscom Group, we have a group-wide sustainability strategy, which we put in place now post Vodafone acquisition. So this is something I'm very happy about. And for the first time also, we have an integrated annual report, which tackles all the financial and ESG topics under a simplified CSRD framework. So you can also see that we are making progress on the financial reporting side, which I'm very pleased about. So we're coming to the performing side. So what will be the result of all of these actions we talked about or the priorities in this year. So for Switzerland, it is clearly managing the telco top line, slowing down the service revenue erosion by working on new levers with new products or the price increase we announced a couple of weeks ago. We continue to work on telco cost, aiming at delivering cost efficiencies again in 2026. And of course, we want to continue to grow profitably on the IT side. And overall, if we manage to execute these 3 priorities properly, we will have stable free cash flows from Switzerland in this year. On the Italian side, the most important topic is obviously to continue to drive the integration and capture the synergy potential that we announced when we signed the deal. And Walter will talk a bit more detail about how -- what we intend to do this year. We will continue the telco turnaround that we started last year to stabilize service revenue in Italy, both in B2B and the B2C space. And as in Switzerland, we will continue to scale the IT part of our business but also the energy business to create new revenues and go back to top line growth in Italy in the next quarters. Upon executing those 3 priorities, we will also then have growing free cash flows from Italy, so that overall, on the group level, we also have growing cash flows coming out of the group. This was it on the group strategy update. I will now move to chapter -- the next chapter, which is the business update in Switzerland. I will start with Slide #19, where you can see the 2025 achievements. So I think we really successfully reinforced our #1 -- or our position as #1 customer choice in Switzerland. We had a lot of activity around delighting our customers. We worked a lot on our branding, our positioning. We had a big brand update in the Swiss market, which we executed, with very positive feedback. We continue to expand our shop footprint to reach our customers even better, and we managed to win all the services, as I already mentioned before. At -- as we improved and delighted customers, we, at the same time, optimized our cost base. So you can see that we delivered another year of telco cost delivery of over CHF 50 million of cost savings that were delivered. And we started to work more intensively now also on CapEx efficiency that we continue to improve also this year going forward. Overall, we invested over CHF 500 million in the FTTH rollout, and we are fully on track to achieve our targets by 2030. And we are also focusing quite a lot on the fiber monetization, and you will see some numbers later on that we made really great progress, especially on the fiber penetration side. The IT growth continues. It was slightly lower than expected in 2025, but we continue to be committed to the IT growth and continue to invest both in the cloud and security space, bring out new portfolios to really drive also the revenue growth in this year. And what I'm really pleased about is that we were able to further improve the profitability of the IT business, and we also plan to further improve profitability in this year. Now what does this mean for B2C? You can see on the B2C, overall, we have like a dual strategy in the market. We need to defend our core market. At the same time, we attack with the second and third brands to overall keep the value as high as possible. You can see that the blended ARPU is still declining in Switzerland, roughly CHF 1. This is mainly linked to the fact that we still have a brand mix shift from the main brands to the lower brands with Wingo and Coop and Migros Mobile. Essentially, the prices on the individual brands are roughly stable. We have executed a price increase last year on Wingo, plus CHF 1. And you have seen that we announced now a price increase also on the Swisscom main brand, and we will see the impact of this going forward in 2026. Really, I think, highlight also on the B2C side is the increased fiber penetration, which went up by 7% last year. On the one side, linked to the increased fiber footprint, of course, that we built, but we are also very actively working on the copper decommissioning so that we can shift customers over to the fiber network wherever there is a fiber network and the copper network in parallel. And you can see the effects of this now going quite impressive uptake of plus 7%. This will be one of the main priorities also in this year, continue the rollout, continue penetration and counter the ARPU pressure with the best service, the best products so that we can keep the NPS high and churn low. This, you can see in the middle, we have quite a big NPS lead in the market compared to our competitors, and we continuously work on this to make sure that our customers continue to be happy, which they seem to be as we have record low churn. You can see on the right-hand side, 7.3% on mobile and 8.5% on B2B -- on the broadband -- sorry, not B2B, on broadband. And we continue to work on keeping this lower churn level, one, by customer satisfaction, but obviously also by extending things like the Swisscom Benefit program to make sure that the customers, which are with us, remain happy and loyal to the brand. Overall, we managed to win 100,000 RGUs, accumulated over the year. You can see that the second and third brand penetration slightly increased. On the mobile side, went up to 36%. And on the wireline side, we had a slight decrease of 17,000 net adds, whereas the second brand penetration increased also by 2 percent points to 30%. And we do expect a similar movement again in this year. Now on Page #21, you can see also some more information on the B2C business. We continue to grow in entertainment, sports and streaming. So we have another year of growth on the blue sports subscription side by plus 3%, and we will continue to invest in this adjacency also going forward in this year to make sure that customers not only buy broadband, but also TV and other adjacent services in the entertainment space. Something which I'm very pleased about as well is the launch of new AI offerings for consumers in Switzerland. So we launched Swisscom myAI, which is basically a sovereign ChatGPT for customers, which we launched a couple of months ago, and we were able to attract 67,000 users on this platform. So this year, our focus will again be to expand capabilities of this AI solution for consumers and continue to accelerate the growth and make sure that as many customers as possible start using our AI solution. So this year will not be so much about monetization of this offering, but rather growing the customer base, and then we will look into monetization a bit later down the road. Another key topic that we are driving this year is security as a differentiator. So we not only want to have the best network, but also the securest network. So we launched a couple of products like a security dashboard or identity monitor last year, and we will continue to launch new security features also going on this -- going forward this year to really make sure that security becomes like a new growth avenue for us. As you can see that last year, we were able to grow revenues by 4%, and we will continue to invest and launch additional security features for consumers going forward as we do believe that next to connectivity, having a secure connectivity is absolutely crucial for our consumers. The more they are in the digital space, the more they use digital services, the more cybersecurity and protection will becoming -- will be more important. And moving on to B2B on Slide #22. First, you can see ARPUs are down by minus 2%. So there is still quite a lot of price pressure in the market. This has 2 effects, I would say. One is really the competitive pressure in the market, both in corporate and SME, but also still ongoing technology shifts such as MPLS to SD-WAN, which allows customers to substitute the high-value connectivity with lower-end connectivity that basically drives down our average ARPU per product. The RGU base is roughly stable, slightly increasing overall. Whereas it's growing on wireless, it was slightly declining on wireline as we lost a couple of bigger corporate customers in 2024. And over the last year, these locations have been migrated that led to a slight decline on the wireline side in the last year. We talked already several times about beem, and I think we will talk about beem every quarter this year because it is really a key cornerstone of our new connectivity proposition on the B2B side, really unifying connectivity with cybersecurity. So we launched it about half a year ago. We managed to bring nearly 40,000 users and nearly 1,000 locations onto the new platform. We are very pleased with these numbers. They are ahead of our expectations. And we continue to drive sales now going forward in this year to really ramp up as much as possible the number of users and locations onto this new and very innovative service. And as you can see, there is quite a big market demand. There is good response we see from our customers, both on the corporate but also on the SME side. And we will continue to invest in this product, bring out new features, new capabilities, which are especially important to our bigger SME and the corporate space so that we can really fulfill the full breadth of cybersecurity offerings so that we can drive revenues with beem not only this year, but especially also in the outer years '27 and onwards. One important aspect to drive the beem take-up on the wireline side is the SD-WAN technical migration. So this is something you see at the bottom of the slide. We now stand at 67% of all wireline connections, which have been migrated from MPLS to SD-WAN. And we strive to complete this migration by end of this year, so reaching 100% SD-WAN base in our wireline business of B2B. This is also the necessary requirement so that you can move on to the beem offering, because on the beem side, everything is software-driven. So this is an important aspect that we will focus on this year so we can finish the technical migrations. And once this is done, also ARPU effects from MPLS, SD-WAN movement should start to fade out. You will obviously still see them in '27 as you have the year-on-year comparison with '26. But over the -- going forward, at least this sort of structural technology effect will fade away over time. On the NPS side, we had a successful year in '25. We have a great NPS, both in corporate and SME, and we're able to keep it stable overall. Now moving on to wholesale on Page #23. We are the leading wholesaler in Switzerland, and we want to defend this position. I think we are doing a great job on the wholesale side. We have high customer satisfaction with many, many customers that we are serving. What is important or especially important with regards to the fiber rollout is that we can continue to drive the access service revenue on the wireline side. So you see this on the bottom left of the chart. We had a 9% growth in wireline revenues, from the access side going from CHF 186 million to CHF 203 million in 2025. And we intend to continue to grow this access revenue as the fiber footprint continues to grow and as we continue to monetize our infrastructure. What is also especially pleasing is that on the wholesale side, we already have more than 50% -- or precisely 51% of all active connections are already on FTTH. 49% are on our copper network, and we expect this FTTH share to continue to grow throughout 2026. And what this means is that basically the service revenue you see this CHF 203 million are generated already by over half by the fiber side, meaning it is future-proof. It is protected also going forward. And I think this is an important aspect of making sure that the wholesale revenues we have on copper are migrated to the FTTH side as we continue to build out the network. Now next to revenue, obviously, cost is also an important topic in the telco space. So you can see on Page #24, what we are doing on the cost side. So we have many different levers that we are pulling on to decrease our cost base. So one of them on the -- in the service center side is increasing the near-shoring share of our workload. So you see the advancement that we made in the last year, and we will continue to nearshore more of the outsourced workload also this year to generate cost savings -- or like a factor cost savings. And at the same time, we are also working on the digitization of customer service, where we have very encouraging results on the chatbot side. So you can see the automation rate or basically the number of incidents that the chatbot can really successfully autonomously solve, which has gone up from 30% to 53%, meaning that we can serve much more customer incidents through the chatbot channel, making it a much more effective channel and allowing us to generate more cost savings in the future. Now with agentic AI and progress in AI, we do expect this 53% to further increase over the coming years and making this chatbot -- and also increasingly voice bot, so voiceifying the chatbot service and a much better and more effective channel going forward on the hotline side. We're also experimenting with digital features in shops. We are trying out or experimenting with new lean shop format. So we want to increase our shop footprint, meaning having more shops throughout Switzerland, but at the same time, decreasing our cost base in the shop side. So we do this by digitizing shops on one side, by having new leaner format. So one of them is, for example, we have like pop-up stores, which we only have on weekends in shopping malls. And so we are experimenting with different aspects to always optimize the cost of sales in the physical channel. We are not only doing this on the B2C side, we are also obviously working on workload or call center workload on the B2B side. So you can see at the bottom the achievements we have on the B2B side, workload reduction by simplifying our product portfolio. Moving to FTTH, we have less costs also on B2B. And overall, this allows us -- or allowed us to decrease the B2B telco cost base by 4% year-on-year in '25, and we will continue to work on our telco cost base also -- or B2B telco cost base going forward this year. Now on Page 25, you can see some highlights linked to the network, where we also focus on generating cost savings. So one of the structural cost savings that we will see also going forward is obviously the copper phaseout. So at the peak, we had 2 million copper -- active copper connections inside Swisscom. Today, we stand at 1.6 million active copper connections. That's minus 20% over the past 2 years. We reduced by 200,000 the number of connections in 2025 and expect a roughly similar decline also this year by, again, a drop of around 200,000 copper line. So you can see that we are making good progress on the copper phaseout side, and we are completely on track to achieve our phaseout target of 2035. We are not only working on the access networks. We're also working very heavily since many, many years, basically since I'm at Swisscom in 2019, we are working on modernizing our core platforms. So you can see that in 2019, we had 57 core IP optical platforms. We are now standing at 35 platforms, and we continue to modernize and phaseout older legacy platforms, and our ambition is to reach 18 core platforms within the next 2 years, meaning a 70% reduction compared to 2019. And this is obviously also generating continuous cost savings as we are able to turn off certain platforms, both in FTEs, but also electricity, maintenance costs, et cetera. So going forward, we are focused to deliver more telco efficiency. Our guidance for this year 2026 is CHF 50 million cost savings in Switzerland, working on the same levers as the past, network and IT simplification and phaseout, data and AI, leaner and more agile organization, factor cost optimization with near-shoring and more and more digital customer interaction on B2C and B2B. Now last topic on the Swiss side, B2B IT, on Page #26. Sorry, I just need to have a quick drink. So we are the leading Swiss IT provider in Switzerland, and we want to lever this position to unlock more growth. You can see that in 2025, we were able to grow plus 2%, which is slightly below our expectations. But last year was not an easy year in Switzerland on the IT side with all the tax uncertainty with the U.S., with macro -- other macro uncertainty, leading many of our customers to delay some of the IT or redimension -- some of the IT investments. So I'm pleased that we still managed to generate a slow -- small growth of 2% in these market conditions. At the same time, we worked on our cost base on the IT side. We improved our EBITDAaL margin to 6.5%, and we are intending to further improve this margin also going forward in this year. We do this by continuously also automating and digitizing service offering on the B2B IT side. And as I already mentioned before, we will continue to push the AI side and the private cloud, sovereign cloud offerings at the same time as leveraging our strategic partnerships with several different vendors in the IT space. Now to summarize all of this before my voice completely stops working. We focus on managing the telco top line, trying to slow down the service revenue erosion by growing wholesale -- the wholesale access by, at the same time, working on the best products and care. We will continue to generate telco cost savings with high discipline, both on OpEx, but also working on CapEx efficiency. And as mentioned previously, we are working on our IT side to, on the one side, grow the IT business and make it more profitable and achieving all of these 3 objectives. Overall, we will deliver stable free cash flows in 2025. Now Walter will explain to you how we will grow free cash flows in Italy. Walter Renna: Thank you, Christoph. Welcome to everybody also from my side. We are at Page 29. I'm very happy to say that through this has been a transition year for Italy, as Christoph said, but we are very happy about the results. Why? For 3 reasons. First of all, we delivered on promises, especially on synergies. You will see that we are ahead of the plan. We also delivered a stable free cash flow despite all the challenges of this year. And last but not least, we set the foundation for the future growth from this year onwards. So let me enter into the main achievements of this year. Of course, integration is the first one. We started very early in '25 to integrate the 2 organization. And now we have a fully integrated single team that is driving the business. We also aligned the go-to-market and the product portfolio of the 2 brands, Fastweb and Vodafone. And as I said, we have delivered -- over-delivered on synergies. This is very important for us because this shows that the rationale is confirmed and even reinforced. Another important strategic project for the year is the RAN sharing agreement with TIM, is a preliminary agreement, still subject to authorization, but it is extremely important for us because this will bring us additional value in the medium term. Why? For 3 reasons. First of all, this will accelerate the 5G rollout in the low-density areas, namely the towns with less than 35,000 inhabitants, therefore, will bring more value to our customer. A better service, a wide 5G coverage, so good for our customers. Second, this model allow us to be totally independent from a commercial and technical point of view, so we can bring our own innovation on those areas. Last but not least, again, the efficiency gains, because we'll save electricity, we'll save maintenance, and this will bring additional value to the company. As I said, the other priority for us was -- continue to be the stabilization of our telco service revenue. We have started the year with main KPIs going in the wrong direction, but we were able to change this trend all over the year. So we are very happy on how we are executing our value strategy. Value strategy, which means we bring more value to our customer, and we can continue to work with them with new products. But there is not only stabilization of revenues, we have worked also to develop new growth areas. So wholesale is one of those. Both on fixed and mobile, we are continuing to grow, and we'll discuss in a second. But also energy is growing very well together with the IT in the B2B market. Page 30, I will deep dive the integration. I said, for us, was key and crucial to start working together as Fastweb and Vodafone, so we achieved to have a single team already in place by mid-'25, and then we worked to align processes -- HR processes but also to set a new framework for the new culture of the company. So in '26, looking forward, we are working to optimize our organization. There are still areas of efficiency that we want to gain, but we need also to establish and implement the new winning culture that we are designing together with the old employees. Another important aspect is related to the integration of our product portfolio, but also of our sales force, both on fixed, mobile, both on B2B and in B2C. As you can see from the slide, already, all our shops have been changed to a dual branding image. So in all shops, you can find both Fastweb and Vodafone products. This is an improvement and a boost of the sales of the 2 brands. And then our operating model. Our operating model is changing. Since January this year, we have completed the legal merger between Vodafone merged into Fastweb. This will bring massive simplification for our processes. So we need to work along this line also in '26 for simplification of processes, consolidation of location all over Italy and also aligning HR policies for all our employees. Next page, synergies. As said, we are progressing very well. We are very happy about the progress on the synergies, especially on the migration of the faster mobile SIMs, the 4 million SIMs on the Vodafone network. This has enabled us to reach the EUR 200 million synergies up and running for '26. So we completed this migration ahead of plan. So we are very happy for what we did. We'll continue to work on synergies in '26. We need to work on fixed network because we need also to optimize the access cost by leveraging on the best-of-breed footprint we have in Fastweb and Vodafone, which will bring additional efficiency, but also new technologies to our customers. Another important element is that we are working on reviewing our tower strategy. The current terms and conditions of our contracts are not sustainable, especially in light of the telco market that is very competitive and with strong pressure on margins. So we will work on that front. We unfortunately cannot say much. As you know, this is a very sensitive topic. So please understand that we will not answer any further question on this topic. I can only say that, as usual, we try to work with our partner to find a win-win solution. But at this stage, we will investigate all the options that we have on the table to maximize the value for our shareholders. Another important piece of the synergies that we realized in '25 is the disentanglement or the in-sourcing of some services that are currently provided by Vodafone Group. So we worked very hard with our teams to define migration plans and to start executing on those. Just to give an example, we are very proud that at the very beginning of the year, we've been able to introduce our Wi-Fi 7 modem on Vodafone customer that is completely managed by us. This has brought simplification on processes and efficiencies on cost. So we will continue to work on new services to in-source, but we will also continue to collaborate with Vodafone Group where we see that there is a value in working together. So all in all, in '25, we overachieved the synergies by EUR 35 million, very happy about that. And we are on the right trajectory to reach the EUR 600 million at 2029. So now we are working on consolidating IT, on consolidating the networks and to further optimize the external spend. Page 32, B2C. As you know, consumer market is very complex, is highly competitive, but we decided to exit the volume strategy which focuses only on promotion. So we moved on a value strategy. Value strategy means bring value to our customer in a more-for-more approach. For this reason, we worked very hard on our product portfolio, on our pricing, to bring to our customers the best products on fixed and mobile. It's not only that, we also worked on quality. We are increasing the customer experience to our customers. And this has turned into a very satisfactory trend of the ARPU in outflow gap, which has been reduced by 60%, both on fixed and mobile during the '25 if compared to last year. So if you look to the customers, you see that on mobile, the customer losses are 2.7%, true, that you don't see improvement there. But to be honest, in that losses, most of them are related to low-value customers. We are talking about tourist SIM. We are talking about second SIMs. We've been able to keep and develop our customer base -- our high-value customer base. On the B2B, it's more evident the result of this strategy. As you can see, the losses on fixed are reducing quarter-on-quarter. We are very happy about this development, which again set the trend for 2026. Another important pillar of our value strategy is also to deliver transparent and simple offer to our customers. And this is extremely important because if you treat well the customer, then they will stay with you. And this is very evident if you look to the churn reduction in mobile and fixed, which has been very satisfactory to us. Last but not least, we continue to work on enhancing the customer experience. We have seen the NPS growing in all the brands, both on fixed and mobile, and this is crucial because customers start to understand that we deliver value to them, and they recognize our brands as premium brand with quality. If I look at '26, we need to continue on this trend. We need to continue to deliver value to our customer. We need to continue to deliver quality to our customer, to bring new products to our customers that are in line with their expectation. But it's also a matter of being transparent with our customer. This is the reason why we are continuing to align the front book and the back book prices to reduce the in-out spreads and therefore, also reduce the churn and then extend the convergence benefits because the more the customer buys new services, the more they are loyal. Last but not least, we need to work on optimizing sales structure. We need to work on increasing the NPS by continuing to improve the customer experience. And during the course of this year, we will also introduce new AI-driven tools, which will help us both on churn reduction but also on cross-sell and upsell of our services. On Page 33, we talk about B2B in '25. We know very well how to manage this segment. We put together immediately the best of the 2 in terms of product portfolio. So we can deliver the best of fixed, thanks to the Fastweb experience. We can deliver the best of mobile, thanks to Vodafone, experience and skills. We are combining all this and bring it to our customers. And this is extremely important because it's allowing us to gain traction in the order intake. Especially on the high-value customer, the order book is growing very well. This means that we deliver value to our customer, and they are starting to -- they are continuing to buy from us. The churn is also very important. So we started immediately to renegotiate the contracts that were going to expire. We did in advance, and we did with a different approach, which is a value approach. So we started to offer to them more value in exchange of a longer contract. So this is working because we see the churn stable. That you can see also on the RGUs that are growing on mobile, thanks to TM9. Pretty stable on fixed, thanks to this strategy. Also NPS for us remains key also in the B2B. We are #1 on fixed with the Fastweb brand. #1 on mobile, thanks to the Vodafone brand. We'll continue to work and bring innovation to our customers, also working on some initiatives like the mobile private network, which shows how we can deliver also complex project to our customers. On '26, again, we need to continue to work along this line. Order intake will continue to grow also in '26. We will continue to simplify our product portfolio in order to offer always the best products to our customers. We need to work on churn but also to optimize and maximize the value of our complementary public sector tenders. Again, also for B2B, customer experience is key. We'll introduce AI in the operations also in the B2B, and this will bring us additional value for this segment. Wholesale. For wholesale, was a great year '25, both on fixed and mobile. You see on this page, the growth that we did on fixed, over 200,000 lines, but also mobile, over -- almost 2 million lines added to our network, thanks to the CoopVoce migration on our net. This shows the superiority of our proposition, the quality that we deliver through our network. But as you can see, we are not only working on the network, we are also delivering operational excellence. You see a couple of KPIs that are improving significantly. The activation process is shortening and also the 1-day resolution is improving considerably. So in '26, we'll continue to grow in the ultra broadband market, leveraging on our strong customer base. We will try to drive up the FTTH because we see more value on those customers. And so we will continue to strengthen the operation on that front. We will also continue to work on the mobile. We would like to minimize Poste losses that will happen this year. And we are also working to find new customers. One of those is Sky that will launch in the course of 2026. Energy, another important key driver of growth for us, both on consumer and B2B. We launched energy in mid-'24. And now after 1.5 years, we are very happy about the development of this service, especially in terms of growth of customer. You see we are over 100,000, but we are growing also in terms of new acquisition. We did 141,000 acquisition in 2025. So we will continue to scale up this service, this business. We opened the Fastweb Energia offer to the Vodafone customer base. We still see space of growth on that front. We are also opening new -- continuing to opening new sales channel to Fastweb Energia. We are very happy about the development on the B2B, especially in the small and SOHO business, where we see still space for growth. So we'll continue to work to increase the customers on that front. But we will also work on the value creation as we want to evolve from a pure reseller towards a market operator. This will increase the margins that we do on those services. And energy is also very important to strengthen our convergent proposition because we will push more and more on what we call super convergenza, fixed, mobile and energia together. This will bring additional value, additional loyalty from our customers. B2B IT is another important driver of growth in the B2B market. We are working on 3 main products. One is cloud. Over the course of '25, we have invested in building a strong product portfolio which is based on sovereignty but also on the capability to offer a multi-cloud proposition to our customer. So as you can see from the picture, we have our own proposition, FASTcloud. It's 100% built from us. So it's bringing sovereignty 100%, but we have also a significant partnership with AWS and Oracle that are growing very well in the cloud market. Cybersecurity is another important element of our proposition. We offer network security but also cybersecurity services to our B2B customers. We will introduce AI also in that front to enter also these SoHo/SME market, where you need more automation in order to have a proposition that is compelling with this segment. Last, AI. AI is key, as Christoph said, in our strategy. We have developed internally in Italy an end-to-end solution for our customers from the infrastructure, we have a supercomputer in Milan, which we can leverage. We have our own LLM models. We are developing new application on top to that. We want to bring all this to our customer to offer them a sovereign proposition but also compliant with all the regulation in Italy and in Europe. This business is developing very well. As you can see, we have over 25,000 licenses sold in '25, mostly to SoHo/SME, but we are very happy the result of this new segment. So in '26, we need to work to expand the services to continue to grow on that front and to bring more value to the overall company. Last slide from my side. Again, we are very happy about what we did in '25. We are working very hard to integrate 2 big companies. We are now already have a single organization working. We need to have a single culture, a successful culture and a future-proof operating model. This is the focus of this year. But we need also to accelerate on synergies, ramp up. The target of this year is EUR 300 million. We are fully on track to deliver on that. So we are -- we will deliver on that front. Second priority is to continue the telco turnaround. You have seen KPIs changing direction in the right direction. So we need to continue to execute our value strategy, and we need to continue to grow on the wholesale business despite the losses of Poste. Last but not least, again, scale growth, thanks to energy and IT, new businesses that are growing very well. We have a good product development in place. So we think that with these 3 pillars, we can continue -- we can start to generate growth in the midterm. Thank you very much, and I leave the floor to Eugen. Eugen Stermetz: Thank you, Walter. Hello, everybody, from my side. Let's move on to the numbers, Page 39, maybe a sentence or 2 at the start. Christoph mentioned it, 2025 was a new chapter in Swisscom's history, from a financial point of view, that chapter made for very pleasant reading. So I'm quite happy to present these numbers today. All the numbers that we are going to see are in line with guidance and in line with previous Capital Markets communication. We delivered what we promised at the outset of the year, stable free cash flows from Switzerland and a transition year in Italy, which incidentally also delivered stable free cash flows from Italy. So we are very happy with the results. Happy to turn the page to 2026, to grow free cash flows but before we do so, let's dive into all the results of 2025 in the appropriate detail. As usual, I'll start with the group overview and then deep dive into the segment Switzerland and segment Italy. So let's start with revenue at group level. Revenue was CHF 15.048 billion, fully in line with guidance. CHF 310 million down year-over-year, CHF 105 million of which were due to currency effects. So net of currency, revenue was down CHF 205 million, CHF 108 million out of which from the segment Switzerland, mainly reflecting lower telco service revenues, CHF 77 million lower in Italy, reflecting, on the one hand, lower telco service revenues but on the other hand, compensating higher revenues from the IT business, from the wholesale business and the energy business. On the level of EBITDAaL, CHF 4.984 billion, also fully in line with guidance. On a reported level, down CHF 60 million. On an adjusted level, down CHF 100 million. I will cover all the adjustments in individual segments. It's easier to explain in Switzerland and in the Italy segment. So Switzerland was down just CHF 27 million EBITDA on an adjusted basis. That's the net of telco service revenue down on the one hand and cost savings on the other hand, and the positive contribution from the IT business, Italy was down CHF 54 million. That's the net of the impact of the telco service revenue decline but also synergies already kicking in, starting mainly in Q3 and then accelerating in Q4 and also the result of the very pleasing wholesale growth that we already heard about. We have a jump in Q4 that you see there with plus CHF 41 million. That's partly driven by synergies, but not only, and I'm going to explain it later when I talk about Italy. . I'll move on to Page 40, which covers CapEx and operating free cash flow on group level. So CapEx at group level was CHF 51 million below prior year. On an adjusted basis, CHF 102 million below prior year, both in Switzerland and in Italy, we had some onetime CapEx item in 2024. So that helped us together, obviously, with the usual cost discipline to deliver lower CapEx in both countries. Obviously, in Italy, there was also integration CapEx, which we are going to talk about later, which is shown in the adjustments. But on an adjusted basis, CapEx was down. Now on operating free cash flow, with EBITDA down and CapEx down as well, we were able to deliver stable operating free cash flows both reported and adjusted. In Switzerland, EBITDA is slightly down, CapEx slightly down, stable operating free cash flows and the same in Italy, EBITDA down, CapEx down and stable operating free cash flows. . Now let's dive into Switzerland, Page 41. Revenue down CHF 108 million, B2C minus CHF 24 million. So we had lower telco service revenue in B2C of minus CHF 52 million, but higher hardware sales, which compensated partly at a hardware device push in the market in the fourth quarter. And this is why in Q4, you see a slightly positive number on revenue. B2B down CHF 80 million year-over-year. There is obviously a telco service revenue component to that of CHF 70 million. But that revenue decline is at least partly also by design because we also have lower hardware revenues as we try to avoid having revenues with 0 margin and focus on the higher-margin business, a strategy that we already explained a couple of times over the course of the year. And then there was another positive effect compensating partly the service revenue decline, which was moderate growth in the IT services business. On wholesale, plus CHF 4 million doesn't look like much. But behind that, there is steady growth in the wholesale wireline business, Christoph showed the impact before. This was masked somehow by smaller leased land businesses and mobile back holding and in particular, in the fourth quarter, also some lower termination revenues. So there are always some volatile elements in the wholesale revenue, but the underlying trend, which is important is the growth in the wholesale wireline business, in particular on FTTH. Now EBITDA in Switzerland reported plus CHF 33 million on an adjusted basis, minus CHF 27 million in between 2 adjustments of CHF 60 million. Now we had sizable adjustments over the course of the year, which I explained in the individual quarters. Most of them are a wash in the end. So what shows up in the end here is plus CHF 60 million compared to prior year is exactly the transaction costs in relation to the Vodafone acquisition that we booked in segments Switzerland in the prior year. Obviously, there are no such transaction costs anymore in 2025. So we have a positive year-over-year effect that shows up in adjustments. So if we focus on the adjusted numbers, B2C, first, minus CHF 19 million EBITDA. That's due to a service revenue decline of minus CHF 52 million, which we could compensate partly by cost savings, indirect cost savings, but also lower subscriber acquisition costs softening a bit growth from the telco service revenue decline. In B2B, EBITDA are down CHF 44 million. That's also due to the service revenue decline. On the one hand, we had some cost savings and in particular, we had a small positive contribution from the IT business. Wholesale is up in line with revenue and Infrastructure & Support functions segment. ISF, up CHF 32 million. There is a number of cost savings in there, obviously, from workforce savings, IT cost savings, maintenance and energy savings. I'll dive into the Swiss P&L next on Page 42. On the top left, you see the telco P&L with the service revenue decline of minus CHF 122 million, minus CHF 52 million B2C and minus CHF 70 million B2B entirely as expected and as communicated already in Q3. You also see there up on the top left in the box, the plus CHF 53 million cost savings, which partly compensated the service revenue decline. Also the number completely as expected and also as expected and previously communicated, a small contribution only in Q4 of 2025. Together with some other smaller moving pieces, this yielded an EBITDA decline of CHF 40 million in the telco business that you can see on the top left chart. Top right, IT business growth of CHF 24 million in revenues year-over-year and a positive impact on EBITDA of plus CHF 13 million, which helped balance the Swiss EBITDA together with minus CHF 40 million from the telco business. This adds up to the minus 27 of the segment Switzerland that we looked at on the previous page. Now importantly, telco service revenue bottom left, there is actually not much to report, no news is good news. We are facing a very stable situation here. There are some variations from quarter-to-quarter, for example, in B2C, but overall, the situation is very stable. So I'll go directly to the outlook for 2026. We expect service revenue in Switzerland in the same order of magnitude as we saw in 2025. Yes, there is the price increase that we announced in January. But obviously, this price increase will have a gross effect from the price increase and after churn, a net effect. And as of today, we obviously don't know yet how big this net effect is going to be or how big the churn is going to be, number one. Point number two, important for you to understand the dynamics already in 2025, we had a non-insignificant increase or positive impact on our service revenue out of price increases. You see it in the B2C wireline ARPU column of this page, where you have a small sentence that says plus CHF 33 million value. So this is the year-over-year result in 2025, out of all the small targeted price increases that we already realized in 2024 and beginning of 2025. So in the dynamics from 2025 to 2026, yes, there is a new across-the-board price increase but we already had price increases in the past and the dynamics, therefore, we do not expect to change significantly. I'll move on to Page 43. CapEx, as I mentioned, slightly down in Switzerland with plus CHF 33 million. We spent as planned, CHF 500 million on the fiber rollout. And so with lower EBITDA and also lower CapEx, stable free cash flows from Switzerland on an adjusted level and reported level plus CHF 66 million. Let's dive into Italy. Starting with revenue. Revenue -- now that's all in euros, by the way. So revenue down EUR 81 million mostly due to B2C. B2C revenue was down EUR 100 million. There is a telco service revenue decline of EUR 160 million compensated, however, by the growth in energy that Walter mentioned before and by some hardware revenues that were growing as well. In B2B, down EUR 16 million year-over-year. There was also telco service revenue declining B2B of minus EUR 66 million, but the IT -- the growth in the IT business of EUR 42 million was able to compensate most of that. Very importantly, on wholesale, strong growth, both in wireless and in wireline, actually much more than you see here in the plus EUR 37 million total. So wireless and wireline together was about plus EUR 70 million, but we had some other wholesale revenues with practically 0 margin, which went down year-over-year, which we inherited from Vodafone. So you see the net effect of all these 3 positions here of plus EUR 37 million. Obviously, the margin impact of wireless and wireline will show up in the EBITDA bridge. To which I move now, EBITDA reported stable plus 1% on an adjusted level, minus EUR 57 million. Now the adjustments in between of plus EUR 58 million, that's mainly the decrease of OpEx integration costs year-over-year. You may remember that last year, at the end of the year, we already booked OpEx integration costs in the amount of EUR 176 million in connection with the termination of our MVNO agreements with WindTre and with Telecom Italia. This year, we also had OpEx integration costs of different sort of EUR 109 million. And so OpEx integration costs in '25 were actually below 24, and this shows up as a positive impact here in the adjustments column. So if we focus on the adjusted numbers, contribution margin, B2C, down EUR 93 million. That's obviously mainly due to the service revenue decline of EUR 160 million, but also importantly, synergies ramping up. So if you look at the Q3 and in particular, the Q4 numbers, so finally, after talking about the MVNO synergies for the last 2 or 3 years, we see the actual numbers. You see these numbers are kicking in, in Q3 and Q4 where we almost reached a run rate of these synergies on a quarterly basis and which is obviously very nice to see. B2B contribution margin flat. There is 2 things driving this really. One element is the shift from telco service to IT services, which has a negative impact that you see throughout most of the year, if you look at the individual quarters. There is a second driver that shows up in the fourth quarter. This actually has nothing to do with '25, but much more with 2024. In the fourth quarter of 2024, Vodafone had some significant negative impact from device subsidies on a large B2B or public administration contract. We don't have these anymore in 2025. So this shows up is a quite significant positive impact year-over-year, but it certainly rather a onetime effect, the underlying trend is rather a shift from B2B telco to B2B IT that we saw in the previous quarters. Together, the Q4 impact in B2C of the synergies and this kind of onetime impact in B2B. Together, these 2 effects explain the jump in EBITDAaL in the fourth quarter in Italy that I talked about at on the very first page. Wholesale plus EUR 34 million, so that's the margin impact of the EUR 70 million plus in wireless and wireline revenues. Indirect costs are more or less flat. That's a net effect of growing costs from the INWIT MSA and from energy on the one hand. And on the other hand, the first synergies coming out of the disentanglement from Vodafone, and there are some quarterly variations in between, but net, it's a flat development. So I'll move on to telco service revenue in Italy, also a very important topic also looking forward. So let's start with the total number for 2025, which is minus EUR 226 million B2C and B2B taken together, minus EUR 160 million B2C, minus EUR 66 million B2B. If we look at the quarterly evolution in Q4, we have minus EUR 60 million, so slightly improved over Q3. In B2C, it looks slightly worse than in Q3. We already heard about the increased churn due to our back book to front book alignment in B2C wireless that was announced in October. So customers could already react to that in Q4. The price increase is effective in December. So what we see is the negative impact from added churn, but not yet much of a positive impact from the higher prices. B2B in Q4 is slightly better than Q3. You might remember, I explained that in the Q3 conference, Q3 was mainly impacted by onetime revenues that we had in Q3 2024 that we were not able to replicate. And now in Q4, things have normalized a bit on the B2B telco service revenue side. Now I think it's important to understand the individual drivers because they tell us also something about how things are going to move forward into 2026. So I'll go one by one. B2C wireless. Yes, B2C wireless RGUs were down year-over-year. ARPUs were down year-over-year. But as we heard from Walter before, churn numbers are significantly down. The ARPU decline is slowing down as the ARPU spread between ARPU in and ARPU out is declining strongly. So we are definitely moving into the right direction, even if it doesn't show up yet in the year-over-year numbers. Similar story on B2C wireline. Yes, RGU's are down. And yes, ARPUs are declining year-over-year. However, if you look at the quarterly numbers, and Walter showed it before, the RGU losses have already come down significantly over the years. So they were mostly in Q1 and Q2 due to commercial decisions taken by Vodafone in the prior year. Churn numbers have come down significantly and also the ARPU is stabilizing. So also here, moving into the right direction. So the short story is we lost a lot quarter-over-quarter from Q4 2024 into Q1 2025 and Q2 2025. Now things are stabilizing quarter-over-quarter but negative impact. So we will all need to be a bit patient, and that takes me to the outlook. So the outlook 2026, very important is clearly better than what we saw in 2025. We expect a gradual stabilization of year-over-year numbers from the second half of the year onwards. In total, we expect a service revenue decline of about minus EUR 150 million, which is significantly improved vis-a-vis 2025. And those EUR 105 million, we expect to be split roughly 2/3 into B2C and 1/3 into B2B. Sorry, that was a long explanation, but I think it's very important to understand the dynamics going forward. So quicker on this one. CapEx, as I explained, down year-over-year and with lower EBITDAaL and lower CapEx, stable operating free cash flow in a transition year, which is obviously very positive. Page 47, synergies and integration costs. So synergies ramped up to EUR 95 million in -- at the end of 2025. Over achieved our EUR 60 million target mainly due to the faster migration of the Fastweb mobile customers on onto the Vodafone network. Also, integration costs were in line with target, EUR 217 million. We talked about the target of EUR 200 million. . Now overall, this doesn't change anything with regard to our plans. So the total run rate synergy that we expect is still at EUR 600 million. The total integration costs we expect over the first 3 years is still EUR 700 million. The ramp-up changed slightly to the better. So the ramp-up accelerated EBIT both on synergies and on integration costs. For 2026, we expect and added EUR 200 million of synergies, so plus EUR 200 million of synergies in 2026, 3/4 of which are related to the MVNO synergies, which are basically already in the bank with the migration having been essentially completed by the end of the year. And on the integration cost front, we expect another EUR 250 million to be accrued this year with EUR 200 million in CapEx and EUR 50 million in OpEx. . I'll move on back from Italy to the group level, free cash flow. Free cash flow was stable year-over-year at CHF 1.4 billion. The equation is quite simple. We are comparing not to pro forma here, by the way, but to prior year.as it was reported. So the equation is quite simple. Operating free cash flow is up after the Vodafone acquisition, which is clear, up by CHF 168 million. At the same time, we have extra interest payments compared to prior year CHF 214 million. And there are some other smaller moving pieces. And so free cash flow remained stable in the group, which is obviously an excellent result for the first year after such a large transaction. I'll move on to net income. This is a very complicated slide. I don't worry, the story is really quite simple. So net income was down CHF 271 million year-over-year. I'll start the explanation at the level of EBIT because this is the simplest thing. So EBIT came in at CHF 1.925 million, down CHF 28 million year-over-year. There are 2 things behind this flat EBIT. On the one hand, there is the increased EBIT, excluding PPA, depreciation. So excluding PPA depreciation, EBIT would have gone up by CHF 208 million. And then there is PPA depreciation, so CHF 236 million of PPA depreciation, which leaves the EBIT basically flat. In addition to PPA depreciation, we have an additional expense in relation with the Vodafone acquisition. And this is the added interest expense. You see the minus CHF 266 million here. Be careful. This is not only financial -- not only interest on financial debt, but this also includes the additional interest on lease liabilities that we acquired with the Vodafone acquisition. So net income is down due to 2 factors, PPA depreciation and added interest. Expense, obviously, this bridge will become much simpler and much more present as we go into the first quarter of 2026. . Just a few words on net debt and leverage and our overall debt profile. So first of all, we were able to reduce net debt year-over-year by CHF 600 million. On the one hand, this is due to the spread between the free cash flow and the dividend payment of CHF 1.1 billion that we paid out in April 2025. And secondly, the lease liabilities out of the INWIT agreement up until 2028 came down because the remaining life was reduced. So leverage came in at 2.4x exactly as guidance. . Our ratings are still excellent and unchanged. S&P and Moody's A- and A2. Our average interest rate is still very low at 1.86%, and we managed over the year -- or over the course of 2025 to further stretch our maturity profile, which is very well balanced now and we have about CHF1 billion to CHF 1.5 billion of refinancings every year in the near term. With that, I come to the guidance. And I'll walk you first through Switzerland, then through Italy and then we'll add it up to the group, bearing in mind always that there is a third segment, other, which typically doesn't have much of an impact, but in the details, it can have. So let's start with Switzerland. . Revenue of the guidance is CHF 7.7 billion to CHF 7.8 billion, so down CHF 100 million. That's telco decor service revenue decline in the same magnitude as in 2025, as I explained, partially compensated by IT growth, simpler bridge. Next, EBITDAaL about CHF 3.3 billion so that's slightly down year-over-year. As usual, and as you know well, we will have a spread between the telco service revenue decline on the one hand and the cost savings of roughly CHF 50 million on the other. And then there is a small contribution from the IT business. So that gives an EBITDAaL in Switzerland of CHF 3.3 billion, which is slightly down year-over-year. CapEx, CHF 1.6 billion to CHF 1.7 billion also slightly down year-over-year, thanks to CapEx efficiencies. And that gives for Switzerland an operating free cash flow of CHF 1.6 billion to CHF 1.7 billion, which is stable as CapEx efficiencies compensate the somewhat softer EBITDAaL contribution. So this is Switzerland. Moving to Italy. Italy, revenue guidance that's in euro now EUR 7.2 billion, so down EUR 100 million year-over-year. I talked about the telco service revenue decline that we expect of EUR 150 million. There is on top the loss of the Poste Mobile contract in the wholesale segment which we expect to impact negatively with minus EUR 75 million. And those 2 negative elements will be compensated by growth in the IT business in the wholesale business outside Poste Mobile and from the energy business. On EBITDAaL, EBITDAaL, the guidance is EUR 1.8 billion to EUR 1.9 billion, so about EUR 0.1 billion to EUR 0.2 billion higher year-over-year. What are the main drivers? Number one, synergies ramping up, plus EUR 200 million year-over-year. Number two, underlying business, down EUR 100 million, Telco service revenue decline partially compensated by the rest of the business. Number three, the loss of the Poste Mobile MVNO will actually be a wash and will not impact the reported numbers in 2026 because we do have an indemnification of a certain size, which is similar to the loss that we have in 2025 from Vodafone. So on a reported level, the Poste MVNO loss will not impact the 2026 numbers, it will impact then the '26 to '27 bridge. So synergies up EUR 200 million, underlying business down EUR 100 million, Poste [ Avosch ] that's EUR 100 million. And then on integration OpEx, integration OpEx will be lower year-over-year. It will be EUR 50 million expected in 2026 after EUR 100 million so year-over-year, a plus of EUR 50 million. And if we add all these elements up, that's business EUR 100 million, change in OpEx integration cost, plus EUR 50 million, we end up with EUR 100 million to EUR 200 million higher EBITDAaL year-over-year. Then CapEx simpler story, roughly stable at EUR 1.5 billion. On the one hand, we will have higher integration CapEx by EUR 100 million, but at the same time, the underlying business as usual CapEx will be down about EUR 100 million. So CapEx roughly stable at EUR 1.5 billion. So the EBITDAaL increase that we guide for in Italy translates into an operating free cash flow increase of EUR 100 million to CHF 200 million. One important note as the business is going to turn around over the course of the year, the operating free cash flow will be -- the operating free cash flow improvement will be backloaded towards the later quarters. So don't be surprised if you don't see too much in Q1 and Q2 out of this growth. Now adding it all up to the group guidance. Revenue CHF 14.7 billion to CHF 14.9 billion. So slightly lower revenues from Switzerland, slightly lower revenues from Italy and a different Swiss euro exchange rate underlying these numbers of CHF 0.92. That all adds up to this revenue guidance. EBITDA guidance, CHF 5.0 billion to CHF 5.1 billion. Thanks higher to Italy, on the one hand and Switzerland, slightly lower. So CHF 100 million higher, CHF 150 million plus out of Italy and slightly lower in Switzerland. CapEx, CHF 3.0 billion to CHF 3.1 billion, slightly down year-over-year, primarily thanks to Switzerland. And so operating free cash flow, which is the nicest part on this slide, CHF 2 billion guidance for 2026, up CHF 100 million roughly year-over-year due to the synergies coming from Italy, as we always said. Now 2 more words on the guidance, leverage and dividend. The leverage guidance for 2026 is 2.3x. We heard from Walter that we are reassessing our tower strategy in Italy. This reassessment will have an impact on our lease liabilities at the end of 2026, but of uncertain size. So given this uncertainty, our guidance of 2.3x only includes the INWIT lease liabilities under the current agreement up until 2028 and does not consider the prolongation of existing or the conclusion of new tower agreements, which will come on top of this number of 2.3x, and we will update the guidance once there is new news on the topic. Finally, the dividend guidance for 2026 is upon achieving all the other numbers here. The dividend guidance for 2026 is CHF 27 per share. Looking beyond 2026 for a second, we obviously remain committed to rock solid financials, focusing on long-term value creation and attractive dividend and a strong balance sheet. And with that, I hand over to Christoph for the wrap-up. Christoph Aeschlimann: Thank you. Eugen, I will wrap up on Slide 54. I think we emphasized all of these points in the presentation. We strive to be the #1 customer choice, both in Italy and Switzerland by leading the markets. We will continue to create efficiency and innovate and deliver new products to our customers to increase the value we deliver to our customers. And we have, as outlined, clear priorities in 2026 to perform against expectations. . Our investor story is quite simple. We will deliver stable free cash flows from our Swiss business, growing free cash flows based on the back of synergies in Italy, leading to overall growing free cash flows from on the group level, allowing us to further increase the dividend from CHF 26 to CHF 27 upon achieving the financial guidance of '26. With this, we conclude the presentation, and I hand back to Louis. . Louis Schmid: Thank you, Christoph. Now it's time for the Q&A session. [Operator Instructions] First question coming from... Polo Tang: It's Polo Tang from UBS. I have 3 questions. The first one is just on Swiss telco revenues. So you're expecting a decline of minus CHF 120 million for 2026, and that's similar to 2025. But I'm just trying to understand, should there not be more of an improvement given the benefit of the 3% to 4% price rises on the Swisscom brand. Now I know that you said there would be some offset from churn but what level of gross to net drop-through are you assuming from the price rises. Can you maybe talk about what you're seeing in terms of Swiss competitive dynamics in Q1? And specifically on the Swiss B2B revenues, do you think they can grow medium term once the SD-WAN migration is complete? The second question is really just about Swiss cost savings. So on Page 25, you laid out a number of cost-saving initiatives. But can you maybe give some detail in terms of the quantum of savings from the different initiatives? So for example, how big will copper switch off be? And more broadly, what has been the biggest driver of cost savings historically? And what do you see as the bigger driver going forward? So your net savings in the past were about CHF 100 million per annum, current run rate is CHF 50 million but do you see more or less opportunity for cost savings going forward? Or maybe another way of asking the question is how content are you in terms of your Swiss operating free cash flow? Do you think it can grow longer term? Or is the ambition in Switzerland only to be stable? The final question is really just in terms of Italian telco revenues. So you outlined you're expecting a decline of minus EUR 150 million in 2026 compared to minus EUR 226 million for 2025. But given that you've had several rounds of price prices on both the front book and the back book, why is there not more of an improvement in terms of Italian telco revenues? And can I clarify if you said that these Italian telco revenues are expected to be stable in the second half of 2026? And can you give some color in terms of what you're seeing in terms of competitive dynamics in the Italian market? Louis Schmid: Thank you very much, Polo. And first question on Swiss telco revenue is covered by Christoph then cost by Eugen and Walter, Italy. Christoph Aeschlimann: So on the telco revenue, so we do expect roughly a similar order of magnitude this year compared to last year. Roughly again split in the same way, so slightly more tilted towards B2B than B2C in terms of maybe sort of a 40%, 60% split between B2C and B2B as we had also in 2025. And we do expect a roughly similar split on that side. Now on the gross to net, let's say, impact of the cost savings is obviously highly dependent on the resulting churn. So depending on what kind of assumptions you make you come to completely different numbers on the net effect of the price increase. Currently, our assumptions is sort of lower to mid double-digit millions in terms of net effect and this is roughly of the same size of impact we had by taking price measures that we took in '24 and '25. So as you know, we worked on price initiatives, especially on moving or turning -- migrating older legacy subscriptions to the new front book. We worked on like options in the TV space, et cetera. And those also generated double-digit millions in terms of new revenues. . I think as we progress in -- throughout 2026, and we can better evaluate the churn impact by mid of the year, we might be able to say something different. But I think for the moment, it is more reasonable to stick to a rather conservative outlook. . Eugen Stermetz: Good. I'll take the next one on the cost savings. So I'll start with the copper switch-off. Obviously, this is still some years out. We are talking about the final switch of 2035. We once did a rough cut estimate that we also shared, I believe at some point of what the OpEx improvement would be of that copper switch-off. And we talked about roughly CHF 100 million at the time, lower energy cost, lower maintenance cost, lower customer care costs, et cetera. So this is the ballpark number for 2035. Obviously, there will be a ramp-up over time but it also goes in steps because you have to switch off complete central offices to gain the benefit and in the end, switch off the complete network. So it will be a progressive saving. It will be something that contributes to our cost savings over the years, but it's right now at the moment, not yet very significant. Then on the individual component of our cost savings, what where over the last, say, 2 or 3 years, the most important contributions. One is certainly the digitalization of the customer interface which allows us to reduce the customer care costs. Number two is the cleanup of the IT and the network architecture which takes a lot of time and cost a lot of money in the first place, but then generate sustainable savings. And number three is clearly also near-shoring, which we have been which we haven't done much a couple of years ago and have ramped up over the last 2 or 3 years. On the one hand, in IT development, where we have our own near-shoring centers, which produce at a lower cost. And on the other hand, also near-shoring customer care, not our own customer care or internal customer care departments, but the customer care that is being done by our suppliers instead of doing it in Switzerland goes nearshore. So recently, these were the 3 most important things. I can't give you an exact number on each of those, and there is also no exact number, to be honest, because as you know, these cost savings programs also have -- always have hundreds of lines of individual measures but these are the most important buckets we are talking about. Confidence going forward, Christoph talked about it. We expect another CHF 50 million cost savings this year in the near term. It's also something that we had on the slide. We see that more CapEx becomes OpEx as more software becomes not developed on your own, but it's being bought via SaaS models so that will increase the burden on OpEx. So it will certainly become more difficult to reach the same OpEx number because at the same time, CapEx is kind of being morphed into OpEx. This is why we're also working on OpEx efficiency, obviously. Comfort in delivering stable operating free cash flows from Switzerland is high due to the cost savings on the OpEx side, on the one hand and the CapEx efficiency. On the other hand, confidence in growing free cash flows would not be very high from my point of view, but that's the CFO talking, maybe Christoph has another view, but I would say stable free cash flow is for the moment, the ambition we have, and that is already challenge enough. Christoph Aeschlimann: Maybe I could just add on your first question here. You asked also the B2B service revenue, which I sorry, I omitted the answer. I think obviously, this year, we still have quite a strong decline. And in the year-on-year effect in '27, you will again see a decline as the SD-WAN migration takes until the year-end. So I would say, let's say, in the short to medium term, B2B service revenue will continue to erode. But going forward, there is indeed like the SD-WAN effect will obviously go away completely '27 to '28. And depending on the ramp-up of beem and if we really manage to scale the offering as we intend, there is, I would say, a reasonable hope that we can get maybe not to a growth, but at least to a steady state evolution on the B2B side, but we are talking about '28 and beyond. So there is quite a big range of uncertainty around this depending on various parameters also obviously market evolution, et cetera. But I think we are working on the right initiatives which should allow us to achieve it. But first, we still need to deliver many, many things before it happens. Walter? Walter Renna: Thank you for your question. Regarding the telco revenues, I think Eugen already explained to you the dynamics of the churn reduction is allowing us to stabilize the customer base but also the ARPU is slowing down the decrease. You see already the effect on a quarter-over-quarter revenue trend, why we expect the stabilization in the second half of '26 because all the activities related to front -- back book to front book alignment started in late Q4 and we go -- we'll continue in Q1 and Q2. So you will see the effect of this maneuver only in the second part of the year. I. N terms of competitive dynamics in Italy, I mean, the market continues to be very competitive. There is a strong competition. The good news is not deteriorating. So we don't see a market that is deteriorating. We see a market where there is space to play a value strategy, and this is exactly what we are doing. So we are maybe get less volumes in terms of sales, but we are winning a lot in terms of churn reduction. So this is a customer base game for us. we continue to work on our customer base because we really believe we have a strong value there. Louis Schmid: Thank you, Walter. Thank you, Polo. Next question coming from... Robert Grindle: Robert Grindle from Deutsche Bank. I've got 3 as well, please. On leverage, the guide of 2.3x reflects the reassessment of tower strategy uncertainty, and you say does not consider the prolongation on new towers. Is there also a change in view as to when this contract is renewed? Secondly, you mentioned CapEx savings in Italy this year, which are impressive. Is there any color as to where they're coming from? And are they sustainable in nature? And thirdly, just a point of clarification on the CHF 75 million Poste Mobile MVNO loss at Fastweb, offset by indemnification. I didn't quite hear -- were you saying it's an indemnity from Vodafone, I assume that's just 1 year? And are there any other indemnities worth filling us in on? Louis Schmid: Thank you very much, Robert. First question will be covered by Eugen. Second question, CapEx savings Walter, and the last one, again by Eugen. Eugen Stermetz: Okay. So on the leverage guidance, as I said, it excludes prolongation or the conclusion of new tower agreements. On all the rest, we have no news to tell. We told our story last year, and Walter also introduced the topic today. So unfortunately, we are not going to comment on any further contractual question, sorry for this nonanswer, but this is in line with what Walter said before. Maybe I jump to question 3 because then I can already do this. So the indemnity, yes, you understood it correctly. It's an indemnity under the SPA from Vodafone. And it will cover roughly the loss that we expect this year, but this is it. So there is no other indemnity to be expected under this title. Walter Renna: Okay. Regarding the CapEx, in '25, the saving is driven by a couple of effects. On the network side, we are enjoying by sharing contracts between Faster and Vodafone. So we are leveraging on the best condition of both. This from one side is bringing new efficiency. From the other side, we are developing our 5G on a more cautious -- with a more cautious approach. So we develop where it's needed to unlock capacity needs. . And the third element is on IT, we are reducing the IT spend because we are investing only on the stock that we will retain. So we divest the stack that we will dismiss after the transformation. These are the major effects, together with the fact that also the customer acquisition slowing down a bit, and this is bringing savings in terms of customer driven. Louis Schmid: Thank you, Walter. Thank you, Robert. Next question coming from... Ajay Soni: It's Ajay Soni from JPMorgan. I've got a couple of questions. So my first is just around -- you mentioned around second brand penetration potentially increasing again during 2026. I was wondering how the launch of a new brand within this obviously discount segment has had maybe impacted you guys in the last couple of months? And then the second question was around the Swiss beyond the core services, which I think is Slide 21. You mentioned around monetizing it may not be a 2026 story, but what do you think you could actually charge for these services and especially with the Swisscom, myAI, I mean, how will this differ from existing free AI offerings in the market. Do you actually think you'll be able to charge us to customers for this? Louis Schmid: Both questions go to you, Christoph. Christoph Aeschlimann: Thank you, Ajay. So on the second brand, indeed, we expect again a increase in penetration of the order of the same magnitude as we've seen in the past years. Now you alluded to a new brand impact. So I assume you allude to the CH Mobile brand of Sunrise because we didn't launch any new brands. So on that side, we don't expect this launch to accelerate our second brand penetration. I think this was more driven by customers coming down from the main brand and going to a lower tier offering with less value at a lower price point. And we don't expect this dynamic to change during the course of 2026. . On the Swiss adjacencies, like -- so on the security side, we are already monetizing these services since many, many years. So we have different security offerings, and we will launch some new ones in this year. So at certain different price points. Typically, security, I think, is around CHF 70 to CHF 10 a month. So quite an attractive upsell possibility. On the myAI side, we are currently working on increasing the penetration into the customer base. So it's more a question of onboarding as many customers as possible and getting them used to using our GPT versus another GPT. In terms of monetization opportunity, we will see probably '27 onwards if customers are willing to pay for this. I think it's a very compelling proposition because it basically has the same features as an entropic you buy on the market, but with Swiss sovereign capabilities. And looking at sort of the general GPT pricings in the market, they are typically around CHF 10 to CHF 20. So we do expect to be able to achieve something similar, should we go into a monetization model. Obviously, afterwards, it's a question of how many of the customer base really buy let's say, the upper tier model because probably there will always be like a free version as you already have today on the market from OpenAI and other players. And then you have like premium version. So it becomes more a question of how much of the customer base can you actually upsell the premium tiers. Louis Schmid: Thank you, Christoph. Okay. And then what I know and see from the screen, a very last question coming from... Joshua Mills: It's Josh Mills from BNP Paribas. If I can add 2 please. First one was just around the RAN sharing agreement you've announced in Italy. Could you give us any indication on the scale of those cost savings perhaps in the medium term and then also whether there's any renegotiation required with tower partners in order to deliver on those? I'm not asking you to comment on the separate tower debate, which you've already addressed, but just specific to that RAN sharing agreement would be very helpful. And then the second question is more around the CapEx profile in Switzerland. So, obviously, to stabilize operating cash flow this year, you're reducing CapEx a bit there. You've got a very healthy Slide 63 in the appendix where you can give a breakdown of the different building blocks in the Swiss and the Italian CapEx. But what I'd love to understand is where kind of floor CapEx you would be in Switzerland and which of those CapEx buckets could drop down a bit further, perhaps not this year or next year, but in the medium term, so we can get a sense of how much of an offset to revenue CapEx would be over that period. Louis Schmid: Josh, first question goes to you, Walter. Second one to you, Christoph. Walter Renna: Yes. Thank you for your question. So RAN sharing is a strategic project for us, as I said, as we can really put together the network with TIM in rural areas. We are talking about over 15,000 sites as a possible target for this sharing. So this will bring us the opportunity to extend our coverage as said, in cities with less than 35,000 inhabitants. As you may know, in Italy, there are a lot of municipalities of this size. So we will really enjoy the additional coverage and additional quality for our customers. In terms of savings, we will not disclose numbers at this stage as we are still in a preliminary phase. But in the midterm, I can say that we expect savings of mid-double-digit euro million range. We will let you know once we will go into more details and approval from the authorities here in Italy. So we expect to have more news in the second part of '26. . Christoph Aeschlimann: So the CapEx profile in Switzerland, I think the easiest -- so at the moment, we have roughly CHF 1.7 billion in CapEx, out of which CHF 500 million are strictly related to the fiber rollout. So obviously, once fiber rollout is complete, this CHF 500 million will go away. So you land at CHF 1.2 billion of CapEx in Switzerland starting 2035. I think over the time, you will see sort of a slight ramp down of the rollout CapEx, but still at a very high level until 2030 and then probably starting to slightly decline in the first part of the 2030s. Now on the other buckets of the CapEx, we obviously also work on efficiencies, in particular on the IT bucket, which stands at CHF 470 million. So as you know, AI is highly impacting software development efficiency, et cetera. So there is an ambition and some hope that we can further decrease the IT bucket. And as we said, on the other side, but this will not help from a free cash flow perspective, there is a CapEx to OpEx shift on the IT side. So some of the IT CapEx of this CHF 470 million migrate into the OpEx. So this is basically a wash from a free cash flow perspective, but will to some decrease CapEx. And then if you look at the backbone in infrastructure, which last year was at CHF 121. As you know, we are still modernizing and upgrading our core and backbone infrastructure, which we intend to complete by '27. So this will also generate some savings in this bucket. Now the magnitude will probably be quite limited. Maybe a low double-digit number. But still, there are opportunities to further optimize CapEx in the short run. Fiber rollout I mentioned at the beginning is obviously a very long-term topic and nothing that will change in the next 3 to 5 years. Louis Schmid: Thank you, Christoph. We have some additional new participants. The next one is audio only dialed in. Thank you for your questions. Justin Funnell: Louis, Justin Funnell here. Yes, just some small follow-up questions, please. Could you explain again the financial effects of the shift from MPLS to SD-WAN in '26 and '27? What does it do to revenue and EBITDA? It's sort of broad brush. It sounds like it the impact peaks in '27. So just wondering how to model that basically. Secondly, the gap between inflow and outflow in Italy on price, there's still a gap there. Do you think you need to reduce that gap still? Could you do more price ups in Italy on the front book pricing -- on the front book? And then thirdly, you mentioned without much detail, a sort of more network agnostic approach to fixed line in Italy and I was just wondering what opportunities you saw in moving into sort of selling fixed wireless access instead of fiber? And are you also looking at Starlink? Louis Schmid: I think the first question go to you, Christoph. And second and third to you, Walter. Christoph Aeschlimann: So on the B2B question. So as you know, the service revenue decline in B2B last year was minus CHF 70 million, out of which wireline was minus CHF 44 million. So obviously, this SD-WAN MPLS topic only concerns this wireline effect of minus CHF 44 million. There is some RGU loss in there as well. So I would say the effect of this transition is quite difficult to estimate because it has various components to spinning down from high value to low-value connectivity, sometimes you lose connectivity, et cetera.but it's probably fair to say, okay, sort of a very low double-digit number is related to this effect, and you will see it again in -- or we have it inside the guidance or service revenue guidance again for this year. But -- so it has an effect, but it doesn't, let's say, massively change the B2B service revenue erosion going forward. It helps to bring it down.but it will not like half it or rather suddenly take out 3/4 of the erosion. So I think that will be vastly overestimated. Walter Renna: Okay. Thank you for your questions. So we'll start with the FWA question on the network side. Yes, we are using FWA, especially to cover digital divide areas that in Italy are still between 5% and 6% of the population, but we also offer the service where we see that there are copper lines that are low quality. . Having said that, for us, FWA is a marginal technology as for us is key to develop fiber. So we always offer the best technology to our customer. So we have in mind the quality, and we do whatever we can to offer the best service. . In terms of price increase, which is somehow connected to this, we don't think will change pricing structure on the course of '26, but we'll work to improve the price mix in our tiering offer. We have a 3-tier offering of fixed and in mobile. So we will try to move customers from the entry level to the top level, and this will allow us to increase the average ARPU inflow, therefore, contribute to the stabilization of the revenues on the B2C. Louis Schmid: Thank you, Walter. And now really the final question. The floor is yours, Javier. We can't hear you. Unknown Analyst: Okay. Can you hear me now? Louis Schmid: Yes. Unknown Analyst: Just simply a follow-up on your price increase in the Swiss market. Simply just to ask you, what have you noticed from your rivals, mainly, I mean, Sunrise, Salt or maybe the other smaller MVNOs. What has the pricing strategy been lately in terms of their entry points, In terms of the promotions? And how do you expect them to react to your price announcements? Do you think you're giving them some breathing room? Or do you think they will play ball? I mean maybe a little bit of the competitive dynamics you've seen recently in the Swiss market. Christoph Aeschlimann: So excellent question, which is obviously top of mind in our daily work in B2C. I think in terms of pricing, you've seen that both Salt and Sunrise have increased prices in the past 1 or 2 years. However, the market has remained highly promotional with very aggressive promotions, especially centered around the Black Friday period. And this has not really changed in the course of the last year. And we do expect sort of a similar promotional activity also going forward. And we will see if it is slightly scaling down now or if it sort of continues in the same way. In terms of customer or reactions of our competitors to the price increase, I can obviously not comment as I don't know how they will react. So we will see over the coming weeks now, what happens on the promotional side. What are they doing? Do they try to attack even more? Or are they choosing to do something else? This will be up to them to decide and we will, let's say, adapt in function of what is going on. But I think overall, you can say promotional activity, maybe slightly less, but overall, I would say, roughly similar over the past 1.5 years. Walter Renna: Sorry let me just clarify what I said before. I don't want to be misunderstood. So on the pricing structure, I said that we will remain with this 3-tier approach, and we work to increase -- to improve the mix. But in terms of individual pricing, of course, this will depend on the market condition and the target that we have. So just to be clear, I don't want to give a forward-looking statement on pricing that I can't. Louis Schmid: All right. Thank you very much, Walter and Christoph. Thank you, Javier. At this point, that's it from our side. In case of any follow-up questions, we are available. Thank you for your participation, and have a nice evening.
David Bortolussi: Good morning, everyone, and thank you for joining us today. My name is David Bortolussi. I'm the Managing Director and CEO of the a2 Milk Company. Today, I'm joined on our call by our CFO, Dave Muscat; and our business unit leaders, Li Xiao, Yohan Senaratne and Eleanor Khor. The team and I will present the results and outlook. And as always, there will be time at the end for questions. During the presentation, we will focus on continuing operations, which excludes MVM that we divested during the half and occasionally refer to underlying results, which exclude a2 Pokeno. We've excluded a2 Pokeno from underlying earnings given that the site is currently underutilized and incurring manufacturing losses and transformation costs, which are short term in nature. Starting on Slide 4, we've had a very positive first half of the year, reporting significant revenue and EBITDA growth and underlying EBITDA margin improvement. In our IMF business, we achieved revenue growth of 13.6%, which was well ahead of category growth. We grew English label IMF by 21%, with strong performance in the CBEC and O2O channels, supported by growth in our new a2 Genesis product and from Vietnam. In China label, we delivered 6.5% revenue growth and achieved record market share in both the MBS and DOL channels. Our Other Nutritionals revenue growth accelerated to 43% on a like-for-like basis, driven by our recent kids and seniors innovation, and we recently entered the pediatric supplements category and launched a new kid UHT product. Yohan and Xiao will speak to these new product innovations in more detail later. Our Liquid Milk business continues to perform strongly with growth of 18.5%, driven by our core product range with much higher growth in our lactose free and grassfed product innovations. We significantly advanced our supply chain transformation with the a2 Pokeno acquisition, MVM divestment and long-term milk supply agreement with Fonterra, which were all announced and completed during the half. And we've made a significant progress against key a2 Pokeno transformation streams, including advancing our China label registration amendment process, upgrading the facility and expanding our team. Our strong first half performance has enabled us to upgrade our full year guidance and declare an interim dividend at the high end of our policy range. Moving to Slide 5, which summarizes our financial results. We delivered double-digit revenue and EBITDA growth of 18.8% and 18.4%, respectively, with our EBITDA margin consistent with prior year on a continuing basis. On an underlying basis, excluding a2 Pokeno, our EBITDA was up nearly 26% and our EBITDA margin was up 0.9 percentage points to 16.6%. Net profit after tax and EPS were both up just over 19% on an underlying basis, and we are pleased to declare a dividend of NZD 0.115 per share. Turning now to Slide 6. At a group level, our sales growth was driven by core products and recent innovation with some benefit from FX and the inclusion of a2 Pokeno sales, which are first half weighted. Our growth continues to be driven by our China and Other Asia segment, led by English label IMF and Other Nutritionals supported by China label IMF growth. Our ANZ segment sales were up, primarily driven by growth in Australian Liquid Milk with stabilization of IMF sales in the Daigou channel. Our U.S. business continued its strong performance, driven by growth in our core products and grassfed s. I've already covered our product performance upfront, so I'll move to the next page. So turning to Slide 7. The China IMF market returned to growth in the half, up 3.6%, supported by a higher number of newborns during 2024, which was the Year of the Dragon. While the number of newborns in 2025 are lower than the Dragon year, there are positive indicators in 2026 with last year's marriage registrations up 11% and the China Central Government recently stating that birth rate stabilization is a national priority. From a product perspective, the China label market has stabilized, supported by price recovery and stable volumes. English label growth continues to outperform China label, supported by product innovation and premiumization. And finally, the A2 protein and ultra-premium segments continue to outperform the category to our advantage. Turning to market share on Slide 8. We remain a top 4 brand in the China IMF market and continue to gain market share to 8.2%. Within this, we achieved record high China label market share of 5.6%, and we remain well positioned in English label as the second largest player in the market with just under 20% market share. Turning now to FY '26 and the company's outlook on Slide 9. I'm pleased to say that we've had a very good start to the financial year with revenue trending ahead of our previous expectations across all product categories and markets. As a result, we have increased our FY '26 guidance for revenue growth from low double-digit percent to mid-double-digit percentage growth versus FY '25 continuing operations. We've also tightened our EBITDA margin range to approximately 15.5% to 16%, which is at the higher end of our previous guidance and expect our net profit after tax to be up on FY '25 reported. As previously announced, the Board intends to declare a NZD 300 million special dividend, subject to regulatory approvals being received in connection with amendments to the 2 existing a2 Pokeno China label registrations for use under the a2 brand. The amendment process is currently underway and is progressing well. Moving to Slide 10. We continue to execute against our growth strategy, which was recently updated after completing our supply chain transformation transactions. We adjusted our transform supply chain priority to focus on execution of our important transformation program at a2 Pokeno and on building capabilities to support future innovation and growth. And we've placed more emphasis on entering new markets, which is now called out as one of our key priorities. We are tracking well towards our medium-term financial and non-financial goals and remain on track to achieve the majority of our targets, which are outlined on Slide 11. Turning to Slide 12. Our strong first half result and upgraded FY '26 revenue guidance means that we now expect to achieve our medium-term revenue ambition of NZD 2 billion in FY '26. This is a year ahead of our amended plan and in line with our original 2021 Investor Day timing expectations. Market and category growth drivers remain on track, and our emerging market strategy continues to advance with encouraging early performance in Vietnam as we continue to assess broader opportunities across Southeast Asia and the Middle East. And from an EBITDA margin perspective, the a2 Pokeno acquisition is expected to support margin improvement going forward as we discussed at our full year results last year when we announced the transactions. Moving now to Slide 13 and covering our supply chain transformation in a bit more detail. To recap, during the half, we successfully announced and completed the acquisition of a2 Pokeno facility and the sale of MVM as well as a long-term A1 protein-free milk supply agreement with Fonterra. These transactions mark a key milestone in our supply chain transformation, which has been years in the making. Essentially, these transactions enable us to secure greater market access to the China label IMF market with strategic control over our registrations, growth in our core IMF business through portfolio expansion and innovation, accelerate the development of nutritional manufacturing capability and capture vertical margin and generate attractive overall financial returns. Turning to the next slide, which provides a transformation program update. A dedicated transformation office led by our transformation expert was established prior to the a2 Pokeno acquisition to provide governance, planning and execution support to our Pokeno supply chain and wider a2 team. Key transformation initiatives at a2 Pokeno are progressing as planned, including the China regulatory approval process, blending and canning trials, capital investment activities, ERP implementation and product development. And recruitment and manufacturing leadership and operations is well progressed to support execution of the plan. Overall, the program is tracking well with some areas ahead of expectation. So that's the end of my introductory comments. And before I hand over to Dave to take you through the financials in more detail, I wanted to publicly thank our global a2 team for their outstanding contribution in delivering the results we've shared with the market today as well as for their exceptional work in our supply chain transformation. We're only a small team, but we've achieved a lot so far this year. Over to you, Dave. David Muscat: Thanks, David, and good morning, everyone. I'll start on Slide 16 with a summary of our group P&L. We delivered net sales revenue of NZD 992.6 million, up 18.8% on prior year. Our gross margin of 48.9% was down 1.1 percentage points due to manufacturing losses at a2 Pokeno, which is currently underutilized ahead of our planned a2 Platinum transition from Synlait in the first half of '27, which will significantly increase production levels and improve a2 Pokeno's financial results. Excluding these temporary a2 Pokeno losses, our gross margin percentage was slightly up, reflecting lower IMF ingredients costs and a net FX benefit. Distribution costs were up due to higher freight rates and volumes related to Liquid Milk. Marketing investment increased in support of our China growth strategy, including awareness building campaigns to support our recently launched products, including a2 Genesis and kids and seniors fortified powders. Given the second half weighting of marketing expenses, our reinvestment rate was slightly down. SG&A was higher due to investment in capability in support of growth in China and supply chain, including a2 Pokeno transformation costs. Our effective tax rate improved due to reduced losses in our U.S. business and utilization of a2 Pokeno losses. Reported NPAT was NZD 8.4 million, including a loss from discontinued operations of NZD 103.7 million that was almost solely due to the MVM non-cash divestment loss of NZD 103 million. As David mentioned earlier, we have declared an interim dividend of NZD 0.115 per share, totaling approximately NZD 83.4 million. This equates to a payout ratio of approximately 74% of NPAT and is towards the higher end of our policy range. The dividend will be fully franked and unimputed and will be paid on the 2nd of April. Slides 17 and 18 summarize our segment and product performances with the key drivers covered throughout the presentation. It should be noted that a2 Pokeno is included in the China and Other Asia segment. Moving on to Slide 19. Our closing cash balance at the end of the period was NZD 896.9 million, down NZD 164.3 million versus June '25, mainly due to the supply chain transaction net outflows of NZD 168.7 million associated with the a2 Pokeno acquisition and MVM divestment. Operating cash inflows, excluding interest and tax, were NZD 140.7 million, representing operating cash conversion of 91%, which was in line with expectations and reflecting our inventory rebuild following Synlait manufacturing challenges late in FY '25, which temporarily reduced IMF inventory at June '25 and into the first half of FY '26. Investing activity outflows included the previously mentioned supply chain transaction net outflows, capital expenditure and a reduction in term deposits. Cash flows from financing activities included the repayment of MVM's external banking facility prior to divestment. Turning to Slide 20. Our balance sheet remains strong as we invest in our supply chain transformation and continue to execute against our growth strategy. Inventory was up approximately NZD 34 million, reflecting the inventory rebuild previously referenced with trade payables also increasing accordingly as we continue to progress towards target levels. Intangible assets were NZD 105 million, primarily due -- were up NZD 105 million, primarily due to the goodwill associated with the a2 Pokeno acquisition. And the reduction in other liabilities primarily relates to the reduction in external MVM loans associated with the divestment that completed during the half. That concludes the first half '26 financial overview. I'll now hand over to Xiao to take you through the performance of our China label business. Li Xiao: Thank you, Dave. Starting on Slide 22, we delivered China label MF revenue growth of 6.5%. This was supported by strong execution, China MF market stabilization and a favorable foreign exchange. This is a pleasing result given growth during the period was partially constrained by market shifts towards English label and the supply. We achieved record China label MF market share, reflecting strong execution across both online and offline channels and supported by strong new user recruitment in FY '25, which is now graduating into later stages. Outside MF, Other Nutritionals also delivered growth, driven by recent senior and kids innovation that's resonating well with consumers. Turning to the next slide. Overall, we continue to gain share in China label with total market share reaching a new high of 5.6% as well as brand health. Performance was strong across both our MBS and the DOL channels with each reaching record shares as we continue to execute well in our key channels. Moving to Slide 24. New user recruitment remains a key focus. In mid-December, we launched a targeted marketing campaign in China, partnering with the well-known My Little Pony franchise. The campaign was designed to attract new users for the year of the whole. We designed maternity gift pack and a fully integrated campaign across online and offline channels, including social media, which has generated strong consumer engagement and user-generated content. Since launch, our brand has moved from ninth to first in search share on Little Red Book and Stage 1 new user recruitment has increased versus pre-campaign levels. Turning to Slide 25 and taking a closer look at our kids and senior nutritional products, which are performing well. Our kids milk powder product has supported a turnaround in China label Stage 4 performance with the product now leading international brands in key channels. This reflects strong consumer acceptance, supported by a competitive formulation, good taste and appealing package. In senior nutrition, we are building share in the ultra-premium segment with a steady online growth, supported by targeted seasonal campaigns and new user recruitment through family gifting. Across both categories, we continue to leverage the strength of the a2 brand in MF to attract new users and expand our offering to other life stages. Slide 26 provides an overview of our new kids fortified UHT product, which we have recently soft launched into Costco and select online platforms. This is our first locally sourced UHT product in China, which enable improved freshness and high support formulation addresses an area of strong consumer interest. Moving to Slide 27. Our focus on innovation has seen us expand our Other Nutritional portfolio through entry into a new category. The pediatric supplement category is a rapidly growing market with approximately NZD 8 billion in retail sales value and is an attractive adjacency to our core infant formula business. It is a fragmented category where we believe the a2 brand can be successful. Continuing to the next slide. Slide 28 provides an overview of our new China label pediatric supplements range known as a2 Zhi Yi, which will be progressively rolled out during the second half of the financial year. We have 4 products in the range, which are focused on high-growth areas and formulated to provide functional benefits aligned to what the a2 brand is known for by consumers. The locally manufactured products have a new and innovative packaging to maximize consumer and trade appeal. Near-term sales are not expected to be material. However, the long-term potential of the category could be significant. I will now hand over to Yohan to take you through the English label. Yohan Senaratne: Thanks, Xiao, and good morning, everyone. Looking at Slide 29, English label IMF continues to grow with sales up nearly 21%. Growth was supported by overall market expansion, growth in our combined CBEC and O2O channels and growing contributions from our a2 Genesis product. It is also pleasing to see our ANZ IMF sales in growth with the Daigou channel stabilizing and continued share and sales growth in retail. We continue to deliver solid momentum in Other Nutritionals across all channels, led by strong growth in our milk powders portfolio with additional support from a2 Smart Nutrition and a2 Nutrition for Mothers. We also saw increased UHT volumes, particularly in Vietnam. Turning to Slide 30. Momentum in the English label market has continued with English label now accounting for 20% of the total IMF market. A2 remains well positioned to benefit from the growth in this segment as the second largest brand in the English label market with our market share just shy of 20% and our online channels continuing to grow. A2 continues to perform well in the CBEC and O2O channels with significant sales growth. On an MAT basis, a2 was a leading share gainer on CBEC from June to December last year. Continuing on to the next slide, the rapid growth of HMO and specialty product segments continues to be a growth driver of the English label market. Our a2 Genesis HMO formulation has now been in market for a year and is performing well. We have invested heavily to build awareness, consideration and trial with our sales building month-on-month. In the first half, a2 Genesis represented 6% of all our CBEC channel consumer sales with more than 50% of sales being for early stages, which supports future potential. Turning now to Slide 32. We continue to develop our Vietnam business with our distribution expanding significantly during the half. A2 IMF and Other Nutritionals products are now ranging over 1,000 MBS stores and initial listings have commenced across national key accounts and e-commerce platforms. As we execute in Vietnam, we remain focused on our broader emerging market strategy, assessing opportunities to further expand into other markets with a particular focus on Southeast Asia and the Middle East. I'll now hand over to Eleanor, who will take you through ANZ. Eleanor Khor: Thank you, Yohan. Turning to Slide 33. Our ANZ Liquid Milk business has continued to perform well. We delivered double-digit revenue growth driven by growth in both our core and lactose-free ranges. In terms of market share, we outperformed the category with overall share increasing to 11.5% and lactose-free achieving a record high MAT share of 20.6%. During the period, we were also pleased to complete the final stages of upgrades at our Kyabram processing facility to strengthen our operational capability and capacity. Moving to Slide 34. In 2026, a2 proudly became the Australian Open first-ever dairy milk partner in the tournament's 120-year history. We activated across our priority markets in Australia and China with the partnership delivering positive results. During the tournament, a2 Milk was the only dairy milk to be served on site, reaching more than 1 million attendees and our bespoke co-branded frappes became a viral sensation on social media, driving exceptional visibility and brand engagement. And with that, I'll hand back to David. David Bortolussi: Thanks, Eleanor. And before I move on, I wanted to acknowledge that this will be your last investor call with a2, and thank you publicly for your outstanding contribution to the company over the past 7 years and leading our strategy function and ANZ business, which you've done exceptionally well. So thank you very much. I'll now cover our U.S. business on behalf of Kevin Bush, who is unable to join us today. Our U.S. business has had a very good start to the year with revenue growth of 29%, driven by our core range and grassfed innovation across all channels. Our revenue growth was supported by positive market trends during the half with premium and specialty Liquid Milk market value growth of 11%, which was higher than total category growth of around 4%. Our market share continues to increase with growth in household penetration and consumption and our profitability improved with an EBITDA loss of NZD 3.4 million. And finally, from an IMF perspective, our FDA submission remains under review and is progressing. That concludes today's formal presentation. I'll now hand over to the operator for Q&A. Thank you. Operator: [Operator Instructions] Your first question today comes from Thomas Kierath with Barrenjoey. Thomas Kierath: Obviously, a lot of focus on the birth rate and the weakness of it that's been reported more recently. Just be interested in your comments around how Stage 1, I guess, is growing versus Stage 2 and Stage 3 and whether you're seeing any initial signs of that weakening birth rate in your numbers? And then I've just got one on Genesis as well. David Bortolussi: Thanks, Tom. I might ask Xiao to comment on the stage performance at the moment and outlook around that. Li Xiao: Yes. So in the first half of fiscal year '26, we see Stage 2 have a very strong growth. Stage 3 improved and Stage 4 dropping, but we were helped by the newly launched kids fortified powder, we have a very strong, I mean, growth combined Stage 4 and kids fortified powder. For the Stage 1, due to the supply constraint, we did see Stage 1 is dropping as well losing share. But I mean, we have started, I mean, the -- what we call early-stage campaign. And as we show in the slides My Little Pony, since December, I mean, to boost back the early new user recruitment after the improved supply. So now we see a pretty encouraging early signal of, I mean, improved new user recruitment comparing with the previous month. And also, I mean, if you look at China label track record in the history, like in the fiscal year '25, our -- I mean, Stage 1 share improved from 3.1% in the previous year, I mean, to the first half, 3.9% and the second half of more than 4.2%. So we are pretty confident that we are going to turn around the Stage 1 performance, I mean, with all the, I mean, focused efforts on the early new user recruitment. Thomas Kierath: That's great. And just secondly on Genesis. I know initially, you were investing pretty heavily in that brand. So the sales that you were generating, you weren't actually necessarily making much profit as you were reinvesting. But where about that is that at the moment? And when do you start to see, I guess, a profit contribution coming through from Genesis? David Bortolussi: Yohan, would you like to talk to Genesis? Yohan Senaratne: Yes. Look, I think you're right. In terms of the focus for the Genesis product, we're definitely looking to invest in driving awareness through to trial. But the product itself makes quite a strong gross margin, just slightly below our Platinum gross margin. And then over time, we expect, obviously, the net contribution post the marketing spend to improve. At the moment, yes, absolutely, we're investing behind the brand, but I expect the net contribution to improve over time. David Bortolussi: So our percentage margins were lower, the dollar margins were similar. Operator: Your next question comes from Josephine Forde with Bank of America. Josephine Forde: Congratulations, David and team on the result. My question is also in a similar vein on the China label market. Can you talk through your expectations on the continued brand consolidation, just given it was stable in the half? And then also just a bit more color on the market returning to growth and pricing in closing too? David Bortolussi: Josephine, I think the -- even though there was a sort of a temporary pause in the level of consolidation, the top 5 is 58%, top 10 is around 78%. There were some kind of winners and losers within that -- within the sort of top 5 and top 10 during the period. But we fundamentally believe that the brand concentration trend will continue in the market. And certainly, the top 5 will gain a disproportionate amount of share over time. And maybe in time, there might even be corporate consolidation as well, which we've seen some evidence of over the last 5 years or so. In terms of the growth going forward, it's pleasing to see, like I've been here 5 years and in effect 10 half year -- full year and half year reports. And the first time we've seen the category in growth for the half at 3 and a bit percent. That's based on Kantar numbers, and I do sort of caveat that Kantar is reviewing their growth numbers in March. So just important to look out for that. But definitely, the English label category is in growth and China label is flat to up. The outlook, we continue to believe there will be ups and downs in the newborns numbers. The Year of the Dragon was probably higher than market expectations, and last year, clearly lower than expectations. But there's good reason to believe that the newborns will be up next year or this calendar year. We're seeing marriage rates are up 11%. The last 3 quarters are up 20%, as you would have seen. And we've also got insight in terms of maternal registrations as well, and we're seeing those being up high-single digit at the moment as well for the first calendar quarter -- for the March quarter of this year as well. So I think the newborns will be up this year. It's difficult to predict how much, but probably in the low- to mid-8s. But there is long-term socio demographic pressure on the newborns rate over time. So we're still expecting that to decline by low-single digits, but a degree of premiumization in the market to support the category, hopefully around flat. So as we've always said, this is a share gain for us. We've been very successful with the strong brand and our execution behind that and innovation fueling growth now, where we've managed to more than our double our share from just over 4% back in 2021 to over 8% now in the market, and we think we've still got significant market share growth opportunity, both in China label and English label. English label is doing really well at the moment, and China label has been growing for many years, and we'll have the benefit of the 2 additional registrations that we obtained through the Pokeno acquisition shortly as well. So I think in essence, I think the market should be relatively flat, and we still have a significant share opportunity gain in infant and other category expansion opportunities. I think the pediatrics supplements market entry is a pretty significant milestone today. So plenty of growth opportunities for us in and outside the infant category in China and new markets. Josephine Forde: Okay. And then just on the guidance upgrade, since November, what's driving such an improved outlook? Like is this driven by English label? Or is it a more positive backdrop for the China label's improvement? Or are you seeing early read-throughs on these new marketing campaigns in the China label? David Bortolussi: All of the above and probably the only thing you're missing there, so -- I mean the infant category has been pretty robust for us, and the growth has been slightly higher than we expected. But certainly, the Liquid Milk and Other Nutritionals growth at the beginning of the year and even at the AGM, we didn't expect such high growth in those categories, which is really pleasing. That will probably come off a bit in the second half, but you can tell from our guidance, we're still expecting pretty robust growth for the full year with mid double-digit sales growth. So I mean all of those are contributing and it's kind of very pleasing for us as a team to see that really all categories and all markets are performing really well at the moment. It's terrific to see. It's a real credit to the team and also the health of the a2 brand. Operator: Your next question comes from Matt Montgomerie with Forsyth Barr. Matt Montgomerie: I might just come to Pokeno to start. Clearly, things are tracking quite well there. Just within the EBITDA losses for the first half of NZD 9.8 million, I think, of that, what was related to the transformation costs? And then secondly, I suppose your guidance for the second half implies quite a meaningful step up in losses. I appreciate it was a full 6-month period. But yes, just be interesting to understand that. And then with Pokeno tracking ahead of expectations for this year, you haven't changed your FY '27 outlook for Pokeno. Yes, maybe if you could just sort of step through that as well and why sort of that couldn't be improved over time as well. David Bortolussi: Dave, do you want to... David Muscat: Yes, I'll take that Matt. In terms of the transformation, I assume it's about 5 in terms of the transformation. So that's going through SG&A and the residuals going through gross margin. In terms of the step-up in losses, I think the way you've got to think about it is that, we are significantly ramping up the capacity of that site over the course of this financial year in advance of the transition at the start of the next financial year. So our under-recoveries are going to get worse before they get better. So that's why we have the ramp in terms of the second half. And in terms of FY -- in terms of why it's better, overall, in terms of our sort of estimates around Pokeno is that, we set our expectations for this year at the time of the full year announcement where we were outside the company. We hadn't bought it yet. We haven't guided. And it was all based on our estimations from due diligence, et cetera, et cetera. So now we're getting closer to the numbers, and we can give more refined sort of outcomes. And then also what helped us slightly is that we have been doing some of our Platinum canning, as we alluded to at the AGM, during the course of this year, which helps us a little bit as well. But none of that changes our expectations for next year. Matt Montgomerie: Yes. Perfect. And then secondly, just on guidance on China label. I know you haven't given breakdowns by the pieces, but would it be fair to assume similar levels of growth in the second half year-on-year as experienced in the first half? I know, Xiao, you mentioned earlier sort of there were some supply issues impacting the half you've reported now, and there's been some sort of numerous moving parts over the last couple of halves with supply shortages, but just expectations for China label growth in the second half. David Bortolussi: Matt, we're not providing sort of individual business unit or label-related growth guidance for the second half. As you'd appreciate, it's still uncertain. There's a long way to go through the half. What I can say is that, in terms of the infant category, as you would expect, we're expecting double-digit growth in infant in the second half. And for Liquid Milk and Other Nutritionals, we're expecting that -- the rate of growth to come off a bit, which you sort of have to conclude based on the guidance. We're confident in China label and English label growth in the second half. But as to the specifics around it, I'm reluctant to sort of provide guidance on the components. Xiao mentioned the supply challenges in this half. It's more -- probably less of a sales impact in the half. It's more -- I think Xiao was referring to the impact on user recruitment, which we had to reduce our level of activity during that first quarter, but we certainly ramped that out subsequently. And that's the experience we had actually going back a year in FY '25 and the first quarter of '25, we had a similar experience. So that's where that comment comes from. And definitely with the lower newborns and the -- some of the pressure from the supply chain constraints we have, we're very focused on increasing our new user recruitment and our early-stage share. Operator: Your next question comes from Julia de Sterke with Morgan Stanley. Julia de Sterke: I just wanted to ask first, back to the -- some color on the industry numbers. Just in terms of the English label category, I know now you're kind of cycling some stronger industry numbers in that category. Where do you expect that penetration number to get to over the next couple of years? Are you sort of expecting that strong cadence of growth until you get back to kind of that 28% peak penetration? Or is this kind of industry growth starting to tail off in your view? David Bortolussi: We're not seeing it tail off at the moment. The category is for the label cross-border business is growing quite healthy. I mean, double-digit growth over the last 4 halves, which is terrific. But as you know, like we're only at 20% of the total category, and it was a peak of 2018. Well, actually, it was even higher prior to that, but 28% in FY 2019 just prior to COVID. So we think it's still got some way to go. But I don't think anyone can be conclusive in terms of where it will get to, but we still think it's got some more category growth ahead of it because there is some advantage that English label has over China label at the moment, particularly on formulation. And then from our point of view, from a share point of view, at just under 20% share, we had a sort of peak share in the category in the mid-20s. And we're definitely focused on over time, getting back to sort of the mid-20 share in the category as well. So that's probably all the color I can give on that at the moment, Julie. Julia de Sterke: Got it. And then just wanted to ask on global competitor recalls that have been going around over the last couple of months. Acknowledge that it's probably still pretty early on, so you might not have too much color around what the ultimate impact will be. But has this factored at all into your guidance changes or how you're thinking about the market over the next couple of years and your market share opportunities? David Bortolussi: No, it hasn't, Julie. I mean it's a very unfortunate set of circumstances for consumers, trade and the brands that are involved. So -- and we're not -- we're definitely not sort of tactically trying to be opportunistic about this. And we wish all those involved the best, because it is -- I mean, the infant formula category is -- this happens from time to time, and it's a very difficult circumstances. But that's not factoring into our guidance. We're not banking on a major shifts towards our brand, English label or China label in that regard. I mean if there was any shift, it would probably be more like English label because most of the recall activity has been in that space, but that's probably all I'd like to say on that at the moment. Operator: Your next question comes from Sam Teeger with Citi. Sam Teeger: David, earlier on, you made a comment about potential for corporate consolidation. I was keen to understand just the thinking behind that and how you see things playing out? David Bortolussi: Sam, I think most important -- like in consumer goods, the most important thing is brand concentration, no matter what the corporate ownership structures are in the marketplace. So that's what we're primarily focused on, and that's sort of the category dynamics lead to that. I was just mentioned in passing that there has been some corporate consolidation by Nestle and Yili over time in particular. I mean there is a possibility of that, but we're more focused on and how we present that market share information is by brand, which is the most relevant no matter who owns what brands in the marketplace. So it's just an in-passing comment. So I don't think any corporate consolidation is imminent in the market at the moment. I think most of the players in the industry are really focused on their own portfolios. Sam Teeger: Okay. And just wondering, when you saw the birth rate for 2025 come out last month, how did you balance up whether you should upgrade your FY '26 guidance now or potentially hold off for a few more months to ensure that the strong momentum continues? David Bortolussi: Well, we sort of undertake a regular forecasting rhythm to our business. And based on our year-to-date performance and outlook for the end of the -- for the year to go, it's pretty clear at the moment that we should be in a position to achieve mid double-digit growth. And I don't think that's particularly influenced by the newborns number at the moment, because the impact on Stage 1 in the market is sort of -- it's not as severe as what the decline in the newborns is, because you've got -- what's going on in the market is you've got sort of breast-feeding rates have declined. That's not something that we would promote because breast feeding is obviously best. But that has declined in the market based on the evidence that we've seen by different reporting on that. And also the extent and use of early-stage product has increased as well. And it has a -- so there's a prolonged use of early-stage product as well. So I don't think you should expect the impact to be as significant. And it's also -- it's less than 20% of the market and of our business as well. So I think it's not a huge driver of this year's outlook. And as Xiao said, we're very focused on ensuring that our early-stage recruitment is optimized, and we set ourselves up well for the future. So not a big factor at the moment, Sam. Sam Teeger: And then on the decline in breastfeeding rates, what do you attribute that to? David Bortolussi: I think some of it may well be economic from what we've heard. A lot of mothers for economic reasons are feeling that they need to get back to the workplace pretty quickly. So I think there's probably some of that going on, and there's some social sort of demographic trends around that as well, which I not to comment on the call. So I think it's -- yes, I think there's some underlying drivers there. It's actually stepped down quite a bit -- several points over the last year or 2. So it's quite significant. Operator: Your next question comes from Adrian Allbon with Jarden. Adrian Allbon: Maybe this is one for David, first of all. Just looking on Slide 18 and just trying to just understand like the Other Nutritionals growth, like it sort of like when you back out the Pokeno contribution, like it's just sort of NZD 30 million in terms of the China and Other Asia category. Are you able to kind of give us a steer of how much of that is these new products? David Bortolussi: I guess -- yes, it's pretty significant the growth in kids and seniors. And then outside of that category, you got Genesis contributing quite a lot of the growth. I'll come back to you a little bit later. But probably overall, when you look at our growth, I mean the investment we've made in innovation over recent years, it's really pleasing to see that come through. So if you look at our total growth for the half of just under 19%, if you adjust for the sort of FX impact and sort of Pokeno in the period, you've got sort of 15-ish percent growth underlying. And over 1/3 of that in the period was driven by innovation, specifically Genesis, the kids advanced product in China label and the seniors range that we've introduced. Now those products weren't there in the comparative period. So that's really just 6 to 12 months of growth coming through, which is pretty outstanding. So it is making a meaningful difference is the answer. Adrian Allbon: So of the total growth which was 19%, you sort of said underlying 15% and the innovation was... David Bortolussi: Yes, if you take out currency and the a2 Pokeno impact, the sales associated with those, they're about 2 percentage points each. So call it around 15%, yes. And I'm saying that over 1/3 of that underlying core growth is due to innovation with the rest being the core portfolio. Adrian Allbon: Okay. And within that, obviously, the fortified products and Genesis are the main lifters in that 1/3 of the 15%? David Bortolussi: Yes, it's around -- probably 30%, let's say, 30% for the half. Adrian Allbon: Okay. That's cool. And just like staying on the revenue side, just in terms of the pediatric entry, is the sort of -- is the unit economics quite similar to infant? It's probably an outsourced manufacturer, but like it is quite high gross margin... David Bortolussi: Yes, it's quite a high margin category, similar to infant, yes, which is great. And it allows us obviously to reinvest to establish our awareness and consideration and trial in the category. So yes, we're attracted to the margin structure associated with it relative to our Other Nutritionals, the rest of that category, which is lower margin, but improving with the new innovation we're bringing to market. Adrian Allbon: Okay. Just in terms of the guidance, I'm presuming -- does the upgrade to 15% or midpoint -- mid-double digits, does that assume returning to target inventory levels? Or is that a risk buffer within your upgrade? David Bortolussi: It assumes -- I won't be specific about it. But it does assume that we receive adequate supply during the period from Synlait -- and there's no major issues or disruption associated with our a2 Pokeno facility and transition and all that, yes. Adrian Allbon: Okay. And then just on the marketing side, the marketing intensity for the half, like it seemed to sort of be at the low end of sort of 17% on a continuing basis because I think when we were talking about that reset at the last result, on a continuing basis, it was -- I guess, the track record have been more like 18% of late. Are we expecting quite a step-up in the second half to support these new programs? David Bortolussi: Yes. So in the first half, we pulled back a little bit on our investment, principally related to what I highlighted in terms of the supply constraints. So we pulled back a little bit on our new user recruitment activity, and that's why it's lower in the first half. But we did invest behind our new innovation that we brought to market. So that's why it's at 17% in the first half. So the second half will step up as we invest more in new user recruitment and our innovation in the marketplace. So that will step up. So overall, our reinvestment rate will be around the 18% mark. It's similar to actually in a way, Adrian, to what happened in FY '25 because we had supply constraints in the first quarter, then we pulled back a bit on marketing. So if you have to look at the marketing reinvestment rate in '25, that was 17.5% in the first half and 18.8% in the second half and overall 18.1%. So I'm not saying specifically what it's going to be in the second half, but it's kind of a similar profile for similar reasons in a way. Adrian Allbon: Okay. That's helpful. And just a clarification on those Pokeno losses, did you say that they were NZD 5 million? And I think originally, at the last result, you were expecting NZD 10 million. Is that correct? I just didn't quite hear the end of... David Muscat: No, no. No, I was referring to the half numbers, so NZD 9.8 million EBITDA loss and NZD 5 million of that's in SG&A. So it's only to the end of December. So there will be more transformation costs in the second half. Adrian Allbon: Transformation costs in the first half? David Muscat: Sorry, that was NZD 5 million for the first half for transformation costs in SG&A and we've guided to about NZD 10 million for the full year. Operator: Your next question comes from Craig Woolford with MST Marquee. Craig Woolford: Can I just ask a question around the market share performance -- your English label market share performance, which was steady. Just trying to get a sense on when you -- what triggers you see for an improvement in that market share? The reason for the question is the commentary on Genesis looks very strong and some of the other products look stronger. So is there an inference that something else is losing share? David Bortolussi: Good question. I might let Yohan answer that. Yohan Senaratne: Yes. So yes, if you look on Slide 8, it shows our market share, particularly, if we look at the CBEC market share, we're slightly up on an MAT basis. If you look at the December monthly number, we're up a bit more. So that's about 20.1%. And part of the growth is, obviously, there's the Platinum, which has been the base product for many years. But what we're seeing is incremental market share upside from a2 Genesis. And the primary channel of sales for that product is CBEC. So that's why you can see the CBEC market share trending upwards. The other parts of the business are there or thereabouts. But as we roll out Genesis, we'll also roll it out into more O2O channel store networks as well. And so if we look at the English label market share trajectory, we're hoping to get to 25%. But currently, overall less than 20%. So there's about 5% market share that we're looking to gain. Part of that will come from Platinum continuing to improve, but then products like a2 Genesis, of course, offer some upside opportunity incremental as well to get us to 25%. David Bortolussi: Share growth in that channel has been fantastic. Yohan Senaratne: Yes. So we're the #1 on an MAT basis for the last 6 months. So -- and that's primarily driven by the success of a2 Genesis. David Bortolussi: And in the half, the #1 as well. Yohan Senaratne: Yes. Craig Woolford: So what would drive Platinum share gains? Like, it's been a relatively steady a2 share of EL for a few half year periods now. What do you see as a step change in that Platinum products' share of the market? Yohan Senaratne: Yes, you're right. It's been the workhorse for English label for many years and still is the biggest contributor to English label. Of course, as we go forward, we'll also look to upgrade our Platinum proposition. The last time we upgraded the proposition was back in 2022. And so as we move forward, we'll also look to upgrade the proposition and the packaging as well. David Bortolussi: And Craig, as we transition from Synlait to our new facility, our Pokeno facility. So as you would expect, we're taking the opportunity to upgrade the formula on the packaging. Craig Woolford: Great. That's clear. And just a quick one, just on the guidance, anything that sort of moved in the other direction was just the cash conversion. Apologies if I've misheard something, but I just wanted to -- it was 80% to 90%, now it's 80%. What's the reason for that shift in cash conversion? David Muscat: Yes, Craig, probably the biggest change is the timing of the working capital build at Pokeno. So as we -- the transition that Johan is just talking about in terms of the platinum moving in, we're going to have to start to produce base powder towards the end of the year and the start of the next financial year. So we just got better line of sight over the timing of that. So it's not worse than what it was. It's the same working capital build that we called out previously. It's just the timing of that working capital build. Operator: Your next question comes from Richard Barwick with CLSA. Richard Barwick: I've also got a question on English label because there's a couple of things here that don't quite add up, I don't think because if you look at the English label market, you're saying it was up 12% or I guess the Kantar numbers saying it was up 12% for the half, and you were growing your English label IMF revenue by 21%, but your share is holding about flat. Do we put down all that difference or the difference between the 21% growth in the market up 12%, is that Vietnam and other markets that sort of make up the difference? Or am I missing something here? Yohan Senaratne: Yes. So part of it is Vietnam, and Vietnam has accelerated quite a bit. I think the key thing is that we've seen Genesis as well growing. So if you look at our PCP, we didn't have Genesis in it. And so that's a large contributor of our sales. But that's concentrating the CBEC channel. And then the last thing is we've been working on O2O channels. So you'll see our O2O share with Daigou is a little bit lower, and we've been making some operational upgrades to improve our consumer experience there. So yes, there's a few things going on there. I understand where you're coming from. But some of it is the Other Asia, if you like, outside of China. Some of it is a2 Genesis and some of it is some of the work we're doing in the O2O space. David Bortolussi: I think, Richard, I'd also just Kantar data is helpful and looking at the longer-term trends, there's always anomalies in that. So if you look at the Kantar from a growth point of view rather than share. So Smart Path, the data for the total English category is up quite a lot, so over 20%. Richard Barwick: Well, that's exactly what I was going to question. Do we -- I mean, you put the caveat at the bottom of that -- of the Kantar data. So do we take those share numbers with a grain of salt because that is a big difference. 21% plays the market at 12%. David Bortolussi: Yes. I think Kantar is more relevant, the more aggregated you look at it. So total market, China label, English label. But when you get down into the below that, it becomes more challenging. They review their methodology from time to time. It's obviously a panel-based survey. It's the only full market survey that is available. So I wouldn't say take it with a grain of salt pinch of salt. It's really -- I mean, it is relevant, but I'd just look at it over time in terms of trends. I mean if we take -- if we excluded it, then we'd probably be criticized for excluding it. So we're just including it to be honest. Richard Barwick: No, no, I get that. David Bortolussi: I know many analysts don't have access to it. Yes. Richard Barwick: No, no, I get that. But I was just surprised that the difference between the 21% that you're growing, so that's a very clear number. And just really wanted to clarify, do we put the rest of it down to Vietnam and Co, it sounds like that's the biggest differential. David Bortolussi: It helps, but we're still growing quite significantly in the core business in English label Genesis. Yes. Operator: Your next question comes from Marcus Curley with UBS. Marcus Curley: I just wondered if we could start with the slide that you're talking about the new pediatric supplements for the existing China label range. And maybe it's for Xiao, but just interested to know whether this is resulting in a substantial change in stocking by the mother and baby stores. Do they see this as now 4 products rather than one? Or is it a relatively small component of what's likely to roll out in the stores themselves? Yohan Senaratne: Marcus, it's Yohan here. I can help to answer some of those questions. So firstly, the supplements market is quite fragmented. There's many different products looking at many different functional benefits. And often when consumers are looking to buy in the supplements category, they're buying for a specific functional benefit. So firstly, it's helpful to have a range of products because each product is targeted at a specific proposition and a specific consumer need. When sold into -- so these products are sold into both MBS stores and also online on DOL. And so when we look at MBS stores, if you think of the way the key categories of sale, it's infant formula supplements and diapers. And supplements is a big driver of their business. And so having another set of supplements products in the market in their store that they can -- that is effectively companion to some of their a2 products in the early life nutrition space is obviously helpful for them as an additional sale. And so it's probably best to think of each product as an individual product suited to a specific need. So you can see even the ones that we have on the page on Slide 28, they're very -- you can see they're focused on either immunity, allergy gut health or brain and eye health, areas that a2 are known for in the early life nutrition space. And so over time, we'd look to build on those depending on the success of these. Marcus Curley: It's hard to say from the pictures. But in terms of -- are these individual infant formula products or just a container with supplements in them? Yohan Senaratne: No, these are a container with supplements in them. So they're not infant formula, they're supplement products. And so you can see on the picture, it's a container with a set of supplements inside the sachets within each, with the exception of the Brain & Eye Health, which is a soft gel in blister. Marcus Curley: And could you give us any perspective on how big the supplement market is as the share of infant formula in China label? Yohan Senaratne: Got you. So if we look at the total supplements market, it's an NZD 8 billion market for pediatric supplements, represents 15% to 20% of the total supplements market in China, which is far bigger, of course. But... David Bortolussi: I mean the last time we quantified that NZD 28 billion in our Annual Report. So NZD 8 billion versus NZD 28 billion. So it's quite significant. When we look at all the adjacencies that we're expanding into, this is the single biggest category. And most of it is addressable. Marcus Curley: And the competitors there are sort of aligned with the infant formula brand. So like, for example, Danone would have the largest share? Or is it a different dynamic? Yohan Senaratne: No, it's a different dynamic. On Slide 27, you can see the market shares by competitors in the online space. There's a lot of new brands entering the market. It's highly fragmented. And so there's an opportunity for a trusted brand to enter the market such as a2. Marcus Curley: Okay. And then quickly, just on gross margin, David, you called out an improvement in the half. What are you seeing in terms of those trends? Are you seeing increasing benefits from lower ingredients costs? Or what should we be assuming? David Muscat: I think for the second -- yes, we saw some of the lower milk and lactose costs coming through in the first half. But we're now seeing that reverse and some pressures coming through whey proteins. But then we've got some counters to that in terms of mix of business, should be more IMF weighted in the second half. So I wouldn't say overly too much change coming through in the near term. Operator: The next question comes from Phil Kimber with E&P Capital. Phillip Kimber: Early stage, Stage 1 and Stage 2, I mean, previously, you've shown some market charts in prior reports of what Stage 1 and Stage 2 have been doing. And after the Year of the Dragon Stage 1 had grown rapidly and it started to come off. I couldn't see anything in this presentation. Is that -- has that now sort of moved to Stage 2 products at the market level? I know you guys are winning market share and got good growth, but I'm just trying to understand the market. And then to put some context around that, I think you've said your China label sales are roughly half Stage 1, Stage 2 and the remainder is Stage 3, Stage 4. Is that the same across English label as well? So as a total infant formula business, are you roughly skewed half to early stage and half to Stage 3? David Bortolussi: I'll hand to Xiao just on the Stage 1 trajectory in the market and our share. But so on the mix of stage share in the business, so we're roughly -- it's roughly sort of -- it's just under 50% across the total group, early-stage products, Stage 1 and 2 with China label being slightly higher and English label being slightly lower, if that helps, Phil. Xiao can you comment on stage -- I think Phil's question was around Stage 1 growth in the market and our share around that. Phillip Kimber: And Stage 3. Sorry. David Bortolussi: Yes. And Stage 2. Li Xiao: So Stage 2 China label in the first half is strong growth. I mean the benefit from FY '25, we have a lot of Stage 1 new user recruitment, I mean, cycling into the Stage 2. But if you look forward it's going to be either flat or down due to -- now they are moving to the Stage 3. Stage 3 in the first half is improving, but you are going to see a stronger growth in the second half when they are Stage 2 consumer moving to the Stage 3. Stage 1, as you can imagine, the whole segment is going on a downtrend, because of combination of less newborn baby. But hopefully, it can quickly bounce back into the new year, but also kind of help by this -- David mentioned the prolong usage and increased penetration. Those are all tailwinds for the Stage 1. But I think, for us it's more of a share gain in the new user recruitment because we have done extremely well in the past. I mean demonstrate that we can almost grow the new user recruitment by 30%. [ Pity ] that we are constrained a little bit in this first half by the supply constraint. But now we have put all the focus, energy and money back, I mean, try to turn around and we are confident we are going to see an improving trend on Stage 1, no matter the market are going down or worse. David Bortolussi: So Phil, just on the stage trend, I know most of you don't have access to Kantar, but -- so if you look at the stage, so in the half, the -- for China label, so the 2% growth is Stage 1 was still in growth, so high-single digit -- mid- to high-single digits. Stage 2 was low double digit. Stage 3 was down single digit, but the second quarter was flat as that sort of graduation comes through. And Stage 4 was down sort of high double-digit, if that helps in terms of the stage relative growth in the market at the moment. Operator: There are no further questions at this time. I'll now hand back the conference to Mr. Bortolussi for closing remarks. David Bortolussi: Thanks, everybody, for joining the call. I guess in closing, we continue to execute our growth strategy, focusing on maximizing our opportunities in China IMF, adjacent categories and new markets, which you've hopefully seen a lot of today. And we're pleased with our supply chain transformation progress following the acquisition of a2 Pokeno. So I look forward to catching up with most of you during the course of the next couple of weeks, and thanks very much for joining the call. Cheers.
Masaomi Gomi: Good afternoon. This is Gomi, Head of Investor Relations at Coca-Cola Bottlers Japan Holdings. Thank you for joining our full year 2025 earnings presentation for analysts and investors. Today, we are joined by our President, Calin Dragan; and CFO, Bjorn Ulgenes. Also with us are Executive Officer and President of the retail company, Alex Gonzalez; Executive Officer, President of the Food Service Company and Chief Business Strategy Officer, Maki Kado; Executive Officer, Chief Supply Chain Officer and Chief Sustainability Officer, Andrew Ferrett; and Executive Officer and Chief Human Resources Officer, Yuki Higashi. Following prepared remarks, we will be happy to take your questions. Simultaneous interpretation in Japanese and English is available for both today's presentation and the Q&A. Before we begin, please note that today's presentation contains forward-looking statements and should be considered together with cautionary statements contained in our presentation materials. With that, I'd like to turn the call over to Calin Dragan. Calin-san, please? Calin Dragan: Good afternoon, everyone. This is Calin Dragan. Thank you for joining our earnings call. And first, I will go over the key highlights of today's presentation. Please turn to Slide 3. 2025 was a fantastic year that delivered many remarkable results, increasing our shareholders' value. Business income exceeded our forecast even after they were revised upward twice during the year and reached JPY 24.5 billion, more than doubled than the previous year. Despite the challenging cost environment, we maintained a robust profit growth trend. Over the past 3 years, cumulative business income growth totaled JPY 39 billion. I would also like to highlight that this JPY 24.5 billion business income includes significant cost increases from external factors such as foreign exchange fluctuations and increased commodity prices. I would also like to emphasize that adjusted business income, excluding the cumulative impact of this factor since 2017 exceeded JPY 50 billion and reached a new record high. This clearly shows that our profitability improvement initiatives are delivering steady results. Building on the strong earnings performance, we revised our strategic business plan upward in August and announced the new Vision 2030. We set ambitious targets for key metrics and continued our commitment to further increase shareholder value. In October, we also announced an expansion of our shareholder returns. We view this positive cycle where we have consistently improved performance and enhanced shareholder returns to be one of our major achievements for 2025. In 2026, we will continue this positive momentum as a year of great progress towards achieving our ambitious long-term goals. This year, our business income target is JPY 35 billion. This marks the 4th consecutive year of earnings growth exceeding JPY 10 billion. At the same time, we will enhance shareholder returns, including a 20% year-on-year increase in dividends. And as the -- first year of Vision 2030, we will pursue profit growth and higher shareholder returns to further increase shareholder value. Now our CFO, Bjorn Ulgenes, will walk you through our financial results in more details. Bjorn Ulgenes: Thank you, Calin. Good afternoon, everyone. This is Bjorn. Please turn to Slide 5 for the full year profit and loss. In 2025, our profitability improvement measures and other initiatives proved successful. As a result, profits increased significantly following the previous year. Sales volume also performed well and outperformed in the market experiencing negative growth. Revenue remained broadly in line with the previous year and exceeded the revised plan announced in October. Price revisions improved wholesale revenue per case despite the impact of channel mix changes. Gross profit decreased by JPY 3.1 billion year-over-year. This was mainly due to a weaker channel mix and higher external costs. It also includes a onetime revenue decline linked to changes in Coca-Cola Japan companies marketing investment method. Business income increased significantly by JPY 12.5 billion year-over-year. This was mainly driven by top line growth and cost savings from transformation initiatives. Factors contributing to the profit increase will be explained shortly. Operating income and net income decreased from previous year. This was primarily due to an impairment loss of JPY 88.4 billion in the Vending business, recorded during the second quarter. EBITDA, a measure of cash generating profitability, rose by JPY 6.7 billion year-on-year to JPY 64.2 billion. Slide 6 shows segment performance. In 2025, the OTC and Food Service businesses supported revenue growth while the Vending business drove profit growth. In Vending, revenue declined due to lower sales volume from ongoing market contraction and the impact of price revision. However, segment profit improved significantly by JPY 6.1 billion. This was mainly due to transformation benefits including lower depreciation expenses associated with impairments and higher route productivity. In OTC, the market environment was challenging and volume declined due to price revision. However, growth in online and drugstores and discounters supported overall performance and full year volume remained in line with the previous year. Revenue increased by 1.7%, partially due to price revision. Changes in Coca-Cola Japan companies marketing investment methods had an impact which led to a decrease in segment profit. The Foodservice business achieved strong sales volume and revenue growth and earnings growth rate that was even higher. This was supported by expanded product offerings, activities to acquire new customers and price revision. Please turn to Slide 7 for the factors behind the change in business income. Starting from the left, we can see the impact of volume, price and mix. These reflect changes in marginal profit from commercial activities and contribute a positive JPY 8.8 billion year-over-year. The main factors were a negative impact of JPY 6 billion from volume effect, including channel mix, a positive impact of JPY 18.8 billion from pricing and a negative impact of JPY 4 billion from other factors. While channel mix deteriorated due to shifts in consumer trends, improved wholesale revenue per case from price revisions is steadily supporting results. Transformation benefits exceeded initial projections by a significant margin and reached JPY 6.9 billion. Major contributions came from commercial and supply chain with vending transformation, particularly exceeding expectations. Promotional expenses increased by JPY 0.9 billion year-over-year. Spending increased due to intensified activities to capture peak season demand and secure shelf space ahead of the October price revision. However, the increase was well controlled versus the initial plan through appropriate marketing investments based on market conditions and ROI. Manufacturing decreased by JPY 2.2 billion compared to the previous year due to cost savings at manufacturing sites and in the procurement process. Other costs increased by JPY 3.2 billion year-over-year. This was mainly due to higher outsourcing fees, logistics costs and vehicle and facility-related expenses, despite lower personnel expense. It also include special factors such as reduced depreciation following the vending business impairment and changes in Coca-Cola Japan companies marketing method. Commodity and utility costs increased by JPY 1.3 billion. Of this increase, JPY 1.4 billion was attributable to commodity market and ForEx rates, while utility costs decreased by JPY 0.1 billion. Next slide onwards is on commercial activities. Slide 8 shows sales volume performance by channel and category. Full year sales volume was flat year-over-year despite negative impacts from price revision. This was achieved by strengthening core categories, expanding sales space and executing effective marketplace. As a result, we outperformed declining markets. Wholesale revenue per case also improved across all channels following price revision benefits. By channel, sales volume for vending and convenience stores declined due to price revision. However, in Vending, wholesale revenue per case improved by JPY 90 year-over-year due to price revision. In convenient stores, profitability improved through higher wholesale revenue per case, disciplined control of rebates and promotion. Supermarkets, drugstores and discounters face challenging conditions, especially for large PET buffers due to price revisions and the cycling of the previous year's special demand. However, in the fourth quarter, we captured increased demand opportunities and achieve positive volume growth. Online and Food Service continued to perform well and supported overall volume growth. Online volume increased by 17%, driven by the channel exclusive labelless products and other initiatives. Food Service volume increased by 9%, supported by stronger Sparkling sales at restaurants and related initiatives. In the Sparkling category, volume increased by 5%, led by Coca-Cola and Coca-Cola Zero. Tea volume grew by 1%, mainly driven by Ayataka, which delivered double-digit growth last year following its successful full product renewal. Ayataka further grew by 2% with the launch and renewal of multiple products, including Ayataka Koi Ryokucha, sports, water and coffee, so volume declines due to the impact of price revision. Slide 9 shows market share and retail price trends. Our profitability focused commercial activities supported value share growth and maintain price premiums. Market share increased by 0.2 percentage points in total channel value share and 0.5 percentage points in volume share. Despite tough market conditions, our volume continued to outperform the market and contributed to positive value share growth. In Vending, the market remained challenging and value share declined. However, effective demand capture measures, including Coke ON campaigns, supported volume share growth, while wholesale revenue per case improved through price revision. In the OTC channel, value share declined due to volume decreases from price revisions and channel and package mix. However, in the fourth quarter, we capitalized on increased demand opportunities resulting in a 0.6 percentage point increase in value share, showing recent improvement. Our products continue to maintain the price premium relative to the industry average. In October last year, we implemented our 8th price revisions since 2022 and retail prices continue to show an improvement trend year-over-year. Slide 10 covers key topics in our 2025 commercial activity. Despite continued challenging market conditions in 2025, we implemented price revisions to improve profitability while enhancing competitiveness and achieving volume growth performance of the market. In 2025, in line with our profitability focused strategy, we implemented price revisions twice in May and October and work to maintain and improve shipment prices after the revision. The effects of these price revisions have materialized as planned and contributed significantly to profitability. Alongside price revisions, we flexibly controlled rebates and promotional costs. Through ROI-focused marketing activities, we work to contain costs and allocated resources to mid- to long-term growth investments. We have also announced ahead of the industry, our 9th price revision this March, targeting Green Tea products. This shows our strong commitment to further profitability improvements in an environment of rising industry costs. From a competitive perspective, we also delivered solid results. By strengthening core categories, expanding sales pace and executing effective marketing, our sales volume consistently outperformed the market experiencing negative growth throughout the year. Implementing these growth strategies within clearly defined business units has led to a more effective business operations and performance management, contributing to enhanced competitiveness and improved results. We are confident this will form the foundation for our mid- to long-term growth. Slide 11 explains our sustainability and human resource strategies for sustainable growth. For environmental and community initiatives, we invested in projects that reduce environmental impact in the future. This includes conducting road tests of large trucks using renewable diesel, a new generation biofuel contributing to decarbonization and demonstration projects that generate clean electricity from tea and coffee grounds, while using refurbished high purity CO2 as a manufacturing power source. At the Osaka, Kansai Expo, we implemented horizontal PET bottle recycling through bottle-to-bottle and introduce groundbreaking initiatives, such as the world's first vending machine powered by hydrogen cartridge. To strengthen human capital, we focused on recruitment, development and retention to enhance the pipeline at each stage to increase the ratio of female manager. As a result, we achieved our 2025 target of 10% female managers ahead of schedule. We also introduced initiatives to support dual-income households, shared parenting and flexible work style. These ESG initiatives have been highly recognized and our company has been selected for multiple indices. We will continue to advance our efforts towards achieving ESG initiatives, that supports sustainable growth. From the next slide, Calin will explain our 2026 full year plan. Calin Dragan: Thank you, Bjorn. This is Calin again. In our strategic business plan, Vision 2030 aimed at further increasing shareholder value, we have set ambitious shareholder return targets alongside profitability and capital efficiency goals, such as business income exceeding JPY 80 billion and ROIC exceeding 10%. We consider 2026 the first year towards achieving this Vision 2030 to be a crucial year. And as mentioned earlier, we positioned 2026 as a year of great progress towards achieving our ambitious long-term goals. We aim to further increase profits beyond the substantial growth achieved in 2025. We will also enhance profitability and capital efficiency with a focus on ROIC while further expanding shareholder returns in line with our Vision 2030. Our 2030 targets are ambitious. However, we are confident that steady profit accumulation will allow us to achieve them. With this conviction, we will move ahead with determination in 2026. Slide 14 outlines the strategic direction for 2026. In commercial, as a key initiative for achieving commercial excellence outlined in Vision 2030, we will further evolve the business operation structure for each business unit aiming to enhance competitiveness and profitability. We will strengthen our market execution through an optimized product portfolio and marketing plans while continuing to focus on profitability driven commercial activities, including price revisions throughout this year. We will also focus on further strengthening customer engagement, which is crucial for accelerating our growth strategy. Furthermore, through transformation, we will generate an annual cost savings of JPY 6 billion, while building a solid growth foundation for the future. Within the supply chain domain, one of our key pillars, we will continue to focus on strategies that achieve further productivity gains through the local production for local consumption model in both manufacturing and logistics, while strengthening demand-driven agile responses. Furthermore, in the back office and IT fields, we will further advance data-driven management. To strengthen our financial foundation, we will continue to strive for appropriate capital management and utilization aiming to improve capital efficiency, including optimizing our balance sheet. Through a steady advancement of these initiatives, we aim to achieve business income of JPY 35 billion, an increase of over JPY 10 billion from the previous year, with a ROIC of 4% or higher. Regarding the shareholder returns, we will increase the annual dividend per share by 20% compared to the previous year and complete the second year of our JPY 30 billion share buyback program by October. While aiming to achieve this ambitious 2026 targets, we also intend to realize the year the positive cycle embodied in 2025, improving performance and expanding shareholder returns. Now Bjorn will take you through the details of the 2026 earnings plan. Bjorn Ulgenes: Thank you, Calin. This is Bjorn again. Slide 15 shows the P&L for the full year 2026 plan. For 2026, we plan to achieve revenue of JPY 902.7 billion, representing a 1% increase year-over-year. While we anticipate a 1.5% decrease in sales volume compared to the previous year, due to the continued challenging market environment and the impact of price revisions on volume, we plan to steadily implement profitability improvement measures, including price revisions to achieve a strong improvement in wholesale revenue per case. Gross profit is targeted to grow by 4.3%, outpacing revenue growth driven by improvements in wholesale revenue per case from price revisions and other factors as well as controls and sales deductions such as rebates. For the 4th consecutive year, we aim to achieve business income growth exceeding JPY 10 billion, targeting JPY 35 billion. We will provide details on the factors driving changes in business income later. Operating income and net income are projected to improve significantly year-over-year, driven by increased business income and the cycling effect of the impairment loss on the vending business recorded in the previous year. EBITDA is projected to reach JPY 70.1 billion, an increase of JPY 5.9 billion as we steadily enhance our profit-generating capability. Slide 16 shows the P&L by segment. The Vending business is projected to achieve revenue similar to the previous year despite anticipating continued challenging volume trends across the overall market due to the impact of price revisions. On the other hand, we expect segment profit to increase significantly by JPY 9.3 billion as we accelerate the transformation of our Vending business, leveraging technology. This includes the effect of reduced depreciation expenses following the impairment of the vending business in the previous year, but even excluding this factor, we will achieve solid profit growth. For the OTC business, volume is projected to decline year-on-year overall, impacted by the challenging market environment and volume declines due to price revision, despite anticipating growth in the robust online segment. In contrast, we anticipate a 2% increase in revenue driven by improved wholesale revenue per case resulting from the effect of price revision. Segment profit is targeted to grow by 5%, exceeding the revenue growth rate through price revision benefits and optimal promotional investments focused on ROI and cost control. In the Food Service business, we anticipate strong volume growth of 3.5% driven by expanding product offerings to enhance customer proposals and the results of new business development activity. We aim to increase profit through top line growth. Please turn to Slide 17 for the factors behind the change in business income. We aim for an increase of JPY 10.5 billion year-over-year, driven by top line growth and the realization of transformation benefits. Starting from the left, we can see the impact of volume, price and mix. We target JPY 10.2 billion improvement over the previous year, primarily driven by the positive impact of price revisions, improving wholesale revenue per case while factoring in the continued trends in volume and channel mix. Cost savings through transformation will generate benefits across all areas; commercial, supply chain, back office and IT, aiming for a total profit contribution of JPY 6 billion. We will steadily advance this plan as outlined in Vision 2030. DME plans to increase its budget by JPY 1 billion from the previous year to further strengthen the growth foundation toward achieving Vision 2030, we will strategically execute marketing investments focused on ROI that drive mid- to long-term growth while taking market conditions into account. Regarding manufacturing, we expect to reduce costs by approximately JPY 0.2 billion through measures such as maximizing utilization rates and yield rates at manufacturing. Other costs are projected to increase by JPY 3.5 billion. Overall costs are expected to rise as we implement necessary investments and expenditures at appropriate levels to achieve Vision 2030. This figure includes the reduced depreciation effect associated with the impairment of the vending business recorded in the previous year. The impact of commodity prices and utility costs is expected to deteriorate by JPY 1.4 billion compared to the previous year, primarily due to foreign exchange impact. While the upward trend in cost is expected to continue, we believe we have been able to mitigate some of the cost increases through collaboration with the Coca-Cola Systems global procurement organization and our own unique procurement strategy. Now starting with the next slide, Alex will explain our 2026 commercial strategy. Alex, please go ahead. Alejandro Gonzalez Gonzalez: Thank you, Bjorn. Alex here. Slide 18 outlines our 2026 commercial strategy. In commercial, we will enhance competitiveness and profitability through business unit-specific operational framework. As pillars of our commercial strategy, we have established strengthened portfolio edge, ensure profitability focused commercial activities, strengthened relationship with customers and business unit-specific operations. Now let's move on to the next slide for a detailed explanation. Slide 19. In collaboration with Coca-Cola Japan Company, we will strengthen our portfolio age centered on the 3 pillars you see here. Establishing our core involved strategically focused on our core brands, enabling Coca-Cola Trademark to achieve robust growth last year and deliver one of the highest volume growth rates within the global Coca-Cola system. This year, we will continue implementing initiatives to expand our share in meal occasions and enhance our shelf presence. Additionally, Ayataka has achieved growth for 2 consecutive years since its full renewal 2 years ago. This year, its third year since renewal, we will implement price revisions while leveraging the competitiveness we have strengthened to capture demand. Starting this month, we have launched a campaign encouraging people to enjoy rice bowls with Ayataka. In Georgia, we will strengthen sales through campaigns at convenience stores and vending machines near workplaces, aiming to establish drinking habits in work settings and expand our customer base. For strategic new products, we will enhance sales by relaunching Karada Sukoyakacha W+ with a renewed focus on promoting its consumption during meals, responding to growing consumer demand for health and wellness. Additionally, for Ayataka Koi Ryokucha, we will broaden consumer choices in daily life by offering a diverse range of package sizes, meeting a wide variety of drinking needs. Minute Maid Zero Sugar Lemonade was launched in March last year as a juice beverage offering zero sugar and zero calories, capturing the growing health consciousness trend. Since its launch, it has been well received and has contributed to the expansion of the growing thirst quenching juice market. We plan to introduce new products and aim for continued growth across the entire series. To deepen connection with consumers, Coca-Cola will leverage FIFA World Cup assets to maximize drinking occasions. Furthermore, the Coke ON app, a key digital engagement tool, has surpassed 65 million downloads, contributing to the growth of repeat users. We will continue to evolve this platform. Slide 20 is on commercial activities focused on profitability. To maximize profits, pricing strategy will remain a key initiative this year. We will maintain disciplined commercial activities to generate the benefits from the series of price revisions we have implemented. Additionally, we will proceed as planned with the price revisions for green tea products effective for shipments starting March 1. This marks the 9th price revision for our products since 2022. Revision applies to approximately 10% of our total sales volume with the adjustment rate representing an increase of 6.3% to 12.1% of the manufacturer's suggested retail price. Price revisions remain a key measure for improving profitability and form the growth foundation supporting our sustainable profit growth. We will leverage the gain from our series of price revisions to implement strategic pricing approaches that adapt to changing environments while continuing to explore further price revisions. We will also focus on mix improvement and strategic growth investments, implementing profitability focused commercial activities from a broader perspective. We will strengthen sales of profitable small package products and high value-added products to strategically deploy optimal products and packages tailored to customer profiles and competitive environment and focus on ROI-driven marketing investments from a mid- to long-term perspective. By executing these initiatives, reliably under a strong partnership with our customers, we will achieve improved profitability. From Slide 21, we will now explain business unit specific operations. In the Vending business, we will enhance profitability and capital efficiency through technology-driven transformation. This year, we will accelerate the placement of new profitable vending machines. This will be achieved by introducing new targeting tools for placement locations, building a digital platform that combines vast amounts of data to gain insights into locations with promising profitability and revamping our operational processes to enable efficient and effective new placements. We will further enhance sales and operational efficiency by focusing on strategic assortment and flexible pricing and packaging strategy. Regarding assortments, we will improve the quality and precision of our initiatives. So just updating the AI engine of the assortment system introduced last year, while also sequentially rolling out measures to achieve optimal pricing and packaging tailored to each location, implementing this through ongoing testing. Additionally, as part of our digital marketing efforts, we will continue to strengthen initiatives on the smartphone app, Coke ON. We will implement individualized strategies based on usage patterns and sales data to acquire new users and increase purchase frequency. Furthermore, to strengthen the foundation of the vending business, we will work to optimize costs and capital investment by reviewing operational route designs, revising transaction terms, effectively utilizing equipment and prioritizing system investments focused on return on investment. Slide 22 covers the growth strategies for the OTC business and the Food Service business. In the OTC business, we will thoroughly execute market strategies tailored to each area and stores unique characteristics. We will focus on establishing core products as staples aligned with consumer needs, while aiming to expand shelf exposure, particularly for Sparkling and Tea. In convenience stores, we will pursue the development of customer exclusive products. We will also appropriately manage and execute promotional investments, including rebates based on ROI. Investment will be directed to our initiatives aimed at fostering buying habits, such as implementing digital-driven promotions and integrating retail media with in-store activation. Furthermore, focus on enhancing proposal capabilities through AI and strengthening comprehensive collaboration with customers to build a foundational -- for sustainable, high-quality profit growth. In Food Service business, we'll focus on expanding beverage consumption occasions by strengthening tailored proposals for each customers and building a strategic partnership with customers that leverage our strengths. We will optimize equipment and product assortment with a focus on profitability while also leveraging digital tools to stimulate demand. By concentrating on effective and efficient activities and creating drinking occasions, we will strive to expand business opportunities. I will hand it back now to Bjorn. Bjorn Ulgenes: Alex, thank you. This is Bjorn. Slide 23 outlines our initiatives in the supply chain and back-office IT. We will build a robust business foundation through a transformation to achieve Vision 2030. In supply chain, we will continue to enhance productivity by further promoting the local production for local consumption model in both manufacturing and logistics. This year, we will establish a new integrated logistics center, IDC, in the Kanto region, following last year's launch of such a center in the Kyushu area. Leveraging our accumulated knowledge, we will accelerate the reorganization of our logistics network, including the consolidation of product inventory and logistic hubs. Additionally, we will fully implement the new supply planning platform introduced by the end of 2025 as the foundation for our SOP process. By leveraging AI and utilizing detailed data and analytical capability, we will strive to further improve the process. Additionally, in the second half of this year, we plan to commence operations for new aseptic production lines at our Saitama plant,, which involves modifying parts of the existing production line. This will enhance overall manufacturing capacity in the country region. The back office and IT areas, we will further advance the standardization and streamlining of business process. We will also integrate various IT systems and data to drive data-driven management. Preparations for the future introduction of a new core system will also be undertaken. We will accelerate these initiatives by leveraging access to DX best practices within the global Coca-Cola system. Please turn to Slide 24. I will outline our financial strategy and shareholder returns. Each business unit will manage and enhance not only profitability, but the ROIC as well, which will lead to an improvement in the company-wide ROIC. We will also focus on executing capital investments with an emphasis on ROIC and on initiatives to optimize the balance sheet. ROIC improved by 1.8 percentage points year-on-year in 2025, reaching 3%. This year, we aim to improve it by at least another percentage point targeting 4% or higher. We will also focus on improving our cash generation capabilities, which serve as the foundation for expanding shareholder returns. While we have a JPY 60 billion corporate bond repayments due this September, we will consider borrowing and refinancing options while keeping an eye on mid- to long-term funding needs and considering balance sheet leverage. Our earnings power is steadily improving, and we will continue to allocate the generated cash appropriately between growth investments and shareholder returns. Regarding shareholder returns, we will expand them as planned on the Vision 2030. The dividend, based on our progressive dividend policy, we plan to increase dividends for the third consecutive year. This year's annual dividend per share is planned to be JPY 72, a 20% increase from the previous year that grew 13%. Furthermore, the share buyback program totaling JPY 30 billion. Now it is second consecutive year and implemented since last November, is progressing as planned and is scheduled for completion by the end of October. Whilst details for the 2027 program has not yet been decided, based on previous levels, we are considering a buyback equivalent of JPY 30 billion or more. Now finally, for the summary. Maki, please take it. Maki Kado: Thank you, Bjorn. This is Maki. Allow me to conclude today's session. Please turn to Slide 25. Once again, 2025 delivered outstanding results and proved to be a remarkable year. The growth foundation we gained through transformation pursued even under challenging conditions, combined with profitability-focused business activities contributed to increased profits and enable us to achieve significant progress. The substantial improvement in performance we have realized thus far provides momentum and confidence toward achieving our ambitious Vision 2030 goals. Furthermore, I would like to reiterate our strong commitment to enhancing shareholder returns and our track record of delivering results. To increase shareholder value, it is crucial to create a positive cycle by simultaneously improving profitability and capital efficiency while expanding shareholder returns. We believe that embodying this cycle represents a significant achievement contributing to the realization of Vision 2030. Moreover, based on our track record to date, and the outlook for 2026 and beyond, we are now setting a new target for business income in 2027 at between JPY 45 billion and JPY 50 billion. While this is an ambitious target, we believe it is achievable, given our track record and the steady progress of key initiatives according to plan. This further strengthens our commitment to the Vision 2030 goal of over JPY 80 billion in business income. To ensure the growth trajectory towards 2030 outlined here, the success of 2026, the first year of Vision 2030 is of crucial importance. By executing the strategy explained today, with unwavering focus, we will firmly achieve our 2026 business income target of JPY 35 billion and launch Vision 2030 with a strong momentum, aiming to further increase shareholder value. That concludes today's presentation. Thank you for your attention. Now we will move on to the Q&A session. Gomi-san please take it from here. Masaomi Gomi: Thank you, Kado-san. This Q&A session is intended for analysts and investors. Members of the media are kindly asked to refrain from asking questions at this time as a separate session will be held later today. [Operator Instructions] We will now begin the Q&A session. Operator, please proceed. Operator: [Operator Instructions] Ihara-san from UBS Securities. Rei Ihara: This is Ihara speaking. So I would like to ask one question. On Page 25, you were talking about like JPY 45 billion to JPY 50 billion for 2027, the return is also very strong in commitment in the tone. So I feel a confidence in the management here. But on the other hand, probably by looking through the length of the stock market, we were wondering the external environment is really harsh, but you have a very, very strong confidence. I feel that the communication is a little bit weak in here. So my question is when it comes to mid- to long-term plan, I know you are very confident, but what is the reason behind your confidence? I know there are something obvious to us, but there must be something that we are not yet realizing. I would like to understand where the confidence comes up from -- within your company? Masaomi Gomi: Thank you, Ihara-san, for your question. From the midterm mid- to long-term perspective, you would like to understand why you are confident about this plan? So Bjorn-san, would you like to pick up this question, please? Bjorn Ulgenes: Ihara-san, thank you for the question. So as you said, we are confident about the trajectory our business is on. And that's why we also thought it would be helpful for you to see a 2-year range so you can evaluate how we are progressing towards those strategic targets. And I think the root of your question, if I got the translation correct, is what's the source of the confidence? I think there are several things. One, we have a clear vision where we're going. We know our targets, we know our KPIs and the whole purpose is executing against that. Everything will stand and fall on commercial execution. And every day, we're seeing the 3-legged business unit approach we have or segments, as we also call them, continue to perform very well according to the job ticket they have been assigned. So that's the overall commercial part. And if we have time, maybe Alex and Maki can build on that. The second part is transformation. You saw very strong results for transformation in 2025, and we continue to build on that across the board, the Commercial business units, supply chain and back office. And three, you also see from the shareholder-related results that we're putting out there with the dividends, the share buybacks and the commitment to continue, so is the source of a very strong balance sheet. So overall, we believe these key fundamental elements will enable us to deliver our targets. Thank you. Alejandro Gonzalez Gonzalez: Ihara-san, Alex here. Just to provide a little bit more color on the business unit. I think to begin with Vending, clearly, we have over the last 3 years and particularly last year, driven a significant profit growth back to the strategic role of this business unit in Vision 2030. And we will continue to accelerate beyond the learnings of what we have captured until now. And again, back to the track record of delivering in a very challenging environment, we have been able to grow ahead of the market, indeed, the market growth. Particularly with Vending, we will move further into more granular growth looking at unlocking opportunities beyond the total Japan but really looking at where by subsegment closures and location level and unlocking and deploying the tools and the data-driven strategies back to placement back to how are we allocating the capital in the market and how are we driving assortment. But just to give you a color on Vending. Masaomi Gomi: Thank you, Ihara-san. So I hope that answered your question. Operator, please put through the next question. Operator: Next person with a question, SMBC Nikko Securities, Furuta-san, please go ahead. Tsukasa Furuta: SMBC Nikko Securities, Furuta speaking. So I have one question. So the concept behind the guidance for this term. So volume mix effect will be much higher than last year. So there is an impact of the price revision in last October and also deterioration of channel mix. And also -- so not many manufacturers announced the price division. So considering everything, how are you going to deliver on the plan for this term for 2026. Masaomi Gomi: Furuta-san, thank you for your question. So in the guidance for 2026, so there is a tough situation in the volume price mix and how we can deliver on the high target. Bjorn will answer the question. Bjorn-san please. Bjorn Ulgenes: Thank you, Furuta-san. So I think the essence of how we're going to deliver the plan is included in our waterfall. So let me try to put some context around it. One, we believe the Commercial profit will increase, which is a combination of what I said to Ihara-san's question around 3 business units executing their job ticket. And yes, as we also said, there are some challenges in the market with, for instance, Vending, not growing as fast as OTC and Food Service. But overall, we believe the combination of focused Commercial plans, price increases and a good management of our trade investments will deliver the commercial profit. When it comes to transformation, I think you would agree with me that we have delivered on our promise to change the business, and we will continue to do so across the board. This is not one specific business unit or function carrying the transformation. It comes from all the significant functions in the company, including IT. We're managing our investments, as you saw from the waterfall. Yes, there will be some increases in DME or marketing investments as we support the effect of the price increases and the channel mix. We are continuing the excellent track record in our manufacturing and our logistics to again, make sure we manage cost per case and in our investments. And we are offsetting a lot of the inflation we see coming through, especially on third-party outsourcing expenses and logistics in a good way to overall manage our performance. There is impact from a weaker yen that continues to hit the commodity basket. But overall, I think a very balanced way of achieving our 2026 guidance. Masaomi Gomi: Operator, could you move on to the next person with a question? Operator: Saji-san, from Mizuho Securities. Hiroshi Saji: I have a question for Slide 25. For next year's guidance, thank you very much for the next year's guidance. And this year, the next 2026, except the depreciation is JPY 6 billion, JPY 7 billion, profit has increased. By 2027, in that sense, the depreciation -- because of the impairment, impact will be shorter or smaller and the performance amount, I believe the amount will be increased, that is the forecast, I think. But what I'd like to ask is that for 2027, comparing with 2026, the transformation initiatives or what will be the differences for the 2 years? So what is the driver for accelerating the growth? What is your thought? Masaomi Gomi: Saji-san, thank you very much for your question. For next year, what are the factors that are going to increase the profit? And for this, I would like to ask Bjorn to take this question. Bjorn Ulgenes: Thank you, Saji-san. Excellent question. Let me try to give a little bit of context to it. One, on the commercial arena, as we have said earlier, our main focus is to execute the commercial strategies across the 3 business units with 3 different job tickets. And as you heard earlier, we are surgically focusing on leading on price and therefore, positive price mix that would be one of the elements. But secondly, also pick up the very important points that Alex had in his prepared remarks and also his answer to Ihara-san, data-driven profit growth. And as we keep on investing in Vending, but also an integrated finding, as you heard about earlier, and overall, in our tech-led transformation programs. All of this will start taking effect, we estimate, from 2027 onwards. So that will give us new insights that we either can't find today or will take a lot of time to develop. We will have them more at our fingertips. And that, again, will enable us to sell smarter and spend market. So the major changes are going to be primarily internally driven that we can control, but of course, also working, as I said earlier, striving for positive pricing. Hope that gives a little texture to your question. Thank you. Hiroshi Saji: So the transformation initiatives, the positive increment of the profit, so that will expand for 2027. Is that correct? Bjorn Ulgenes: Correct. Masaomi Gomi: Operator, please move on to the next person. Operator: Daiwa Securities, Igarashi-san. Shun Igarashi: This is Igarashi from Daiwa Securities. I have a question on the business units. So I would like to hear more about the sales activities, especially Food Service. And I'm seeing that you are having a lot of outcomes and success in the Food Service. And looking at Page 16, it seems in terms of sales, volumes is going up. So you have a positive outcome in this area. And what I have heard so far, it seems that you have expanded lineup and you have new customers that you have achieved as well. But to be more specific, what kind of success are you really seeing in the sales activities? And when we think about the Food Service right now, so the mix out of your total business is still small. But probably, if you have a great success here, you'll be able to expand it to other businesses? Would that be possible? That is my question. Masaomi Gomi: So your question is about Food Service business, about volume, sales, why is it really strong? And are we able to use the learnings to the other business areas, was another question. And I would like to ask Kado-san to answer this question. Maki Kado: Well, thank you very much for the question. This is Kado-san from Food Service. I would like to mention 3 points. First of all, looking at the past 2 years or so, I would like to say, basically, the foundation part has changed. What I mean by that is, for example, in the past, Bjorn, Alex, they have explained this already, but let me repeat. So we are using more data. So it's data driven than the past, and we're getting all the insights from the data. So we're doing that. And also, our sales members have a stronger skill set. So the capabilities are really being stronger. So we have been really improving the base or the foundation of our business. And I think this is the foundation for success in the couple of past years. And the second point I want to mention is, again, I have mentioned this before, but we have customers that are winning at. So we want to have a closer collaboration, a very strong relationship with these customers, and that's working as well and that is another source of our growth. And talking about the future, so how should we proceed in this way. I think what we have to do is we need to make sure that we have more customers that we can win with, we would need to have sales activities based on strong proposals. That will be our ultimate goal. So that's my third point. We have already been doing it; OTC, Vending team, we have been collaborating already. We have been changing information. Of course, we are sharing our learnings to them, and vice versa, are the learnings from OTC and Vending. So they have a long history in their commercial activities. They have really achieved lots of success as well. So from those teams, we are gaining lots of insight information as well. So it is like it is a vice versa, mutual relationship that's really working. And we want to continue to do that. Thank you very much. Masaomi Gomi: It is already time, but we would like to take one more question. Operator, please move on to the next question. This will be the last question. Thank you. Operator: Sumoge-san from BOA. Manabu Sumoge: Sumoge, from BOA. I would like to ask about the guidance. On Page 17 on your presentation, I would like to understand this. So in others, you said that you are factoring in the reduction of the depreciation from the Vending impairment. But I think other than that, we also have the cost elements here. So I would like to understand what are the other parts. And also, Kyoto has already put up some market investment because you have to secure the volumes since you have hiked the price. But I see your marketing expense is not going up that much. I believe that you are having very good control. So I know it's all in all a very positive trend. But is this feasible? My overlap to other questions, but I would like to understand about the marketing expenses? And also, what are the costs that are increasing? Masaomi Gomi: So you would like to understand about the cost elements on the waterfall chart. I would like Bjorn-san to answer to that detail. Thank you. Bjorn Ulgenes: Sumoge-san, let me try to give a little picture to you. First, let's start with the others part. So yes, correct, negative JPY 3.5 billion, but that includes the close to JPY 5 billion of the positive impact of the depreciation, correct. So what is happening inside here, we are having inflation as most other companies in Japan, for instance, of logistics and outsourced expenses and overall inflation in general. That's one element, sort of the cost increase part. The second part, we are also investing, as you heard me said a couple of times today and also Alex talked about in Vending, we are investing ahead of the curve to again reset of how we work with data and using technology level transformations going forward. And you've also heard in our prepared remarks late last year and for this year, we went live with an integrated end-to-end planning system, which again, demands investments for us to be able to reap the benefits later back to my answer to Saji-san earlier about what the future benefits that we're going to see from all of this. So, net-net, we're seeing cost increases but also investments ahead of the curve in others. When it comes to DME, we are surgically focused, Sumoge-san, on having an ROI when we invest in the marketing activities together with the Coca-Cola company, as you know. So this will depend on the customer landscape. It will depend on the channel and also the competitive environment where we commit to managing these expenses just like we do with every other expense in our P&L. Hopefully, that added a little texture. Masaomi Gomi: We have run over time. So we would like to close the Q&A session for today. All these materials will be uploaded to our corporate website. If you have any questions or feedback, please reach out to IR team. Thank you very much for your participation.
Mark Coombs: Good morning, everybody. Thank you for coming. Ashmore Group First Half '26 Financial Results. Anyway, so here's the overview. The market has done pretty well, and we've done okay as well. Generally, EM is doing really what we'd expect it to do, which is outperforming developed markets. We're at 82% of our assets outperforming in the 1 year, which is good. We're comfortable with that. Our flows have gone up, which is great. So 10% increase in assets under management over the half, which gets us to about $52 billion. Net inflows of $2 billion. Subs up 35%, reds down 39%. So things moving in the right direction -- or the other way around, 39% subs, 35% reds. Our statutory profits. Revenues are down year-on-year due to lower average AuM and reduced performance fees, which you would expect. We try and keep our costs as tight as we can despite inflationary environment. Our investment performance on our seed has been strong. That's delivered GBP 55 million of gains. PBT, up 64% to GBP 82 million. Diluted EPS, up 90%, basically, to 10p. Dividend per share, maintained at 4.8p. Strategic stuff that we're doing is working, which is nice. Equities AM continues to grow steadily as it has throughout the last 5 years, up 17% to $8.8 billion, which is 17% of group assets now. And local offices are also growing, up another 8% to $8.4 billion, which is 16% of group assets. Those two trends we expect to continue. Steady growth in those places. Macro for us is pretty good, and we think that will continue. So economic growth is pretty solid in the larger EM economies in particular, which is where we see the most interesting things going on. Pretty high rates and steady deflationary pressure being exported from China, we think, allows for further easing. Dollars, we don't think get any stronger from here. Geopolitics are a drama, but they've often been a drama and in some ways quite good for EM. And a lot of opportunities across the piece. So we keep thinking active as a way to go. Sitting on an index, you guarantee yourself a problem at some point. Update on the performance in particular. Obviously, dollar weakness -- dollar collapse isn't great, but dollar weakness is good for us. It's a tailwind. So good absolute returns in '25, better than DM, as I said. The indices are on the right. So ignoring us, this is just the indices. So the dollar was down 10%; the MSCI World equity index was up about 20%; and EM Equity was 30%; and Frontier, 40%. So strong equity outperformance. And then on global bonds. Global bonds were about 5% or 6%; external debt was about 12%, 13%; and EM local currency was about 20%; and corporate was just a little bit better than DM. So across the piece, index, no judgment required. Better year for the 12 months on December '25 in EM over DM. What else is going on? U.S. tariffs are what they are, generally inflationary and not positive for global trade. But what it has done is push intra-EM trade up quite a lot, and we see more of that coming. If anything, more intra-EM reforms and progress in terms of making stuff easier to do, which I think is great. Geopolitical risk has calmed down a wee bit until it hasn't. But a lot of the drama is out there and people are aware of it. Currency generally has underpinned equity and local currency in particular, and we're seeing that in terms of client appetite, too, continuing appetite for local currency bonds and for equities. Spread compression helps. Developed markets, I think we all know the problem, right? Lots of debt, fiscal deficits, politicians trying to issue paper to kick the can down the road, valuation is expensive and policy uncertainty. Just summarizing performance for you. We like to do this just to give you a sense. As you know, we split between global and local businesses here. These are the main themes. So the 1 year, we're up. 82% is outperforming, which is good. We're happy with that. The good news is we're also outperforming where we see most of interest in raising capital, which is in local bonds and in equities, both global equities and actually local equities. So that's good to have. So overall, as a group, we're now up above 80%; 3 years at 70%; and 5 years at 58%. That's a very strong recovery from '21 drops out. But this is not an issue. This is all salable. I think this is Tom. Tom Shippey: Thank you. Okay. So starting as usual with a high-level financial summary for the period: characterized by strong investment performance, continued operating efficiency and, consequently, strong growth in statutory earnings. Adjusted net revenue was 16% lower year-on-year, reflecting the impact of reduced average AuM levels and lower performance fees compared with a year ago given fewer asset realizations from the alternative vehicles in this half. Total operating costs marginally increased by 1% as we continue to focus on operating efficiently across the group's global network of offices. And variable remuneration was accrued at 32.5% of pre-bonus profit. Consequently, adjusted EBITDA of GBP 20.9 million delivered an operating margin of 31%. The combination of strong markets and Ashmore's investment outperformance mean that the seed capital portfolio generated pretax profits of GBP 55.4 million, leading to a 64% increase in profit before tax to GBP 81.9 million. Therefore, diluted EPS rose 89% to 10.1p per share. And excluding the seed capital returns, diluted EPS was 3.1p. The balance sheet remains well capitalized and highly liquid with excess financial resources of GBP 480 million or 67p per share. And finally, as Mark mentioned, the Board has declared an unchanged interim dividend of 4.8p per share. Looking at the local offices. During the half, we've continued to develop the network in key emerging economies. These businesses are exposed to high-growth markets and also provide real diversification. It's been demonstrated again in this period. Looking at each office in turn. Ashmore Colombia delivered 16% growth in AuM, reflecting strong absolute and relative performance in its listed equity strategies. During the period, the business broadened its product offering with the launch of a regional LatAm equity strategy and has been investing the most recently raised private capital in infrastructure debt and private equity. Ashmore Indonesia had a notable increase in new client flows as the broader market environment improved and retail distribution initiatives were implemented. In Ashmore India, the team's high-quality, long-term performance track record continues and the near-term focus is on deepening onshore distribution access for retail investors. And finally, while Saudi Arabia had some institutional redemptions early in the half, the business continues to diversify with the launch of a second private equity fund focused education and is also broadening its client reach through the use of digital distribution. In terms of the two newer offices, Ashmore Qatar is now fully operational, supporting the group's investment management capabilities in the region and deepening local institutional relationships. And regulatory approval for Ashmore Mexico is anticipated shortly, allowing the team on the ground to exploit the growth opportunity arising from recent pension reforms. Alongside continuing to build scale in the existing local operations, we'll continue to look for opportunities to expand this network over time. In terms of the aggregated financial performance. Management fees were broadly in line year-on-year while performance fees were lower, reflecting the successful realization of alternatives investments in Colombia and Saudi Arabia that generated performance fees of approximately GBP 7 million in the prior year. While asset realizations from the older private equity vintages are ongoing, meaning that performance fees are possible, the timing of these is inherently uncertain. The implementation of a consistent global operating model means that the local businesses achieved a 45% EBITDA margin and delivering increasing profitability as assets under management locally grow. Looking at the group's assets. The total of $52.5 billion increased by 10% over the period driven by Ashmore's investment outperformance, which added $2.6 billion and net inflows of $2.3 billion delivered across both global and local businesses. Subscriptions increased by 39% year-on-year to $5.7 billion, reflecting higher client engagement levels over the course of '25, an increasing recognition that EM is outperforming the attractive absolute and relative valuations on offer, and therefore, a realization that global portfolio allocations need to change. The subscriptions was broad-based and includes both the funding of new client mandates, notably in equities, external debt and blended, and existing clients increasing allocations across the group's range of fixed income and equity strategies. Client demand was also geographically diverse with equity flows from European clients and Asian clients allocating to sovereign fixed income strategies. There are also encouraging signs that U.S. investors are now considering reallocating away from their home market. Reduced redemptions also contributed to the net inflow with a 35% decrease year-on-year to $3.4 billion in the half. Indeed, this is the lowest half year redemption level since 2010 and reflects the latter stage of what has been a reasonably lengthy EM flow cycle. Looking forward, Ashmore has started 2026 with a healthy client pipeline, reflecting the positive market environment of recent years, the outperformance being delivered by Ashmore's active investment management and a growing realization by investors that emerging markets warrant a higher allocation. The caveat as ever is that the timing of funding can be uncertain. Turning now to revenues. The year-on-year decline of 16% is attributable to a 3% lower average AuM level and reduced performance fees compared with the level delivered from asset realizations a year ago. Net management fees were 9% lower year-on-year at GBP 62.1 million with the movement attributable in roughly equal measure to the average asset level, an FX headwind from a stronger sterling and an average fee margin that is 2 basis points lower than a year ago. The year-on-year movement in the management fee margin is entirely due to the full run rate impact of flows in the prior year period, i.e., the 6 months to December 2024. The reported margin in this half of 34 basis points is unchanged compared with the 6 months period to June '25 and was broadly stable over the period. Management fee margins at the investment theme level were also relatively stable with the exception of alternatives, where the first half margin was impacted by the return of higher margin capital to investors, coupled with the investment cycle of recently raised private debt capital that is not yet earning full run rate management fees. On a pro forma fully invested basis, the alternatives margin is approximately 110 basis points. As mentioned, the first half performance fees of GBP 0.8 million are lower than the prior year period. I continue to forecast up to GBP 5 million of performance fees in the current financial year excluding any contribution from alternatives realizations in the second half. And finally, other income of GBP 4.6 million increased due to the generation of transaction fees in the period. I would expect this source of revenue to revert to more normal levels in the second half of the year. In terms of operating costs. We continue to operate an efficient business model globally, and total operating costs of GBP 48.3 million were broadly consistent with the prior year period. There was a modest increase in salary costs to GBP 16.1 million, primarily reflecting recruitment in the group's local businesses, including the establishment of the new office in Mexico. Other operating costs were reduced by 2% to GBP 10.9 million notwithstanding the preparations for moving to a new London head office at the end of fiscal Q3. The VC accrual of 32.5% is consistent with the prior year range of 30% to 35% and in absolute terms means a charge of GBP 19.8 million, 1% higher year-on-year. As in previous years, realized life-to-date seed gains of GBP 14.8 million and interest income of GBP 6.8 million are included in the calculation of the VC accrual. Given neither life-to-date gains nor interest income are included in EBITDA in this period, this has had the effect of reducing the operating margin by approximately 10%. Looking to the second half, there will be a slightly higher noncash depreciation charge reflecting the cost of the new London office lease. But overall, I expect full year non-VC operating costs to be approximately twice the first half level of GBP 29 million. The group seed capital program is now well established and has meaningful scale to support the diversified AuM growth and deliver attractive through-the-cycle returns to shareholders. Seed investments now have a market value of GBP 391 million with mark-to-market valuations in the period benefiting from both positive markets and Ashmore's outperformance. In addition to the GBP 391 million, the group has made commitments of GBP 81 million to funds in the alternatives theme, which are likely to be drawn down over the next few years to facilitate growth in Ashmore's thematic private equity and private debt strategies. Given that many of the current seed investments have delivered positive returns and provided appropriate scale to funds, I would expect the successful realization and recycling of existing seed investments over the coming periods to largely fund these additional commitments. While the primary goal of seed investments is to support growth in third-party client AuM, over time, the program has also delivered meaningful profits to shareholders. In this period, the impact was a GBP 55.4 million gain, of which GBP 9.6 million was realized in the 6 months. In terms of new investment activity, a total of GBP 38 million was invested in the period to support growth in private equity strategies, notably in the Middle East, and to establish new funds, including the regional LatAm equities product I mentioned at the beginning. Realizations of GBP 47 million were achieved principally through matching client flows into ceded equity strategies and following the return of capital by alternative vehicles. On a life-to-date basis, these realized investments have delivered GBP 14.8 million of gains. Finally, on the P&L. Interest income of GBP 6.8 million reflects lower average cash balances, in part, reflecting the incremental seed investment activity in recent periods and prevailing short-term interest rates compared with the prior year period. The effective statutory tax rate of 13.6% is relatively low compared with the guidance of approximately 22%, largely due to mark-to-market equity gains on the seed book not being subject to U.K. corporation tax. On an operating basis and taking into account the geographic mix of the group's profits, the effective tax rate remains around 22%. Turning to the balance sheet. Ashmore has total financial resources of GBP 573.6 million, which compares with its total capital requirements of GBP 93.3 million. That means that the group continues to operate with a meaningful level of excess capital, equivalent to 67p per share. The balance sheet remains highly liquid with GBP 261 million of cash at the period end, and approximately 2/3 of the seed capital investments are in funds with frequent dealing opportunities. The group's cash position is, however, relatively low with the recent levels given the seed activity. And from a cash flow perspective, the first half typically see significant payments related to the prior financial year, namely, the final ordinary dividend paid in December and employee variable compensation paid in October. Additionally, in the last 6 months, the EBT has purchased shares worth approximately GBP 14 million. Operating cash generation tends to be stronger in the second half of the financial year, and total cash will continue to depend on the balance of seed capital investments and recycling achieved. And with that, I'll pass you back to Mark. Mark Coombs: Thanks, Tom. Thank you very much. So outlook from here. I think things are pretty supportive actually from what we're up to. Absent some global war, I think things look pretty good. So on the right, we just talk a bit about bond yields and also how equities are doing. And if you look at the bond space, those 3 lines are CPI, so inflation, real yield and actual yield. And as you can see, real yields are really pretty good in terms of EM. You've got positive real yields, inflation low, if anything, declining, but let's say, worst case, flat. So there's plenty of room for EM to cut rates. But even if they don't, you've got nice positive real yields. And so we're seeing that in terms of client demand to buy local currency and local currency bonds in particular. And then on the equity side of things, after about May, June in the year we've just had, significant index outperformance over the S&P, and if anything, started at the end of Q1. And we would expect that should be able to continue. Although there has been, as I say, a significant performance to this point, but the EPS story is still good and recovering in EM. So as EPS improves, share price performance tends to continue to follow it. In terms of policy and things for the year ahead. Yes. China is obviously China and definitely going to continue to export deflation, which may give other challenges, et cetera. But that is definitely the game. So inflation should remain low in China and they should export deflation, so relatively stable growth. They have one thing probably now that they still have to fix and they're struggling to fix, which is the property market and generating sufficient youth employment for these large numbers of people coming out of university every year. But it's feeling relatively stable in terms of their outlook from here. This is one of those years that's a big election year for EM, which tends to provide reasonable opportunities for us. Everybody lies to get elected and EM is no different from anywhere else. And so I'm looking through the noise. It tends to be quite a good time to take some risk through the first half of this year. The trick is don't get carried out in a lot of bad headlines and start acquiring risk -- subject to price, of course, but start acquiring risk at pretty good prices midyear with a view to election tending to usually be back end or mid- to back end of the year or late half 1 through to late December time. So a lot of LatAm elections. And that tends to be, as -- as I say, we've quite like years like this. We tend to get a little bit of negativity around headlines and then you tend to get a chance to buy risk. So we quite like years like this. This tends to be a good time for us to add risk to make quite a lot of money in the year after. The only thing against that is if nobody lies or nobody says anything controversial. But I think we are going to get some noise around LatAm elections in particular. Monetary policy, I think, is going to get looser. As I said, high real rates and inflation under control, so I would expect to see rates continue to get cut in most places. I don't really see dollar strength being a drama. You're going to get moments of strength but you're going to get generally a selling trend. Just huge net liabilities in the U.S. and everybody is so long on the dollar. And the way people are talking to us about what they want to buy, it's mostly nondollar assets. So it's noise around the edges, but it's the right sort of noise in terms of dollar softness. And the policy mix plus what the Fed is up to, I think, is going to continue to do that. And then AI is going to be deflationary, probably. I suspect you're going to get bottlenecks around the ability to turn massive spending into actual productivity gains. You're going to get bottlenecks in terms of the kit being available when you want it, where you want it. But at the margin, you would expect it to be deflationary. So that's kind of the macro outlook. Summary from where we're at. A reasonable half for us. It's a good market. We outperformed. Flows are better, so increased AuM. That's nice. Flows will be two ways for a while. It always happens like that. It comes down, then it kind of bubbles along, then it goes up. So we're at a point where we should see gradually drop -- this was a huge drop in redemptions. Redemptions never go to 0. So you'd expect to see redemptions fly around a bit but generally lower. The trend is lower. And subs, definitely, given what we're seeing in the pipeline, you'd expect to see that to continue to improve. Staff profits have been up. That's good. What we're doing strategically in terms of growing the local businesses and equity businesses, that's continued since '22 all the way through. We expect them to continue to grow and to change and particularly those things. And then macro, I think, is pretty good for us. There's a relative value story but there's also an absolute value story. So that's the broad picture. Very happy to take questions. I'll actually do that. I think that's right. I don't want to make -- I've realized I'm already standing up. Well, that was easy. Thank you, Mike. Let me help. Michael Werner: Mark, just two questions, please. First, really good progression in fee margins over the past 6 to 12 months. Are you guys still guiding to on a like-for-like 1 to 2 basis point decline, I think, it's every 12 to 18 months? And then on the second question. Really, as you mentioned, redemptions coming down, subscriptions up. How does that pipeline feel in terms of your ability to kind of repeat what we saw in Q4 in terms of flows of around $2 billion or so ex the liquidity? Mark Coombs: Do you want to deal with the first one? Tom Shippey: Let me do the first one. So yes, as you know, the basis point every 12 to 24 months is the best guess having taken out the things that we can calculate that have driven any other move in terms of mix or size of product, et cetera. That feels like it's about right, but it's still a best guess. The market is still competitive. There is industry-wide pressure on margins. We think we're in a relatively protected part, but we're not immune to the competition or the margin erosion by osmosis. Where people get a good deal somewhere else, they tend to come to us and say, can we get a better deal? So that basis point also feels about right. But as we've seen in this period, things can stabilize depending on mix and the retail flow and what we're getting in the locals, et cetera. Mark Coombs: Yes, exactly. It's a best guess. I mean, as the local business gets larger and as the equity business gets larger as a percentage, that kind of helps because fixed income tends to be priced generally cheaper. Huge sweeping statement around the world. And alternatives tend to be priced higher, too. So as all those things are growing, that all helps. And the other question was? Tom Shippey: On the pipeline. Mark Coombs: Pipeline, yes. The pipeline is, I think, the last time we spoke, it's probably better than the last time we spoke. There are more people -- it also tends to feed itself a bit. As people see this happen, they tend to sort of start saying, oh, maybe we should do better than that. Unfortunately, everybody follows somewhere. So pipeline, I would say, is better than the last time we spoke. If the pipeline was 10 at a screaming raging bull market, everything is fantastic, and it's 1 when the Russians invaded, it's probably 5. And last time we spoke, it was probably 3. Again, I'm hoping I said it. I meant to say that if I didn't. Reds will be -- fundamentally, they're trending lower. There's no question. But individual clients will have things they want to be doing. So you can't really -- that's a huge drop in reds. And so we thought, well, isn't that nice? But I wouldn't guarantee that drop every time. Yes, looking at the mic. Great. Self-help, I love that. Laura Gris Trillo: This is Laura Gris Trillo from Jefferies. So I guess on the back of Mike's question, I'm just wondering in terms of the differences you're seeing in the pipeline for institutional versus intermediary channels and also in terms of new client mandates in EMD versus top-ups. As I understand, top-ups are normally like easier to come around because clients need to do due diligence. And my second question is on the local platforms. I've seen you have had a drop in revenues year-on-year and also a decrease in EBITDA margin. So any context on that would be very helpful. Mark Coombs: Do you want to do the second one? Tom Shippey: Should I do the second one? So yes, that's entirely... Mark Coombs: I might forget the first one. Tom Shippey: Yes, okay. I'll remind you when you're ready to go. So on the locals, the drop in revenue and the margin, entirely due to fewer performance fees. So we realized some assets in LatAm and in the Middle East at the beginning of the '25 financial year. It's about GBP 7 million in total. That's in the first half. So underlying management fee is broadly in line. And the margin, that sort of mid-40s to 50% is kind of where we would expect the aggregate to be and growing hopefully from there as scale comes through. Mark Coombs: And then on flow, I think you're talking about institutional over retail and existing client over new, and I guess, by product set. So in terms of institutional over retail, it's mostly, I would say, yes, we're seeing flow in retail kind of begin to move a bit. And retail is often ahead of institutional, but it's not dramatic. I would say steady retail interest in equity, and that is a mixture of U.S. and other. Sporadic retail interest in local currency and some in investment-grade dollars. But if retail -- again, if 10 was everybody was crazy and happy and delighted and 1 was they never did anything, I think retail, we're kind of still 2, 3. There's a lot of retail still sucked into the U.S. market. Institutionally, it's definitely, I would say, a stronger pipeline. And then I think the second part of the question around that was around the split between new clients, new target type things and existing top-ups. Using the last quarter as an example, it was about 50-50, I think. Is that about fair? But I would say the top-up clients are the ones you feel you'll -- again, fortunately, we have a bunch of clients who we've had for a while. And a lot of them are still at 1 out of 3, having gone in '22 or '23 from 3 down to 1, let's say. A lot of them are still at 1 but we've just seen some of those start to go back to 2, just beginning, I'm talking about. So it was 50% roughly of what happened in Q4. And it was a few people going back to 2. But they're not in any way -- not that many people either. New client activity is the rest of it. And I would say the pipeline is more new client than top-up at the minute, and it's more geared to equity over fixed income at the minute. But that's the kind of general statement that will be proved wrong in 6 months' time. But that's just my sense of the last couple of few weeks of conversation and RFPs. Does that cover all the questions? Laura Gris Trillo: Yes. Mark Coombs: Great. Thank you. David McCann: Dave McCann from Deutsche Bank. A couple for me, please. So first of all, on the variable comp ratio, 32.5% for the first half. Would you say that's a good guide to be using for the full year and thereafter? Or if not, is there a sort of a better guide you'd have there? Secondly, do you have any update on the performance fee guidance for this current year? Sorry, you may have mentioned it. I might have missed that. And then lastly, one for Mark. Obviously, there's quite a lot of asset flow coming to the industry, as I'm sure you've observed. Do you think this is sort of realistically addressable for you as an active manager? Do you think there's a case that this money stays and can you address that? Or is this realistically money you can't really touch because they've gone passive. That's all they're ever going to be. Just curious on your thoughts on that. Tom Shippey: Do you want me to answer the first two? Mark Coombs: Yes. Tom Shippey: So VC at the half year, always an accrual percentage. As we talk about every year, we top it up or we reduce it once we know what the full year result has been. So if we continue to deliver the strong levels of outperformance, we'll need to pay the investment team. There could be upward pressure on the 32%. If it falls off in the second half and the 12 months has not been as good and the distribution team doesn't continue to deliver the flows that we've seen in the first half, maybe there can be some downward pressure. It's an accrual at the half year. It gets determined by the remco in July once the full year numbers are known and understood. If you want an estimate for the full year at this point, 32.5% is as good as anything. But it will change come July. And then on the performance fees, I thought I made it clear. The guidance I gave in September was for up to GBP 5 million. The guidance I'm giving now is up to GBP 5 million, absent something being realized somewhere in the portfolio of private equity assets that delivers a fee. Mark Coombs: And then the passive question. Some of it is permanent. I mean some of it, people will say, well, I'll just do passive. They definitely get a bit of that. Fortunately, for what we do, some of it isn't very well replicated by passive indices. But there are some people who are just obsessed with cost and will take sort of index drift from passive even if they haven't really thought it through. Money through consultants tends to not do that because the consultants have done an enormous amount of work in this because their initial thing is we should sell passive to some extent. Although, of course, they want a business. So they don't want to completely kill active so they can choose between managers. So some of it is permanent, I would say, particularly in the fixed income space, in the larger tighter spread stuff. Some of it is definitely a first thing to just throw the cash in before they find a manager. And I think that's always been true. For us, that's more of an issue for us -- again, this is a big generalization, but more of an issue for us in fixed income, I think, than in equities. Not that there aren't indices in equities and passive things to do, but just what we're doing tends to lend itself better to active. And we're taking market share from other actives. So we are in a different place than we are perhaps in some of the fixed income strategies. I don't know if that covers it. Rae Maile: Rae Maile, Panmure Liberum. I suppose the only question that hasn't been asked about pipelines and flows is geography. Is there any sign that the Americans themselves are realizing they're a bit too long the dollar? Mark Coombs: No, not really. I mean, well, that's not quite true. A little bit of retail. I mean Americans love equities. So we've seen a dribble now. I think I hopefully said this earlier. There is a bit of a dribble of American retail capital into the equity products. Nothing in bonds. And then institutionally in the States, not really. Again, a bit of equity. I mean there is a bit of an equity pipeline, but the pipeline we have is there's some U.S. but it's mostly non-U.S. There's some but it's mostly none. So they haven't gone, it's time to have less America. That whole story of getting them from 100% America to 90% America in the 90s, we're back in that game again. Nobody gets fired for losing a lot of money in buying the wrong American stock, but they will get fired if they buy Ukraine and Russia invades. But I think the conversations are still there, but the retail story is picking up. And the retail tends to be a leader. Institutionally some, but not a big wall yet. Anybody else? Okay. Well, thank you very much for coming. Happy to chat, if that makes sense. And we're hoping to see you again in 6 months. Hopefully, we'll have even better numbers. You never know. Thanks very much, everybody. Thank you.
Yuko Okimoto: [Interpreted] Good afternoon, everyone. This is Okimoto from IR PR department. Thank you very much for joining PeptiDream's Financial Results briefing for the fiscal year ending December 2025. We are very sorry that the starting was delayed. Now we will begin the meeting. Today's attendees are President and CEO, Patrick Reid; Director and the CFO, Kiyofumi Kaneshiro; Chief Medical Officer and President of PDRadiopharma, Masato Murakami; and Chief Scientific Officer, Christian Cunningham. Please note that simultaneous interpretation is provided for today's briefing by selecting your language at the bottom of the screen, you can listen to the audio in your chosen language, including the interpreted audio for either the Japanese or English lines. If you do not select a language, you will hear the original. Please also note that simultaneous interpretation is not available for access via telephone lines. Today's briefing will begin with Patrick Reid presenting FY '25 summary, key topics and future outlook, followed by Mr. Kaneshiro discussing FY '25 consolidated financial results and FY '26 forecast. This will be followed by a Q&A session. Presentation materials are available on our company website. Before beginning the presentation, we would like to make a disclaimer. The explanations provided may include forward-looking statements based on current expectations. All such statements involve risks and uncertainties. Please be aware that actual results may differ from these projections. We will now begin the presentation. Patrick Crawford Reid: Good afternoon, everyone, and good evening or good morning to those overseas that are in attendance today. Today, I'm going to provide an overview of where we are as a company, how we performed in fiscal year 2025, provide some guidance on what fiscal year 2026 and beyond will look like for PeptiDream. After this, Kiyo will provide an overview of our financial results for the 2025 fiscal year, along with guidance for the fiscal year 2026 before we move on to take questions from those in attendance. PeptiDream was founded with the dream of creating a revolutionary peptide library generation and hit finding platform that could enable us to unlock the exceptional promise and power of macrocyclic peptides to create the next generation of life-changing therapeutics for patients in need worldwide. What was only a dream 20 years ago has now become a reality. PeptiDream started as a university spin-out focused on creating our revolutionary PDPS platform and getting some of the world's largest pharmaceutical companies excited about the power of macrocyclic peptides. We spent the next 10 years focused on our discovery and development partnerships, narrowing our own focus to our 5 core therapeutic areas across RI and non-RI, creating our own internal wholly owned discovery pipeline and acquiring the exceptional Radiopharmaceutical business now known as PDRadiopharma to further accelerate all of these efforts. Today, PeptiDream on the back of an exceptional 2025 embarks on a new chapter in our history, with our first wholly owned CAXI program moving into a U.S. Phase I study in the coming weeks. This event marks the start of our evolution from a global discovery company into a truly global discovery and development company and represents the next phase toward our goal of ultimately becoming a global pharmaceutical company. Over the coming years, investors should expect to see us continue to focus on our discovery partnerships as we see the fruits of those efforts produce clinical compounds and clinical candidates that move into clinical development. In parallel to these efforts across our 5 core therapeutic areas, we will continue to grow a robust preclinical pipeline, both in-house and partnered, while in parallel moving some of the highest value programs into clinical development to both unlock further value and operational flexibility with the ultimate goal of creating exceptional value for shareholders and delivering life-changing therapeutics and diagnostics to patients. Our focus has been and will continue to be on creating a pipeline of high-value preclinical and clinical programs, both in partnerships and as in-house wholly owned programs across our 5 core therapeutic areas. The 5 core therapeutic areas represent initially in the RI side of our business, RI-PDCs. We have the goal to continue to position PDRadiopharma as the leading Radiopharmaceutical company in Japan by supplying a robust set of exciting programs for PDRadiopharma to bring to patients in need in Japan. PeptiDream also has a validated platform and track record of discovering best-in-class and first-in-class macrocyclic peptide ligands for use as targeted RI conjugates across the broad spectrum of targets and tumor types. And this is highlighted, as I'll highlight, by our Glypican-3 program and our FAP program moving into the clinic in 2025. Our second core area of focus is around oral and injectable peptide therapeutics. We have a long collaboration history in the field of injectable peptide and oral peptide therapeutics, and we've been leveraging this extensive experience and expertise to in parallel, develop a robust internal pipeline of programs. The third core area is around oligo PDCs. PeptiDream has been researching utilizing macrocyclic peptides as targeted delivery vectors for CNS delivery back since 2017 and also ex-liver oligo delivery since 2021 across a wide range of partnerships. We have extensive experience in conjugating various partners, oligo therapeutic payloads to our peptides and showing robust delivery, and I'll touch on that today. Our fourth area -- core area of focus is around cytotoxic PDCs. From our RI business, we have a growing track record of discovering and developing tumor-targeting macrocytic peptides, utilizing RI payloads for cell killing. In this area, we extend beyond RI to also cytotoxic payloads and other small molecule payloads capable of killing cells, similar to ADCs. In most of this business, the cytotoxic payloads are provided by the partner, but we have an extensive growing pipeline in this area. And lastly, is around our area of multifunctional peptide conjugates. PeptiDream has been combining our macrocytic peptide discovery capabilities with our next-generation proprietary linker architectures to allow us to create an entire new spectrum of multi-specific biologics that are capable of doing some exceptional things as both therapeutics and potentially as next-generation diagnostics. We made exceptional progress across these efforts in 2025. We had 6 programs enter clinical development in total last year, allowing us to close 2025 with a total of 13 programs in clinical development. This is an exceptional year for us, almost doubling the number of clinical programs that we have for this company. In addition to that, beyond just the 6 programs that moved into clinical development, we saw 13 programs stage advance across the entirety of our development pipeline and portfolio in 2025. We saw our ALXN2420, our GhR antagonist program partnered with Alexion and AstraZeneca moving into a global Phase II. We also saw a number of new programs in our cadherin-3 program and our IL-17 oral program also being announced. So 2025 represented a significant and exciting new phase driven by the creation of significant pipeline value, both with preclinical programs and the successful movement of clinical programs for us. More specifically, on Slide 9, we highlight some of the late-stage development pipeline that is progressing forward at PDRadiopharma. We're on target to bring these 3 late-stage exciting programs to the market between 2027 and 2029. We've announced previously on the right, the LinqMed collaboration for the Copper-64-ATSM. This continues to progress in an exciting Phase III study in malignant brain tumor patients, on path for the submission of an NDA in 2027. The 2 PSMA programs partnered with Curium, our diagnostic copper-64-PSMA-I&T entered first patients last year and is on path to progress forward for NDA submission in 2027 for the diagnostic of prostate cancer. Fast followed by the 177-lutetium-PSMA I&T therapeutic program, which has now kicked off its registrational bridging study, utilizing the data from Curium's global Phase III and are now on path toward potential submission in 2029. So these are 3 late-stage exciting programs that should contribute significantly to growing revenue at PDRadiopharma. In addition to those assets, in 2025, we saw our in-house or partnered discovery assets also moving forward into the clinic. With RayzeBio, our diagnostic and therapeutic pair of gallium-68 Glypican 3 and actinium-225 Glypican 3 as a therapeutic, moving into a Phase I, Phase B study for the treatment of hepatocellular carcinoma, liver cancer, excitingly. That was also followed by the lutetium-177 therapeutic and diagnostic gallium-68 FAP program, partnering with Novartis, that Novartis took into a Phase I study against 4 different types of cancers of solid tumors. We're looking forward to the future Phase I results to arise from those programs. In addition to excitement around the late-stage assets and our partnered programs that have been discovered at PeptiDream, as I mentioned, we're also developing a robust internally wholly owned pipeline, centered around initially our internal CAXI program. At the end of 2025, we had filed INDs for both the diagnostic Copper-64 CAXI program and the therapeutic actinium-225 program, both of which were accepted. And now we are on path to initiate a Phase I study of both of these programs here in 2026. As a second program that we had announced 2 years ago, 18.2 for gastric cancer and pancreatic cancer with a diagnostic Copper-64 agent in partnership with the actinium-225 therapeutic, we are on now path in 2026 to initiate a Phase 0 study to get an initial early look at human feasibility data in patients. In addition, we are rapidly planning a Phase I study that hopefully, we will have more news on soon, looking forward possibly to start the initiation of the Phase I in the second half of 2026. The third program, which we had announced at our R&D Day, December of 2025 was targeting cadherin-3 for potential use in head and neck squamous cell carcinoma and triple-negative breast and a few other types of solid tumors are possible. We think this is an exciting program. We currently have moved this into IND-enabling studies, and we are also now rapidly investing in the possibility of conducting a Phase I human validation study as soon as possible for this program. We look forward, of course, over the course of 2026 to update on the progress of all 3 of these exceptional programs here at PeptiDream. From the previous 3 slides, you can see we're developing a compelling targeted Radiopharmaceutical pipeline, both of exciting therapeutics and next-generation diagnostics. And we couldn't do any of this without PDRadiopharma. PDRadiopharma is Japan's leader in radiopharmaceuticals. It has a 50-year history from 1968. It is -- represents the clinical and commercial arm for PeptiDream in Japan. It has a fully integrated R&D, manufacturing and commercialized operations and a nationwide distribution and sales network. And the 450-plus people at PDRadiopharma represent a trusted partner for global companies to access the Japan market. The ongoing transformation of PDRadiopharma, that was initiated when we acquired the company in 2022, continues today under the exceptional leadership of Murakami Masato. We are very much focused on strengthening our teams across the entirety of the organization, focused on our people. We are focused on driving capacity, as we had mentioned previously, and I will touch on in a later slide, expanding our manufacturing capability and capacity and related infrastructure is a key to the growth of this business. And lastly, diversifying the product portfolio, not just across SPECT and PET and targeted therapeutics, but also from a partnering perspective, from retaining rights to the Japan rights to certain PeptiDream collaboration programs such as Glypican 3 and also PeptiDream's own wholly owned compelling programs to take forward. We believe PDRadiopharma is well positioned to see exceptional revenue growth in the many years to come, and we look forward to seeing these unfold. Beyond our Radiopharmaceutical business, the other 5 core areas of focus are, of course, spread across our non-Radiopharmaceutical business. Second core area of focus that I'll mention today, of course, is around our oral injectable peptide therapeutics. PeptiDream has numerous collaboration programs in the field of injectable and oral peptide therapeutics, and we have been leveraging this extensive experience and expertise gained over the past 10 years. At the close of 2025, PeptiDream currently has 5 programs in clinical development, but we have a robust pipeline of preclinical collaboration programs complemented by a growing number of high-value in-house programs that are setting up us for future success and future growth. In 2025, we saw significant progress across these efforts. Highlighted in part by the ALXN2420 program. As I mentioned, this moving into Phase II -- a global Phase II study is a big step forward in seeing our pipeline in our discovered macrocyclic peptide programs progressing toward the market. In addition to that, we had 2 other programs, one partnered with Asahi Kasei Pharma and one partnered with Johnson & Johnson that also reached development candidate nomination in 2025. Both of those programs, which have certain information yet to be disclosed, are progressing toward the next steps of the Phase I initiation. Dramatically -- we look forward to seeing these programs advance in that respect. Complementing our clinical pipeline, of course, has been our in-house preclinical discovery efforts, highlighted in part by our oral myostatin inhibitor program, which we have reached development candidate nomination of, and we continue to progress with IND-enabling efforts as we continue partnering activities around this program. As everyone is aware, we did not find the right partner or have yet to consummate a deal for this program, but we've had a number of exciting discussions and look forward to those continuing here in 2026 to find the ideal partner for this exciting program. At the end of 2025, we also announced our oral IL-17 dual A/F inhibitor program. This exciting program has now progressed to development candidate nomination and will be progressing into IND-enabling studies while we consider partnering activities. There's exceptional interest around this program. We continue to field such interest, and we will continue to listen and consider best partnering possibilities for this program, while we continue to drive this toward clinical development. In addition to both the oral myostatin inhibitor program and the oral IL-17 A/F inhibitor program, we have a number of other exciting preclinical oral peptide therapeutic programs ongoing, that we look forward to taking forward toward development candidate nomination in 2026. And once we do, we will, of course, make that news publicly available. From our third core area of focus is our peptide oligo conjugate efforts. We have a strong roster of peptide-oligonucleotide conjugate discovery collaboration partners from Alnylam to Takeda to Shionogi and so forth. Extensive experience in conjugating partner therapeutic oligo payloads to our peptide delivery vectors has gone exceptionally well. We're going after not only targeting CNS, but also the ex-liver organs of skeletal muscle, cardiac muscle, kidney and adipocytes. As a highlight of 2025 in December, we announced a pivotal breakthrough in our collaboration with Alnylam, demonstrating extrahepatic tissue-specific delivery of a peptide-oligo conjugate in large animals. This breakthrough paves the path for us to see multiple programs, both nominated as development candidates, and we expect to see these programs progress into the clinical development in the years to come. This represents an exceptional and transformative time for our peptide-oligo conjugate efforts. Our fourth area -- core area of focus is around peptide-cytotoxic conjugates. As I had mentioned, we have a track record of discovery and development of tumor targeting macrocyclic peptides capable of delivering both RI and cell-killing payloads, yielding similar potencies to comparable ADCs. Such exceptional efforts have gone and continued extremely well in 2025, and we are now progressing toward the nomination here in '26, potentially of the first development candidates to take forward into clinical development. This fourth area, for us, we believe is going to continue to grow in the future and yield many development candidates in clinical programs in the years to come. Lastly is around our multifunctional peptide conjugate programs, largely focused around next-generation immune engagers. We have been combining PeptiDream's macrocyclic peptide discovery capabilities with our next-generation proprietary linker architectures to create an entire new spectrum of multi-specific biologics that demonstrate all of the best qualities and best properties of their more complex protein brothers, but with the simplicity of the ease of chemistry of peptide-based therapeutics. In 2025, we had successful in vivo proof of concept of our first in-house immune engagers, which is supporting expansive -- expansion of our efforts and expansion of the programs. And at the same time, we are both considering strategic partnering of these programs and a variety of different collaboration opportunities in the MPC space. Everyone should look forward to more news to come around this area for us in 2026. As we look to our guidance of 2026 and around our clinical pipeline, I am very excited to announce that we expect to see anywhere from 6 to 12 programs enter clinical development in 2026. While we haven't broken down whether these are RI or non-RI at the moment, we expect to see these programs as they advance into clinical development, allow us to close the 2026 year with anywhere from 19 to 25 clinical programs. These 6 programs in this ratio that may not -- that may enter the clinic in 2026. If they don't, they will be on Q4 and then they will progress in the clinic in 2027. So we see very good line of sight to these 12 programs advancing and we're extremely excited about both 2026 and also 2027 and seeing our clinical pipeline, continue the trend we saw in 2025 and expand further. These amazing efforts underlie our transformation into a discovery development company. To enable this next phase of growth, the next 10 years of this company, we felt it's extremely important to create a new organizational structure and management system to enable this to occur. As announced in part last year, we have now created both an executive leadership team and also a research leadership team and a development leadership team to coordinate our research-related functions and our development-related functions and for the ELT to oversee the entire strategy of the company and all aspects thereof. To support this organizational change, we also feel it's extremely important to increase the management team. PeptiDream has relied on a very skilled but lean management team until now. To recognize the future of this company, we believe it's important to expand that team further. This is in part why we are introducing an EVP, SVP and VP system. We expect going forward to add additional EVPs, SVPs and VPs in the future. This, as is depicted on Slide 20, is not going to happen tomorrow. This is over the next 5, 10 years of our company to build out this management structure so that we can take on the future of developing a robust clinical pipeline and also advancing the many, many preclinical programs we have here at PeptiDream. To support this further, of course, is our continued investment in growing the company from a capital perspective. As we have touched on in the past, what is shown here on Slide 21, is our efforts to build and expand PeptiDream's current headquarters and R&D center at the Tonomachi site. We believe that this program is moving very well through the design phases. We had hoped that this would start construction in late '26, but that has now moved into early 2027. We're very excited about the capabilities that this new building will bring to us going forward. In addition to that, on the right side is the Kazusa manufacturing site, a further extension of PDR's current manufacturing capabilities by adding exceptional new lines to support our next-generation programs and products, both across partners and in-house, supporting lutetium-177, actinium-225 and Copper-64-related programs. This is on track to initiate construction in late 2026 and become operational sometime in 2028. So we very much look forward to providing additional news on these -- both of these exciting capital projects as they advance here in 2026. And with that, I would like to pass this over to Kiyo Kaneshiro to continue the financial presentation. Kiyofumi Kaneshiro: [Interpreted] This is Kaneshiro speaking. In the interest of time, I'd like to highlight some of the key points to give you an overview of the consolidated performance of FY 2025 as well as the full year forecast for FY 2026. Please turn to Page 23. And this is the consolidated results for the FY 2025. For the Drug and Discovery Development (sic) [ Drug Discovery and Development ] business, oral myostatin inhibitor out-licensing was not able to conclude a deal during FY 2025 and versus the initial forecast that it was -- the business was significantly below the forecast. However, on the Radiopharmaceutical side, it is now growing into the growth stage, the PET business. And it drove this entire Radiopharmaceutical business for -- therefore, after the merger in 2022, for the 4 consecutive years, we were able to maintain the profitability and also for the clinical pipeline, which made a significant progress. So it is growing steadily. Please turn to Page 24. This is the difference from the initial forecast. Let's start with in-house programs, which is the oral myostatin inhibitor. Regarding the out-licensing, we are to maximize the value, and we are exploring a more optimum partner. That is essential. Under this strategy, we wanted to prioritize choosing the best partner. Therefore, we -- the conclusion of the deal wasn't achieved in 2025. We, however, continue the negotiation towards 2026. And we initially planned to reach an R&D milestone for the existing programs as well as new partnership agreement. Part of them were delayed and postponed to 2026. Following page describes the consolidated balance sheet for FY 2025. As you can see, in the last few years, financial soundness has been our objective, and we are making steady progress. Equity ratio is improving steadily. In addition, net cash positive was maintained. So towards FY '26 and onwards, for future growth, we'd like to continue our active investment. However, financial soundness is also very important for us. And this is -- we have a very sound finance, and therefore, equity finance is not scheduled. Please turn to 26, Page 26. This is the consolidated cash flow. As you can see in the bar chart on the right-hand side, as of the end of December 2025, the cash amounting to JPY 28.6 billion, and the operating cash flow and the investment cash flow as well as financial cash flow. As of last year, the net debt, apart from that, the income tax payment as well as the repayment of the borrowing are the main contributor here. And regarding the PeptiDream and PDR pharma, R&D as well as manufacturing-related equipments and also future CapEx are the major consumption or factors plunging the cash. Please move on to Page 27. This shows the full year forecast for 2026. In revenue, JPY 32 billion plus outsourcing upfront payment. That is our announcement. We would like to make sure that we won't repeat the same incident which took place last year. Therefore, large-scale products -- projects are taken separately, and we are planting seeds for multiple programs and accumulating to stabilize our revenue. And we'd like to maximize our asset value. Those are the basic assumptions. And based on that, we'd like to actually achieve both of these in order to actually create an upside potential strategically. Please move on to Page 28. This shows our new growth drivers as well as the midterm and long-term management goals. As I mentioned earlier and Reid-san mentioned earlier, we'd like to become a global discovery leader, focusing on 5 core therapeutic areas, whereby we'd like to accumulate our asset values. That is the most paramount growth driver that is going to be. And also, needless to say, first, the platform is going to generate a stable cash flow. Second, under these core areas, we'd like to accumulate a strategic asset value. And number three, we'd like to utilize the strength of our infrastructure so that we can solidify the competitive edge. There are many companies which may have one of them. However, but combining, it's unparalleled that it's only PeptiDream that has all 3. Therefore, we will be able to serve as a growth model that can leverage this proprietary strength. And this is my key message here. And lastly, I'd like to introduce our sustainability-related initiatives. As you can see in the diagram or slide, we'd like to ultimately pursue ESG-related initiatives, and we have been accumulating results. As a result, on the right-hand side, each rating agency rate us quite highly, and it is rising and improving. This is the propensity we'd like to maintain. And within the industry, we have reached a high level considering the industry average. We have been closely working with the old stakeholders. And once again, we'd like to express our gratitude for those of you who have supported us throughout this. That concludes my presentation. Now we'd like to entertain questions from the floor and participants. Yuko Okimoto: [Interpreted] Thank you very much. Now, we'd like to entertain questions from those in attendance. [Operator Instructions] Now we'd like to open the floor. Yamaguchi-san, would you like to start your question. Hidemaru Yamaguchi: [Interpreted] Citigroup, Yamaguchi is my name. For this year, you explained the forecast for 2026, and -- but you expect the lump sum payment -- upfront payment of JPY 14 billion. And then for the close to the JPY 30 billion that you were expecting, but didn't receive last year that is to be added on that. Is that a correct understanding? Kiyofumi Kaneshiro: [Interpreted] Thank you for your question. First, yes, your understanding is correct. Hidemaru Yamaguchi: [Interpreted] I see. And then for all the myostatin, I believe that it will be difficult for you to make a comment. But for the past 1 year, you made efforts to maximize the value, but didn't achieve that. But this year, you didn't include this in your forecast. So it seems that you can just out-license at any time. But what is the reason of the delay? And then about the expected timing of the license out this year, if you can discuss? Patrick Crawford Reid: Thank you for the question. So you're asking in regards to whether or not we will be able to partner the myostatin program this year. And what is the current status of those efforts? As you mentioned, we started this in 2025. We continue to discuss with a number of different companies. What is a key difference for the myostatin program compared to any of our other programs is that will be combined with someone else's oral weight loss drug. As we've mentioned previously, that makes picking the right partner extremely important. With the exception of Lilly and maybe Novo, the rest of the large pharma companies are still very much working on their oral weight loss directions. And therefore, without having a strong sense of where they intend to take or say, exceptional maybe Phase II or early Phase III data, it's hard to expect them to want to combine an oral muscle preservation piece to those studies. So we think the value of this program is exceptional. One of the challenges then is that we were probably a little too early, right? The other muscle preservation agents that are in development are being developed for SMA or just early stages in combination in obesity, but being developed as injectables. There is no current oral muscle preservation agent in clinical development. So our goal, of course, is to partner this in 2026. I would really like us to be able to find the right partner. But I don't think we have -- we know exactly when that will happen or we can't comment on this time exactly who that will be with or when that will happen or what the deal economics will look like. In part, that's very similar for IL-17 program or our CAIX program. There's exceptional interest in these programs for us. But I think it would be difficult for us to disclose what we expect for upfront fees or what type of deal structures would be the best for those programs. Yes. Hidemaru Yamaguchi: [Interpreted] Just one thing to clarify that you talk about -- you wanted to combine with the oral to oral rather than oral to injectable, right? Patrick Crawford Reid: That's correct. From the large pharmaceutical big pharma perspective, that would be their development goal. They don't -- they -- or at least the discussions that we have to date, none of them have been around combining with their injectable. So it has been an oral-oral. Yes, that's correct. Yuko Okimoto: [Interpreted] Next question from Wada-san, please. Hiroshi Wada: [Interpreted] SMBC, Wada speaking. Am I clear? Yuko Okimoto: [Interpreted] Yes, we hear you clearly. Hiroshi Wada: [Interpreted] I'd like to actually confirm several things about the business forecast. On Page 27, that is regarding the discovery business amounting JPY 15 billion, what is included here? And what is the assumption? For R&D progress in 2026, 6 or 12 programs are anticipated, which are making -- will make a stage advance to the clinical stage. So are they included? So -- at least 6 programs, which will enter the clinical stage. Is it the assumption for the R&D piece here, which is included in the full year forecast scheduled for JPY 15 billion? Kiyofumi Kaneshiro: [Interpreted] Thank you very much for the question. So out of -- in terms of the breakdown of JPY 15 billion, I understand that you are actually asking the breakdown. So the revenue is comprised by milestone payment as well as R&D funding. And amounting to [ JPY 500 million ], they come. And outside that, JPY 1 billion will come from new deal or existing programs expansion. So that is the breakdown. Hiroshi Wada: [Interpreted] I'd like to ask you one more thing regarding costs. Last year, the entire cost, including the COGS as well as SG&A amounting to JPY 23.5 billion. And this year, it was expanded, right, if I understand it correctly. But the significant surge will come from R&D costs. Is that -- am I right in thinking that? So cost-wise, what is the main driver? Or what is the major factor contributing to the significant increase in cost for 2026? Kiyofumi Kaneshiro: [Interpreted] Thank you very much for the question. So basically, you had the right understanding. Regarding R&D expenses last year in FY 2025, which amounted to JPY 5 billion. But this year, in 2026, FY is going to increase to JPY 6.4 billion. So it's an increase of about JPY 1.4 billion year-on-year. Yuko Okimoto: [Interpreted] Mr. Hashiguchi, please. Kazuaki Hashiguchi: [Interpreted] This is Hashiguchi from Daiwa. Regarding the forecast, the assumption, what Kaneshiro-san just mentioned, the remaining [ JPY 10 billion ], the new deal and also myostatin, IL-17 that is included in the plus alpha, what are the differences between those? Regarding the new deal -- so you have a good probability, including the actual value. And so those in the plus alpha like myostatin, am I correct to assume that it's possible that you will not out-license that in 2026? Kiyofumi Kaneshiro: [Interpreted] Thank you for your question. The first -- regarding the first point, yes, your understanding is correct. So the JPY 15 billion, there are quite certain probable ones that includes those proper ones. And so our activities of this year will not actually lead to the actual revenue this year, but there will be some delay. The activities in the past may lead to the activity -- the actual revenue of this year. And also, we have a rather high certainty or the probability of receiving that amount from the activities of the last year or 2 years ago. And regarding the upfront payment, your question is what is different. And so one thing is that we have some potentially large project. So the impact on our revenue or the profit is quite large. And of course, it depends on our partner. And so it's not only the timing that is important for us, but it's important for us to maximize the value of our asset. And so the partner as well as the future development should be optimal. So including everything, we want to maximize the value of the asset. So it's possible maybe we may be able to conclude the deal within 2026, but it may be possible that our optimal solution may be to postpone it to 2026. Thus, we are separating this JPY 15 billion in the lump sum payment. Kazuaki Hashiguchi: [Interpreted] So myostatin, IL-17, these ones, you have 4 projects here. So you will continue the clinical development in-house like myostatin and IL-17, your option is to continue the development through the registration. Is that possible? Kiyofumi Kaneshiro: [Interpreted] Thank you for your question. And our answer is yes, especially like the CAIX and Claudin, we do have the capability to work end-to-end. But for the myostatin and IL-17, for the actual manufacturing, we will need a partner and that's our assumption. And so within that framework, we would like to consider what is the optimal time point to transfer or change the hands. Yuko Okimoto: [Interpreted] We'd like to take next question from Ueda-san. Akinori Ueda: [Interpreted] This is Goldman Sachs, Ueda speaking. I'd like to raise questions pertaining to your full year forecast. Currently, your basic revenue-generating ability and also what is the future outlook for mid- to long term? What is your perception here? Previously, in 2024 performance and 2024 initial forecast that about JPY 50 billion that was achievable, that was achieved. And you were to actually reach the JPY 100 billion mark in mid- to long term. That was your long-term view. However, this year, profit-wise, you are to reach JPY 5 billion level as a basic assumption, is that true? And also, if you are to reach JPY 100 billion level, do you have a concrete picture to reach that far? What is your perception right now? Kiyofumi Kaneshiro: [Interpreted] Thank you very much for the question. On Page 28, you are asking questions. Regarding the revenue mid- to long-term goal of achieving JPY 100 billion, we are on track of reaching this JPY 100 billion level in revenue in the long term. Of course, there will be some fluctuations and ups and downs down the road. However, broadly speaking, for us to attain this JPY 100 billion, the biggest driver here, which is described on [ Slide 28 ] are the core therapeutic areas. We are to maximize the values and accumulate values in these 5 core areas. That is most important. And to be more specific, in the first half of our presentation, in 2025, it was an exceptional year for us. It was the best in the past. And also in 2026, we'd like to surpass the 2025 results in order to maximize value in these 5 core areas, and that is our -- on our horizon. So in terms of mid- to long-term goals, we are making a steady progress and everything is on track. And to raise your -- to address your numbers -- second question, which is the profit level, profitability, JPY 32 billion plus upfront as a result of out-licensing. And if the upfront payment is on top, that will be added on top of the profitability. So there is a significant potential of upside in terms of profitability and the bottom line. Akinori Ueda: [Interpreted] And I'd like to raise the second question. Regarding the management structure, what was the background that prompted you to change the management structure? And what was the purpose of the change in management structure? In terms of the growth that -- well, in anticipation of the growth in the size of your business. But in the last few years, in terms of revenue, the top line hasn't grown that much in the last few years. So what prompted you to actually decide in this management change? What are the factors behind this change? And also this time, in terms of the management organization, the Executive Vice President ought to be introduced and what the benefits or what is the advantages of deploying this executive... Patrick Crawford Reid: Of course, our plans to revise management moving to the EVP, SVP and VP system. And of course, what type of individuals or what type of capabilities are we looking to expand and have covered. I think at this stage, as we want to grow into a global pharmaceutical company, we could use, I think, certain talented executives around overall operations and operational management, decision-making at PeptiDream. We are looking for individuals to focus or with strategic or expertise around strategic planning. We have many, many programs, of course, so which programs should be a priority and which programs maybe should be less of a priority. And also certain executives with portfolio management background and skill sets. Moving from a company that is just discovering drugs and passing those on to partners to develop them into a company that is going to take forward our own or certain of our own assets requires a very different operational skill set than we currently have. So I'm very much looking over the next couple of years to see us expand kind of our talent around those core areas around operations, around strategy and around the portfolio management, as we look to continue this trend of taking more of our high-value preclinical programs into clinical development to at least gain human POC before kind of out-licensing them. So I think this is a natural evolution for a company like PeptiDream I don't think this is surprising. And this is, as almost all U.S. biotech companies do, is the best path forward to maximize value for shareholders, which is, of course, the core focus of everything we're doing here at PeptiDream. And it's also the best way to see these programs drive forward toward patients in need. So with those 2 focuses in mind, those are the type of individuals we look to bring in for the next 10 years of growth here at PeptiDream. Yuko Okimoto: [Interpreted] Next question, Kawamura-san. Ryuta Kawamura: [Interpreted] Kawamura from SBI. I have two questions. First, some overlap of the previous question is that this year's forecast and your target last year was quite high. And so you said that it's a mind setting that needs to work. You have plan B, but you needed to do the downward revise. And so JPY 15 billion is the important point. And so you have a quite strong commitment. And for the management, it's really a must or do you rather consider the maximization of the pipeline value more important than achieving this number, particular number? Kiyofumi Kaneshiro: [Interpreted] Thank you for your question. This is about the '26 forecast and the positioning of the JPY 15 billion. And as you mentioned, it's rather conservative. Yes, this is a very rather conservative expectation, and so probability is quite high. And -- but not only that, naturally, of course, we want to have additional one. We want to maximize the pipeline values and/or the assets. And so we will positively work on the further upside. And so we wanted to separate these 2 gears. And so we will target a high level, but with quite a high probability projects and also some projects that where we have to think about the different options. They are separate. Ryuta Kawamura: [Interpreted] And the second question is regarding the myostatin. So I want you to do some expectation control. And so this obesity area is quite a hot area and the expectation is very high. And the player is -- there are 2 leading companies for the oral and other companies are working on the different mechanism of actions such as long-acting. And so with this trend, you want to combine the oral on the oral combination. Do you have a lot of inquiries or on the potential deal partner companies? And so can we have a very high expectation? Or could you discuss as much as possible? Patrick Crawford Reid: Yes, Kawamura-san. I understand you're asking about, of course, our myostatin program and what is the likelihood of a deal soon, what is the size of a potential deal soon and with who. I think it's hard for us to give concrete guidance at this stage. As you mentioned, I think we have the only orally bioavailable muscle preservation agent against a very exciting pathway, the myostatin pathway, that has already shown clinical success in humans with the injectables. So that places us in a very, very strong position. As you mentioned, besides the 2 top players in the space, the rest of the companies are navigating their strategies. And I think as you well know, their strategies changed quite quickly sometimes, right? We saw some large acquisitions by Pfizer and Roche over the last couple of years. There's a number of deals coming up, of course, licensing deals coming out of China still. So it is a very fluid market space still today. Because of that, I think that's what is -- makes it difficult to give you guidance exactly when a deal will happen. But as I mentioned, I think we have an extremely valuable program. I think we will find an exceptional deal for this program. What I don't know or what we don't know is the exact timing of that yet. But we do believe it's in the future. I think just lessons learned is to not put it as a part of guidance. That's a very good lesson learned from 2025 for us. And I would echo to your earlier question, I would echo kind of Kaneshiro-san's guidance, which is, yes, we're returning to more of a conservative guidance for the company. The goal over the next 3 or 4 years is to continue to grow our clinical programs and clinical pipeline. That's how we reach the goal of the -- I don't know what it is, [ thousand-billion ] yen kind of goal that we have. We get there on the strength of the clinical pipeline. And so that's going to be our focus in -- for these next couple of years. We will, of course, intend to return to the black this year. We -- and the JPY 150 million or the [Foreign Language] gets us, of course, back into the black so that we can continue to take the proceeds or the profits from that and reinvest into the clinical pipeline. I think that is what we've been doing in the last couple of years, and that will continue to be the goal over the next 2 or 3. And we will manage our clinical programs as best we can. It was previously asked also, do we think R&D spending is going to go up every year. And yes, we budgeted for almost a -- I guess, [Foreign Language] an increase in our R&D costs for this fiscal year. That could potentially increase every year by around [Foreign Language] depending on whether we take 1 program in there into the clinic or whether we take 2 programs into the clinic. And we believe part of that is going to be guided by the revenue that we can continue to bring in. So as long as we can continue to maintain good revenue streams, good cash flow, instead operating in the black, we continue to use those proceeds to invest into taking more of our exciting preclinical programs into the clinic. And I think long term, that's how we best generate value for shareholders over the next 10 years. Yuko Okimoto: [Interpreted] Next, we take questions from Yamakita-san. Miyabi Yamakita: This is Yamakita speaking from Jefferies Securities. I'd like to ask you a cost-related questions. Regarding the number of headcounts, which was reported in the summary of the financial results, a slight increase to 810 from 761. Why at this timing did you increase the number of headcounts? And is it inflating your R&D, most of the R&D cost increase? Kiyofumi Kaneshiro: [Interpreted] Thank you very much for the question. So for the entire group, you are asking the entire headcount, PeptiDream as well as PDRadiopharma, both increased our headcount. And nearly 50 personnel was added new for this year. And mostly, the growth came from PDRadiopharma because listed products -- or excuse me, launched products are nearing the clinical late stage, and we are to make full preparation for the manufacturing and sales. So we are making preparations for the market launch. And then starting from 2026, we'd like to make necessary preparations. And in 2027 and onwards, on a gradual basis, the approval or the application will be filed, and we are to make a solid preparation that is reflected in the increase of the headcount in the PDRadiopharma. Miyabi Yamakita: [Interpreted] Thank you very much for the detailed explanation. Second question relates to a quick confirmation. Last year, during the first half, in your presentation, you had a deal pipeline or the timing of your potential deals. In 2026, first half, the partnerships awards to be concluded for about 2 to 3 programs. There was a time line describing -- the chart describing a time line, but is it a thing of the past? Regarding the timing of each expected pipeline or deal? Kiyofumi Kaneshiro: [Interpreted] Thank you very much for the question. The answer is yes and no. So 6 months ago, we showed you a diagram describing the time line, and there are some ongoing items. So for those, you had the right understanding as we announced previously. And on top of that, towards the year-end as well as the beginning of this year, there are new deals that are making -- that are underway. So in terms of the revenue and the forecast of those KPIs and numerical targets, and regarding the timing and the order as well as the price -- unit price and how much time line is expected. We are actually talking with our counterparts. So at the best possible way, we'd like to actually attain our numerical targets for the revenue and both the top line and the bottom line. That is our mindset. Yuko Okimoto: [Interpreted] Next is Matsubara-san, please. Matsubara: [Interpreted] This is Matsubara from Nomura. Just one question from me. Again, it's about the myostatin inhibitor. Last year, the end of last year for the [ P1 ] study, so siRNA data was obtained that reduces the body weight while maintaining the muscle and the deal -- was your deal affected by that? Or because you have the combination of the -- so probably [ it ] wouldn't affect that... Patrick Crawford Reid: With regards to recent disclosure around an siRNA to knock down myostatin or other players in the myostatin Activin signaling pathway as potential new therapeutics for muscle preservation. As you are probably well aware, manipulating the myostatin pathway is useful in a number of potential therapeutic diseases beyond just muscle preservation. It also has a key role in many of the muscular dystrophies such as DMD. As you know, there's a couple of inhibitors for myostatin that are about to be approved for SMA and again, a number of other muscular-related disorders to which inhibiting this pathway could be very effective -- clearly very effective since you have some myostatin inhibitors about to be approved for SMA and other disorders. So I think that's largely the science behind various companies moving to an siRNA-based approach to go after myostatin, of course, inhibitors. Whether this will affect our oral myostatin program, I would say, at current, no. And I think just looking at siRNA in general, I might point to one very obvious comparison, which is in the high cholesterolemia space of PCSK9. So PCSK9, of course, there is an approved siRNA drug for high cholesterolemia targeting PCSK9. But as you know, Merck is -- or may know, Merck is about to seek approval for an oral macrocyclic peptide inhibitor of PCSK9, which shows significant value to our patients different than the siRNA. So the siRNA, while can be wonderful in some cases, multiple injections over long periods of time renders them less effective. You have certain injection site issues. You can have other kind of compelling reasons why someone is not able to take an siRNA drug that actually exists for those type of therapeutics. So that's a specific example where there's an approved siRNA therapeutic against PCSK9, but now also an oral macrocyclic inhibitor, PCSK9, that will be approved, and there's actually a small molecule inhibitor PCSK9 underway, too. So I think it's a very interesting space, but we don't see siRNA, at least at this stage, causing any type of, say, loss of value for this program for us. Kiyofumi Kaneshiro: [Interpreted] Let me add a few things here. For the myostatin, we received several questions. And I'd like to add one thing. From last year, we made various presentation and the clinical -- regarding the research and clinical. But as a market is getting warmer. I think you can understand it that way the myostatin including siRNA, there are many different approaches, and it's getting a lot of attention in the industry, and there are many players. And when the data are becoming available, then we are -- we can expect the competitive advantage of a compound as it becomes clear and clearer. And also various companies have different clinical plans. And so our compound, the positioning of clinical -- the positioning is getting clearer. And so the market is getting warmer and warmer right now. That's what we understand. On the other hand, the market potential for this compound is quite large. And so in our asset, the net present value is very large for this. And so we want to maximize the net present value for this compound. And so we are looking at the timing. And also, we are taking a little -- more time from last year to this year. And so with that, we want to really maximize the high net present value. Yuko Okimoto: [Interpreted] We will take questions from Mizuho Securities. Yuriko Ishida: [Interpreted] This is Ishida speaking. Regarding the full year forecast, I'd like to confirm one thing. Regarding the upfront plus alpha additional CAIX and Claudin are listed on your slide. Previously, under RI, maximization of value, you mentioned P1 data or partnership after the P1 data has become available. But regarding the [ PI ] domain, the partnership out-licensing or in-house, the decision, what is the threshold? Is it changing whether you are to out-license or conduct an in-house development? Kiyofumi Kaneshiro: [Interpreted] Thank you very much for the question. Regarding Page 27, myostatin, IL-17, CAIX, Claudin, all of these at this point in time have inquiries in this -- so in that sense, without being selective, they can be out-licensed by tomorrow, but that is not the case. Of course, we need to ascertain when the data will become available so that we can maximize the value. In that sense, CAIX, IL-17 and Claudin, we'd like to wait until Phase I results come out. That will be the maximize sweet spot for us to initiate the out-licensing. We are actually advancing in the clinical development phase. And of course, multiple companies are interested in these products. So finally, when we reach the final decision, our ultimate goal is not to actually reach the out-license agreement. We are to commercialize so that we can keep winning in the market once these products are launched in the market. So at the best earliest timing, out-licensing at an early timing is necessary. So in that sense, for this year as well as next year, we'd like to maximize value. And that is our policy in terms of making the right decision. Yuko Okimoto: [Interpreted] Now we'd like to entertain one more question from [ Yamada-san ]. Unknown Analyst: [Interpreted] [ Yamada from Nikkei Biotech ]. In 2026 for the clinical, the pipeline, the compounds are getting into clinical in 2026. And you mentioned that between 5 to 12 projects will go into the clinical phase. And for those -- excuse me, it's 6. And for those 6, could you discuss which area, which of these... Patrick Crawford Reid: Thank you, [ Yamada-san ] for the question. The 6 to 12, I think we'll just comment that it's a good -- it's roughly a 50-50 mix between RI and non-RI. Again, at this stage, we're not sure exactly of the 6 that will enter the clinic. Those already, at least the 6 that we know will enter the clinic for sure in 2026 are also a mixture of both RI and non-RI programs. So last year, we had 6 programs moving into the clinic, and those were all RI related. So this year will be more of a balanced mix between our RI and non-RI programs. And of course, as far as the -- I guess you're asking if any of those are also either peptide-oligo or peptide cytotox or maybe an MPC. None of those are MPCs, we can say at this stage. But we think that could be a representative of an oligo peptide and potentially a cytotox peptide. But Again, I think it's just a better -- it's a better mix than it was in 2025 of both RI and non-RI. And we are expecting over the next 12 to 24 months to see potential clinical programs across all of our core therapeutic spaces. Yuko Okimoto: [Interpreted] This come to conclude the session. Now we'd like to adjourn this financial results briefing for FY 2025. Additional questions, please contact IR department. Thank you very much for taking the time out of the busy schedule to attend our briefing. Thank you. The meeting is adjourned. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Unknown Executive: Good morning, and welcome to LINK Mobility's Fourth Quarter 2025 Presentation. With me today are our CEO, Thomas Berge; and our CFO, Morten Edvardsen, who will walk you through the key developments and financial performance for the quarter. Throughout the presentation, you are welcome to submit your questions online, and we will address them during the Q&A session at the end. With that, I'll hand it over to our CEO, Thomas Berge. Thomas Berge: Thank you for the introduction, Kristian, and good morning to everyone listening in on the call. We'll start with Slide 3 with a brief overview of LINK Mobility. LINK Mobility is Europe's leading provider of digital messaging, a position we established over time through a combination of strong organic growth and a proven track record of successful acquisitions. Today, we are the #1 player in Europe with application to person or A2P messaging. In practice, this means we enable businesses to communicate directly and securely with their customers through channels such as SMS, RCS and WhatsApp. Our. Award-winning RCS solution positions LINK at the forefront of next-generation messaging, offering enterprises richer, more interactive ways to engage with their users. We serve approximately 65,000 customers on a recurring basis, sending around 23 billion messages in the last 12 months through our product portfolio. LINK employs 700 people across more than 30 offices with operations spanning 18 European markets as well as South Africa and Latin America. Since 2014, we have completed over 35 acquisitions, which have been a key driver in building scale, customer stock and tech functionality. At the center of the slide, you can see our product portfolio, a broad modular offering that allows customers to manage and automate communication across multiple channels. The MyLink suite includes tools for marketing, engagement, payment and APIs, essentially covering the full life cycle of digital customer interaction. Finally, on the right-hand side, we highlight LINK's footprint, demonstrating how the company has established strong local positions across Europe and selected international markets. This broad platform now provides a solid foundation for continued growth, both organically and through future strategic acquisitions. 2025 has been a transformative year for LINK Mobility with clear progress across profitability, cash generation and strategic execution. We strengthened the business both operationally and financially while continuing to scale the footprint. The key highlight for the year is our operating earnings growth compared to our 2024 numbers and including the full year contribution from acquisitions completed in 2025, adjusted EBITDA increased by 48% year-on-year, while leverage rose only modestly from 1.35x to 1.49x. This shows that we can deliver high growth and profitability while maintaining financial discipline and a healthy balance sheet. Looking at growth, we delivered 5% pro forma gross profit growth in 2025. That is below our target. And given the opportunities we see in the market, we believe we should be able to deliver stronger organic growth than this. A softer fourth quarter weighed down the full year results. Improving organic growth is top priority for us going forward. Still, we delivered 7% pro forma adjusted EBITDA growth in 2025, demonstrating continued scalability in the business. Last year was an active year on the M&A front. We completed 3 acquisitions, including SMSPortal, adding more than NOK 300 million in combined cash EBITDA to the group. We also introduced our first ever shareholder distribution policy, reinforcing our commitment to consistent capital return. Cash generation remains strong with our NOK 400 million in free cash flow, supported by solid cash conversion across the business. With the addition of SMSPortal, we expect cash generation to improve further, giving us meaningful flexibility to invest in core business and conversational solutions, pursue selective M&A opportunities and return capital to shareholders through dividends or buybacks, all while maintaining a healthy leverage ratio. Q4 was weaker than expected due to headwinds that we view as largely temporary rather than structural. The underlying demand, our pipeline and the continued shift toward higher-value conversational channels gives us confidence in returning to stronger growth. Reported gross profit came in at NOK 461 million, up around 6%, including M&A, but down roughly 4% organically year-over-year. On a pro forma basis, gross profit declined 2%. The software development mainly reflects a weaker performance in parts of our European footprint. We saw lower volumes in Global Messaging, some negative accounting effects and softer enterprise campaign activity in what is normally a seasonally strong quarter. South African business delivered around 5% pro forma growth, which is in within normal variance versus our high single-digit target. Adjusted EBITDA declined 8% on a pro forma basis, mainly reflecting the shortfall on gross profit. OpEx increases were somewhat higher versus previous quarters due to negative year-end accrual deviations. Reported EBITDA for the quarter was NOK 198 million, with the difference to adjusted EBITDA primarily related to nonrecurring M&A items. Operating cash flow in the quarter was solid. We generated NOK 236 million from operations, supported by a positive working capital release of NOK 87 million, bringing full year operating cash flow to NOK 700 million. Commercial activity remains healthy. We closed NOK 40 million in contract value during the quarter, in line with expectations and internal targets. We observed continued high demand from the market for conversational solutions on top of OTT channels with one contract on RCS being the second strongest quarter ever. For the full year, contract wins represent an expected gross profit of NOK 175 million, up 17% year-over-year. On the M&A side, we maintain a pipeline representing around EUR 50 million in cash EBITDA at attractive multiples. Discussions and due diligence are progressing as planned. We successfully closed and consolidated SMSPortal in December, which also delivered positive EBITDA growth in the quarter of 7%. The long-term growth drivers remain intact. We continue to see strong momentum in next-generation OTT channels. Billable RCS volumes grew 113% and WhatsApp volumes grew 177% year-over-year. Both channels are increasing their share of total messaging traffic. We view the weak performance in the current quarter as a temporary slowdown and expect to return to organic growth over the coming years or coming quarters. The Q4 impact was driven by an unexpected reduction in share of wallet from 3 customers in Global Messaging and 1 customer in Central Europe on top of the handful declining enterprise accounts we already highlighted in prior quarters. The gross profit decline was attributable to these 9 customers. As shown in the upper left chart, these clients contributed negatively to gross profit growth of NOK 27 million in the current quarter, which more than explains the total organic decline of NOK 17 million. Most of the NOK 27 million decline originates from the 4 larger customers reducing their share of wallet. These customers with aggregator-like behavior shifted away from LINK. The customers do not share detailed information behind their actions, but we assume the shortfall in volume is due to specific pricing considerations on selected destinations. We have already initiated targeted commercial actions to restore volumes to a normal level with these accounts. The rest of the customer base continues to perform, although growth was softer in Q4 due to negative impact of accruals and lower enterprise campaign activity. The residual customer stock delivered NOK 10 million in gross profit growth, including net negative year-end accruals of NOK 7 million. Excluding these one-off accounting effects, underlying growth in the quarter was NOK 17 million, which better reflects the true momentum in the business and in line with previous quarters. In the retail sector, campaign activity was somewhat lower than expected, also somewhat lower than same quarter previous year. We do not see any common factors here, only smaller discrepancies on numerous retail clients in the current quarter. Looking ahead, we expect the group to return to organic growth over the coming quarters. This is supported by 3 factors. First, comparables with isolated decliners ease as we move through the year, although Q1 will still face tougher comparisons. Second, we are executing targeted commercial initiatives to recover volumes with the impacted customers. And third, the broader customer base continues to develop positively, supported by strong contract wins in 2025, up 17% year-on-year. Overall, these factors gives us confidence that the Q4 slowdown is temporary and that we're well positioned to return to growth. For the full year, LINK achieved NOK 175 million in expected gross profit from new contracts, representing 17% growth year-over-year. This strengthens the forward visibility and provides a solid foundation for continued growth as these contracts ramp up and convert into gross profit over time. In the fourth quarter, we delivered NOK 40 million in estimated gross profit from new contract wins. This was in line with our expectations and quarterly targets. The mix towards CPaaS continues to improve, which remains a key strategic priority for us. CPaaS now represents more than 40% of total contract value for 2025, reflecting the ongoing shift toward higher value, more scalable solutions and a structurally stronger revenue mix. Within CPaaS, OTT solutions are showing particularly strong momentum. OTT now represent the majority of CPaaS contracts closed and gross profit from OTT increased 46% year-on-year to NOK 12 million in the quarter. Within OTT, we are seeing encouraging traction on RCS, where we delivered our second highest quarter ever in terms of contract wins. Overall, this highlights solid commercial momentum and improving mix towards higher-margin solutions and a good starting point for future growth. Let's turn to the 2 key structural drivers behind LINK's organic growth. Although our recent performance have been softer than expected, we view this as mentioned as temporary. The core fundamentals remain solid and the long-term growth drivers that underpin LINK's strategy are unchanged. The first driver shown on the left-hand side is the increasing adoption of A2P messages across Europe. We continue to see adoption growth, and there remains significant room for further expansion across Europe, providing a solid foundation for sustained long-term growth. The second driver illustrated on the right-hand side relates to the new and more advanced CPaaS solutions. We are observing growing traction for richer channels such as RCS and WhatsApp, which offer higher ROI for clients, more efficient customer interactions and greater engagement, particularly in sectors like banking, retail and logistics. Together, these 2 trends, higher adoption rates and ongoing shift toward advanced conversational solutions are the key enablers of LINK's organic growth strategy going forward. Moving on to the newly acquired South African entity. SMSPortal is a strong and well-established business. It's the #1 A2P messaging player in South Africa, serving more than 5,000 customers on a market-leading platform with high throughput and reliability. Over the last 12 months, the business has handled around 16 billion messages, so this is already at scale, profitable and highly recurring volumes that fit very well with the LINK model. Performance was in line with expectations, steady quarter-by-quarter improvement in gross profit and positive adjusted EBITDA development. In stable currency, gross profit grew around 5%, which is within the normal variance for a stand-alone quarter. On the commercial side, we're encouraged by the pipeline. We are implementing new contracts from new customers in the first half of the year, representing roughly 600 million messages on an annualized basis. Beyond that, the broader pipeline is substantial with an estimated 1.7 billion messages. Integration activities are progressing according to plan. Platform synergies are being evaluated. We are actively exploring cross-sell opportunities on specific customer and LINK's CPaaS solutions across the SMSPortal customer base. LINK Mobility was recognized by Juniper Research, one of the most respected analyst firms in telecom and CPaaS space. We received 2 major awards, Platinum winner for Best Customer Interaction solution, reflecting the strength of our platform to create seamless conversational customer experiences across channels. In addition, we were awarded Gold for Best RCS monetization solution. This is encouraging as RCS and next-generation messaging are key strategic priorities for us and important growth drivers going forward. These awards are not just nice recognitions, they confirm that we continue to innovate, that our product portfolio is strong and that customers trust LINK with the most business-critical communication. This kind of independent validation is confirmation that what we're building is competitive on a global level. Overall, M&A discussions and due diligence are progressing as expected, and we continue to see an attractive market for inorganic growth opportunities. During the quarter, we successfully completed the closing and integration of SMS portal. At the same time, we have a healthy and active pipeline. We currently have 9 prioritized targets in various processes and 5 companies are in due diligence. Larger opportunities naturally carry more uncertainty in terms of timing and signing. The combined scale of these prioritized opportunities is significant. Together, they represent more than EUR 50 million in cash EBITDA. Looking ahead to the next 3 to 6 months, our focus is clear. We will continue capturing synergies and operational improvements in SMSPortal while progressing the most attractive targets in our acquisition pipeline and positioning LINK for larger, more structured processes where we can leverage our scale and track record as a preferred buyer. To sum up, our inorganic growth strategy remains disciplined, but clearly opportunity driven. We operate comfortably within our leverage range of 2 to 2.5x adjusted EBITDA, supported by a proven M&A framework and a strong track record of successful integration. Our pipeline has never been stronger and with our financial flexibility, we're well positioned to act quickly when the right opportunities comes along, always with a clear focus on quality, profitability and long-term shareholder value. My last slide captures our key medium-term objectives built around 3 pillars: growth, profitability and capital allocation. Starting with growth. Our ambition is to deliver high single-digit gross profit growth over time. While we saw softer momentum in Q4, we expect a gradual normalization through 2026. Some of the headwinds we experienced at the end of the year will likely still impact the first part of the year, but the underlying drivers remains intact, supported by solid order intake and continued growth in OTT channels. Turning to profitability. We expect adjusted EBITDA growth to outpace gross profit growth, reflecting the scalability of our business model, consistent with what we have demonstrated historically. Finally, on capital allocation, accretive M&A remains our first priority, supported by a strong and actionable pipeline. At the same time, as highlighted last quarter, we expect shareholder distribution to increase over time, reflecting our expectation to be able to fund both continued M&A activity and growing returns to shareholders. At the same time, we remain committed to maintaining financial discipline, targeting a leverage range of max 2.0 to 2.5x adjusted EBITDA. LINK is committed to deliver sustained value creation, combining profitable organic growth with accretive M&A and attractive shareholder returns. With that, I will hand over to Morten for a closer look at the financials. Morten Edvardsen: Thank you, Thomas, and good morning to everyone joining the call. I'll now walk you through the group's financial performance for the fourth quarter. Starting off with an update to segment reporting. We have made updates to our segment reporting this quarter following an internal reorganization to align customer management under the best suitable part of the LINK organization. This includes shifting enterprise customers with aggregated like behavior under the management of the Global Messaging organization to secure the best possible handling and growth on these clients. The shift also includes the Tismi business unit in Netherlands, which customer profiles aligns best with Global Messaging. In addition, the Italian business unit has been reclassified from Western to Central Europe region. To ensure comparability, all historical figures have been restated to reflect these changes. With the acquisition of the South African entity SMSPortal and consolidation from December 2025, we introduced the segment Rest of the World, capturing both the domestic and international business of the acquisition. Hence, figures for this segment aligns with previous communication regarding the acquisition. Then to the results. Reported revenue increased 7% year-on-year to nearly NOK 2 billion, while organic growth declined 5% in the quarter. As illustrated in the lower graph, the organic decline was mainly driven by a decline in the Global Messaging segment with NOK 116 million, partly offset by growth in the Enterprise segment of NOK 29 million. The organic decline was more than offset by M&A contributing with NOK 211 million in the quarter, resulting in positive reported revenue growth overall. The revenue decline on the mentioned 9 declining customers represented a revenue decline of 9% in the quarter or NOK 166 million, mainly within Global Messaging but also impacting enterprise regions as in previous quarters. Organic enterprise revenue grew 2% year-on-year, driven by Northern and Central regions, while Western Europe reported an organic 2% decline, impacted by softer-than-expected campaign activity and slight increase in churn in the quarter. Overall implementation of closed won CPaaS contracts are strengthening the overall quality of revenue and hence, structurally improving margins. The Global Messaging segment declined 24% in the quarter, and the main driver was loss of wallet with 4 large aggregated clients in an inherently volatile business. Overall, while Enterprise continues to deliver positive growth and a trend of improved revenue mix, the group's organic revenue declined driven by the weaker performance in Global Messaging. Then to the next slide, giving an overview of churn and net retention. Starting with churn, we observed a quarter-on-quarter increase in enterprise churn. This was, among other effects, related to new churn on one high-volume SMS customer with low margin. This client is, on the other hand, working with LINK on implementation of future OTT solutions. In general, OTT contracts typically come with higher value and stronger integrations, which over time supports improved stickiness and customer lifetime value. Looking at net retention, which was broadly stable quarter-on-quarter, but remains below our target level. As shown in the chart, retention has stabilized compared to recent quarters, which is encouraging. However, performance in the quarter was impacted by softer campaign activity and a more competitive environment in the aggregator segment. The previously mentioned 9 clients reduced net retention by 9 percentage points in the quarter. That effect is expected to fade out over the next quarter, supporting a gradual improvement in net retention. We remain confident in returning to our medium-term target level of approximately 105%, which supports high single-digit gross profit growth. Then to the gross profit. Reported gross profit increased 6% year-on-year, including acquisitions to NOK 461 million, while organic gross profit declined 4% in stable currency. The organic decline in gross profit was primarily driven by the Global Messaging segment, where gross profit decreased 21% or NOK 14 million, mainly due to the mentioned reduced share of wallet customers, representing NOK 18 million. The Enterprise segment declined 2% organically in the quarter or NOK 3 million. This includes a net negative year-end accounting impact of NOK 7 million, hence, underlying growth was slightly positive at 1%. The softer growth momentum compared to previous quarters was impacted by lower-than-expected campaign volumes in the quarter, while we observed a continuation of growth on CPaaS solutions and especially OTT channels, now representing more than 6% of total gross profit. Organically, gross margin improved by 0.4 percentage points, mainly driven by Global Messaging representing a lower share of total revenue compared to same quarter last year. The year-end accounting effects impacted margin negatively by approximately 0.4 percentage points and was offset by positive margin impact from higher-value OTT solutions in line with previous quarter of 0.5 percentage points. Currency and acquisition effects weighed slightly on the reported numbers, resulting in a reported gross margin of 23.3%. Hence, reported margin was slightly down. The underlying organic margin trend remains positive. Over to adjusted EBITDA and the margin development. Reported adjusted EBITDA increased marginally year-on-year, including M&A and declined 15% organically in fixed currency. The organic decline was NOK 32 million, whereof NOK 17 million explained by the organic gross profit decline and NOK 15 million is related to higher OpEx year-over-year. OpEx grew 7% year-on-year in the fourth quarter. The organic OpEx increase in the quarter was higher than previous quarters due to year-end closing effects and timing items. Full year organic OpEx increase was modest at 4%, reflecting ordinary inflation and planned investments to support growth. Acquisitions closed and consolidated during 2025 contributed with NOK 33 million to adjusted EBITDA in the quarter, which more than offset the organic decline. Adjusted EBITDA margin decreased from 11.5% to 10.9%, driven by higher OpEx to sales influenced by lower top line and partly offset by the gross margin expansion. Closed and consolidated acquisitions supported expansion in reported margin by 0.6 percentage points with SMSPortal being the largest contributor, operating at a reported EBITDA margin of 22%. Then to the next slide on the P&L. I will, as always, comment on the key items below adjusted EBITDA. Nonrecurring items were reported at NOK 21 million in the quarter, primarily related to M&A transaction costs with NOK 12 million, where NOK 7 million related to SMSPortal and restructuring activities of NOK 9 million in the quarter. EBITDA came in at NOK 195 million. Depreciation and amortization totaled NOK 116 million or up NOK 24 million quarter-over-quarter, where NOK 12 million related to 1 month of SMSPortal ownership, while the remaining linked to year-end catch-up related to finalized internal R&D projects during 2025. The estimated future quarterly amortization of SMSPortal are NOK 36 million, pending the finalization of the PPA. Net financial items were negative NOK 46 million, consisting of net currency loss of NOK 25 million, net interest expense of NOK 27 million and other financial items representing a positive impact of NOK 6 million. The net currency loss mainly includes a mark-to-market valuation loss with no cash effect of NOK 23 million related to ZAR/EUR cross-currency swap established in relation to the SMSPortal acquisition. Net interest expense of NOK 27 million consisted of NOK 32 million in bond interest, including amortized transaction costs, partly offset by interest on cash deposits held. Other financial items was positive NOK 6 million related to a positive earn-out adjustment related to the Net Real Solution acquisition in Spain. This results in a profit before tax of NOK 33 million and net profit for the period of NOK 31 million post the tax expense of NOK 2 million recognized in the quarter. Then to the balance sheet. Overall, the financial position remains solid with strong liquidity and ample capacity to support continued inorganic growth with a cash position of NOK 1 billion and leverage of 1.5x adjusted EBITDA after closing SMSPortal. Total assets increased slightly year-on-year, primarily driven by higher noncurrent assets following acquisitions completed during the year as well as foreign currency effects. Total receivables were positively impacted by continued collection efforts, improving DSO year-over-year and settlement of an earn-out and partial sellers' credit repayment related to the U.S. divestment, offset by acquired entities and currency effects. Cash position, as I mentioned, is NOK 1 billion end of the year, down NOK 1.4 billion year-on-year. The decrease primarily reflects debt repayments and M&A activity. Net debt repayments totaled NOK 835 million during the year, while the NOK 1 billion cash consideration for the SMS Portal acquisition was funded from existing cash reserves. These outflows were partly offset by solid cash generation throughout the year. Looking at the financing, long-term borrowings consist of 2 outstanding bonds totaling EUR 225 million with an average cost of 3-month Euribor plus 2.53%. In addition, we have an undrawn working capital facility of EUR 65 million, which provides further headroom to fund operations and future M&A. Equity stands at NOK 5.7 billion, corresponding to a solid equity ratio of 52%. Net interest-bearing debt supported at NOK 1.6 billion, resulting in a leverage of 1.5x adjusted EBITDA and up 0.5x quarter-on-quarter, driven by the closing of the SMSPortal acquisition. Leverage remains below our target range of max 2 to 2.5x adjusted EBITDA. Then to my final slide on key cash flow items. We delivered adjusted cash flow from operations of NOK 257 million in Q4, reflecting strong underlying profitability and good cash discipline. This corresponds to a cash conversion of around 119% of EBITDA. Working capital normalized in Q4, leading to a net positive cash effect from working capital on a last 12-month basis of NOK 22 million. Taxes paid were higher in Q4 due to timing differences. On a last 12-month basis, adjusted operating cash flow amounted to NOK 782 million, corresponding to an adjusted EBITDA conversion of approximately 95%. CapEx have been elevated through 2025, primarily driven by fast track investments in our CPaaS platform and in Q4 initiatives supporting additional consolidation and strengthening commercial development. We expect these investment levels to normalize into 2026 and expect CapEx level to come down by approximately 10% in 2026. Interest payments reflect the new LINK02 and LINK03 bonds, and we continue to maintain additional liquidity through the undrawn revolving credit facility, as I mentioned. That concludes the presentation, and it's now time for Q&A. Back to you, Kristian. Unknown Executive: Thank you, Thomas and Morten. We will now start the Q&A session. [Operator Instructions] If Q4 had included a full quarter of SMSPortal instead of 1 month, how materially different would reported gross profit and EBITDA have been? Morten Edvardsen: We are presenting that on Slide 5, where the full pro forma results for the group is presented. So on a full pro forma basis, including SMSPortal for the full quarter, gross profit will be NOK 531 million versus the reported NOK 461 million. And on adjusted EBITDA will be NOK 293 million versus NOK 216 million reported. Unknown Executive: Should we expect SMSPortal to be margin accretive to the group already in Q1? And how quickly can synergies be realized? Morten Edvardsen: I can take the first one. We already see margin accretion effect also in the Q4 numbers. So our expectation is that when we close the acquisition that it should lift the margin -- adjusted EBITDA margin by 1.5 percentage points. And I would say still they're operating at a margin of 22%. So it should be margin accretive definitely also in the first quarter. Thomas Berge: When it comes to the synergies, we see that we are actually able to implement on some customer synergies that we have customers in our footprint with traffic to South Africa that we are in a position to win now. And also, we see that we can export some of the SaaS solutions that we are having and also OTT channels like WhatsApp to some of the customers in South Africa. The first synergies are going to materialize quicker than the second category, WhatsApp on the customer stock in SMSPortal. The time line to sort of sign a new contract and to implement the solution is, of course, a little bit longer, but we expect that to be positive gradually during 2026. Unknown Executive: Good. You mentioned move toward more SaaS-like CPaaS KPIs, which metrics should investors focus on going forward to capture underlying value creation? Thomas Berge: The metric we are following up is gross profit growth, adjusted EBITDA growth, and we're also monitoring quite closely the contract backlog. So those are the 3 main KPIs for us. Unknown Executive: With a pipeline of over EUR 50 million in cash EBITDA and several targets in due diligence, how confident are you that we will see at least one acquisition in 2026? Thomas Berge: I'm very confident on that. Unknown Executive: Given current market volatility, do you see opportunities to acquire assets at even more attractive multiples than historically? Thomas Berge: We see that the valuations are quite stable. So historically, it's been somewhere between 6 to 7x cash EBITDA, and that would sort of be the normal valuations for most targets. Unknown Executive: You mentioned strong RCS contract momentum. With Apple opening up RCS in the Nordics, how should we think about the revenue potential over the next 12 to 24 months? Thomas Berge: I am more occupied with sort of gross profit potential here. So Apple is planning to open up for RCS in the Nordics. Exactly when we don't have full transparency on it, Q1, Q2. And we do see that customers, enterprise customers in the Nordics, they are increasingly interested in the solution, and we're doing more and more PoCs in the Nordics on RCS. So I would believe that the gross profit growth potential on that channel in 2026, 2027, especially 2027 is going to be quite good. Unknown Executive: You mentioned that 4 large customers weighed on growth in Q4, but except for 9 clients, organic growth were NOK 17 million. Did 4 or 9 clients drive the miss? Thomas Berge: We basically have 2 buckets of decliners. The 4 -- that's share of wallet clients, which means that they are enterprise clients, but they have somewhat of an aggregator like behavior. Those 4 clients drove most of the decline in the fourth quarter. The 5 other customers are customers we informed of in the second quarter that cut use cases. They do not have other vendors, but they decided to eliminate certain use cases that resulted in volumes declining at the beginning of the year. We stated in both Q2 and Q3 that, that effect on the total gross profit growth was about 2 to 3 percentage points. It's in that area also in the fourth quarter, and that's going to be the last quarter we will have those enterprise clients negatively impacting the growth momentum as the impact is sort of worn out after 12 months. Unknown Executive: Good. Are there any differences in conversion rate from order intake to revenues between A2P and CPaaS? Are the lead time longer in CPaaS? Thomas Berge: The lead times on CPaaS was longer in 2024, 2023. We are seeing that it's improving as the product is getting more and more mature. So the lead times are catching up when it comes to -- compared to legacy solutions. So a little bit longer still, but the gap is being closed. Unknown Executive: What is your capacity for buying back your own shares? And how do you think about that versus further M&A? Thomas Berge: The capacity is basically in the general assembly from May. This is something we are -- or the Board is always considering on a constant basis what the best option for value creation is. We do see a lot of potential for value creation on M&A also. So we are going to do what is best for creating value for the shareholders. Unknown Executive: Should we expect SMSPortal to continue to grow at the same rate as in Q4 in 2026? Thomas Berge: SMSPortal without inflow of bigger customers normally sort of grow in the mid-single digits. Historically, the growth has been more chunky, meaning that it can grow significantly over high single digit for a certain period of time when they have won some bigger customers and more sort of in the single digit when that's not the case. So over time, we do expect SMSPortal to grow in the high single digits, but it's varying between the interval I mentioned. Unknown Executive: Good. What concrete actions are you taking to improve organic growth and revenue retention in the enterprise customer segment? Thomas Berge: The commercial strategy is the same. The market is adopting to a larger degree, the new CPaaS solutions. So what we are doing is tactical changes to what kind of use cases and which verticals we are trying to address. And also, we are doing tactical changes constantly on legacy products on what use cases and what size of customers we want to focus on. So this is sort of something that we are doing on a recurring basis. Unknown Executive: Do you have any information as to why some of your larger Enterprise customers have lowered their spend? Thomas Berge: Yes, we do. On the Enterprise side, we know exactly why. Some of the decline is due to them just stopping the use case or that they are using a cheaper channel like e-mail because they feel that the return on investment is high enough to justify the cost. Unknown Executive: And then the gross profit margin is lower in other regions than just Western Europe compared to last year. Is this a structural shift or random fluctuations? Morten Edvardsen: I think we should remember that we have NOK 7 million in year-end accounting -- net negative accounting effects, which are impacting margin mainly in, I would say, Nordics and Western. Also, I would say the underlying margin development is more linked to traffic. We don't see a sort of structurally different margin picture overall sort of per client level. So it's more linked to client and destination mix to some degree year-on-year. I also mentioned just for Western, there's an impact, of course, of the acquired entities in the U.K., which is coming with a lower gross margin. Unknown Executive: What makes you confident volumes will return to growth in Q1 and for 2026 as a whole? Morten Edvardsen: As we outlined in the Slide #6, we -- the 9 customers, we see the contribution there on the lower graph. And we see the sort of contribution from these clients easing off to entering the comparison will be sort of lower as we go through into 2026. Q1 still had a quite significant contribution to gross profit. Also, we believe the initiatives that we are taking and closed contracts will positively contribute to a gradual improvement in the growth momentum. Thomas Berge: Yes, I can also just mention that we don't see any structural changes in the market. We see strong demand for the more advanced solutions and continued demand for sort of SMS and legacy solutions. After 3.5 years of outgrowing the market, Q4 was soft or weak. This is something we experienced before also like 2022. And we've seen historically that we're able to bounce back in the coming quarters. So we don't see any reason why this shouldn't happen in 2026 compared to our sort of experience with markets and what we've seen historically. Unknown Executive: Good. And then a little bit on the same question. Could you please give more details on why the weak volumes in Q4 was considered more temporary than structural? Thomas Berge: It's mainly connected to the 4 share of wallet customers. Those customers, they are using a multi-vendor strategy because they are terminating on a global level, their messages. The volumes there are more volatile. So for Q4, we had a large decrease on those 4 customers, which was unexpected for us. We have had these customers for a few years. There are no structural reasons to this. The volume can flow back partly or wholly or it can sort of increase more again. So that's just the nature of those use cases. There's nothing indicating in the enterprise market that there are any structural changes. It's growing quite nicely even if we had a somewhat lower campaign activity in the retail segment in the fourth quarter, which is also not a sign from sort of the way we see it as a structural change. So that has happened historically as well. Campaign activity in the fourth quarter in a year can be somewhat lower than what we expected. And then sort of we revert back to normal again Q1, Q2 and then Q4 next year is at par with expectations. So that's sort of the main summary from our side. Unknown Executive: And could you also provide some information on seasonality effects with regards to SMSPortal? Morten Edvardsen: We don't see a material seasonality effect in SMSPortal. It's fairly flat across the quarters, maybe slightly higher in Q4, as you can see from our pro forma numbers. There is no -- the seasonality is a little lower than in LINK. Unknown Executive: Thanks. Why does the growth in messages differ so much from revenue gross profit growth? Morten Edvardsen: It basically comes from the price per message in SMSPortal compared to the rest of the LINK footprint. That's the main driver for it, I would say. Unknown Executive: And then a question on the segment changes. What's the reason that's being done now, the segment changes to Global Messaging? Thomas Berge: What we have done some changes to the internal organization that was planned actually since the summer. And part of that change was to strengthen the team that follow up aggregators and enterprise customers with aggregator-like behavior to make sure that we have a stronger operational and a better customer follow-up. So that's the reason for it. Unknown Executive: For the Global Messaging reduced share of wallet customers, will you reduce your prices to increase your share of wallet so we should expect lower gross profit margin in Global Messaging going forward? Thomas Berge: No, that's not the plan. We are following -- we are, of course, working with those existing customers to regain some of the volumes or the whole volumes, but we also got a couple of new customers coming in that will hopefully sort of make a positive impact. We are not planning to lower margins in that segment significantly in order to grow revenue. We have a strategy of growing the gross profit. Unknown Executive: Could you comment on the strength in RCS versus competitors, both on aggregate and geographically? Thomas Berge: Yes. On RCS, geographically, we have a very strong solution, not necessarily on the gateway side. We have a very good throughput and latency there, just as good as the bigger competitors. But we have a strong offering of SaaS solutions to help the client do their communication content and library functions and template managers and stuff like that, which according also to Juniper is being recognized as very good compared to the industry. The smaller competitors that we are seeing mostly on a day-to-day basis on the enterprise segment in the different countries where we operate, most of them, they don't have any RCS connectivity at all. So there, of course, we have a large competitive advantage. Unknown Executive: In which key regions do not Apple support RCS currently? Could you just update the market on that? Thomas Berge: Apple supports -- I can do it differently and state where Apple supports RCS, U.K., France, Germany and Spain. We are expecting Portugal and the Nordics to follow the beginning of this year, Q1 or Q2. We don't control that, of course, it's Apple and the mobile operators who control it. Unknown Executive: Do you see any risk for more customers reducing their SMS volume in 2026? Thomas Berge: There's always going to be some customers reducing volumes on certain use cases, and there will always be other customers that are growing quite nicely. This changes over time. We don't see that there is a trend that enterprise customers are reducing volumes. So we don't have any reasons to expect that this will happen sort of at the same pace as we experienced in 2025. No. Some customers, they increase, other customers, they decline. Historically, sort of we've been able to deliver a healthy growth momentum. So that is sort of the normal expectations. Unknown Executive: Yes. Can you give any further details on enterprise weakness related to the same customers that have reduced spending in prior quarters? Do they use other competitors? Can you share more details behind the weakness? Thomas Berge: I guess the question is regarding the 9 questions, which was divided in 2 buckets, 5 enterprise customers declining on certain use cases. There are no commonalities between them. It's different from each of the 5 customers. And the other 4 customers that has a share of wallet, enterprise customers with more aggregator-like behavior, that is mostly due to price considerations. They have found other competitors offering attractive prices on the destinations that we have. So now we're working on to match and retrieve some of the volumes either on those destinations or on new destinations. Unknown Executive: How has pricing discussions -- regarding M&A, how has pricing discussions developed since the last report? And can you give any further details on size? Thomas Berge: Pricing discussions on M&A is fairly similar to what we experienced in the previous quarterly reporting. We have the interval of 6 to 7x cash EBITDA, which is our normal purchase price discussions or valuation discussions. Regarding the size of the pipeline, we have a few bigger opportunities there. And we also got a couple of sizable opportunities in due diligence. Any more detailed commentary around that where they are and so on, I don't think I should go into those details due to competitive reasons. Unknown Executive: In general, do you see any changes in the competitive landscape with regarding to pricing and yes. Thomas Berge: No, pricing is pretty stable in the enterprise market. We don't see any increased price competition nor any lower price competition. It's quite stable. In Global Messaging, of course, it's more fluid and volatile, which we experienced in this quarter. There, the price competition is stronger as most of the customers there have a share of wallet. There's 2 customer categories in the Global Messaging segment. It's aggregators, which is by nature, very price sensitive. Then you have the enterprise customers who have a share of wallet strategy on the vendor side because they're terminating on a global level and no player in the A2P market is able to do that competitively. So they have to use different vendors. And they are price sensitive, but they also have quality considerations. So it's less price sensitive than the aggregating market. But still, volumes due to a multi-vendor strategy can be somewhat more volatile. What happened in the fourth quarter, it's more volatility than we've seen before. So that is sort of the way we view it. Unknown Executive: Could you give some flavor on the synergy potential of the SMSPortal acquisition? Thomas Berge: I think we've answered that already. It's mostly on the customer side. SMSPortal on the OpEx side is very, very efficient. Unknown Executive: SMSPortal gross profit growth of 5% year-on-year feels a bit low given the maturity of the total addressable market, at least, I believe. Please comment on price versus volume impact for SMSPortal in the quarter. Morten Edvardsen: I think Thomas commented on the growth momentum in SMSPortal that could vary within sort of a range depending on the inflow of new clients. We see a good number of closed volume that's going to be implemented over the first half. So that's positive. There's also a significant pipe of also larger targets, which is being worked on. So that gives us confidence about the future growth momentum. I think the volume development is fairly in line with the price or revenue growth that we're reporting for the quarter. Unknown Executive: What commercial initiatives are you considering to restore volumes for isolated decliners? Thomas Berge: I think that has already been answered, and I won't repeat it because we have more questions and we're running out of time. Unknown Executive: The new contract on SMSPortal that should add NOK 600 million in new messaging volumes, should we assume same GP per message as the rest of SMSPortal's business or higher, lower? Thomas Berge: Yes, you could assume that just for ease. Unknown Executive: Given the impact we have seen from large customers in '25, how should -- how much of gross profit currently comes from top 1 and 10 customers? Morten Edvardsen: Top 1 represent about 4%. Top 10 is about 14%. Unknown Executive: Any other large customers where you see a risk of large volume reductions in line with what you have seen in 2025? Thomas Berge: No, nothing that I am aware of now. No. Unknown Executive: And then what can you do on the cost side to offset the reduction in gross profit growth? Thomas Berge: If we can, of course, reduce costs, that's an alternative. We have chosen not to do so yet because we believe that we're going to regain the growth momentum during 2026, and we see a lot of growth opportunities in the future, especially for the more advanced CPaaS solutions. So we believe as of now that it's better to sort of regain the momentum and then make sure that we maximize resources internally to extract growth momentum going forward. Unknown Executive: What is LINK doing to reduce time from contract signing to go live on new contracts to improve financial contribution from these contracts faster? Thomas Berge: We're, of course, following up the customers, especially the bigger contracts. That is done. So that has been done historically too. Most of the time when we are having delays, it's because development resources within the clients, they are occupied with other elements in the road map. That is difficult to change, of course, and we just need to be patient there and make sure we are in contact with them on a regular basis. So we have a priority in the road map. Unknown Executive: Could you elaborate on gross margin development, excluding one-offs and FX? Are you seeing structural pricing pressure from operators or competitors? Morten Edvardsen: Yes, the one-off effects that we had in the quarter is impacting the margin by -- the organic margin development by 0.4 percentage points. As we have commented on before, we didn't see any sort of structural difference in pricing or -- and margin pressure as such. Pricing from operators is sort of following normal trends, seen a price increase in the Nordics over the last few years, which we have alluded to before. But no sort of -- no significant changes, I would say, compared to previous quarters. Unknown Executive: And then I think this will be the last question. Do you see any signs that AI could enable alternative communication channels that might structurally threaten LINK's organic growth? If not, what do you consider to be the company's key moat in preventing this? Thomas Berge: AI is something we see as an asset when it comes to helping us and the customers to design and create communications. When it comes to communication channels, there are physical connectivity that needs to be in place, which AI can do. AI can help on API integrations, but you can't automate it. So I don't see a structural threat from AI going in and sort of doing these sort of connections to the different communication channels. We see it more as a value for future growth. Unknown Executive: Thank you. That concludes the Q&A session. Please reach out if you have any further questions, and we will be happy to answer them. Thank you to Thomas and Morten, and thank you for all your questions. See you next quarter.
Operator: Welcome to Ratos Q4 earnings call 2025. [Operator Instructions] Now I will hand the conference over to CEO, Gustaf Salford, and CFO and IR, Anna Vilogorac. Please go ahead. Gustaf Salford: Good morning, everyone, and thank you for listening in to the Ratos Q4 call. I will start by giving some highlights for the full year 2025, an important and eventful year for Ratos, a year of change with several strategic milestones that created a more focused and streamlined company. I'll give you some examples. The sale of airteam, a supplier of technical ventilation solutions in the beginning of the year. The listing of our construction company, Sentia, on the Oslo Stock Exchange in June. Since then, the share price of Sentia increased more than 30%, and last Friday, Sentia proposed a dividend of NOK 5.5 corresponding to a dividend percent of 96%. Diab has continued its focus towards more advanced materials and applications into new industry segments such as subsea and defense. And we finalized the year with a major add-on acquisition in HL Display of the German player, Deinzer, the largest acquisition in HL Display's history. 2025 also came with challenges that required operational improvement projects in some of our companies, but also major restructuring in Plantasjen that resulted in a reduced and more optimized footprint that is better set up for the future. Plantasjen is a different structure compared to when we acquired it in 2016. And we did the required balance sheet adjustments in the fourth quarter to reflect the new structure. Today, we also announced that we have divested Expin Group to Baneservice, Norway's leading railway contractor. This is an important step in the continued streamlining of Ratos, to strengthen our focus on long-term value creation. We're pleased that Expin Group will be backed by Baneservice, a strong and committed owner as the company continues its journey, and Anna will come back to the specifics on the financial impact. In terms of the overall market situation, macroeconomic and geopolitical uncertainty had a negative impact on the overall demand situation in most of Ratos segments in 2025. But if we now turn to the isolated Q4, we started to see a gradual improvement in net sales, mainly driven by increased demand in the defense and energy sectors. We also won some major orders supporting future net sales. In Q4, HL Display secured orders in the U.K. and North America of around SEK 500 million to be delivered over 2 to 3 years. After the end of the quarter, Aibel was awarded a 5-year framework agreement with an estimated value of approximately NOK 20 billion, and Presis Infra secured a 5-year contract worth about NOK 900 million. Overall, we expect the uncertain macroeconomic and geopolitical situation to continue to impact our companies and the markets. And if we now move on to the net sales development in Q4 and for the full year. In Q4, we saw an organic growth of 3% for our continuing operations, and 2 out of 3 business areas reported growth. Industry came in at plus 2% and Construction & Services at plus 9% and Consumer at minus 4%. So all in all, for the full year, net sales came in at minus 1%. In Q4, our adjusted EBITDA increased by 57% compared to last year. EBITDA was positively impacted by lower losses in Plantasjen and the contribution from the minority holding in Sentia. Diab delivered robust sales growth with improved profitability. The EBITDA margins improved in all segments, except Industrial Services, where the general market uncertainty remained with longer decision-making processes, having a negative impact on our consulting activities. The full year adjusted EBITDA increased by 17%. The 2025 earnings per share or EPS increased by 19% from SEK 2.36 to SEK 2.8, supported by improved earnings and lower effective tax rate. The Ratos Board of Directors proposed a dividend for 2025 of SEK 1.3 per share corresponding to 50% of profit of the tax. This is in the upper span of our dividend payout ratio of 30% to 50%. And if we now turn to the development by business area in Q4. For Industry, organic net sales grew by 2% and adjusted EBITDA declined with minus 17%. Within the industry, Product Solutions had a positive organic growth of 6% with EBITDA growth of 23%. Diab benefited from the strong demand across several industries and geographies. In Industrial Services, we saw net sales declining with minus 1% with a 44% decrease in EBITDA year-over-year. This came from weaker performance among the consultancy companies related to overall slow market, especially in the automotive segment. The ongoing automation projects in Speed Group also put pressure on the profitability in the quarter. And for Construction & Services, we saw that Presis Infra reported net sales growth in the quarter, but the profitability was impacted by the product mix and the timing of projects. We also saw a worsening market for rail electrification in Finland, and it continued to impact Expin Group numbers. Adjusted EBITDA increased with 39%. And if you adjust, for the Sentia minority contribution, adjusted EBITDA increased with 12%. Adjusted EBITDA margin, excluding minority holdings came in at 9.8%. If we now turn to consumer, we saw organic net sales growth of minus 4% and Plantasjen was declining with minus 6% versus last year's Q4. However, if you do a like-for-like comparison, sales was slightly positive versus last year and EBITDA increased as a result of the executed reconstruction. KVD's profitability was negatively impacted by the lower volumes, partly offset by cost-saving initiatives. Adjusted EBITDA came in at minus SEK 106 million, an improvement from last year's minus SEK 209 million. And with that, I would like to hand it over to Anna for the financial section. Anna Vilogorac: Thank you, Gustaf. So let us dig through some details of net sales and adjusted EBITDA. So looking on the left-hand side in the bridge of the organic components, we saw a really good contribution from this 3% organic growth. EBIT margin accretion of 70 basis points. On the M&A side, we didn't have a lot of activities of executed M&A for the quarter, hence, zero or very limited contribution from that. Hence, we were really happy to see the closure -- signing of Deinzer within HL Display. Moving along in the bridge, we saw a really good contribution from reconstructing activities in Plantasjen for which the closed stores contributed 130 basis points on our EBIT margin. FX continue to impact us negatively. This stems predominantly of SEK strengthening towards Norwegian krona. Our associated company, Sentia, contributed significantly, 120 basis points, and we should remind ourselves that the same period last year, so Q4 2024, we did not have this minority share in Sentia. So this is not a bridge effect. It's a full effect. Last but not least, our associated company, Aibel, contributed slightly negatively, so margin dilution of 30 basis points. This has to do on project mix. So it's a little bit lower profitability than we saw same period last year. If we would have looked at the full year bridge, Aibel would have been a positive contribution and Aibel actually leave this 2025 with record high order book and a record year behind them. So moving into next page. This was one of the important happenings during quarter 4. We have conducted a reconstruction in Plantasjen, which meant that we do have a vastly different footprint. We've gone of having 3 markets in Nordic countries to 2 markets. We have closed down 1/3 of our stores, and historically, Plantasjen could generate revenues of SEK 5 billion and had EBITDA margins of above 15%. This is vastly different now. So the 2025 year ended at SEK 3 billion in sales. And what we were happy about is that for the full year, we reported a 5% EBITDA margin. But due to this vastly different structure, we made a conservative estimate here. And hence, an impairment of goodwill was booked in quarter 4. Going forward, however, we do feel that Plantasjen is a more resilient company, and also, it was good to see that we have broken this negative sales trend in Q4 and posted slight positive growth. So going forward, the focus will be of delivering profitable growth, and we are really happy of a new CEO joining as of April. Another important happening was that we signed a contract to sell Expin Group, but this is one of the major overhauls that has been done during 2025, where we exited direct exposure towards construction industries but also that we decided that we are not the best long-term owner for the Expin Group, and hence, we are really happy to see Baneservice, a reputable and committed owner, to support Expin continuing journey. This has resulted in a negative impact on our reported results of minus SEK 800 million. This is noncash and that this has been booked in quarter 4. We also do expect positive cash flow impact upon closing. Also, what is important just to remember that we do have a couple of different ongoing disputes as we did discover some accounting differences, accounting deficiencies, post our acquisitions back in 2022. This, of course, would constitute an upside going forward. Turning our attention to net working capital. A big impact here is our disposal of Sentia as Sentia normally comes with highly negative net working capital. So we should focus on the gray bars, and comparing this quarter with same period last year, we saw that the relative net working capital came down even though we saw a slight uptick in absolute terms. This is solely explained by some timing issues in accounts payable in Construction & Services business area. And looking at our cash flow. Q4 is normally a strong cash conversion quarter. So it is this time around where we almost hit 200% cash conversion mark. But also here, we did see impact from the structural changes, especially Sentia again, and some impact from Plantasjen from last year. But if we look at on the right-hand side and focus on the underlying development, we did see a solid increase of 67% up. The only business area not contributing versus last year was Construction & Services and again, has to do with timing of accounts payable. Looking at our leverage, we peaked at Q2 2025, had also to do with a Sentia disposal as Sentia normally has a very strong cash position. Now we are back at pre-Sentia disposal level, so very similar to last year at adjusted 1.4x in net debt to EBITDA. And just as a reminder, our share in Sentia is not included in these numbers and just looking at the share price from yesterday, this amounts to SEK 2.6 billion. And last but not least, we would just like to conclude on our previous financial targets, which were adopted 2020, 2021, and have been now concluded. So EBITDA in absolute terms, we said that we would take that up to SEK 3 billion, looking where we landed. And if we adjust for Sentia and airteam, adding that back, 2025 is at SEK 2.7 billion versus the SEK 3 billion in target. Hence, we did not achieve that. And looking at -- so we should have grown EBITDA by 15%, our actual was 13%. So close but not there. Looking at our leverage target, in the graph, you can see that our average is 1.2x, whilst the targeted range is 1.5x to 2.5x, we can say that we have seen a lot more disposals in the past 3 years than acquisitions. Hence, the leverage is slightly lower than what the financial target would indicate. And then the third one was the dividend payout ratio. As Gustaf said, for this year, the Board has proposed 50% payout ratio. But if we look at the past number of years, the average has been 52%. So now I hand back to Gustaf for some final remarks. Gustaf Salford: Thank you, Anna. And I would just like to briefly summarize the year and the quarter. So 2025 was a year of transformation with several strategic milestones, and operational initiatives towards a more focused Ratos. In Q4, we started to see gradual improvement. We returned to net sales growth. We improved EBITDA. We won large orders, and we also did a very important add-on acquisition in HL Display. Going forward, we expect continued macroeconomic and geopolitical uncertainty to continue, but the Ratos team ends 2025 with a measured optimist going into 2026. We would also like to invite you to our Capital Markets Day on March 19. It starts at 01:00 here in Stockholm. So if you're interesting to participate, please send an e-mail to the address here on the slide for registration. I will present our strategy going forward, and Anna will present our new financial targets. But there will also be presentations by our companies and CEOs from Diab, HL Display, Knightec, and Presis Infra, some of our very important platform companies. So welcome. And with that, I would like to open up for questions. Operator: [Operator Instructions] The next question comes from Henric Hintze from ABG Sundal Collier. Henric Hintze: This is Henric. First of all, on Expin, I was wondering if you could just specify what types of costs were included in this figure that you adjust for, in the quarter? And secondly, I was wondering if you could maybe give us the sales and adjusted EBITDA for 2025 that Expin contributed with sort of we can kind of know what to expect after the divestment here. Anna Vilogorac: Thank you, Henric. Starting with your first question. So minus SEK 800 million, which impacted our operating results. You can see that as a capital loss in its entirety, and then we will see what the actual cash flow impact will be at the date upon closing. Our best estimate now is that it's going to be SEK 50 million to SEK 70 million. And in regards to the full year results for Expin Group, we are at SEK 650 million in sales, and we had minus SEK 36 million in EBITDA. Henric Hintze: Okay. Great. And after the divestment, Presis Infra will be the only majority-owned company left in the Construction Services segment. Should we view that -- should we view that as Presis Infra maybe also being a target for divestment? Or how will you view the structure after that divestment? Gustaf Salford: Henric, it's Gustaf here. So no Presis Infra, we see it as one of our core platform companies. We also see good opportunities for add-on -- attractive add-on investments there. So no, we are very proud owners to Presis Infra and will continue to be so. Anna Vilogorac: And just maybe to add little flavor, Presis Infra has shown a significant organic growth in the history. We also have really good return on capital employed, and we see these M&A opportunities to scale and add to the business. Henric Hintze: Okay. Very good. And maybe one more question from me. The profitability in Industry segment here in the quarter was down quite a bit despite the organic growth in the quarter. So I was just wondering if you could maybe give us a bit more detail on the drivers there. Gustaf Salford: I think I can take the overall picture, and Anna will complement here. But I think if you look at the technical consultants, and the last couple of quarters, it's been a bit weaker demand. The activity is not fully there. And that has an impact on the profitability. And then we have also had some market and product mix in our specific portfolio that has this impact on the overall profitability. And Anna I think I mentioned that we are investing in automation that will drive future profitability in this segment. However, in the quarter, that has a negative impact on the margins. Anna Vilogorac: And that is for Speed. So Speed is doing these automation projects, which, of course, come with additional cost up until the automation is up and running. So that's the one. We also have had weaker biotech segments and, so TFS is also contributing to this decline. . Operator: The next question comes from Bj�rn Olsson from SEB. . Bjorn Olsson: First on Aibel. You mentioned that due to the product mix, you see a sort of deteriorating margin. Could you give any guidance if this is to be expected for the years to come as well or if this is more of a one-off? . Anna Vilogorac: I would say like this, not deteriorating project margins. I might have misspoken. It's lower profitability than it was last year. It's still great. So that's only in comparison with Q4 last year. I would say, of course, it's a project business. You can never know for sure, but we don't expect any material change from what we've seen in this very good 2025. Bjorn Olsson: So flattish margins ahead? Anna Vilogorac: I would say so. And then it depends how much new project, how much change orders, how much maintenance is in there. Gustaf Salford: Anna and I, we were up in Haugesund visiting Aibel, and it's a very impressive and well-run operation. And I came back from that visit with a strong positive view on the offshore segments in the years to come here. And I think the indication from these large orders of the SEK 20 billion, and that could actually be more in the coming years, is one indication that it's a very strong company, Aibel, with a strong future. Bjorn Olsson: Great. And on Expin, you mentioned that you have an ongoing legal dispute. Could you give any figure and time line of a potential resolution? And if sort of in what ballpark we talk about in terms of financial amounts that you could see as an upside potential? . Gustaf Salford: I think there is processes ongoing. We don't want to go into the details on those processes. I think that's important to say they have to run and we have to follow them and work with them closely. So I think it's too early to say the financial outcomes of those processes. Anna Vilogorac: And I would say these kind of disputes, be warned, they can take a very long time. So it is difficult to judge, but it's a substantial amount. Bjorn Olsson: Okay, clear. And just final question on -- you mentioned the automation investments in Speed. When do you expect this to start yielding improving efficiency and so forth? Gustaf Salford: I think it's very exciting times now on the automation overall, the trend in the warehousing sector and 3PL and so on. So it's very important to do those investments to have a good offering in also the years to come. Right now, we are in a very exciting phase where we start to go live with these projects and these new solutions. And then starting from the coming quarters, we will see gradual, bigger automation of those volumes going through different warehouses. So I think a small start and then we will accelerate into Q2, Q3, Q4. So that's the plan we have at the moment. Operator: The next question comes from Georg Attling from Pareto Securities. . Georg Attling: I just wanted to come back to the margins here in Industrial Services. So I'm wondering, first of all, how much of that margin contraction is Speed? And how much of that is the technical consultants? And then second, your predecessor, Gustaf, guided for SEK 80 million in the cost synergies in the Knightec, Semcon merger. I'm just wondering if you still stand by that estimate? Gustaf Salford: Yes. I think I can start and Anna will continue. If we start with the margins, there is a slight decline in the industrial consulting or technical consulting segment. I think if you look at the industry as such, I think if you take Knightec Group, they're holding up well, and if you do a benchmark of the other companies. However, there was a bit of what we call market mix with more volumes from markets outside Sweden, that impacted a bit. Then we had Speed as we mentioned. If you look at the synergies then that we have been working on the last year or so, if I remember the call correctly, it was added from SEK 50 million to SEK 70 million, and I keep the SEK 70 million on the synergies, you saw some of them in the quarter, I think it was SEK 10 million in the quarter. So we're on a run rate of SEK 40 million, and somewhere mid into this year, we expect to be at the SEK 70 million, and I stand behind those numbers as well of the fiscal year 2026. Georg Attling: That's very clear. Second question on capital allocation. So I mean, if you treat the incentive position as cash, you're almost in net cash and still the dividend wasn't that big of a hike and no comments on buybacks either. So just wondering what the plan is here on the capital allocation? Are you going to ramp up M&A? Or how are you going to make sure that you aren't going to end up in net cash for too long? Gustaf Salford: I think that's a big part of our strategy, Georg, that we are now developing. The capital allocation strategy going forward. We have talked a lot about focus. We have talked about streamlining, but we have also talked about add-on M&A on our key platforms. But I would like to come back to the more detail, the strategy going forward on the Capital Markets Day, the 19th of March. Georg Attling: Yes, that's clear. Just a final question on -- I appreciate if you don't want to go into too much details here, but you've been at the helm now for a couple of months. Just interesting to hear your first impressions and also if you -- what you want to do with the Ratos in terms of divestments and acquisitions, is it any different to what the strategy was before you came on board? Gustaf Salford: Thank you for that question, Georg, because I really enjoyed my first time here at Ratos. So I started off 1st of December, and I said, I really want to visit all the companies, meeting all the people, that's key for me, understanding the leadership, the CEOs, the management teams. And I've been very impressed. I mean, of course, some companies, they have challenges, but they also have a lot of opportunities. So for me, it's really learning the business from the ground up and being very interesting in what our companies are doing from that knowledge base and together with the leadership team here at Ratos is really to thinking about how can we add value? Where can we add value to the companies, where can we add value to our investors and our shareholders, and from that, we will then do this kind of streamlining strategy, as I mentioned, into focusing more on a couple of the platforms we now have and drive growth there, from organic growth, but also from add-on acquisitions. So that's something we are working on. So that's a bit of the ingredients that we will add to the Capital Markets Day strategy. But exactly what that will be is we need to -- I don't want to disclose that now. We'll come back to that on 19th. But I think Ratos has a fantastic opportunity to create a lot of value. We need to take some tough decisions for sure. And I think we showed that in Q4 that we did. And we'll continue to do that going forward with the aim to create shareholder value. So that's what I can say today. Operator: The next question comes from Johan Sj�berg from Kepler. Johan Sjöberg: First, Gustaf, maybe you could talk a little bit upon what you see now going into 2026? I mean, given your company's big share of sales towards the Nordics where you see better PMIs in general and also potential impact also from lower interest rates as the Nordics starts to cut the interest rates earlier than rest of the market. Could you talk something about it? Do you see any change whatsoever in terms of sort of sentiment among consumers or the industry, please? Gustaf Salford: Absolutely Johan. And that's actually something I spent quite a lot of time on reading report, looking at the new KPIs and indices coming out about the business cycle going forward. And I think if you look at the consumer sentiment, it's not me saying, I'm just looking at data, but that's more positive in the end of the year and the beginning of this year. So I think we see positive signals there. And as you can say, if you look at the Plantasjen numbers that we mentioned previously, that's also a positive signal. I mean I also think if you look at biotech clinical studies, et cetera, an area that I've spent some time on previously as well, you see positive signal there as well that more of these midsized biotech companies and pharmaceutical companies will run more clinical studies going forward. And then overall, Nordics, I believe in the Nordics, and I think it's really a pleasure working with these countries, both Sweden and Norway, that is the majority, I think it's up to 75%, 80% of our revenues that, that will develop well. So I see a lot of positive signals. On the flip side, maybe you can see the more industrial cycle with impacting our technical [ consulting ], we are a bit cautious there. We want to see that demand coming back, and we see it in some segments. We mentioned defense, really growing nicely and strongly. We mentioned energy as well. But if you look at automotive, that is a bit more challenging. So of course, we serve a lot of markets, but I just wanted to give you some important highlights from some of those markets that we serve. Johan Sjöberg: Yes. Got it. Anna, can ask you on the book value now of Plantasjen, how much do you have it on your books now? Because, I mean, we are sort of used to -- we have seen a lot of write-downs, I must say, over the years for us who sort of -- and I keep getting surprised, but there is more to write down, to be honest, where is the book value now in Plantasjen? Anna Vilogorac: I would tell you, Johan, roughly, it will be around SEK 1 billion, and then you have the leasing debt on top of that, which is additional SEK 2 million. Johan Sjöberg: So SEK 2 million out of the SEK 3.6 billion in the leasing is from Plantasjen? Anna Vilogorac: Yes. . Johan Sjöberg: Okay. Good. And then also just coming back to you, Gustaf, may be you could -- obviously now you met up with all the companies here. What was sort of the rationale or I understand the Expin acquisition has not really worked out as you had hoped for. And I mean obviously, the market against you, you got the fraud and everything like that. So it was very unlucky, of course. But what was sort of when you met up with then looking at it, what was sort of why did you decide to, this is not the segment where we should focus going forward here? Because I mean, for us, on the outset, I apologize for my lack of knowledge here comparing Expin with the Presis Infra, but it seems like sort of these are the similar segments. So why did you decide to exit this and also at this time of the cycle, given that your earlier comments that, hopefully, you would see better markets in '26 going forward? Gustaf Salford: I fully understand and respect that question. And I think it's also about performance. So we have one company, Presis Infra performing extremely well, serving more road infrastructure, maintenance, especially in the Nordics, but also in Sweden. And if you look at Expin Group, that was not fully the case. I mean there is good trends in the Swedish market. Finland has been extremely challenging, and I think we mentioned that in many quarterly reports. So I needed to go into my new position here and look at the companies where I believe we can add most value and grow companies. From that analysis, together with the management team and Anna here, we came to the conclusion it's better that we focus our energy, time, capital on platforms that in the Ratos ownership where we can add most value going forward. So it's really from a capital allocation and value creation analysis that we came to that conclusion. So that's the background. But I believe, I mean, it's a potentially good market going forward and so on. But I think Baneservice will be an excellent owner of Expin Group going forward. Operator: The next question comes from Linus Alentun from Nordea. Linus Alentun: Just a quick couple of questions here from me. I mean you secured major orders here for a HL Display, Aibel and Presis Infra. I was just wondering if you could provide some more visibility here on when you expect this could convert into revenue? And does this give you confidence into 2026 here despite the uncertain market uncertainty? Anna Vilogorac: So Linus, if we look at Aibel, this is a 5-year contract. So it's -- and you can roughly just divide it by 5, the SEK 20 billion that we got. That's how that looks. For Presis Infra, it's the same thing. It's a 5-year contract for those NOK 900 million. And then last but not least, the HL Display, these SEK 500 million are spread over 2 to 3 years. And if we look at our current order backlog, I would say it's roughly 1/3 to be delivered in 2026. So we do feel confident that this is a good sign, that orders are coming now. And also one thing worth mentioning is that for Aibel, we already have that kind of a frame agreement with Equinor. So this is a repeat. On the other hand, the value has increased a little bit. So NOK 5 billion extra versus the previous period. So it's a great base load. . Linus Alentun: Okay. Super, super. And just one question here on the -- continue on the capital allocation here. I was just wondering, I think someone else mentioned it by buybacks here. Is this something that is on the table? Or do you see the M&A pipeline here is strong enough to deploy capital there instead? Gustaf Salford: Linus, that's often a question you get. I think today, we announced what the Board proposed in terms of dividends. So that historically has been the focus of Ratos for sure. Then we have an interesting pipeline of add-on acquisitions. So I would take it in that order. And you should say never say never on buybacks, but it's not our primary focus right now. Linus Alentun: Okay. And just one last question here regarding the shares in Sentia here, if you could perhaps give some more flavors here -- flavor regarding our thoughts here on this position. Gustaf Salford: Yes, for Sentia for sure, and I recommend all of you to look through and listening to Sentia's report last Friday, where they had really interesting presentations about data centers, et cetera. And so that's a good material that you can take a look at. I think for meeting Sentia, understanding Sentia, I'm impressed by the company. I'm impressed by the market they serve, and they're well positioned in that segment. And I'm optimistic about that segment into 2026 as well. And they also have a strong operation, as you know, in Sweden. And I've been visiting some of the construction sites and so on. So I think that's a strong place to be into next year as well. So I'm positive towards our ownership in Sentia. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Gustaf Salford: Yes. Thank you to all of you for listening into our call and your questions. So if I summarize a bit whole call, 2025 was an important and very eventful year for Ratos. And we are now working really hard to drive strong performance into 2026. So I also hope to see many of you at our Capital Markets Day coming up when we'll present our strategy and financial targets going forward. So with that, a big thank you to everyone dialing in. Thank you.
Grace Chen: A very good morning, ladies and gentlemen, and welcome to CapitaLand Investment's Full Year 2025 Results Briefing. On behalf of the team at CapitaLand Investment, thank you for joining us today, both in-person as well as online. My name is Grace, Group Head for Investor Relations and Communications, and I'm going to be moderating today's session. I think firstly, please note that this session is being recorded, and we will begin first with management's presentation, followed by a Q&A session. So with that, let me hand the time over to Paul, who will start the session with financial updates, and then we will follow by business updates from quite a few of us; Andrew, Kishore and Kevin before Chee Koon concludes this outlook. Wei Hsing Tham: Good morning, everyone. Thank you all for joining us. It's a pleasure to see so many of you. It's a good turnout. I know there was a lot of anticipation about other announcements, and we've been taking a lot of questions. All I can say is my favorite one so far has been in terms of M&A, has there been anybody that we have decided to swipe right on. So it must be a Valentine's Day thing. My only response to this is please save all your difficult questions for Chee Koon. Okay. Let me just very quickly go through our full year results for 2025. Maybe just some key highlights to start. First off, I would say it was a very challenging environment last year, and it was very uneven recovery for us across different markets. But we did see quite a number of positive signs, which I think is what we, as a management team, are at least excited over in the coming year of 2026. Funds under management, up $7 billion or $8 billion, 7%. Fundraising went very well for us last year. We had our best fundraising year, and Andrew is going to share a little bit more about that, almost double from the year before. Fee growth, up 6%. This is where we are relentlessly focused on, particularly on the fund management fees. Result of that was slightly better operating profit, up 6%. We consider up 6%, somewhat steady growth rate for us, and we think this is something that we can keep a rhythm on. I think most importantly is this is somewhat turning a corner from us -- for most of you who have been following us would know that operating profits have come down over the last few years. This year, we're seeing an uplift, which we're very excited on. We had some capital recycling. We have less assets left on the balance sheet. So this number will continue to slide down, but it's still continued momentum as we move to an asset-light model. And then we did make a lot of effort last year, thanks to [indiscernible] and our IT team on really AI and digital initiatives, and we're starting to see the fruits of that labor come through. And we believe that will help us for the future, both in terms of cost, but more important, in terms of being more forward-footed in how we look at AI and digital initiatives. Financial performance for the year. So as you know, we look at it in 3 buckets. We look at it as our core operating performance, which is really the core part of the business for us, portfolio gains from sales and divestments and revaluations and impairments. So starting on the left, you can see we are at $539 million this year for our operating performance. This is up 6% year-on-year. I'll go through a little bit more in detail on the specific verticals, but we had strong contribution, particularly from the listed funds last year. We expect that momentum will likely continue going into this year. Profitability for the fee segment did come down slightly, and that was really us investing for the future. We've made hires and more investments, particularly between -- behind private funds and the lodging business. And because of that, profitability has come down slightly even though revenues are up materially in some of these segments. The real estate investment business, which is our ownership stakes in the REITs and funds, we saw good performance here, really driven by 2 things. One was lower interest and operating costs as that has come down, but also stronger operating performance from our units. Most of you who follow CICT, Ascendas. Just between those 2 REITs, we have $5.5 billion invested in that -- in them. Those 2 units together with our India Trust and CLINT turned in very good performances, and that helped drive up some of our performance. That was offset by a decline in -- from assets that we had already divested. So as we divest assets, that will come down a little bit. But that number overall improved. So from an operating PATMI perspective, sort of this mid-single digits is about the right growth rate without any special catalysts. We could keep this as a run rate growth quite easily. Portfolio gains, down 80%. That was expected. Most of you know the year before we divested ION Orchard to CICT. That was clearly very good for CICT, but it was also good for us on that divestment year. Last year, we didn't have any big chunky divestments to make up that difference. We did see good gains from India and from Japan divestments. That was offset by losses from China divestments. So we divested about $1 billion worth of China assets on a gross basis; on an effective basis, about $700 million. That was sold at a discount between 10% to 20% of book value. So on average, about 13% discount to book value, that offset some of the gains that we got from the positive sales out of Japan and India. And then the last bit is revaluation and impairments. This is the big adjustment for us. This was actually very similar to the year before. We saw valuation drop in China, offset by Singapore and India doing well. In particular, and there is more information in the slide pack. China valuations were down $545 million and Singapore and India up. The rest of our countries largely flat or neutral. So on an overall basis, we are down a fair bit in terms of total PATMI, but really, it's mostly noncash elements, which is why we kept our dividend at $0.12 for the year. Specifically on where we are most focused on, which is really on our fee business and fee business contributes about 60% of our business -- of our operating profit usually. As you can see, starting on the left-hand side, listed did well, up 8%. This is on the back of transactions across many of our REITs, investments, divestments and also the addition of the contribution from Japan Hotel REIT as part of our SC Capital acquisition. So good growth there and continues to be good margins. Margins down slightly year-on-year. As mentioned, we are investing heavily behind growing our private funds business. On the private fund side, very good top line growth, up 24%, partly from the contribution of Wingate and SC Capital, as the M&A has added to our growth platform and capabilities, but also very much organic growth as a lot of the second follow-on funds for our private funds business has come. And Andrew and Kishore are going to talk a little bit more about the organic growth potential here. We expect that we'll continue double-digit growth across this segment. Commercial Management, flat year-on-year, but better operating profits. The team did a good job of optimizing the platform and cutting costs. So we did see a nice uptick in margins for the commercial management. We would expect commercial management to generally grow at a low single-digit range. This is meant to be really a supporting vertical for our private funds and our listed REITs. And then finally, lodging management, which Kevin is going to talk a little bit more about in terms of where we believe the long-term growth potential is. Clearly, last year was a little bit of a softer RevPAR growth year compared to some of the preceding years we've had, but the team has still done an excellent job in terms of new signings. We hit a record there as well. And I'll leave Kevin to share a little bit more. But overall, as you can see, margins generally about flat on average behind solid performances from listed and commercial and then the investing for growth for private funds and the lodging segment. So the other part of our earnings, about 40% of our earnings, as mentioned, comes from our real estate ownership business, where we own stakes in REITs and funds and on balance sheet. As you can see, the different portions. On the listed funds, there is some adjustment because as most of you know, we deconsolidated Capital and Ascott Trust the year before. So the numbers move a bit. I wanted to share a little bit more articulating why our listed funds component has come down, partly because I know a lot of the analysts, a lot of you cover us from a REIT perspective and the REITs are doing well. So the REITs DPU are doing well. And actually, on an operating performance, actually, our REITs did contribute plus $20 million to us in terms of uplift. Where the challenge comes is because from an accounting perspective, and I would blame all the finance and accounting people here, and I include myself in that portion, the challenge is we have to account for a lot of the mark-to-market and FX at the REIT level. So because of that, with the Sing dollar strengthening, we did see some movement in terms of the contribution as we account for it on our books, and that offset a lot of the gains we had from the operating contribution. So this one, we think, will move up and down. But from a cash flow perspective, so from a group, we actually take a lot of those dividends in. From a cash flow perspective, we still had a very strong year. But that is why on the listed funds, we get a little bit of movement. The other component, obviously, being we have a slightly lower stake in 2 of our REITs year-on-year, Ascott Trust and CICT, we have a lower stake, partly from the distribution in specie and the sale of REIT units down. But overall, we would expect this part of the business, assuming that our REIT stay the same, we expect this part of the business to grow. On the private funds, slightly positive. The negative drag for us was China performance. A number of our China funds, which make up more than 40% of our fund -- private funds exposure, that came down. But overall, it was positive because it was offset by some of our new funds, [ credit ] India, which have done well and our sponsors stake in those funds are contributing more than some of the preceding funds before that. So similarly, on the private funds, assuming that the year holds out, we would expect this to be flat, if not positive. Finally, on the balance sheet. On the balance sheet, this is the one that we will expect a continued downtrend on. Actually, the numbers this year kind of surprised the team and myself. This is before interest impact. So as we divest assets, we get a lot of savings from lower debt as we pay down debt. This is an EBITDA number, so this is before debt. But on the balance sheet side, as we sell assets, this is naturally going to come down. And that's the intent. This balance sheet number should eventually move down. The improvement this year was partly because of the deconsolidation of CLAS. So we had some changes on treatment. And actually, the team had a fair bit of operational savings as we've been running a cost program to try and improve operations. So that's our real estate investment business, overall ownership. I would say the outlook for us in this area is we expect it to be largely flat. Even with divested assets, we don't expect this to necessarily come down. And then finally, on the balance sheet, where we have investments. So listed funds, a slight decline last year. I'm sure a handful of you will ask us why we didn't do a distribution in specie this year for our listed REITs. We are generally -- we have come down in terms of holdings, we're at about 20% right now generally across our REIT. We're fairly comfortable in this space. We don't necessarily have a need for the proceeds. So we're not divesting down any of these stakes at this current moment. And because of this, we think we are well hold at this level for a while. But in the longer run, we do think it's unnecessary for us to hold at 20%. We expect that will come down over time. In terms of the private funds, we've gotten slightly more efficient. As you can see, our private funds have grown. Our allocation in terms of capital has come down slightly, about $5.2 billion. This is intentional. We expect we will get more and more efficient for the new funds, we will hold lower and lower stakes. And this for us, improves our overall returns. And then finally, on the balance sheet, as most of you know, we have about $4 billion worth of assets left remaining. This has come down slightly year-on-year. We've divested from the balance sheet about $400 million of China. So of the $700 million effective, some of that came from funds and about $400 million from China. The intention for us is to accelerate that going forward this year. We did take a little bit. Obviously, we've marked down on a fair value perspective. Our China value is down a fair bit. We also took some losses this last year on divestments. We expect to pick up the pace this year on China divestments as we move to being more asset-light and generating higher recurring fee income. And this, obviously, some of you may have seen the announcement. Obviously, we did a C-REIT listing last year. And then there was an announcement recently that we have another filing for another C-REIT listing. So we are trying to grow this business. If you have more questions, I think to Shyang who is here, will be happy to take and share a little bit about that later on. But we do think this is part of how we're going to recycle a little bit more efficiently and be able to generate at least a better return for CLI from our China holdings. And then finally, just on the balance sheet. As you can see, we have a very healthy balance sheet, 0.43x in terms of debt equity ratio. The bottom left, we have a lot of debt headroom for growth. And so this is intended to be for organic and inorganic opportunities. And because of this, we think we're in a strong position for acquisitions and investments. Maybe the only other thing to -- two things to highlight. One, interest costs came down year-on-year, 4.4% to 3.9%. I think that our Treasury team has been working hard, and we've been very thankful that rates are coming down. We expect slight improvement in terms of interest cost savings this year, not necessarily a big shift because Singapore rates have come down quite a fair bit already. But we do think from a group profitability, interest cost savings will save us a little bit this year. And then on an operating cash flow basis, as you can see, we're still generating -- even though profits are down, we're generating more than $900 million in operating cash flow, and that's why we have the comfort level to continue with the $0.12 dividend distribution this year. So that's it on our financials. I'll save the time for questions later. Just very quickly to highlight on two of our verticals before I pass the time to Andrew. The first is operationally on our listed funds. Our listed funds had a good run last year. And I would say a good run from sort of 2 areas. One is, obviously, profitability was up. But actually, the most important thing to us is actually on the left-hand side is shareholder return to our REIT investors. As most of the REIT CEOs, we talk very often to them as having the fact that we have $8 billion invested in the REITs, their share price matters to us a lot and so did their dividends. So the REITs, particularly our S-REIT handful, even though we've got REITs now across 8 different listed funds, our Singapore REITs did a fantastic job last year, generating 15% to almost 30% returns. So we're very excited with that. Obviously, it's good for shareholders and us as the sponsor as well. As you would have seen, there was a lot of transactions last year, almost double the volume the year before. And we think that, that growth this year should continue, particularly given the interest rate outlook looks flat to somewhat downward trending. We think that's positive for our REITs business. The only other thing I'd like to highlight on our REIT is it's not necessarily just about growth. As I said, it's about shareholder return, and it's also about trying to find a way to improve the DPU. We had some active portfolio reconstitution. Obviously, some of the big REITs did fundraising, but we're actually also very proud of the fact that CLAS and CLINT were very active in managing their portfolio. CLINT's maiden divestments last year. We mean chasing [indiscernible] before he joined in terms of divestments. And we think this is important because we want the underlying portfolios of the REITs to do well. So seeing that churn and improving the quality of the portfolio actually for us is very important. So we're very proud of the REIT's performance last year. In terms of commercial management, commercial management, as I mentioned, is a strong steady fee income stream for CLI as a group. But more importantly, for our REITs and funds, it is a key driver of the fund and REIT performance. I would say the team last year, particularly if you look at CICT, you look at Ascendas REIT, you look at even our China Trust, we would think that there were very credible operational performances, which drove whether it was occupancy or NPI. And this for us is really one of the key reasons this vertical is so important for us. Stabilizes values, obviously, drives capital values up for the funds. And then also for us, this fee income stream has been an incredibly valuable, steady, resilient driver for us and contributes more than $100 million in EBITDA for us. So on this front, we expect this will continue slow, steady growth and will be a key value proposition for us in the growth of new REITs and funds. And with that, I'm going to pass this over to Andrew to talk about our private funds. Cho Pin Lim: Thanks, Paul. Good morning, everyone. Thanks for coming. I'll take a couple of slides to talk through our private funds business. Those of you who were here 6 months ago for our first half results may remember our Northstars. And the Northstars are very important for us as an organization because it charts the course and direction of where we want to go. Now private funds, I think, occupies two of those, I think, 5 or 6 Northstar points that I raised. The first is always $200 billion in funds under management. That's a big Northstar for us. The second is the growth and evolution of our private funds business to match the success and the strength of our public funds business, right, to get that equal sized bicycle of balance and stability. Now in order to do that, I think private funds is threefold. You need to be able to design and manufacture good products. You need to be able to raise capital in pursuit of those products. And obviously, you need deployment to be able to earn your fees at the end of the day. This is what it's all about. So let me talk about the first two, the product design and the capital raising. So let's look at capital raising. As Paul mentioned, last year, we had a good year. Overall, the markets for capital raising improved. Sentiment was better, I would say, from 2024, interest rates started to stabilize, most markets passed peak rates, appetite to deploy into real assets returned. In the overall space, I think Asia Pacific raised about $27 billion across all of the GPs. We raised $4.9 billion in total equity. That's about a 15% market share, and it was a substantial improvement from our market share the year before. So on that front, I think we are punching at or above our weight, and we are starting to capture an increasing share of the LPs and what they are looking for, what they are seeking in Asia Pacific. 85% of our investors came from APAC region. We'll talk a little bit about the products they came into at the next slide. We introduced 12 new LPs onto our register. And if you look at the supplemental materials, you'll see that a large part of this is now very balanced, and we had a big growth in our insurance LP base, which is an incredibly sticky, resilient, unique group of capital providers for us. So we're very happy about that. If I turn over to deployment, we raised $4.9 billion. We deployed $7 billion in total FUM last year. And deployment is important because, as I said, it convinces investors that you are able to find the assets that suit each of these strategies that we are talking about. And obviously, when you deploy, you start to earn your fees. And as Paul mentioned, we rose our FRR from the private funds by 24% year-on-year. That is obviously on the back of deployment, which then translates into fees that we are earning. So all of that, I'm confident will take us down into improved margin, improved EBITDA margin growth and so on and so forth, which you saw earlier. So I think we are well on our way. And I think the private funds business, the Northstar of -- heading towards $200 billion and also achieving a better balance between the public and private funds is well underway. So let's turn to what is it that we were busy doing in order to raise that capital and deploy that capital. Before I turn it over to Kishore, I'll talk about our lodging and living space and our logistics and self-storage space. As you know, we are investing into 3 key thematics: Demographics, disruption and digitalization. I'll talk a little bit about demographics, which is lodging and living and our disruption, which is logistics and self-storage. On the lodging and living side, lots of evidence to support thematic growth and interest. Leisure, travel, intra-Asia is at an all-time high. We all see the targets that the Japanese authorities have set in terms of attracting over 40 million tourists a year and so on and so forth. Singapore Tourist Promotion Board equally incentivized to bring tourists here, and we are very well positioned to attract and capture that trend. We've closed CLARA II last year. This is a USD 600 million fund. And already in a short period of time, just over a year after the fund closed and entered into deployment, we are over 50% deployed. As a result of that, we are planning a second fund this year. This is, again, one of our major regional funds, APAC Living, which we intend to launch in 2026 to continue to build on that momentum. I should add that CLARA II is the second of a successful series of lodging-related funds. So this again speaks to our ability and our confidence in being able to deliver product that suits the thematic that we have identified as key and investable for Asia. Turn across to logistics and self-storage, highly disruptive thematic. We all know supply chains are being rewired. We all know that folks are pursuing second order, second option, nearshoring, friend shoring, not relying on necessarily the lowest cost option, but options that deliver reliability and options for supply chains. We have one fund that is doing really well. This is the Southeast Asia Logistics Fund launched just a couple of years ago. That's a $400 million fund. Last year, we deployed 36% of that fund, which Harry was able to do into new geographies, Vietnam, Thailand, of course, Singapore. The logistics fund anchors off a very interesting product, which is what we call an OMEGA. OMEGA is a highly sophisticated automatic self-storage and retrieval logistics asset, highly proprietary, and this is the only fund that has access to that in Asia Pacific. That's again a $400 million fund, 36% deployed last year. Extra Space Asia, another very interesting thematic, playing on the back of folks who are emerging into middle class, which is fastest-growing demographic segment in Asia. As we expand and we accumulate wealth, urban spaces at the same time are shrinking, right? We all can see evidence of this. And so self-storage becomes an extension of your living space where you are -- you have stuff you can't quite afford or don't want to throw away, but you don't want to have it hanging around your house as well. And that becomes a very sticky product that some of us were customers, myself included, find very difficult to give up once you sign up. And so that's a very fast-growing, highly fragmented, highly operationally intensive business. We have a $570 million fund. Last year, Pat and her team triggered the 85% deployment release mechanism, which essentially means if we deploy 85% of that fund, we get to raise more capital. And that again is on the cards this year, another regional fund product that we are targeting to use to raise more capital into a very interesting thematic. We also have a regional APAC logistics fund planned, building on that momentum that Harry has earned with the SEA Logistics Fund. Before I turn it over to Kishore, I want to just take a note to highlight the operating platforms that sit under each of these products. The fact that CLARA II can rely on our in-house 100% owned world-class lodging platform, the fact that Harry's Fund can rely on Ally Logistics Properties to produce a proprietary product in OMEGA and the fact that APAC -- sorry, Extra Space Asia has one of the few operating platforms that has the footprint across most of the Asian markets is no coincidence to us. Because as we've said before, real estate going forward, in our opinion, is going to be increasingly tied to operational excellence. The ability to invest into assets or I should say, the ability to explain to our investors that we are investing into assets because of our ability to understand how to sweat the asset best, and that's the way to deliver alpha for LPs. You can no longer rely on interest rates and cap rates and interesting financing and engineering solutions to get you to your returns. We would much rather sit in front of our LPs and explain why, ALP, why Ascott, why Extra Space Asia can deliver that 14-plus return for you because we know the asset better than anyone else, and hence, you should leave your money with us and park it with us. So for us, I think the way forward is very clear, thought leadership, presence on the ground to locate and find the best assets supported by the best-in-class operating platforms in each of these thematics. And we are on the lookout for more such platforms as our LPs have also told us. It's a theme that resonates very strongly. And this is why this product location, theme and platform is a recipe in our opinion, to grow our private funds business. I'll stop there and turn it over to Kishore to talk about very exciting growth of our alts space. Kishore Moorjani: Thanks, Andrew. Good morning, everyone. Good to be here. So picking up on the platform thematic that Andrew was just talking about, let me touch on credit in 3 things. One, what do we actually have on the credit side? Secondly, how do we define credit because I think that's important. Thirdly, some of the funds and how we're progressing on that. So Credit is not a new initiative at CLI. We've been at this for over 6 years now. Arjun, who runs the credit business for us has been in the seat for 6 years, building this business out. In the platforms, we have forward invested by acquiring Wingate, LXA and bringing in the IP and the capabilities that we need to scale that business. So we're not expecting LPs or investors to take a bet with us on an adventure we're going on. We have put our capital. We've brought in that capability and that skill set, and we're saying now back us on it. So if I look at our credit team, we have 60-plus people in that team today, right? This is not something new. We have 60-plus people, 25 years of average experience across the senior team. And if I count the experience of what CLI has done and what Wingate has done, we have deployed over $10 billion in credit investing. So this is something that is a team that is experienced, that's established, that is now sort of building that out and scaling that within CLI. So that's -- firstly, it's not a new initiative. It's something that I think we're talking about much more, and we're scaling much more significantly, but we've been at it for a long time. Secondly, I think it's very important to think about how do we define credit because the headlines around credit and private credit in particular, have not been very flattering recently, right? So for us, credit is defined very simply. We only back -- real estate-backed underlying assets. We're doing asset-backed investing. We're only doing senior lending in that space. We're only doing it in geographies where CLI operates. So we're not going -- we are not going to be -- credit is not going to be the business that takes CLI into a new country. We're going to follow in that because we have the expertise of CLI. We go and participate in a different part of the cap structure. We're only doing it in developed economies where the legal jurisdiction works. So think Australia, Korea, Japan, Singapore. Again, no adventures because we're being a lender here. And most importantly, I've been asked this question a few times, we are not lending to any CLI assets, right? So this is third-party unrelated where we have the expertise. And why is that important? Because in credit, every once in a while, when you make an investment, things don't work out. When things don't work out, we know exactly what to do because we call our team in Australia, in Korea saying, we need to lease this building. We need to sell this asset. We need to finish the construction, and that expertise lies in-house. When you have that piece in credit where you know what to do if things go wrong, then I think it's a very different skill set. And so that's where the headlines around private credit are very different than the credit that we're investing in, which is in things that we know where we're an equity investor. And if you've been an equity investor through our REITs or through our private funds or through our balance sheet, we know how to run, operate those assets very differently from someone who's being smart in looking at spreadsheets, but if something bad happens, doesn't know how to operate. So we're very unique from that standpoint. In terms of on the credit side, what are we doing? So obviously, the Wingate funds continue to build and scale. Our Wingate senior debt fund crossed AUM of AUD 300 million late last year. So we're very excited about that. They've had a flagship Wingate Investment Partners product. They've now got the senior debt product to add to that offering. That's mostly going into the Australian market, and we're selling there because it's an A dollar product. Our ACP Fund series, our Fund I has now been fully returned to investors with a very, very attractive return. We were above what we had indicated as a target return. ACP Fund II will close imminently, do its final close imminently. That is oversubscribed at this point in time. So we're very excited about that continuing and that scaled significantly from where fund was -- Fund I was. So we're very excited about that and continuing to grow that ACP series on a broader Asia mandate across real estate credit investing. And as we look at how do we now take this origination platform of finding, evaluating and understanding interesting opportunities, we're thinking about what the distribution of that needs to look like. And that distribution is simple. We've been selling into institutions as LPs for some time through ACP. Wingate has been selling into individuals for some time, and you will see us doing that more across our flagship products and across a Singapore product that we've listed here that we intend to launch. And you will see us doing a lot more with insurance, as both Andrew and Paul touched on. Those are the 3 important segments. And to all 3 of those investor segments in credit, we are offering a fixed income alternative. This is not an alternative asset class with high returns and high volatility. This is largely positioned as a secured underlying asset with low volatility and sleep well at night returns, right? Similar to, in many ways, what we've done so successfully with our REITs, owning marquee high-quality assets. So that's what the credit business is focused on overall. On the opportunistic side, let me touch on one quick thing on there on the data center side. So again, unbeknown to many people on an aggregate, we have about 800 megawatts of operating and under construction data center capacity. So we sort of kept this, I'd say, we haven't advertised it significantly. But with that comes a lot of operating understanding and capability. So what we're doing with that data center business and some of those assets sit in CLARA, some of those assets sit in CLINT, some sit in our private funds. But on an aggregate basis, we understand those assets really well. And in data centers, you have to follow customers, contracts and power, right? So because of our capability, we understand what those requirements are. So we're taking that, and you'll see us create within data centers going from what is a niche real estate asset class to, again, an operating platform. As Andrew said, the value in real estate asset classes, the market is clearly telling us this is in the underlying platforms and the value you have the ability to add through that platform and the intellectual capacity and the IP that you get by owning that. So that's exactly where we're going, similar to what Andrew talked about in lodging and in logistics, we're doing the exact same thing across credit, and you'll see us do the exact same thing in the first half with data centers around building that up in a platform that follows our key customers. So with that, I think I'm turning it over to Kevin to talk about lodging. Soon Keat Goh: Thanks, Kishore, and good morning, everyone. Let me just move the slide. Okay. Maybe just to set the context, whatever I'm talking about here, especially the numbers, they're all asset-light. There's no real estate in here, right? And an asset-light business is generally valued not based on the NAV of the business, but as a multiple of EBITDA, right? So you think about it and you look at the comps, it's anywhere between 15, 20x EBITDA. If you look at the growth of the business we've been signing management contracts, franchise contracts, and this gives us very good headwind or -- tailwinds to really write the earnings. If you look at the signings that we have done for the year, about 19,000 keys. We acquired -- we did, I think, 2 recent M&As, right, with Oakwood and with Quest. With Oakwood, it was 15,000 keys; with Quest, it was 12,000 keys. So the organic engine that we are building is outgrowing the M&A acquisitions that we have done in the past. And for every 10,000 keys that we signed on a stabilized basis, the latest numbers that we have is actually about $35 million of fees flow in. But depending on the mix of those keys, whether it's in developed markets, developing markets, high ADR, low ADR, resort -- city, it can range anywhere between $20 million to $35 million. Now you do the math and you multiply it by the EBITDA earnings, we're adding a couple of hundred million of value to the enterprise with 19,000 keys of signings. And that is going to recur every year because the engine of growth is already moving and churning that amount of signings every year. Now the other thing that I want to address is really the growth. Now you look at the 2020 numbers, we're only at $150 million fee income. Today, we're at $350 million. You saw earlier, Paul's like, although we grew only by 2%, but on a look-back basis, 5-year CAGR is about 15%. Now the reason is because a lot of times, the signings and the construction schedules are quite different from project to project. So we get growth spurts, sometimes we grow 20%, 30%; sometimes we grow 2%, 3%. But on a look-back basis, I think on average, we do expect this kind of growth rate going forward. Now the other good news is we've been talking about a $500 million target. If we look at what we have today in the back, and these are recurring fee income, $350 million, and I add on what we already signed but not open, we have exceeded that $500 million target, right? So when do we cross that $500 million mark, it really depends on how quickly we can get the properties to open. We try our best to support the owners, the properties to open as quickly as possible, but sometimes it's a little bit beyond our control, right? But rest assured that these are backed by signed contracts and they will open. So those are kind of like the bigger pictures, the valuation, the organic engine of growth, the value creation that we are giving to the business. The other one is really on our operations, right, and how we are thinking about the future. We believe that this business should operate at 30% and above EBITDA margin. Today, we are operating below that. If you look at [ Slide ], we're operating at about 23%, 24%. And that's deliberate because if you look at some of our strategies, we are doing things that we never did before, right? We're doing Resorts, Branded Resi, Social Living, Franchising, F&B, MICE, Wellness. And this segments actually opens the market a lot for us. Many years ago, we used to sign 8,000 to 10,000 keys a year. Now we are signing 19,000, why? Because we have all these opportunities open to us. And we are operating below where we think the EBITDA margin should be because we are investing in capabilities to build support for franchisees, right, to have people who are able to manage resorts well, to open our distribution channels. We invested in our own loyalty program just in 2019, just a couple -- 6, 7 years ago. We started with 0 members. Today, we have 8 million members, and we're targeting about 10 million members this year. The distribution as a whole, we're distributing about 60% of our business direct to our properties. So you cut off all the middlemen. And I think that's what a lot of owners are looking for. And we're going to strengthen that distribution even more and be able to win deals from our competitors. So the one last point I want to leave you with is that today, I would say over 90% of our properties are with unrelated third parties, right? So that's actually a good validation of our capabilities to the market. And we have about 30% of our signings from repeated owners, means owners who have 1 project with us, 2 projects with us, they're happy with our performance, and they're giving us more projects, right? So that is helping us actually grow a lot faster in terms of reputation, brand recognition and confidence from the owners to sign more with us, right? So happy to take questions later, but I just want to leave you with these 2 slides. I'll pass on to Chee Koon. Chee Koon Lee: In the interest of time, why don't we get everybody up here, and then we can do the Q&A. And I'll just give me some time to say a few things. Thank you all for coming. The thing -- I mean, thank you all for all the presentation. We made the decision to go on the asset management journey in 2021. I mean, at that point in time, interest rates was high and then China started to slow. That was the basis of how we wanted to raise our private funds. I mean we were razor focused, and I think you could see the turnaround in terms of our fundraising machine. The key criteria that I set for the team was that the way we can start to see real success is you see re-up for our private funds and oversubscription. And that's coming through. And I must say that I'm quite confident in terms of what we are looking at in terms of the pipeline of deals and the fundraising activities for the private fund side. So I would say that we have built enough capabilities in the team and enough product capabilities to be able to do that. If you take a step back, I mean, if you think about what are the key strengths for CapitaLand, one is really our -- today, our REITs platform. It's not just the fact that it's there. But if you look around the markets today, our REITs trade quite well, actually offers a platform for many LPs, GPs, investors that have sometimes difficulties in finding liquidity and creates conversations. And if you can find liquidity in a way that makes sense where we can find -- where we can acquire assets, provide them liquidity, and that's a good way to get them to support us in terms of the private funds growth. So that's number one. The second thing is really the operating platforms that we have built up over the years from Ascott to self-storage to logistics, our understanding of real estate and give us the ability to build up the few verticals that allow us to build the momentum for fundraising. It's not easy as what Andrew said, if you're going to get people to just raise money to just invest in real estate unless you have something more to offer. And it's really because of the investments in the operating platforms that allow us to build that momentum. I mean the private funds journey took some time. It's the same way when -- more than 10 years ago, when we decided to go on the asset-light business for Ascott, early 2010, 2013, we decided to start to grow very aggressively on the management contracts. And you saw what Kevin has presented, asset-light, the fee income growth, the embedded earnings and the multiple that one can apply to the EBITDA that we are creating. So that's the focus that we have as a group in terms of growing our fee income, our asset-light business. That's the reason that why we decided to make the switch. So that's point number one. Point number two, I think all of you or many people are coming here today expecting some announcements. I had received a number of WhatsApp correspondence from friends, media, analysts. Maybe I'll just summarize. Our ambition is to grow to a $200 billion FUM business. Organically, based on the engines that we have, whether it's the REITs, the private funds and the lodging business, I think we should be able to grow $150 million to $160 million. We do need M&A. And in the last 12 months, you see our names appearing in different news, whether it is a platform in Korea, a listed entity in Australia, a listed entity in Hong Kong, hospitality platform with European origin. And more recently, the name that Shyang mentioned is but all of you are asking. Not all the news are correct, okay? But we are definitely actively looking at deals and M&A will form a big part of what we want to do. We will look at deals that make sense. It must make strategic sense, as I have said. Culturally, things must work. And at the end of the day, we need to be able to pay a fair price that makes sense to all investors. That's what I want to say. If it's not accretive, it doesn't make sense, it doesn't build long-term capabilities that can allow us to drive new funds capabilities, drive ROE. It's going to be very difficult for us to stand in front of our investors to explain why we want to do a certain transaction. And of course, there are people who are thinking if you're going to do any transaction, are you going to do any fundraising? I think Paul in his capital management slides, have shown you that we do have sufficient headroom to be able to do deals on our own. I think that's the part that I just want to assure you that we are not here to pursue any M&A just for growth, just because we want to hit the $200 billion target. We are careful in the end. If we are happy with the $160 billion target organically that we can do that can deliver very high ROE, we are happy with that. And I'll come and explain to you that I feel to find a good M&A target. But if we can really find a good M&A target that can -- that's highly accretive that all investors will support, I will present that to you. So I just want to assure you that we are not deal junkies. We want to do good deals that really helps to build the long-term capabilities for the company that can drive share price, okay? So I thought useful to take the elephant out of the room. And I apologize for some of you rushing here to want to hear other announcements. Sorry, I do not have, but I thought I would just want to give clarity in terms of the principles that we look at in terms of the deals that we evaluate. And I can't stop the media or the market from speculating. But it's a good thing, right? I mean we're actively looking at deals and still having the discipline to make sure that we want to do things that make sense for all investors. Thank you. Grace Chen: Thank you very much, Chee Koon. And we obviously, we have the team over here for questions. We have Ervin joining us on the panel as well. So you guys know the drill for those of us who are here in person, I see the hands up already, and I've been -- I got a WhatsApp message to say who's going to go first. So please state your name and the organization you represent and hang on, I'll come to you. And for participants joining us online, likewise, there's actually a Q&A function. Please also state the name and the organization that you represent. So the person who chopped the first question. Mervin, can we have a mic? I must say keep to two questions, keep it brief so that we can accommodate as many questions as possible. Mervin Song: Mervin from JPMorgan. Yes, congrats on the core PATMI performance. I thought it was quite good given the challenges you faced. Maybe we can go to Slide 14, the FUM potential. Maybe you can run through potential FUM that you could raise this year based on the planned funds that you're launching. Second question is in terms of China. Share price is down quite heavily, I presume, mainly due to the write-downs, noncash. Are we past the worst? Or would there be further write-downs in China? And for the $3 billion of on-balance sheet assets, what's the implied NPI yield based on valuation? Cho Pin Lim: I'll take part of the first question on FUM. I'll turn it to Kishore as well to talk about alts. So you saw, Mervin, that we had a couple of regional flagship products in the pipeline. I just want to say, first of all, that it's a reflection of where we are as a GP as a house, right? We wouldn't -- I would say we wouldn't be in the position to talk about a regional living fund, a regional logistics fund. And I say -- I definitely can say we won't be in a position to talk about anything on credit 12, 18 months ago. So we are -- first point I want to make is we are on this journey. Now this is a multiyear journey, and we're confident and we're actually quite pleased with where we are, as Chee Koon alluded to. So when you talk about regional flagship products, you are looking at minimum third-party raises of roughly $500 million, okay? Eyeball that as a number, that's a number we target. You double that because you add leverage to it. So your FUM, if you will, should be at $1 billion or there or thereabouts. So these are the 2 flagship products that we are comfortable talking about now because we are confident we think we can get this out this year. This is the launch, not necessarily the raise and the close, right? That's also a multiyear journey. We also have Extra Space Asia, which I talked about. And we're getting more confident by the day that self-storage as an investable asset class in Asia is getting increasing traction just because of the reverse inquiries, the inbound that we would like to think we have helped to generate with the success of Extra Space Asia. People are starting to understand why this is an interesting asset class for Core/Core+, sticky, resilient customer base. And if you know what you're doing on the operations side, you can actually be confident about growing the platform. So those are the two, I think I'm comfortable talking about now maybe turn to Kishore to talk about alt. Kishore Moorjani: Sure. So on credit, similarly, the ACP II fund, that is, I would say, just very high visibility. We're engaged with investors. We're in the process of effectively closing that out. I'd say certainly within Q1, some of the investors may slip into early Q2. So that's very certain, right? We know that's happening. ACP III on the back of that will come out second half of this year, back half of this year. So the pipeline, the originations for that, very strong momentum. So ACP II will close. III likely, I'd like to see us have a first close before the end of this year. So very high visibility. Wingate continues to grow. The senior debt fund, as I said, is picking up momentum given the world we're going into. I actually anticipate we'll see stronger flows into the Wingate senior debt fund. So again, very high visibility on that. Things where we've invested a lot of time that will bear fruits in the second half of this year. I would put both our SGD product, which we expect to launch in that camp and our data center product in their camp. Again, as I said, those are not new initiatives. That's not a 0 to 1. That's places where we're already operating, where we're already investing. We're now bringing that out in a slightly differentiated, more focused product for investors. So on both of those fronts, very, very good momentum. High visibility to hopefully beat the numbers on fundraising that we had this year -- last year. Chee Koon Lee: Yes. Just to add on, I'm very actively involved in conversations with LPs, family offices. There's actually a lot of demand for some of the products that we are creating and some people are asking us to cocreate products for them. And that's why I am actually quite optimistic. I mean, this time last year, I wasn't quite sure because the fundraising momentum was -- we had big plans, but we are not sure in terms of where things could be. There were still changes in terms of personality. And then we went on the road and spent a lot of time with the investors. But given the feedback, given the products that we are creating and a lot of this and also conversations with our LPs, I'm actually a lot more confident in terms of where our private funds team will be able to achieve over the -- at least -- I mean, early conversations just for the start of the year has been very, very encouraging. Wei Hsing Tham: I'll take the other two questions. On the China revals component, so this year, the China revals on average from a portfolio viewpoint was about down 5%. But that was quite a range depending on the asset class. China office was the hardest hit for us, office and business parks, less so in some of the other sectors. So we took a bigger write-down partly because of the vacancy in some of those buildings, which ties to your second question. Because of the vacancy in those buildings has come down as we've had some tenants in the offices and business park move out, it has brought down the NPI numbers for those buildings. So I would say most of the NPI for the assets we're talking about range between 3% to 5%. As we can fill up that occupancy, that should drive the NPI up, hopefully, to get us to, I guess, a stronger, more 4% to 6%, 4% to 7% type level. We hope the worst is behind us. But I think when we've looked at China over the last several years, obviously, we've taken write-downs over the last 4 years, and this was a bigger write-down than most years. I think it's a little bit hard for us to predict whether there will or will not be anymore. Certainly, the team likes to think that our hope is that the worst is past us. But as we continue to expect negative reversions and occupancy is still weak for some of the asset classes, we do think there could be some movement up or down over the next 12 months. Cho Pin Lim: I just want to add to that before I turn to Chee Koon. It's not all doom and gloom on China. Now as Paul correctly characterized, China is -- there's a lot happening exogenously that we are having to deal with, right? There's little we can influence in terms of geopolitics, consumer sentiment, et cetera, et cetera, and Tze Shyang is well versed in this. But as a senior team and as a group, we need to sort of make do with the cards that we are dealt. So what are we doing? As you all know, again, one of the Northstar destinations is China-for-China. And last year, we launched our first C-REIT. C-REIT is trading really well. It's been well received. And as Paul mentioned, this year, we've registered for a second C-REIT, taking advantage of what the Chinese regulators have acknowledged is something they need to focus on. They need to be able to provide retail investors, savers in China with something that is a proven asset class globally, stable, visible, sleep at night distribution yields rather than speculative real estate in China, which we all know they are completely allergic to right now. And that plays to the C-REIT market. And that, again, I think, plays to our ability to provide assets for them that are nothing wrong with them intrinsically. They're great assets. We run them well. We just need to find the right price point where the market says, this is great for me. I can get that distribution yield, get that saving in place. And so in the ability to demonstrate to the market that we've launched one C-REIT doing well, sleep at night, here comes another one that is larger in size, more sophisticated, integrated development. You start to see this ability to accelerate our China-for-China play, even in the midst of what is a very difficult political macro environment for China. China is a huge savings base, in part driven by the fact that sentiment is down. People are not spending because they're worried about the future. When they're not spending, they want to save. They need something to save in. And I think I can think of nothing better in the equity side than a REIT, as we all know, from our own savings here in Singapore. So much of our wealth is tied up in the S-REIT market. So I think this plays to our strength. And if we execute well, we can turn what is an uncertain environment into something that is positive and part of the growth story for the group, which is China-for-China. So it's not -- yes, it's not great. Yes, I know you guys are waiting for the inflection point and for us to come out and tell you that there's not more bad news. Honestly, as Paul says, we can't tell you that because as you know, events are happening very regularly, and they happen come out and left field very often. What we can do as a team is just to respond as quickly as we can and stay focused on what it is we're trying to pivot towards, which is China-for-China. Chee Koon Lee: Just to add on, the -- we've created a master fund last year and then the C-REITs. You will see us continue to do that. Because of our long history in China, ability to operate, manage reputation-wise, we actually have a lot of inquiries from capital partners to actually give us more capital to grow the asset management business in China. A lot of competitors in the market today in China have exited in one way or other, actually position us quite nicely to grow the China business using a lot of domestic capital, using a very capital-light manner to grow the business. Yes, I mean, we do have balance sheet exposure to China from the original CapitaLand days. I mean, where we use the developer's mindset to put very heavy balance sheet to grow, which is not the case anymore. And I mean, I don't want to keep revisiting saying that these are all the things that have worked well for CapitaLand, but it is what it is. But the important thing is what do you do? You want to be able to recycle the capital and invest it to grow the fee business, the asset management part of our business, being very capital efficient, raising third-party capital so that the fees that we are earning will be very -- it's like a coupon clipper for investors that invest with CLI. Perpetual capital save, the fees are there. You don't have to worry about the volatility of the real estate market. And that's what we are transforming the business model into, right? I think the rest of the other parts of the world, we have done that. In China, we are doing the same. We are doing -- raising a lot more third-party capital. And I think that the potential for us to build a big FUM business in China using third-party capital is there. We just don't need to use so much of our own money in China. So that's the guidance. I just want to make sure that the team understands as we execute the strategy is to use less of our own money and to grow the business in China, grow -- make it a fee business. Mervin Song: Sorry, on the -- sorry, on the private credit side of things, $2 billion plus on the property side, private credit, $1 billion plus to be this year is realistic, I presume you hire a big time here to deliver. Kishore Moorjani: I'd like to see us get ahead of that $1 billion, but watch the space. Grace Chen: Xuan? Xuan Tan: Xuan from Goldman. First question is on cost savings. The $5 billion seems a bit low versus previous $50 million target. Can you walk us through the initiatives? And secondly, on strategic M&A, if you go do one with a significant overlapping capabilities, how confident are you in realizing cost synergies? And what will you be doing differently? Second question, if I may, on lodging. So if this business is valued on multiple, then EBITDA is actually more important than keys and revenue. So if I look at your revenue target, EBITDA should grow more than that given operating leverage. So my question is really on time line. When can we expect that to come through? Wei Hsing Tham: Okay. I will do cost savings. So the cost savings number related just to our AI digital initiatives. So overall, the group target is still to get to $50 million in cost savings. I think we are tracking fairly well. We've made some progress this year in terms of increased efficiency, streamlining some of our operations. We're still moving into that next year as we start outsourcing some parts of our work using a little bit more AI and digital initiatives. I think we'll be able to update a little bit more by midyear in terms of progress as we can see sort of full year savings. But the goal is still to get to $30 million to $50 million savings on a run rate basis by 2027. Soon Keat Goh: Should I take the lodging question? Okay. So... Wei Hsing Tham: Okay. So maybe on the cost savings for M&A. So obviously, we've done two M&A in the last year. SC Capital, which was only at 40%, so it's been largely run independently. For Wingate, which was 100%, we have started integrating those operations. And we are starting to see that capability sharing. So Kishore has now got a lot of Australian sourcing capability, not just for the Wingate funds, but also for ACP II and ACP III in the future. And so we're starting to see some synergies there. Given that, that has only been in operation for about 8 months, we have yet to be able to actually count the value of how much there is. But when we look at it, I think it's easy for us to estimate that sort of 10% to 20% is a reasonable saving levels for us in this particular aspect. I think if we were to do a broader M&A, it would depend on how much overlap there is. And if we look at our corporate costs, which based on the slide there, you can see we're still sort of about that negative $55 million, which is not true corporate cost, but has a mixture of factors there. We would think of that as, in theory, where we would get the most savings from in terms of overlap. So that's what we're driving to. We have done no estimates in terms of overlaps for maybe what you are looking for. But we do think that reasonable cost savings when you look at overlapping operations, if it's -- in the case of, say, something like Wingate, we think 10% to 20% is quite reasonable. Certainly, we hope to do more if there is more overlap. Chee Koon Lee: Just to add on, I have done a number of M&As in my career in CapitaLand from Ascott days buying Quest, buying the hotels platforms and then subsequently, the merger with Ascendas-Singbridge. I would say that so far, all the M&As that we have done, we have been able to grow top line. We have been able to create synergies. And I think that's -- that will be the principles that we take -- whichever M&A that we do, it has to make sense. There is no need for duplication of resources. Of course, we want to make sure that we do things properly. When we did the merger with -- the big merger with Ascendas-Singbridge, it was on the basis of a best person for the job. Some of you may recall when we announced the transaction, very quickly, we talked about the org structure. We want to make sure that things could execute. And for some of you who may remember on the day when we completed the Ascendas-Singbridge transaction, the next day, we talked about how do we put together the Ascendas Hospitality Trust and the Ascott Residence Trust. It's a question of the discipline. I mean you just need to make sure that if you are committed to do a deal, how do you work out your entire plans, how do you put the people in place? How do you create the synergies? How do things make sense? I think we have enough track record to be able to demonstrate that we always maintain the discipline in doing transactions. Soon Keat Goh: So just last part, we are absolutely with you in laser focus in delivering EBITDA. If you look at our total key count, it's 176,000 currently, just over 100,000 is operational. So we have another 60,000-plus in the pipe. So the ratio of pipeline to operations is actually quite high. And that suggests that we have a lot of opportunity to gain operating leverage. Now if we look at the construction schedules of the projects we have signed, we do expect a lot more properties to open in '27. And if you give them a year to ramp up, we should be able to get a good healthy boost in fee income in '28. And we do expect by '28, maybe '29 to be operating at a more stabilized level of about 30%, 30-plus percent. Grace Chen: Can we go to Derek first? Yes, I think his hand was up. Derek Tan: Derek from DBS. I'll just ask two questions. So, if I could go back to China, right? Could you give us a sense how much have you written China since the start? Are you at 10% to 12% down? And maybe to ask the question another way, if you put an asset in the market now, do you think you can transact at book rather than going through the C-REIT route? That's the first question. Then my second question is on the ACP Fund II. I'm just curious, could you give us a bit more color in terms of returns that we expect? I always thought that for private credit and credit, you'll be playing in the field where you are either junior debt or a bit more risky or you're lending to corporates that could not get traditional funding type of scenarios. So when Kishore mentioned that you're looking at very senior debt kind of investments, very safe. Just wondering whether it's your landscape or competitive landscape to financial institutions and how you stand apart. So I may be totally wrong, but if you can give us more color, right? Wei Hsing Tham: So on the China valuations over the last 5 years, we've written down about $1.6 billion on our China values. It works out on average to about a 12% drop in valuations. But that's really an average. Obviously, there's been a wide range. For some of the assets, they have gone down 20% to 30%. Some of them have actually barely moved because they are very strong performing assets. In terms of would we be able to sell into this market in this price, I think it's very asset specific. If you ask us right now, certainly, there are some assets that would go out at current value. Some may, if we are fortunate, even get a slight gain. But I think depending on how the market outlook goes over the next 3 to 6 months, it will give us a better sense of whether there is an additional discount that we need to take. I think last year, we took -- as I mentioned, we took an average 10% to 20% discount. We are actually quite willing to take some of these discounts if it gives us an ability to do what Andrew was mentioning, and that is really recycle it into a renminbi fund. If you ask us to take an adjustment to the valuation, but it generates long-term recurring income, that's certainly something we would look at and consider. I think for us on the go forward, we know we have a little bit of weak spots in parts of the portfolio, but we are very much focused on making sure that, that operating profit and that fee income stream grows. Kishore Moorjani: So in private credit, we're not coming for DBS' business, just to be clear. But look, it's a good question. Firstly, we're not doing anything on corporate, right? So it's always real estate, always asset-backed. Why does the opportunity exist? There are many cases where for regulatory reasons, a bank struggles to do a certain type of lend. In construction and transition financing, we understand the underlying assets much better. So our ability to provide financing into that is greater. It's faster very often than in financial institutions. We're clearly not cheaper, right? The end return to your questions that we're looking at in our private credit products is going to be between -- net to investors between a 6% to 10%, right? We hope we can outperform some of that 10% at times, but this is not a 15%, 20% IRR business. It's generally transition, so it's shorter duration, 1, 2, 3 years. We're not doing 5-, 10-year loans because anybody who's taking that cost of capital for a long period of time, it's not sustainable, right? But let me perhaps bring that to life through an example. So we did a transaction late last year, we're about to do our second one in Australia, Sydney specifically in prime Sydney residential neighborhood, financing a developer against completed stock. They got very expensive financing, construction financing, which is a business we understand because of Wingate. And they're now slowly selling out the -- they held on to some stock. They're slowly selling out that stock on a completed basis. On that, they're quite happy to take our capital at probably a 7%, 8%, just to give you directionally where we are. We will lend that on a 60% to 70% loan-to-value. So it's not very high LTV, firstly. Second, we may selectively use some leverage on that, probably 50% back leverage, but we control the entire loan stack. So you're right that our end participation may be junior, but we control the entire stack. So we're not sitting there at a syndication table with 6 lenders if something goes wrong. If something goes wrong, the senior is actually looking to us saying, you guys go resolve it and work through it, right? So on something like that on a levered -- on an unlevered basis, we may be 7%, 8%. On a levered basis, we get to 10%, 11%. Net of fees, we're comfortably at 8% or 9%. And on ACP, that's sort of the 10% or just over 10% net is kind of what we're looking at. On the Evergreen in SGD, that will probably be safer. That will probably be more like a 6%-odd return. Grace Chen: Let's go to Rachel. Lih Rui Tan: This is Rachel from Macquarie. So a few questions from me. I think, firstly, you spoke about interest cost savings. Could you give us some guidance for interest costs in FY 2026? My second question is on divestments. I think you have done $1 billion. So any outlook on the divestments for this year 2026? One last question on commercial side. Any risks you see in your portfolio? I know it's stable growth, but this year, do you see any risk in your retail portfolio? And there are some office assets out for sale, which is very sizable. That's good for CLI. Any thoughts about whether you will acquire them? Ervin Yeo: I think we've always been consistent in terms of our retail portfolio, especially in Singapore. It's supported by fairly controlled supply, right? And we've been conscious on the trade mix. So our reversions, we think, is consistent over time. Last year, it's about 7%, just under 7% and this is consistent. And we measure the business, I think you know by now by occupancy costs, and we look at this across different trade categories. So we think that the business this year will continue to be fairly resilient. Now there's going to be RTS opening at the end of the year. Our malls are not at the northern part of Singapore, but we are getting a presence there via the management contracts that we signed in Zoho. So I think the retail business should remain fairly consistent. Our office performance for the assets have also been strong, also supported by relatively managed supply and all this is in contrast to China where the massive oversupply. So I think any opportunities are on the table, we have various vehicles that we are always looking at it. We will be the first part of call. And if it makes sense, it makes sense. Wei Hsing Tham: In regards to interest cost savings, so in terms of absolute interest costs, this one might move up or down depending on how divestments and investment goes. The truth is I personally, and I'm sure plenty of our bankers here too, hope that we end up borrowing more as we have more investments to do. So the absolute cost may go up. But I think in terms of basis points, we're at 3.9%. The year before, we had at 4.4%. I think we can see it coming down maybe 10, 15 basis points on average. In terms of divestment target, certainly, this coming year, we would like to do more than we did last year, particularly for China. So there will be an effort to try and accelerate that. And we hope over the next 6 to 12 months, we will be able to beat that $1 billion quite comfortably. Grace Chen: Thank you. Maybe we go to Joy. Qianqiao Wang: Joy from HSBC. Two questions. First of all, you held back share buyback last year in view of sort of acquisition pipelines. How long do we expect that process to be as you evaluate large-scale sort of acquisitions? And on the same token, as you evaluate this process, what does that mean to your bolt-on strategies and smaller platform acquisitions? Does that go through BAU? Or will that be on hold as well? Second question is more on operating platform. I think Andrew talked about buying more exploring operating platforms. Can I assume that the end game is eventually to exit through an IPO for these type of platforms? And if that's the end game, where are we on your various sort of operating platforms? And when can we expect potential exit? Wei Hsing Tham: So on the share buybacks we did, obviously, in 2024. We were quite active in 2025, and I think it holds same for 2026. We believe that there are a number of both organic and inorganic opportunities for us to invest behind and sponsoring new funds organically or sponsoring our REITs as they grow is still priority #1 for our capital allocation. Priority 2 is really growth for inorganic opportunities. I think we look at a range, as Chee Koon mentioned, we've been associated with quite a number of deals in the market. And we continue to look at a number of them. And I would say since there is -- there are opportunities in the market, we are conserving capital to a certain degree for these opportunities. In terms of time line, I think that's hard for us to pin down. We believe that the opportunities are very readily available in the market in the different segments and including bolt-ons that we look at. So I think from that viewpoint, we are still working on the basis that there will be more organic and inorganic opportunities for us to use our capital for. Chee Koon Lee: We are positioning the company for growth. So actually, we are seeing quite interesting opportunities, whether it is organic or inorganic type opportunities, it could be smaller, it could be bigger, but positions us very well and allowing us to grow the fee income on a more sustainable basis. And that's why we are conserving some of this capital to give us that optionality. Janine is extremely busy. We need to prioritize all kinds of deals, what makes sense, what's the -- give us the best bang for the buck -- the different verticals hits are also looking at optionalities as well. So that's what I want to say. We are actually seeing interesting things happening in the market. Cho Pin Lim: Joy, very quickly -- Chee Koon talked about optionality. I think that's the beauty of platforms. If you have platforms that are strategic in nature and are sought after, you can do a lot of things with them. You can keep them to generate more fee income vehicles down the road as you produce vintage 2, vintage 3, vintage 4, vintage 5 or you could put it together with a fee vehicle and then do something with that. And I would say the option spectrum exists with all of our platforms, the ones that we have minority investments in, the ones which are strategic, commercial management, lodging management, which are so intrinsic to our business today. Obviously, the consideration set is different. But to your basic question of whether or not you can use them as part of a securitization package or monetization package, the answer is absolutely yes. But obviously, we take a view as to what is the best cost of outcome for us as a group, right? If it's something that's so intrinsic to our business and we see a much longer horizon and the ability to generate more and more fee income vehicles downstream, then it's something that maybe we decide to keep a little bit -- some of it but not release it. But the obvious -- the reverse is also true. Chee Koon Lee: We are today very much an investment house. So you can be sure that if we grow the platforms, I mean, I think some of you may be alluding to whether it's the Ascott platform, it could be some of our platforms in India. If there's an opportunity for us to consider strategic option to list it independently because some of the values are not best captured being the listed vehicle or we can give you a lease of life that can get better valuation in certain markets listing it one way or other, we will consider it and use it as a chance to unlock capital properly capitalize it so that it can compete in the various markets or in the verticals. So all these are optionalities that we are looking at. At the end of the day, we need to grow the platforms properly, how do we unlock value, how do we create the most value for our shareholders. Grace Chen: Let's come to this... Cho Pin Lim: Sorry, relevant to [indiscernible] point, it's all EBITDA, right? We want to generate multiples on earnings. If the platform is an intrinsic part of that ability, that narrative to generate the maximum earnings multiple, then that's where I think it becomes a key consideration. It was not quite ready yet. It's still a bit subscale, but it's a key part to the thought leadership and the ability to think about how to design products, then I think that's better helped onshore because we won't realize maximum value for that. Sorry... Grace Chen: Yew Kiang, over here. Yew Kiang Wong: Yew Kiang from CLSA. Two questions from me. First one is on M&A. How much are you willing to push gearing up to fund M&A going forward? And what kind of IRR targets or targets -- return targets do you have in mind? And also, are you okay with near-term dilution on such M&A? Second question is on China. If you take in all your China assets and you divest it, let's say, we carve out today at book value, how much will this lower your current gearing? Wei Hsing Tham: Okay. I guess that's me. Okay. So China assets for us are about $7.5 billion right now. If we were to carve them out, that would bring us down into a net equity position or net cash position because we actually only have debt of about $5 billion, $6 billion on the books. That assumes that it is all sold. I don't think to be fair, it is a likely scenario for us, partly because we look at these -- a lot of these is our sponsor stakes in a number of funds. I think your first question, though, in terms of how much are we willing to earn. We put this on a slide specifically to show how much debt headroom we're comfortable with. And I think we are comfortable spending additional $6-odd billion gets us up to a 0.9 type gearing. The truth is we are quite comfortable in that range, particularly now as we are divesting assets and as Tze Shyang and the team make efforts to lower our China exposure, we will actually get additional capital back. In the longer run, the truth is we're quite happy at this 0.4x, 0.5x. It's probably about right for us. But we can afford a spike up if there is a deal worth doing. And obviously, with that type of headroom, as Chee Koon mentioned, it's very unlikely we would need to raise equity. And then we would expect it will come down as we divest our stakes of the balance sheet assets. We are putting more money behind private equity. But because of our efficiency ratio, as we enhance efficiency, the truth is we don't really need much more than the $5 billion that we already have in the private funds. On average, our holdings in the -- because of the legacy assets and the legacy funds, our holdings are more than 30% on average. In the new funds, we hold 10%, 15%. So actually, we could double our private funds and not require more capital there. And then similarly, on the REITs, over time, that stake will come down. So I would say from a debt headroom viewpoint, we're very comfortable doing anything in the $6 billion to $8 billion range even. Cho Pin Lim: Yew Kiang, you remember you were around when we did Ascendas. We took the up to, I think, 0.83x, 0.86x with a commitment to bring it back down again, and we delivered on that without issuing new equity. So I think we understand the playbook, and we know what is important to shareholders. Grace Chen: We're going to take a few more questions because we're nearing the 10:30 mark. Let's start with Terence, right? Sorry, Brandon. Brandon Lee: Brandon from Citi. Just two questions. The first one is, if you look at your fourth quarter event fees from private funds, right, there was a very nice $30 million number there. Can you guide us on what that is? And is that what we could see if more private funds were to have an exit over the next couple of years? Wei Hsing Tham: Sorry, Brandon, can you direct me to where you're seeing that figure? I don't think -- we didn't have any event fees -- standout event fees for the private funds in the fourth quarter. So if we did that, it's great. But no, so I would just say though in general, on our private funds, our private funds activity, we do have a little bit of fees, but it's very small in terms of event driven. We're not expecting carry from any of our funds in the near term. So we wouldn't expect that. I think actually, the strength of the figures that we have for the funds business is it's been largely recurring income, both from the listed side and from the private side, and that will continue to go at sort of the same growth rate we would expect going forward. But we wouldn't expect very much in terms of event driven from the private funds. Brandon Lee: Okay. Maybe I'll check my numbers later. So the follow-up is more on your dividends of $0.12. So would you guide the market using your core operating PATMI on a dividend payout standpoint? Or would it be more useful to use the operating cash flow? Because if you were to look at this $540 million and if you can assume that it can grow at 6%, the payout is actually close to 100%. Wei Hsing Tham: Yes. So our payout ratio is high. And actually, enough it ties to the question on share buybacks. There are different ways we can return capital to investors. I think when we look at our operating cash flow, which is the metric that we track more closely in terms of making sure that we have funds, the operating cash flow is more than $900 million because we have a very strong fee business that consistently generates income, and then we have all the REIT dividends that come in. So we look at the operating free cash flow as the more critical measure for our own internal capital management. And then we look at the operating profits as a guide to what we are willing to or what we think is about the right level to return to shareholders. We could have used the money to some degree, some of it for buybacks. We have chosen to keep our dividend stable at this level. We think it is a level that we can comfortably maintain given the trajectory we are on. Certainly, at some point, we hope that we grow faster and we're able to increase the dividends. But at the current payout ratio, we're quite comfortable. Grace Chen: Okay. We'll take a couple more questions because we do have one online question as well. Let me go to Vijay first. Unknown Analyst: I just have two questions. Firstly, again, on M&A, sorry for harping on it. You have two targets, $200 billion as well as asset allocation to different geography. Suppose if a big M&A acquisition comes, that fits your $200 billion target, but doesn't fit your geography target in terms of exposure to China or U.S. markets. How would you react to that in that kind of a situation? My second question is in terms of your private funds, do you also mark-to-market your private funds on an annual basis? If so, there was there a gain or losses? Was this the reason for your reduction in balance sheet exposure towards private funds to $5.3 billion to $5.2 billion? And also -- sorry, that's my question. Wei Hsing Tham: Okay. So I'm not sure if I caught that right on the private funds reduction. Part of the reduction was too. Some of the funds are starting to come back. So for instance, as Kishore mentioned, our ACP I, our first credit fund actually has returned capital. So some of that has come down, and it generated a 15% return, which also helped our earnings. So we have some funds that are returning funds. We also did have a little bit of markdown from the China funds component, which also lowered the stake -- the value there. So actually, there was a fair bit more movement down, but we also invested in new funds as well. So that's how we came out of the balance. I think most importantly for us is just that the capital efficiency on that improved. We were -- we are investing less into the new funds than we were previously. Chee Koon Lee: If we are looking at an asset management platform, we look at the quality of the teams, whether it has a strategic difference to us to be able to raise funds and -- on an ongoing basis, whether we can create new products out of that. So if you ask me, I am less sensitive to where the FUM is from. I mean, even if, let's say, a certain entity has some allocation to China that can help to strengthen our China FUM on a fee basis without us increasing a lot more capital allocation to China, we will look at that. And if -- let's say, there's a fee business that we can buy in the U.S. And the question that we need to ask ourselves is you buy a team in the U.S. today, can the team and together with us actually help to turbocharge the growth in the -- if we are not so sure, then we may not do it. So I think the issues are complex, but I just want to highlight that we are looking or platform basis, we are looking at platforms that help to generate and drive our fee business. So we are not looking to buy a, for instance, a developer and asset heavy business. That's not our business model anymore. And that's what we are trying to reduce our balance sheet exposure on all the hard assets, and we should have less stakes in the GPs. And over time, as what Paul mentioned, we want to be able to also, in an organized fashion, reduce our stake in the REITs without affecting the share price of all the various REITs that we have strong holdings for. I mean, why we want to do something to affect the returns to our unitholders. So I hope that gives you clarity in terms of how we look at M&A. Grace Chen: Terence? Terence Lee: This is Terence from UBS. I have two big picture questions. First one, so APAC Real estate is an underallocated space. And given that 2025's performance for many asset classes have been positive, especially on public equities. I guess APAC PERE is even more underallocated now so than before, such that the rebalancing itself, I think, should see LPs knocking your door. So I guess, is it fair for us to expect that the organic fundraising for private funds should be better on a year-on-year basis for 2026, i.e., more than $5 billion. And the second question, I'll just go to it. Andrew, I mean, towards the Northstar, a question on fundraising and distribution. The U.S. is making all assets accessible to people's 401(k)s. For us, I think platforms like Ascendas, [ S-REIT ], they actually have access to our dominant SRS funds, and they're already distributing products from the likes of Blackstone, Hamilton Lane, et cetera. So do you see Singapore's retail wealth channel as a blue ocean market? And Andrew, you already said we already are investing quite a bit of our money into S-REIT so far. Cho Pin Lim: These are great questions. Thanks. So the short answer, and I'm looking at [ Alan ] here, is yes. We want to build on this momentum. The anecdotal evidence for '26 is that allocations to real estate, real assets in general in Asia have gone up 15% to 20% for the reasons you mentioned. So if we are going to continue to punch at or above our weight in capital raising, yes, it stands to reason that if we raised $4.2 billion last year, that number has to go up by -- at least by that percentage amount. Obviously, it's going to be incumbent on the strategies and the strategies need to make sense, which is where the product design, ability to have folks on the ground who are telling us what investors are looking for, what is interesting in terms of real estate, having the underlying platforms to sync all that together, all very intrinsic to being able to successfully do so. So that's question number one. Question number two is around the wealth channels. So you hit on a very good point. Last year, we made very good strides in insurance. And we've also identified high net worth as a key component of a rounded distribution platform. Institutional, we started off with decently. Insurance, we've identified and we've made some very strategic hires in the capital raising side of the house to be able to speak the very specific language that insurance companies use when they talk about deployment and what their specific requirements are to be able to put out product that makes sense for them. And we've done a very significant insurance mandate that we hope to share with you in the not-too-distant future, which then leaves high net worth. High net worth is a relatively young channel for us. We took a big step forward last year with Wingate, which is essentially a high net worth shop. And I think with Kishore's help, we can learn from how Wingate has developed that very high-touch channel, as you know, it's a very different way of servicing your client, but it can be very sticky capital and your fee cards are very different in nature. So again, it's a specific language, a specific skill set. We've got Yvonne here who comes from that part of the world, both as a customer as well as a proponent, I guess. So she knows how to reach out to these folks. She knows how to target products and design products that make sense to them, including potentially reaching out to U.S. high net worth. Although I will say that, that's probably a bridge to be crossed at some point in time in the future. I think the lowest hanging fruit for us, and Kishore can add to that is certainly, there's enough wealth in Asia and even here in Singapore, there's plenty of it for us to use the strength of the CapitaLand name, the brand, the comfort it provides, the assurance of integrity, the assurance of governance that these investors look for when they make such investments. There's enough for us to do here without thinking further afield at this point in time. Kishore Moorjani: Yes. I can -- sorry, if I can add to that on the wealth side, it's a really good question, Terence. And with Yvonne inside the tent, I think that gives us the ability to go understand and create the right kind of product. But the thing that I find really interesting is given our REITs, the familiarity with the wealth channel of our brand is very, very high, right? So while every global alternatives or private capital firm is trying to move from institutional investor raises to wealth, for us, that path is, I think, a lot easier because the REITs have done a great job of attracting that wealth capital. Secondly, in our home market here, the -- this is a big wealth hub. If you look at the numbers over -- from 2018 to 2030, the wealth channel grows from $800 billion of assets to $1.5 trillion of assets in Singapore. What's going on with the SGD strength to be able to offer products in that, I think, is very important. It's something that we're very, very focused on. The second thing is when we do that, it's the question that got asked earlier from Joy, we do that with platforms where unlike a private equity firm, we are not investing in these platforms and then putting them up for sale in 3 or 5 years, right? We're an aligned investor. Even in our REITs, we own 15%, 20%. We might bring that down, but we own a big cornerstone stake for a long period of time. So that in the wealth channel as well as in the insurance channel gives investors a clear alignment, which is very different from a traditional GP, which is putting up 1%. Grace Chen: Okay. Maybe we go to Goola. Goola Warden: Goola from The Edge. I've got only two questions, right, Grace. So the first one is on the next China C-REIT, which you haven't spoken about much. Is it the Raffles City portfolio? And if it is -- I mean it's the same question. And if it is what are the -- what's the occupancy of the office building like the office part of it? That's the first question. Second one is, you don't have a real data center operating platform in the way that may I use the word Keppel has. So would you be interested in one? And would that help -- I mean, you talked about operating platforms that help you design new products. Will that help you be more focused in your data center strategy? Those are just the two questions. Puah Tze Shyang: Yes, we are planning to launch our second C-REIT this year, probably late second quarter, early third quarter. We had one infrastructure C-REIT launched to assets, and then we are looking to launch another one. One of the assets that we have filed in our prospectus is a Raffles City at Raffles City Shenzhen. It has a mall. It has an Ascott service apartment, and it has an office. Specifically, the office in terms of occupancy, I think it's a high handle coming to 90%, so it's stabilized. Cho Pin Lim: Goola, just to add, okay, go back to C-REITs and the question on why this is good for us in China. The initial class of C-REIT approvals was restricted to certain asset classes, which excluded office. This batch of C-REITs, the Chinese regulators, the CSRC has now relaxed the requirement to allow for commercial assets, which if you think about our portfolio and our legacy funds and this whole China for China pivot opens up the aperture for us to accelerate that pace of pivoting from our legacy U.S. dollar product to China-for-China, including public, private -- including public vehicles, including private vehicles. So I don't want to put the cart before the horse and get overly excited, but the pieces are in place as you always are on us on how quickly can we pivot this China -- get the momentum going. And to us, this is a very sizable and meaningful development that the regulator has done, which allows us the opportunity to do so. Puah Tze Shyang: If I may add, the Chinese regulators... Goola Warden: What is the valuation versus your book? Puah Tze Shyang: Also for the first C-REIT, we had an IPO price of CNY 5.7 per unit, and it's now trading at CNY 6.9. Price over NAV is CNY 1.21. I think the first quarterly results, we are 3% above underwriting. So it's doing well. The -- I just wanted to add to Andrew's point, I think the regulators are -- they are aware that liquidity is available in the market. And through a recognized and trusted REIT product, I think a lot of liquidity can flow back into the real estate. As we can tell in the last few years, there has been a departure of, say, foreign buyers from the market that has affected transactions. Transactions are much lower than before. But with the last 3 years and this infra C-REIT becoming more and more known into the market, the ability of CSRC to introduce a commercial C-REIT, which opens up the mandate to include office, hospitality and retail. And by definition, integrated assets really opens up for us, our entire portfolio to be able to see -- to be C-REITated. Given that the trading -- the BUs are also tight or tighter than the private market, it really represents a huge opportunity for us. Ervin Yeo: And what underpins all these assets are Goola is operations, right? Everyone knows about the office market in China is challenging. I don't think you can find many office assets in China that are REITable. Why Raffles City Shenzhen is able to go in is, one is a mixed development. Second is in Shenzhen is a good location. It has a benefit from Hong Kong tourists. And also because we are a Singapore brand name, there's a bit of added gloss, right? So if we are able to host the HQs of Chinese tech companies and American tech companies, and they're happy to be with us. And Raffles City Shenzhen, ASML is there. They exited SOE building to be there. Previously, one of the Chinese tech companies, HQ was there also and then after the Amazon came in. So it is fairly resilient among other office assets. Kishore Moorjani: Goola, on your data center question, it's a really good question. Thanks for that. So I would say in the few months I've been here, I think data centers is a great example of somewhere that CapitaLand focuses on execution, but does a bad job of promotion, right? So we have 800 megawatts in existing operating or under construction assets, right? We understand customer needs and demands really, really well. We are now looking across that universe as data centers itself has evolved from a niche real estate asset class to a deep operating capability asset class. We're looking at that with customers and with investors. You'll see us in the next few months form that into an operating construct and focus on very specific markets. So if I take India as an example, we are -- we have delivered and are delivering nearly 240 megawatts of capacity. That I think, puts us in the top 5 in the market in India, right? Small size, but we're also delivering in India the first ever liquid cooling, direct-to-chip cooling asset in the country. If you're going to put an NVIDIA GB300, you can't have air cooling. You need to have direct-to-chip cooling. So we're going very specific in that because the scale with these customers is massive, and we'll pick our spots through an operating platform, and you'll see us grow it in that form. Not -- rather than trying to be all things to all people in data centers, we'll pick specific markets where we have strength and go very, very significant, very large there. Puah Tze Shyang: Sorry, Goola, I just wanted to add a couple of points for the commercial C-REIT, just to be complete. There are a couple of things that is going well for the commercial C-REIT side. Number one, it took us 2 years to prepare for the first IPO, for the second one is likely to take 6 months. The regulators are picking up the pace and allowing for a more expedited process. That's number one. Number two, in the first infra REIT, it was only retail. As I explained, the mandate has opened up. That's really good for us. And the third, the regulators are picking up all the pain points from the first 3 years. And for the commercial C-REIT, one of the key breakthroughs is that there is no more reinvestment obligation. This came up in the past year's analyst questions. So the commercial C-REIT does not require sponsors who inject assets to reinvest back into China. So that's really a big breakup. Chee Koon Lee: And the important thing is we are very focused in making sure that the first C-REIT product is well received, trades well. So the second one will be well received. You want the vehicle to trade well to be of significant size then it can really be a vehicle to take out many of the assets that we have in China at pricing that is attractive. So that's why we are very focused. I mean some of these things requires us to invest time, energy, resources to build up all these platforms and optionality and after that, you can execute. Because if you don't lay out this foundation, then you're always held ransom by the market. So I thought you just to clarify that point. Grace Chen: Let's take a question online from Derek Chang. I think -- yes, the question is, thank you for sharing some guidance on core PATMI growth. MSD, I think it means mid-single digit. Will you formalize such guidance in the form of forward-looking disclosures in view of what MAS or SGX is seeking and today's share price reaction? Wei Hsing Tham: So we do have, I think, on the summary slide, sort of the guidance or the expectation that we think this sort of run rate for us is fairly sustainable from -- on two aspects. One is we would expect fund management revenue growth to continue to be double digit, similar to this year. But we are still investing in the future. And for us, that means recruitment. It means in the case of our lodging platform, more marketing, more advertising costs. So because of that, even though the revenue growth may be stronger, particularly for the funds, we do think sort of a mid-single-digit growth for the core operating PATMI is a reasonable way forward, barring any catalyst events, whether it is extremely good fundraising from the team or M&A or other transactions that may skew that number. But otherwise, at least in the near term, that's a realistic growth number. Going forward, we hope to accelerate that. The goal has, as you have most of you know has always been to get to a more double-digit growth rate and a double-digit ROE target. But at least for the near term, we think our current run rate is about right. Grace Chen: Okay. Thank you. I think we've more than crossed the 10:30 mark. I think we'll end today's session. Thank you very much for joining us this morning and for your continued support as we shape the future of CLI. There is actually a refreshment served for friends who are actually here. And if you have got any further questions, please feel free to reach out to the Investor Relations team or better still just speak to them directly, okay? On behalf of CapitaLand Investment, we wish everyone good health, prosperity and happiness. Thank you, and have a good day.
Aapo Kilpinen: Ladies and gentlemen, dear Remedy investors, welcome to the Webcast for Remedy's Full year Results of 2025. My name is Aapo Kilpinen from Remedy's Investor Relations. Joining with me today are Remedy's Interim CEO, Markus Maki; and Remedy's CFO, Santtu Kallionpaa. Markus will guide us through the quarter and the full year, and then Santtu will dive deeper into the financials. We'll then look at the outlook for 2026 before moving to the Q&A session at the end of the webcast. [Operator Instructions] But without further ado, Markus, please, how did the quarter go? Markus Maki: Well, welcome, everybody, on -- my behalf as well. It's an end of an interesting year for Remedy, so let's look back at what happened. So starting with Q4, the financial highlights. Our revenue was EUR 17 million, large growth. It was almost on the record level for us, but not quite a record quarter, but very close to that. EBITDA, EUR 3.9 million and EBIT was EUR 0.0 million (sic) [ EUR 0.7 million ] positive. Cash flow was a bit negative for the comparison period. One of the major events that happened during Q4, we, of course, had the change of the CEO and the Chairman of the Board. So I took the role of the Interim CEO and Henri Osterlund took the role of Chairman of the Board. We had -- we decided on a new option plan for our staff for 2025. And we also had a repurchase program for 50,000 of our own shares to optimize our capital structure a bit. And of course, the huge news was that we unveiled CONTROL Resonant to be published in 2026. Looking at the full year numbers, revenue was EUR 59.5 million, 17% growth from '24. EBITDA at EUR 11.3 million and EBIT was then EUR 15 million -- almost EUR 15 million negative, which is the same amount as the last quarter announced Firebreak impairment that we did. Cash flow was positive for the whole year. Santtu will later go deeper into the numbers a bit. So looking at kind of the highlights. So we got the full CONTROL publishing and distribution rights at the beginning of the year. We did release a new game, FBC: Firebreak. We announced that we have sold over 5 million lifetime copies of CONTROL. I think one of the great news that kind of highlights our move into the strategy and into the sales publishing is that 45% of our revenue now was from game sales and royalties, larger number than ever before. And CONTROL Resonant, as said, big announcement. And of course, then the CEO transition was one of the key points of 2025. Moving on to the main topic of the quarter in my mind, which was the announcement of CONTROL Resonant. We revealed the game to the world at The Game Awards in December last year. So let's see the trailer and set the mood with that. [Presentation] Markus Maki: All right. Yes. So CONTROL Resonant looks like nothing else out there, and we are super excited to be able to talk about it for real after it being in development for a long while. So CONTROL Resonant is the sequel to award winning CONTROL moving out from the oldest house to the streets of Manhattan in an explosive action RPG. And it's coming out later this year for PlayStation, PC, Xbox and Mac [indiscernible]. If you look at kind of the early reception from the reveal and from the trailer, I think it was simply put great. The community sentiment was very positive with lots of engaged fans. And to prove it, we also saw wish listings growing really positively. And we do have a lot of CONTROL lifetime players that we want to appeal to and CONTROL Resonant is also an action RPG that is a large audience segment in itself. So we think that there is a great audience out there for this game. And we are prepared to self-publish this game. We have an ambitious campaign planned running all the way to the launch. We're also planning on working more closely with markets outside of our traditional Western focus as we have a lot of fans in, for example, Brazil and China. And our goal is simply put to build awareness around the game so that it becomes a must-have day 1 purchase for CONTROL and action and RPG fans. Of course, in any entertainment product in any great game, launch window is crucial. So we need a spectacular product. We need spectacular marketing capturing the launch momentum for us. But we are on the road there in my honest opinion. Going to the other games. Let's take a look at the games on the market, starting with Alan Wake 2. So in Q4, we had the PlayStation Plus monthly games with Alan Wake 2, and this actually generated meaningful royalties for us. It was done at the right time in the product life cycle. The game was a couple of years old at that point. And it also kind of converted some fans by -- them buying the -- or got us more fans by -- if you look at the numbers where people upgraded to the Deluxe Edition and so on. So it really had traction on the PlayStation Plus monthly game and steady unit sales on other platforms continued in parallel. CONTROL, lifetime sales is now 5-plus million. We sold over 1 million copies. Of course, the unit price is lower for an older game, but I think that's still a great achievement, shows the interest into the brand. And this is all continuation from buying back the publishing rights for the CONTROL franchise, and we've been in full control of the sales activities since then. So we've actually -- we're pretty happy how last year went on CONTROL sales. And it's also nice to be able to say that the CONTROL Resonant announcement also boosted the sales of the original CONTROL. Firebreak continued in post-launch development. Q4 saw the first large update. And then the second large update, Rogue Protocol was just released after the reporting period in late January. We've gotten good feedback from the core fans, and we've got some new players as well as older players have also been reengaging with the game. But unfortunately, numbers remain on a low but stable level. We are now still working on some smaller updates and balancing for the game, and the game will continue to live on and be playable for gamers in the future as well. Looking at the portfolio, not much changed since last time, except now we have name for CONTROL Resonant. Development work is proceeding normally on Max Payne and the new project. So we're happy with how those are going. But let's look at a bit about the strategy and targets and how kind of what we did in 2025 reflects back to that strategy. So we started the new strategy period in this year and a quick recap on all of the pillars. So on the create and grow world-class gaming franchises, basically, all of the bullet points that I have on the slide have been said before, kind of I'm just trying to bring this into a strategic context. This is using CONTROL as an example, but similar work is happening behind the scenes on all of the other franchises as well. So we are continuing focusing on the back catalog sales, finding new markets, building the franchises with sequels and other ways. Distinctive leading -- distinctive category really leading games. I think these are some -- these could be used as some examples of this strategic pillar. So Alan Wake seen as a horror game being in PlayStation Plus during Halloween, got a really nice audience there. CONTROL resonant, I think you saw -- just saw the trailer can be described as distinctive with a unique look. And it's also an Northlight that helps us make games that consistently stand out in the market. For this way, pillar working in the ways that enable successful productions. A lot of it is happening behind the scenes on how we operate. And that was actually a key of my focus areas before the -- and even after, but especially before the interim CEO appointment. But maybe as kind of a public proof that the engine is running on all cylinders, these points could be mentioned. So we did have one game launch and major updates to that, we had one new game announced this last year, and we advanced one new project to the proof-of-concept stage. So -- and we also did a lot of value-adding improvements, patches, updates to our back catalog, for example, releasing CONTROL on the Mac. And with this pipeline, we are on track to deliver a steady cadence of releases on average, 1 game per year with the current scale and state of operations. So I think we're in a good place, and we'll be moving to a lot better place during 2025 on this strategic topic. Self-publishing, of course, bringing again the points that have been mentioned into this context, full CONTROL rights received during last year, Firebreak self-published and then CONTROL Resonant announced and with an ambitious and global campaign planned for that for '26. And building on those components, we remain committed to delivering on our communicated financial year 2027 targets, which are on the slide here. So doubling the '24 revenue and EBITDA margin of 30%. And the numbers there show a bit how we've kind of -- what we were starting from and where we are in '25 and what our targets for '27 are. With that, passing over to Santtu for the financials. Santtu Kallionpaa: All right. Thank you, Markus, and good afternoon also on my behalf. So let's start reviewing the financials from the revenue. In the fourth quarter of 2025, our revenue was EUR 17 million, which is 46% is higher than in the fourth quarter of the previous year. Growth was driven by higher level of game sales and royalties, which in Q4 2025 were almost half of the total revenue for the period. The main sources of the growth were the royalties received from Alan Wake 2 and game sales revenue from CONTROL and FBC: Firebreak. We also received development fees for the Max Payne 1 and 2 remake and CONTROL Resonant. Amount of development fees decreased from the comparison period. Revenue was impacted negatively by weak USD rate. The FX-neutral growth for Q4 revenue was -- sorry, 54 percentage, whereas the reported growth was 46%. As we can see from the longer history on a quarterly level, the share of game sales and royalties of the total revenue has increased clearly during 2025. Alan Wake 2 started accruing royalties in the end of 2024, and it has been one of the great revenue sources in 2025. Console game sales were on a higher level than in 2024 as well as the sales of other Alan Wake titles. Revenue from FBC: Firebreak is also included in game sales and royalties from Q2 '25 onwards. Level of development fees decreased in full year '25 compared to previous year. The operating profit in Q4 2025 was EUR 0.7 million positive, improving by EUR 2.1 million from the comparison period. Q4 EBITDA also improved from the comparison period and was EUR 3.9 million positive. The main driver for the profitability improving was a higher revenue level. For the full year '25, the revenue was EUR 59.5 million, 17% higher than in 2024. 45% of the total revenue was from game sales and royalties and 55 percentage was from development fees. The main sources of development fees for the full year '25 were for Max Payne 1 and 2 remake and CONTROL Resonant. Game sales and royalties clearly improved from the previous year. The growth was driven by Alan Wake 2 royalties, BC: Firebreak sales revenue related to subscription service agreements and CONTROL game sales. FX-neutral growth for 2025 revenue was 21%, whereas the reported growth was 17%. For the full year '25, the operating profit was EUR 14.9 million negative. It was affected by the noncash impairment of EUR 14.9 million that was recognized on Q3 '25 related to BC: Firebreak. EBITDA improved compared to 2024 and was EUR 11.3 million positive, and it was driven mainly by the sales development. Looking at the unnetted costs, external development and personnel expenses in total decreased by 5.4 percentage from EUR 12.5 million in Q4 '24 to EUR 11.8 million in Q4 '25. Full year expenses had a similar pattern as the external development and personnel expenses in total decreased from EUR 49.2 million in 2024 to EUR 46.3 million in 2025. Full year external work expenses were EUR 14.3 million in full year 2025, being on a 24 percentage lower level than in the comparison period. The unnetted personnel expenses were EUR 32 million in 2025. Personnel expenses increased in relation to the growth of average amount of personnel. In 2025, the amount of capitalized development expenses was higher than in the previous year following the development costs of the projects, which we capitalize. Game project-related depreciations grew in 2025. In Q4 2025, depreciation expenses in total were EUR 3.1 million, of which EUR 2.4 million were related to game projects. Full year 2025 depreciations were EUR 26.2 million, whereas in 2024, they were EUR 6.8 million. 2025 figure includes the noncash impairment of EUR 14.9 million for FBC: Firebreak. In addition to FBC: Firebreak depreciations related to capitalized game development costs; we also had Alan Wake 2 related depreciations running in 2025. Looking at our balance sheet, intangible assets end of 2025, major part of that is from capitalized development costs of CONTROL Resonant and also CONTROL's publishing and distribution rights that have been allocated to CONTROL Resonant. Depreciations related to these elements will start when the game has been launched later in 2026, and they will naturally have an impact on our depreciation levels. Then let's move to the cash flow. So during the fourth quarter of 2025, the operating cash flow was minus EUR 3.3 million. We paid 24 percentage less operating expenses than during the comparison period Q4 2024. However, we also received less inflowing sales-related payments. This is due to timing. Development fee payments are agreement-based and there is difference compared to the revenue accruals. Royalty and game sales-related payments follow the revenue accruals with delay. For the full year 2025, the operating cash flow in total was EUR 4.5 million positive being EUR 6.5 million lower than in the previous year. Net working capital remained at a similar level at the end of '25 than in the end of 2024. So end of 2025, our total cash level was EUR 29.4 million, including EUR 9.6 million in cash and EUR 19.8 million in short-term cash management investments. During 2025, cash generated from sales and development fees was our main source of income. In total, we received less revenue-related payments in 2025 compared to previous year. At the same time, we invested more in our own IPs by paying the final installment related to acquiring the CONTROL franchise publishing and distribution rights and by investing more in capitalized development costs. Additionally, we also had expenses related to self-publishing activities This, together with the cash spent in purchasing the 2019 option rights in the second quarter of 2025 and purchasing own shares in the fourth quarter 2025, resulted in the cash position declining from EUR 41.1 million in the end of 2024 to EUR 29.4 million at the end of 2025. Then let's still look our revenue and profitability from a historical perspective. As said, in 2025, our revenue level was on an all-time high being EUR 59.5 million with 17% growth from the previous year. The revenue growth was driven, first and foremost, by the game sales and royalties, which significantly increased their share of the total revenue in 2025. Also, EBITDA margin kept on improving in 2025. For the full year, it was 19.1%. The operating profit margin was negative following the FBC: Firebreak-related impairment booking. And now Markus will continue with the outlook. Markus Maki: Thank you, Santtu. So outlook is short, sweet and simple. For 2026, Remedy expects its full year revenue and EBITDA to increase from the previous year. And with that, back to... Aapo Kilpinen: Thank you, gentlemen. Thank you, Markus. Thank you, Santtu. Now we are moving to the Q&A session on the webcast. [Operator Instructions] We already have a couple of good questions in the pipeline. So let's begin with those and then move from there. The first questions are in relation to the change of CEO. Will Remedy strategy change with the new CEO? Markus Maki: So will Remedy strategies change with the new CEO? Strategy is kind of decided by the Board and the CEO is, of course, a big part in shaping up that and how that's going to be. Short term, our goals are completely unchanged, and I don't see big impacts on strategy in the short to medium term. But obviously, every CEO will have some input. That's why we hire a great CEO to have some input to how the company is operating and what the targets are. And hopefully, we get to something that's even more ambitious than what we have now. Aapo Kilpinen: Excellent. Markus Maki: That's how I would put it. Aapo Kilpinen: Super. And then coming to your interim stint, what have you done differently in the company since taking the interim CEO position? Markus Maki: I think -- first of all, I think an interim CEO is kind of more nurturing what we have and making sure that everything runs as it should. The target for me at the interim period was never to make any massive changes to the company. It was to make sure that we run on -- with a full clock frequency, get great decisions done faster. And I think I've been able to kind of increase that velocity internally and that execution pace, but it wasn't ever a purpose to do sweeping changes in the interim period. Aapo Kilpinen: Yes. Very good. Then regarding the new CEO, considering the new CEO's previous experience, should this be seen as an indication that Remedy may be changing the type of games it develops or bringing new aspects to the games that they have not had before? Markus Maki: It's the teams and the creatives that develop the games. And the CEO is, of course, a critical part of the company and the decision-making, but we also chose a CEO that can nurture and take care of our culture and the kind of -- and loves the kind of games that we are doing. So I don't expect any radical changes on that side. Aapo Kilpinen: Very good. And then on the other hand, what kind of competence does the new CEO bring to Remedy that the company did not have before? Markus Maki: I think Jean-Charles will bring both kind of the operational excellence and experience having built his career kind of from the ground up in this industry, so to speak, but also something that, for example, I don't have, which is the self-publishing and that side of the experience because we -- I've never had to involve myself with those earlier because we haven't been in that business. We always worked with partners and publishers in the past and in my history. So I think that's a completely new great area that he brings in for us. Aapo Kilpinen: Excellent. Then moving on to CONTROL Resonant. Can you tell us more about your planned marketing activities and budget for CONTROL Resonant? Markus Maki: I think we will let our actions speak on that behalf rather than spoil the surprise. You will be hearing more about CONTROL Resonant soon, let's say it that way. Aapo Kilpinen: Super. Then can you tell us more about CONTROL Resonant's current production phase? Is the game being polished for release at the moment? Or where does the production stand? Markus Maki: Well, obviously, we have said that the game is coming out in '26, and we do also -- we are also aware of what else is coming out in '26. So I think people can fairly closely guesstimate kind of the launch windows. We're not going to tell anything about those. But if we are confident that we will get the game out in '26 with high quality, with spectacular quality, as I said, the game is pretty far. I won't go into more specifics than that. Aapo Kilpinen: Very good. And then congratulations on the well-received announcement of CONTROL Resonant. Can you comment on the reception in relation to internal expectations when considering visibility and wish list numbers, et cetera? Markus Maki: I don't think like the problem is that we don't have a large database of previous experiences to build upon on this kind of what are the metrics that we should follow and so on. But on the goals that we set for ourselves, we kind of reached or exceeded them. So we are happy with those. Aapo Kilpinen: Very good. And then the actual game itself, can you comment some of the factors that influenced the changes in the genre, the character and the game play? Resonant was announced well and was received well, but it's definitely not a safe sequel. Markus Maki: Yes. I think -- well, you've kind of stole my words about the safe sequel there. I think you have to kind of also look at kind of the timing. It's been now 6-plus years since CONTROL 1 was launched. I don't think you can do the exact same thing and expect good results. We have a really -- like the team has always had a really exciting vision, what they want to build out of it. And -- but again, I think we have to let the game and the marketing campaign speak for itself. So we're super happy with how it's forming up. Aapo Kilpinen: Excellent. Excellent. Then maybe to Santtu about the revenue split with Annapurna regarding CONTROL Resonant. Is CONTROL Resonance net sales split to Annapurna 50-50 until recoup? Or are Remedy's marketing investments taken into account in Remedy's favor in the revenue split until recoup? Santtu Kallionpaa: Yes. So the main rule is that the recoupment of the investments will happen in relation to the investments made by Remedy and Annapurna. So if Remedy invests more, including marketing, that will have an impact on the proportion of how big share of revenue we get during the recoupment. This is the level that we have been announcing before, and I will not go into more details regarding the contract. Aapo Kilpinen: Great. Then moving to other topics. What are the long-term plans for FBC: Firebreak? Markus Maki: Well, I think we have to let the gamers decide on that. I've always been kind of a fan of keeping the games alive. And like, as you know, for example, our first game Death Rally is still free on Steam for -- like available for people to play. We also did a remake of that. We've been now updating CONTROL with batches and so on. So we don't -- of course, we are not planning any large investments to it at all. But still, it's a great game. We have fans who like it, and I want to keep it available for them because the cost of keeping it available is not significant for us at all. Aapo Kilpinen: Yes. Great. And then regarding the Max Payne development project, how far along is it? Is there anything that you can communicate? Markus Maki: Unfortunately, the Max Payne communications are all driven by Rockstar. So we are working on it hard, but that's about all I can say, unfortunately. Aapo Kilpinen: Great. Then Santtu, the original CONTROL sold over 1 million copies last year, but what was the average price for those sales? Santtu Kallionpaa: Well, we haven't been sharing kind of average prices on this level. But I guess it's clear, we are talking about 6 years old game now. The discounts that have been implemented for the game to kind of boost the sales, they have been pretty deep. So we are not, at this point, talking about high average prices. Aapo Kilpinen: Yes. When you're looking at 2026, do you believe you could gain more royalties/game sales driven in revenue in -- sorry, 2026, excluding CONTROL Resonant, so looking at other games? Santtu Kallionpaa: Well, I would say that the general rule is that when games become older, of course, the sales level naturally come down a bit. But having said that, of course, there's always possibility to finding new audiences, new geographical markets and doing also B2B deals. So I would say that, of course, we have potential also with other games. Aapo Kilpinen: Great. Then looking at the guidance, in the 2026 guidance, are there any assumptions you can share? Should we expect development fees to be largely stable, growing, declining, anything of that sort? Santtu Kallionpaa: The level of development fees, they depend fully on the kind of milestones of the games and how the kind of development proceeds. And looking at our guidance, of course, it's clear that the launch of CONTROL Resonant has a big kind of impact on reaching the guidance. Aapo Kilpinen: Yes. Then the headcount, what was the number of employees currently at the studio or at the end of 2025? Santtu Kallionpaa: Yes. End of 2025, our headcount count figure that we have reported is 387. It has been growing by 20 compared to comparison period end of 2024. When looking at those figures, it's good to keep in mind that when you are looking the external development costs together with our staff cost without any impact from the capitalizations or depreciations, that cost pool has come down. So basically, our headcount has been increasing, but at the same time, the external development cost has been coming down. Aapo Kilpinen: Excellent. Then moving on to topics more in the general market. Markus, can you give us your take on the Google Project Genie? How do you see it? Markus Maki: Yes. There's like -- well, first of all, I think that technology is, of course, advancing super, super fast, and it's really impressive what they've been able to achieve. But I still think that kind of the market reactions, for example, on some of the tech providers were a bit maybe ahead of their time, at least. It's pretty far out to be able to build a full-fledged entertainment product with that, that people would be ready to pay for, both on the cost side and both on the technology side. But it's impressive development, and we are, of course, following where the world is going. I do believe that at some point, we will probably -- I don't know whether it's 5 years, 10 years, but we might stop rendering triangles and starting generating kind of the final image or with some kind of control and direction as well. That's fine. That's something that when the time comes, when the platforms are there, we are in a good position to do that as well. But for now, I don't think it in the kind of strategy period, for example, changes that many things yet. Interesting development, of course. Aapo Kilpinen: Yes. And then in Remedy's perspective, what is Remedy's view on how will AI affect game companies? Have you increased the use of AI tools at Remedy? And have you achieved anything concrete with them? Markus Maki: This is a topic that people really like to make headlines right now. So first of all, I'm a big believer in player value. So doing things that really add something to the gameplay experience, to the player experience. And I'm also a big believer in a creative people in our team and that they know the best ways how to add that value. There is varied interest between different -- in different crafts of Remedy into investigating these AI tools. I do know and I can say that, for example, CONTROL Resonant does not use generative AI content at all, but making far-fledging like far-reaching promises about the future, I think, is pretty hard at this point. Aapo Kilpinen: Yes. Markus Maki: But we are actively following the development and seeing if there's anything that really is ethically in the right place and also is something that really can add player value and that our teams want to use, then, of course, I think that's -- then that's an easier decision, let's say it that way. Aapo Kilpinen: Yes. Understood. Then a couple of questions regarding Northlight. Have you any plans on outsourcing the Northlight engine to other game companies and developers? Markus Maki: Kind of licensing Northlight to other companies, I think, is something that comes up now and then. We're actually in a really good place with Northlight. We have a great team. The engine is really, really kind of running well. And kind of in a good place with everything. But we have built everything to just support our internal game development team so far. And supporting some -- like at least a larger amount of external people would require a completely different kind of structure and approach also to the development. What theoretically, I would feel possible is that we would find a partner game studio that has enough technical expertise to take on Northlight. And that's something that if the opportunity comes, of course, we're open to discussions, but we don't have any plans outright on that. Aapo Kilpinen: Yes. Great. Then when it comes to publishing, in hindsight, what have you learned from publishing FBC: Firebreak? And what are some of the things that will have impact in the approach that you take to publishing CONTROL Resonant? Markus Maki: FBC: Firebreak and CONTROL Resonant are, of course, quite different games as well and with a different audience. So -- but we did learn a lot about both the technical publishing side, so working with, for example, with the console partners with all of the PC storefronts. That was the first time we did all of that on our own, all of the certifications and so on. And we also learned a lot about the digital marketing side, for example, what works there, what are the KPIs we should be following, what platforms are best for the type of content that we do and how do we react to kind of very quickly to the success or failure of a marketing somewhere. So practical learnings all over the place, I think that's the single line answer. Aapo Kilpinen: Excellent. Markus Maki: Yes. Aapo Kilpinen: Then a couple of last questions before we wrap up. Will you, in the future, do more partner games for other companies? Markus Maki: Partner games like, for example, now Max Payne with Rockstar. And we, of course, had Crossfire with Smilegate. I think that is -- I would never say no, if there's a good opportunity and a good partnership, good IP to work on and kind of stars the line on that side. So maybe, but currently, of course, we have nothing to announce on that. Aapo Kilpinen: Great. And the final question, some weeks ago, Remedy had the buyback program. What was behind the buyback program? Markus Maki: The buyback program was kind of, of course, the Board's decision on kind of capital allocation. We saw that it was a good moment to do -- it was a very small one, of course, it was like 0.0% of our share -- amount of shares. But it was a good time to kind of where we saw the share price was and what our kind of capital reserves were, it was deemed as a sensible thing for shareholders to do that. Aapo Kilpinen: Excellent. Thank you so much, Markus. Thank you, Santtu. Markus Maki: Thank you. Aapo Kilpinen: We are wrapping up the Q&A session now. Thanks for the good questions. If you have any additional questions, you didn't have the chance to ask, please send those over to the e-mail address now visible on the screen. We'll be back next with the Q1 results for 2026 on May 5 this year. But until then, bye-bye from us.
Tania Archibald: Good morning, everyone, and thank you for joining us. I'm Tania Archibald, BlueScope's Managing Director and Chief Executive Officer. And with me today is David Fallu, our Chief Financial Officer. Together, we'll take you through our results materials before we take your questions. I'd like to begin by acknowledging the traditional custodians of the various lands on which we meet and work today and pay my respects to elders past and present. Before I go any further, I need to address the most important issue for our company. In November, a young contractor, Jack McGrath, tragically lost his life whilst working on the #6 blast furnace reline project at Port Kembla. The impact has been profound. A family lost someone they loved and the BlueScope community lost a colleague. I want to acknowledge how deeply this has affected everyone, our employees, our contractor partners and the local community. The Safe Work New South Wales investigation into the incident is continuing, and we're cooperating fully. I won't comment further on the specifics. But what I will say is this, nothing matters more than the safety of our people. Every person who comes to work at a BlueScope site has the right to go home safely. That is nonnegotiable. Our global safety refocus program continues and further improving our safety performance is my highest priority. Before I run through results, let me address the recent acquisition proposal. As I said 2 weeks ago, the Board rejected that proposal, and I supported that rejection. The Board remains open to any proposal that genuinely reflects BlueScope's fundamental value, but we are not sitting here waiting. We're getting on the front foot to unlock BlueScope's value. Two weeks ago, I laid out my agenda as BlueScope transitions into a new era. Let me bring you up to date on the progress and where I'm leading the company. BlueScope is a manufacturer built with strength and built to win. We're now approaching an inflection point as our investment phase ramps down and we ramp up delivery of value to our shareholders. To do this, we're becoming simpler, leaner and more agile. We're accelerating the realization of value from our 1,200-hectare surplus land portfolio. We're increasing our shareholder distribution target to 75% of free cash flow, and we're planning to deliver $3 per share returns this calendar year. Shareholders have been patient through our investment phase. That patience is now being rewarded. Turning now to first half results. BlueScope delivered underlying EBIT of $558 million in the first half, up $249 million on the prior corresponding period. This result demonstrates the strength and diversity of our portfolio. We achieved solid profitability despite historically low Asian steel spreads. ROIC remained stable at 8.1% as we progress our major capital investment program. Reported net profit after tax was $391 million, and we finished the half with net debt of just $2 million, essentially an ungeared balance sheet. On capital management, and I'll come back to this in detail. As I noted earlier, we're planning to deliver $3 per share in shareholder returns in the 2026 calendar year. Looking ahead to the second half, we expect underlying EBIT in the range of $620 million to $700 million. The improvement on 1 half FY '26 is on the back of stronger U.S. steel spreads and improved sales volumes, which offset the impacts from softer Asian spreads and higher foreign exchange rates. I'd also like to call out that our guidance is predicated on a $0.70 FX rate. As always, these expectations are subject to spread, foreign exchange and market conditions. As I said earlier, BlueScope is a manufacturer built with strength and built to win. We have high-quality assets, leading brands and exceptional people with deep steelmaking and manufacturing skills. Our job is to accelerate execution and ensure we capture and deliver the full value of what we've built. We're organizing our work around 3 core themes. First, customer value creation. Customers are at the heart of everything we do, our products, our service, technical capability and reliability. We must continue to earn our customers' trust and repeat business. Second, operational excellence. We'll continue to focus on productivity at every level of the organization, revenue, manufacturing, functions, capital efficiency, every dollar counts. Third, shareholder value delivery. As we move from investment to returns, we're strengthening cash generation, putting our resilient balance sheet to work and rebasing shareholder returns substantially higher. Our major project pipeline is nearing completion, and this is what sets us up for the future. The North Star debottlenecking is progressing well across all 9 project components. Now this will unlock an additional 300,000 tonnes per annum of capacity at our best-in-class mini mill. The new Western Sydney metal coating line, MTL 7, is nearing completion following weather delays with start-up expected around the middle of the year. The new metal coating line adds 240,000 tonnes of coating capacity to support continued strong demand growth for COLORBOND and TRUECORE Steel. The Port Kembla plate mill upgrades are on track and will enhance our product and service quality, enabling us to provide our customers the product specifications and quality they demand. The New Zealand electric arc furnace is in cold commissioning with hot commissioning expected in the coming months. The EAF will transform the operating model for New Zealand, improving demand response capability and lowering costs. The #6 blast furnace reline and upgrade is progressing well. Outperformance of #5 blast furnace provides us with strong commissioning flexibility targeted for the second half of this calendar year. And we're getting ourselves ready for the future. The NeoSmelt joint venture, which BlueScope is leading, aims to develop the technology that allows Pilbara iron ore to be converted into molten iron using lower emissions direct reduced iron technology rather than the traditional blast furnace route. The feasibility study for the project is progressing well. This slide captures the core of our value proposition. We have high-quality assets, a resilient business model and significant upside. There are 5 key drivers of our accelerated value delivery across growth, operational excellence, land realization and shareholder returns. This is really what sets us up for the future. Let me take you through each of these value drivers. Our growth initiatives are targeting a $500 million EBIT uplift by 2030. In North America, we're targeting more than $200 million in earnings improvement. And as I mentioned, the North Star debottlenecking is well underway, and we're progressing our coated and painted strategy, including the BCP turnaround. In Australia, we're targeting more than $125 million in earnings improvement. COLORBOND and TRUECORE steel demand continues to grow and will be supported by the new capacity for Metal Coating Line #7. This is consistent with our broader strategy of premium and branded products. And also, just let me make the point that this year marks the 60th anniversary of COLORBOND and nearly 100 years of steelmaking at Port Kembla. In Asia and New Zealand, we're targeting around $150 million of improvement, particularly through value-added products. And in New Zealand, the EAF model creates new opportunities as it's commissioned. Our existing $200 million cost and productivity program is progressing well. We've now delivered $190 million of annualized benefit, up from $130 million at the end of FY '25. And you can see the breakdown of the cost initiatives for the half just gone on the pie chart. Our new $150 million cost reduction program is now underway, and this is about creating a simpler, leaner, more agile BlueScope. We're streamlining leadership teams and functional areas and rationalizing activities across the business. The full set of initiatives are targeted to be in place by 30 June this year with the full run rate delivered in FY '27. Importantly, this work provides a platform for further simplification and productivity improvements. Now on to property. I want to make the point that our surplus land portfolio of around 1,200 hectares is in sought-after industrial locations with port logistics and energy infrastructure. And the majority of the land is already appropriately zoned and able to be developed. We're accelerating realization through a dual work stream approach, firstly, by accelerating the early wins. In the first half of this year, we agreed to sell 33 hectares of West Dapto for $76 million, which will deliver more than 350 residential lots. We've also put in place a ground lease at Glenbrook in New Zealand for a 100-megawatt battery storage facility. And we're now commencing a process for a 65-hectare logistics hub at Western Port. This is already appropriately zoned with attractive logistics infrastructure, and we're underway in our process to find a development partner. In parallel, our second work stream, we're advancing broader partnership structures, including assessing a master developer partnership across the balance of the surplus land portfolio. This brings me to capital management and shareholder returns. BlueScope's more resilient earnings base and stronger cash flows allows for an evolution of the settings in our financial framework. We're putting the balance sheet to work and rebasing shareholder returns substantially higher. We'll now target net debt of up to $1.5 billion with the ability to move above that if needed. And we've revised the shareholder distribution target to at least 75% of free cash flow, up from 50% previously. That means we're enabling strong returns on an ongoing basis. For this calendar year, we're planning to distribute $3 per share. This includes the $1 per share special dividend announced in January, $1.30 annual ordinary dividend level, starting with a $0.65 per share interim dividend in the first half. And this will then be topped up with a $310 million on-market buyback program or other return method equivalent to $0.70 per share. I'll now hand over to David Fallu to take you through the regional performance and detailed financials. David? David Fallu: Thanks, Tania, and good morning, everyone. Before running through the detail of the business unit performance, you can see from an overall group perspective, the benefit of our diversified portfolio, placing us in a strong position, both financially and operationally. That's also thanks in no small part to the incredible efforts of all our people across the regions, which continues every day. Turning to ASP. Australia delivered underlying EBIT of $122 million, down from $130 million in the prior half. The result reflects softer realized spreads on lower domestic and export pricing with benchmark Asian steel spreads remaining depressed through the half on the back of export levels from China. In this environment, we were still able to grow domestic dispatches, increasing to 1.1 million tonnes, largely driven by residential and nonresidential construction. COLORBOND steel sales performed well, remaining robust at 322,000 tonnes. Cost escalation was offset by improvement initiatives and supported by a one-off $22 million retrospective tax credit. Moving to construction demand. Both dwelling and non-dwelling now represent over 3/4 of our domestic volumes. We continue to see strong demand in alterations and additions and the nonresidential pipeline across a range of industrial uses remains solid. We've spoken previously about the importance of mix and our strategy to shift more volume to domestic sales and more of those sales towards value-added and premium branded products. And you can see we've continued to make progress in this respect. Pleasingly, the long-term trend is apparent, particularly with COLORBOND steel volumes, which are up 25% on the first half of 2016 and TRUECORE steel is up 155% over the same period. And these have been critical to supporting ASP's earnings at low spread levels. North America showed the strength of this market and our strategic position within it, with underlying EBIT of $447 million, up $115 million on the prior half. North Star delivered EBIT of $321 million on significantly stronger realized spreads. The business again operated at 100% utilization of available capacity and achieved a new daily production record during the half as debottlenecking projects increased capacity. Buildings and Coated Products North America delivered EBIT of $129 million. BlueScope Buildings improved materially on higher volumes. BCP's performance improved as turnaround efforts continue. However, it remains loss-making in line with expectations. The U.S. economy is steady with resilient consumer activity and key end markets showing demand at healthy levels. Nonresidential construction is plateauing near historically elevated levels. Auto demand remains solid and manufacturing indicators are showing positive signs. Turning to Asia. We delivered underlying EBIT of $97 million, up $27 million on the prior half. The stronger result was driven by improved cost performance and effective pricing management in Southeast Asia, combined with higher premium volumes across the region. Pleasingly, this performance was broadly based across our geographies with improved performance in Indonesia, Malaysia and Vietnam and continued strong performance in Thailand. China's results were higher on typical seasonality, although softer than the prior corresponding period given China's soft domestic economic conditions. And on the 31st of December, we completed the sale of our 50% interest in Tata BlueScope Steel to our joint venture partner, successfully concluding our investment in this region. New Zealand and Pacific Islands recorded an underlying EBIT loss of $18 million. Performance was impacted by the EAF transition, including increased raw material consumption and stock build activity to cover commissioning. Electricity costs remained elevated, which will be addressed once the EAF is operational with the first power contract, which commenced in December this year. Domestic dispatches were stable as macroeconomic conditions remain soft. Pleasingly, we've seen a similar dynamic to what we see in Australia with an improved mix of value-added product sales, particularly the likes of COLORSTEEL. Turning to group EBIT variance. The slide shows the key drivers for our first half result compared to both prior corresponding period and the prior half. Both comparisons show similar dynamics with stronger spreads, particularly in the U.S., improved volumes and lower conversion costs, including from our cost and productivity program. Looking now to the second half outlook across the regions. North America is expected to deliver a result approximately 15% up on the first half of FY '26, largely on the benefit of higher spreads at North Star. Australia is expected to deliver a lower result against a backdrop of challenging regional spreads and nonrepeat one-off items. Asia is expected to deliver a softer result on typical seasonality with Chinese New Year, and we expect New Zealand will return to profitability as the EAF is brought online. Corporate costs are expected to be the same, noting the West Dapto sale now sits separate from ASP in this area of our reporting. Now to the financial framework elements. Our financial framework is designed to drive performance and disciplined capital allocation. This has been critical during a unique period of capital investment. As we now have line of sight to the conclusion of this CapEx program, we have the opportunity to adjust settings with a shift to substantially higher cash flow and shareholder returns. On returns, we're targeting ROIC above our cost of capital through the cycle and maximizing cash generation. Group ROIC has improved to 8.1% with North America at 13.6% and Asia at 17.5%. Cash flows are lower, reflecting the capital investment program, which is beginning to roll off. From a balance sheet perspective, it remains robust to support investment and returns. We will now target up to $1.5 billion in net debt, up from the previous $400 million to $800 million range. This reflects our confidence in the earnings base and cash generation of the business. At the half, net debt was just $2 million with liquidity of approximately $3.2 billion. As Tania noted, on our major project pipeline, we are investing in our business to deliver sustainable earnings and growth. Capital expenditure was $681 million in the half as we commence -- as we progress our major projects. You can see CapEx peaking for the full year this year and stepping down in the first half of FY '27 as these projects complete. As flagged earlier, on capital management, we're rebasing shareholder returns substantially higher, commencing with $3 per share in the calendar year for 2026 and targeting at least 75% of free cash flow to shareholders going forward. As you can see on the slide, this is a substantial step-up in returns and will deliver overall distributions of more than $1.3 billion to shareholders in the 2026 calendar year, with the expectation for an ongoing higher level of shareholder returns moving forward. And with that, I'll hand back to Tania, and we'll be here for Q&A at the end. Tania Archibald: Thank you, David. Before we close, let me thank Mark Vassella for building the foundation for BlueScope's new era. His exceptional leadership over the past decade leaves BlueScope in outstanding shape with a transformed portfolio, a robust balance sheet and a clear strategy for growth. I'm honored to build on that foundation. I'd now like to summarize our presentation this morning. We're approaching an inflection point at BlueScope. The investment phase is ramping down and delivery of value to shareholders is ramping up. BlueScope is becoming simpler, leaner and more agile. And we're accelerating the realization of value from our 1,200-hectare surplus land portfolio. As a result, we're increasing our shareholder distribution target to 75% of free cash flow, starting with a plan to deliver $3 per share in returns this calendar year. This really is a new era for BlueScope, and we've only just started. We'll now open up for questions. Operator: [Operator Instructions] Your first question comes from Ramoun Lazar from Jefferies. Ramoun Lazar: Just a couple of questions for me. Just maybe starting off with ASP and that result in the first half. I think on an underlying basis, it looks about $100 million of EBIT ex GST benefits versus the $130 million in the June half of last year. Spreads were pretty similar around that $200 a tonne level and domestic volumes are also pretty similar. Just wondering what's the -- what are you seeing there that's driving that step down in the earnings sequentially? And then obviously, there's a weaker guide into the second half. Just keen to get a bit of color on what you're seeing in ASP a bit more. Tania Archibald: Ramoun, nice to chat. The -- I think fundamentally, it's the macro environment that we're dealing with, and it's fundamentally having pressure on prices. And it goes back to the point that we've made around very large amounts of product coming out of China, exports coming out of China. Normally, you would see something like 50 million, 60 million tonnes coming out on export markets. I think we're now well north of 120 million tonnes. That ongoing pressure, which has been there for a couple of years now, it has a fairly significant impact. on the environment, just the general environment that we're operating in. I should also point out there's an element of impact to export prices that we can also achieve, and it goes back to the same issue. So I actually think if you put it in context, the Australian performance has been outstanding because to be at bottom cycle spreads for such an extended period of time and still maintain the level of profitability that we have is a great result. Ramoun Lazar: Yes. Got it. And just on that, I guess, those realized prices that are being impacted, are they also at sort of cyclical lows in terms of import parity price or export parity price that you're achieving? Tania Archibald: Yes. So what I'm referring to is the more IPP-based products, the commodity products clearly linked to the regional pricing, and they are at low levels in line with the benchmark prices that we put out there. Ramoun Lazar: Okay. Good. And then just one, maybe, Tania, keen to get your perspective. It's been about 6 weeks now since the Board rejected the SGH approach. You've obviously come out with a number of initiatives to step up shareholder returns since then. Just wondering maybe on asset realization or running a process to sort of break up the business or try and realize value from parts of the business. Is there anything you can share with us around that and what the Board is doing at the moment? Tania Archibald: Probably the way I think about it is in 2 streams. One is we are fundamentally focused on running the business well, and there's clearly a series of initiatives that we've laid out in the materials. Of course, there's the cost and productivity targets that we've set there. There's the delivery on the growth and there's the acceleration of the land value. And of course, then as we ramp down the CapEx -- that obviously frees up quite a bit of capacity in the balance sheet when we've got the benefits of that earnings improvement coming through, and we want to put that into the hands of the shareholders. But of course, more broadly, yes, we continue to evaluate all options and whatever it is that we can to realize value for our shareholders. Operator: Your next question comes from Harry Saunders from E&P. Harry Saunders: Firstly, just wondering if you can provide more color on where the $150 million of additional cost out would come from? And perhaps what could we expect in FY '27 itself? So not the run rate, but what you could see dropping through and whether we should be viewing this as -- some of it is an inflation offset or fully incremental? Tania Archibald: Thanks, Harry. So in terms of the $150 million, it will come from right across the entire portfolio. This is actually something that we've been working on for quite some time. We started at the back end sort of in the second half of last year. It comes from right across the portfolio. It's not targeted at the operational, the frontline teams. It's more around corporate administrative support and functions. It will be a combination of headcount and spend. But really, what it reflects, Harry, is we've been making investments in capability across the business for quite a number of years now. There's a lot of capability that's now embedded within the business units. And what that allows us to do is simplify some of the corporate structures and take advantage of the capability that we have established across the organization. In terms of the run rate, the plan is that we'll basically be at the full run rate of $150 million by FY '27, the start of FY '27. It is a gross number. So there will be some level of inflation that impacts that over time. But basically, we're targeting to have that $150 million by FY '27, start of FY '27. Harry Saunders: Start of '27. So the majority of that should actually be seen in the P&L. And therefore, where could you take that corporate cost line to? Tania Archibald: I can't comment specifically on the corporate cost line. David Fallu: Yes. Harry, I might jump in. As Tania mentioned, that cost support is across all of the businesses. So I won't specifically sit within the corporate cost line, particularly areas like external spend reviews and things of that nature. But I guess we would expect a typical inflation build within the FY '27 year. And so this will be obviously well in excess of that. Harry Saunders: Got it. And just a follow-up. Wondering if you could provide a time frame on giving a surplus land valuation across the group and potentially what could that Western Port value gain on sale look like potentially if that is to be sold? David Fallu: Yes. So look, in terms of that parallel pathway that Tania referred to, Harry, the most immediate steps have been the West Dapto sale and then the process will run across the 65-hectare logistics hub in Western Port. As you've seen with the West Dapto sales, these are from our surplus lands and have been held at historical costs. So it's a very low cost base and the majority of consideration falls to the bottom line as profit. In terms of an overall valuation for the surplus land, I've seen various reports out there. As we go through the second limb that Tania outlined around the master planning and partnership process across the balance of our surplus land. That will give us an opportunity to provide a more detailed view around valuation of that land, but we need to go through that process first. Tania Archibald: And maybe if I can just add to that, Harry, just in terms of the Western Port parcel, there's some data points that I think you can access some relevant development around Cranbourne, some logistics activities around there. So if you have a look at the developments around Cranbourne, which I think is just to the north, that will give you some good data points in terms of the Western Port potential valuation. Operator: Your next question comes from Daniel Kang from CLSA Australia. Daniel Kang: Just wanted to hone in on the sustained low Asian spreads and the domestic Aussie business, which continues to be weighed down by it. Just wondering if you can discuss where you see any available opportunities to lower the breakeven cost at Port Kembla and to reduce that earnings drag. Tania Archibald: Thanks, Dan. Nice to hear from you. I think in terms of the sustained low Asian spreads, I mean, at the end of the day, I think it will eventually recover. I mean the steel industry does tend to be quite cyclical, and this is a longer-than-normal cycle that we are seeing. In terms of lowering the breakeven cost, that's something that we work on every day. The cost and productivity programs, particularly in the manufacturing space do a lot of the heavy lifting, and it comes from a broad number of areas, whether it's raw materials, optimization, whether it's energy optimization, whether it's the spend that we incur, how we manage our maintenance spend, et cetera. So -- and the functional costs and the corporate costs overall. So there's a lot of work that goes on around cost and productivity. But from our perspective, what we're also focused on is growing the value-add part of the portfolio. So it's one thing to have that highly competitive cost base. It's another thing to make sure that we continue to invest and grow the value-add part of the portfolio. And that's why Metal Coating line #7 coming on later this year is very important to us because it's a critical lever in supporting the growth we have, the ongoing growth we have in COLORBOND and in TRUECORE. Daniel Kang: Swinging over to the U.S. Just interested in your thoughts on the U.S. potentially scaling back on steel tariffs. And then just more broadly on the U.S. market, thoughts on upcoming new capacity and, I guess, potential further U.S. industry consolidation. Tania Archibald: Yes. So I think on the tariffs, that was a bit of a curious one that popped up over the weekend. I think the first headline said something like the steel tariffs were going to be rolled back. And I would stress, I think it's all speculation at this point. And then there was a little bit of detail that started to float around across Saturday. It's really focused on what's referred to as derivative products, which is products imported into the U.S., which contain steel. We've seen various reports, which would suggest that for those products that contain small amounts of steel, they would potentially have a lower tariff. I saw one number of 15% -- but then, of course, going up to products that contain essentially almost 100% steel, so steel pipes could potentially have a tariff of 100%. So it was a little bit curious. At the end of the day, it's a bit of a peripheral issue. North Star does not compete based on tariffs. It's a privileged asset. It's a highly productive asset. It's well located. It's close to its customers. It's close to its raw material source, and it competes on its merit, not based on tariffs. So again, I think it is a bit of a peripheral issue. In terms of the U.S. market, in terms of new capacity. The U.S. is still fundamentally short of steel. It's still an importer of steel. And so -- and it's a very large, I would call it, a large rich, deep market. It's relatively well protected even today's standards might be relatively high, but it's still always been a relatively protected market, and it's one that we see a lot of opportunity and notwithstanding some of the additional capacity that's coming online. And of course, there's always been capacity that's come offline over the years, including a number of the blast furnace operations. So I think it's a great place to make and sell steel. Operator: Your next question comes from Chen Jiang from Bank of America. Chen Jiang: First question on your capital management program, the target of the net debt target up to $1.5 billion with the ability to move higher when needed. I guess you will be finishing your investment cycle, heavy CapEx cycle end of FY '27. I'm just wondering what's the rationale of increasing net debt target from the previous $400 million to $800 million, given your CapEx will be off in 18 months' time. Is this mainly driven by, I guess, increasing capital return program to shareholders? If you can provide any color on that, that would be great. Tania Archibald: Thanks, Chen. I think what it goes back to is we've been involved in a large-scale capital program across many years now. And if I go back to 2018, when I first became the CFO, we started putting a bit of capacity onto the balance sheet back then. You may recall we ran net cash for quite a number of years because we were very mindful of the reline coming up. We're very mindful of the major expansion projects that we had in the pipeline in the U.S. and other activities that we wanted to undertake, including, for example, the metal coating line #7 in Australia. So as we've gone through that very major capital program, we can now see the light at the end of the tunnel. We're coming into the final phases of the reline project, Metal Coating Line #7. We've obviously passed through the major expansion at North Star. There's still some level of expansion activity that's obviously still going on at North Star. We've built the new pipe and tube mill at Unanderra. The plate mill is advancing well. But we can see the back end of that unusually large and long-term capital program starting to ramp down. And as we ramp down the spend, what we're looking to do is ramp up the returns to shareholders. And we felt it was a nice thing to signal as part of the CEO transition. Mark obviously put a lot of effort into those investments, those capacity expansions and improving the resilience of the business right across the portfolio, including New Zealand. But as we -- I'm now the beneficiary of that. So we're ramping down the CapEx and ramping up the returns to shareholders. And of course, when you come to the balance sheet, you simply don't need that level of capacity sitting on the balance sheet given the reduction that we see in the CapEx profile. We've got plenty of capacity to fund the remaining capital investments that we do have, notwithstanding the low spread environment that we have in Asia. So I think really the CEO transition, we see it as a bit of a change in the era as we ramp down the CapEx and we ramp up returns to shareholders. And clearly, what we're trying to signal here is that we want to place more value into the hands of our shareholders. Our shareholders have been very patient for a long period of time as we've undertaken those very significant investments. So it's a good position to be in. Chen Jiang: Sure. I understand, Tania. So to summarize, you are willing to leverage up your balance sheet a little bit. It is mainly because the CapEx cycle is off, return will be higher. Is that how I should summarize? Tania Archibald: It's probably worth pointing out, as much as it's $1.5 billion, that still includes leases. And on a normal mid-cycle basis, it's only about 1x leverage. So this is a pretty prudent balance sheet. At low cycle spreads, it will be something like 1.5x. So this is a very prudent balance sheet. I think it's what you should expect for a company of the size and nature of ourselves, particularly as we come into the back end of a major capital investment program. Chen Jiang: Sure, sure. Maybe a last question on your -- the new annual ordinary dividend per share increased -- well, just more than doubled from the previous $0.60 per share per annum now to $1.30 per share. I'm just wondering if this $1.30 per share annual ordinary dividend is derived from the new capital allocation framework, returning at least 75% of free cash flow to shareholders. I guess that 75% of free cash flow to shareholders also includes buyback. Is my understanding correct? Is that $130 plus buyback, which kind of equals to 75% of free cash flow? David Fallu: Yes, that's right, Chen. Although I'd say the ordinary dividend positioning is still very much in line with a view of a level of ordinary dividends that we're able to pay at all points in the cycle with alternative forms of distributions enabled to achieve that minimum level or go beyond should we determine. So really, the ordinary dividend component is set around being paid at any point in the cycle. Operator: Your next question comes from Paul Young from Goldman Sachs. Paul Young: Good to see you're on the front foot with the step-up in shareholder returns, which all makes sense. Tania, first question is on the Aussie business and the downstream and actually the $125 million EBIT target by 2030 within the $500 million total at the group level. Just looking at the COLORBOND and TRUECORE sales in the half, which were pretty resilient considering that resi is not really firing in Australia at the moment. And actually, I think your volumes in the half were actually run rating at a higher rate than your CY '26 volume targets. I understand Metal Coating and MSM is late a little bit late, but neither here nor there. But just curious around the volume forecast you put out a bit to the market. And also what margin you have actually in that number? Because it actually, to me, actually seems a little bit conservative. Just wanted you to comment just on the $125 million and how you think about considering you're on the front foot, just how conservative you think that is or et cetera? Tania Archibald: Thanks, Paul. Nice to chat. Look, it's clearly a core part of our growth strategy for the Australian business is continuing to grow the premium branded value-add part of the portfolio. We're making fantastic inroads with COLORBOND. I think there's a really big opportunity for TRUECORE. We're obviously making very good progress there. We like to think that over time, that with TRUECORE, which is a very large potential market, addressable market, we'd like to think that we can get to similar share levels over time as what we have with COLORBOND. We've got a very compelling value proposition. But of course, we do need metal coating line #7 to be in place because at the end of the day, we're periodically short on capacity now. And so this is really about addressing the shortfalls that we have at the moment and underpinning the growth going forward. In terms of whether they're conservative, I don't know. We sometimes do get being accuse of conservative. I think we're quite comfortable with the growth projections that we have out there. There's probably some other elements that also sit there beyond just straight COLORBOND and TRUECORE, but they're the main ones that sit within that growth outlook. David Fallu: Yes. I think, Paul, the only piece I'd add is when we put these targets forward, we've done that with a sort of mid-cycle view of market. So to the extent to which you have a view that market continues to grow or expand, that will be an opportunity for us. Paul Young: Okay. And then secondly, just on the portfolio tenure. I know you made some comments on how you look at or how the Board is viewing the strategy going forward and just the review. But just specifically on the Asian business, and it's been really a conversation for the last decade about whether BlueScope keeps this or not. You've just sold India, I think, for a pretty decent premium to book or probably a decent premium to NPV. So if you look at the carrying value of the Asian business, sits around $1 billion or so. How do you think about possible monetization of that business through either JV partner, Nippon or someone else? And/or how do you think about from a replacement value perspective, just to sort of see how you look at the potential hidden value of that Asian business? Tania Archibald: Yes. It's interesting you use that phrase hidden value. the ASEAN business, in particular, sits in one of the fastest-growing regions of the world. And what we have is a footprint that is unparalleled. It would be extraordinarily difficult to replicate that today. I think Connell and the team are doing a fantastic job in terms of the strategy that they have. It's very much a premium branded value-add strategy. We think there is enormous opportunity that sits in that market. I, of course, am very familiar with that part of the world. I spent 8 years within the ASEAN region. And so we're actually quite confident with the value that can be derived from that part of the portfolio. I think what's also important to add is there's plenty of capacity that sits within that business. It doesn't need any significant amounts of capital to be injected in it. There's a lot of upside there. So we're quite confident in how we think about the business. I think the India exit, I think at the end of the day, India is a good market -- was a good market to be in, but we felt it was time to move away because there was more value to be had in the hands of Tata, and it was time for us to step back and simplify the portfolio across Asia. So I think at this point in time, we are very comfortable with the position that we have. We're well positioned in every major Asian economy. And I think that's going to stand us in good stead going forward. Operator: Your next question comes from Peter Steyn from Macquarie. Peter Steyn: Perhaps just keen to color in the property partnership process a little bit better. If you could give us a bit of a status update on how you're thinking about partnerships, what level of engagement, how far along the process you are and whether that sort of means that some of the realization opportunities are perhaps a little bit closer than what market participants would tend to think. Just keen to understand at a deeper level of detail, please. David Fallu: Yes. Thanks, Peter. In terms of -- from an overall perspective, the -- I guess, the short term has been around those parcels of land that have been readily available. And that was West Dapto, and we've announced today the 65 hectares at Western Port, which is a discrete logistic hub opportunity. And obviously, we've been progressing for a number of years opportunities within the site adjacent to Port Kembla and Glenbrook in New Zealand. And you've seen the benefit of some industrial leases that we put in place there. In terms of the master planning and partnership opportunity, that's a process that, again, we've been largely working internally, and we will look through the course of this half moving to external engagement with potential partners to work through what that may look like. Now that will be a full spectrum of opportunities in terms of how we approach partnership there from ownership and development, joint venture to potentially some other realizations. But it's quite important to recognize that as we've said for a while, those sites are co-located to our operational sites that will continue to be operational sites. And so we'll want any sort of activity there to be sympathetic and ideally adding value to those regions through leveraging off the infrastructure that we have at those sites. So that's really how we sort of plan to dual track the property opportunity. Peter Steyn: I guess it's fair to say that you do seem to have a greater sense of urgency on trying to bring these to some form of realization. Does that mean that your strategy potentially alters in favor of realization as opposed to development in any way? David Fallu: I don't think so. I mean, clearly, the shorter-term opportunities have been more opportunistic in nature, and you've got the ability to do so. But by and large, those -- the majority, the vast majority, the sort of remaining 1,100 hectares is something that we will continue to take a very important long-term approach because of its proximity to the operational sites. I think in terms of timing, we've had the ability to leverage off work that's been going on for a number of years now, much in the same way as we've got the opportunity to leverage off the capital investment side that's coming to a conclusion. Tania Archibald: It's probably fair to say that having Michael Yeend on the team has really helped turbocharge everything. I think Michael has been with us for a year now. He's a very experienced property developer, and he's been the driving force behind the acceleration that you've seen. So this is not something that we dreamed up over the last couple of weeks. This has actually been in the works for the last 12 months and again, leveraging off the work that has been going on for a number of years. Peter Steyn: Tania, perhaps a last quick question. Just thinking about your medium-term CapEx outlook, how do you think about the guardrails of what you'd be spending '27, second half and beyond? David Fallu: Yes. So look, I guess we've kind of sent out the guardrails for next half and the half thereafter. As we -- you will continue to see the sort of glide path of that coming down to more normalized levels. That being said, to the degree to which we can find opportunities for growth, we will consider those investments with the business. But effectively, you're seeing that CapEx reverting to more of a sustaining level of CapEx given the significant investment that we've undertaken through that period. Operator: Your next question comes from Lee Power from JPMorgan. Lee Power: Tania, I think you mentioned about the 150 that you said it was a gross number. Are you willing to give us a net number? And then maybe for ASP specifically, do you think this gets steel cash breakeven below $200 a tonne? Tania Archibald: No, I can't give you a net number. Thanks, Lee. But it's obviously a very significant opportunity that sits in front of us. In terms of ASPs component, yes, there will be a weighting towards ASP. That's obviously a large part of the portfolio. I think the key thing is that we're quite confident or very confident in our ability to deliver on that net number, and you should expect to see that in the results at the start of FY '27. Lee Power: I had to ask. And then you've had a couple of questions on realization ASP. Like if I look at the -- it was a pretty big headwind in the second half. Like it looks like on commodity product, it was down $100 a tonne from where we were in August 2025. I get like the moves in freight and you've obviously got a value-added business. But like what are the other dynamics we need to think about with the realization piece. So is it just literally when HRC recovers, you get more freight and therefore, the realization recovers at the same time? I just kind of struggle a bit with the moving parts because it's clearly been a bit of a headwind on the last 6 months. Tania Archibald: Part of the issue, I think we deal with Lee, is you're dealing with the law of low numbers. It doesn't take much of a swing in any one of a number of moving parts, and it can have a fairly significant impact. I think FX is the other component that needs to be considered. So there's FX impacts. There's freight movements that go up and down. And again, it is an intensely competitive environment given the sheer scale of exports coming out of China. So any number of those factors or a combination thereof can have a significant impact on the numbers. Lee Power: Okay. That makes sense. And then just a final one. I mean it doesn't sound like you think that the $1.5 billion net debt target is particularly like a stressed balance sheet and not out of whack with your peers. Can you just to give a range, like where do you think the other end of the acceptable range would be nowadays, if you're willing to talk to that? David Fallu: I think if you look at a sort of broad view of the industry, Lee, you'd be sort of seeing 2x is probably where the average sits. We've sized this at 1.5x at the bottom of the cycle, about 1x through mid-cycle. Tania Archibald: Really the other -- I think the key principle here is we're very well aware of the nature of the industry in which we operate, the cyclical nature of it. We recognize that we need to maintain a resilient balance sheet, and we're certainly not going to be confusing or compounding financial leverage with operational leverage. So we believe that we're taking a typically prudent approach to the amount of leverage that we can put on the balance sheet. If we had to go further, I think we could readily do that. We'd simply have a plan to bring it back in over time. So we're quite comfortable that what we've put out there is readily achievable. Lee Power: Your next question comes from Scott Ryall from Rimor Equity Research. Scott Ryall: Hopefully, my 2 will be relatively quick. Tania, you -- in the -- well, and maybe, David, I guess, on Slide 26, you talk about the BCP business expected to deliver reduced loss through ongoing improvement. I guess I'm just wondering what -- in terms of the glide path for that business, is there a time where you'd be willing to say you can take that out of being a loss-making business, please? Tania Archibald: Thanks, Scott. Nice to chat. The reality with BCP is we're probably a couple of years behind where we wanted to be. I've spent quite a bit of time in the U.S. recently. I've been there twice in about the last 8 weeks and spent a lot of time with the BCP team. They've got a new leadership team. I'm very happy with the team that's been put together. They've got a very clear plan in terms of what they're working on. The market is still there. There's absolutely a good market that's sitting there, but we've got to get some investments. And when I say investments, I'm talking mainly about resource investments and sort of low-level things that we need to fix, but there's just a number of them. And so we're very, very focused on uplifting the operating performance of the lines to improve and get to the quality and service delivery performance that we want. I'm expecting to see significant progress made across the next 6 months. And so we'll obviously give you an update at the next results. I should say that we have pretty clear expectations about what that business should be contributing as part of the 2030 growth targets as well. The value there is -- the value opportunity there is very significant. So BCP largely operates at the moment as a tolling business. What we've been introducing is the single bill offer. In terms of the opportunity to introduce the branded offer, again, this is a very large market, and we see very significant opportunity there over time. Scott Ryall: Yes. But you're still -- the reality is to get the volume growth, which is what you need presumably to turn it around, you're still doing the quality investments and that will just take some time, right? You'll update us every 6 months, but that will take some time. Tania Archibald: We will. And I should say there's been a lot of hands on deck, in particular, over the last 6 to 12 months has been a huge effort in terms of supporting the business and drawing upon the broader BlueScope network. So we're quite -- I'm quite pleased with where we are. I think we see quite an improvement. We just got a way to run yet. Scott Ryall: All right. Good. And then you've obviously had a lot on your plate since you took over, reformulating strategy and working with the Board on approaches, et cetera. In none of this, I've seen any mention of Whyalla. So I was just wondering if you could update in terms of what BlueScope's view on the Whyalla process is at the moment, please? Tania Archibald: Yes. So Whyalla still remains an option for us. We're still participating in the process. We're still engaged with that process. But at the end of the day, it still has to make sense for shareholders. I mean the primary reason why we're looking at Whyalla, of course, is because of the resource base that sits there, the types of ores there that could be consumed down the track in some form of direct reduced iron technology. So it is an interesting option. We continue to be very engaged with the consortium that we put in place a while back now. So we're continuing to have some good conversations. But at the end of the day, we need to think about Whyalla as an option that ultimately has to make good commercial sense. Scott Ryall: And do you have a timing for when that -- is that expected to play out over the course of this calendar year, as an example? Tania Archibald: Potentially. I think at the end of the day, there is quite a way to run with the Whyalla process. The process itself is being run by the administrator. It is probably quite a large complex issue that they're dealing with. And I think any solution will also be dependent on funding that would need to be provided by government and also the finalization of feasibility studies because you can't obviously make a decision to invest in something if you ultimately really understand the economics of it. So there's quite a way to go, I think, in the Whyalla process. Operator: Your next question comes from Owen Birrell from RBC. Owen Birrell: I just wanted to drill into some of the wording that you've put into Slide 12, which is that targeted growth to 2030. And mostly just that headline, which says that the $500 million EBIT uplift to 2030 is to be supported by macro normalization. I just want to understand what you mean by macro normalization. I'm assuming that doesn't include any sort of spread recovery, but I am assuming that, that includes some sort of building or construction market recovery. Just wanted to confirm that that's actually the case. And then we look at that $500 million EBIT target, how much of that is actually reliant on a building market or construction market recovery? David Fallu: Yes, Owen. So in terms of the $500 million uplift, that's separate to spread recovery. And what it assumes is a mid-cycle end market use. So primarily where you would be seeing the material change would be in relation to the Australia and New Zealand markets, which would still be at a relative low point in terms of residential construction activity. So really, that's what's meant by that comment there. Owen Birrell: Are you able to go into that number then? You're talking about, call it, $300 million from Australia and -- or actually, what's that -- you're probably looking at around about $200 million from Australia and New Zealand. Of that $200 million recovery, how much of that is just housing market recovery versus operational change that you guys are undertaking? David Fallu: The majority of that delivery will be operational change. So the way to think about it, Owen, if you look at total domestic volumes, I'd describe that as at a relatively low level of activity now, kind of if we were to sort of move towards where it's been historically, it's been at sort of that more of that 2.4 million, 2.5 million tonnes. The increased volume over and above that is really a reflection of share. Owen Birrell: I'm not sure if you get where I'm going at, but like in terms of -- if the market just normalizes by itself, won't you deliver the $200 million target ex any other sort of investment you make? David Fallu: Look, if the market normalizes, you will get a benefit from the fact that we've got a higher share position, but there is still an element of growth in share volumes. If you look at what we're trying to achieve in TRUECORE, within New Zealand, I agree, the majority of that is coming from the normalization in the market given the investment in the EAF has largely been completed. Tania Archibald: Of course, we do need the capacity expansions to be in place to support that growth as well. Owen Birrell: Okay. And just to confirm that this $500 million EBIT is relative to -- is it calendar '24? That's the base year. Tania Archibald: That's it. Yes. Owen Birrell: And can you give us an update on how much of that $500 million is actually be achieved? At this point now that we're coal at almost 2 years? David Fallu: Look, the majority of that is really coming from sort of the North Star expansion. That's really the one that's kind of progressively comes online. The other ones really are reflective of a step change once the capacity comes online through the course of this year and next. Owen Birrell: Essentially nothing out of Australia and New Zealand at this point. Tania Archibald: Pretty much. Owen Birrell: Okay. And then just I wanted to just touch just on the following slide, Slide 13, where you talk about your working capital reduction target. You're targeting a $200 million to $300 million release by the end of FY '26. Half-on-half, it's a little bit difficult for us to sort of back calculate how much of that you've actually achieved. But I'm wondering if you can give us an update on how much is to go in second half '26 to hit that target? David Fallu: Yes. Look, the majority of that target will largely be achieved through the progressive realization of land in the BlueScope Properties Group. In terms of -- from an other area of focus is going to be around inventory. But for the FY '26 period, there's obviously the build of inventory as we go into the cutover for blast furnace 6 and the EAF commissioning in New Zealand. So following FY '26, more of that opportunity will be delivered through inventory reduction. Tania Archibald: Yes, that footnote on 2 is very important. Yes, there will be an impact as a result of the transition. I mean it's -- you do have a bit of operational disturbance there with the transition with the blast furnace and the EAF... Owen Birrell: Okay. So it's not necessarily going to flow through into the accounts that we will see. David Fallu: With the exception of obviously, the realization of the properties portfolio. Owen Birrell: Yes. Can you give us an update on that? Apologies if I missed that anywhere. But how much has been realized at this point? David Fallu: That's being progressively realized. And in terms of that target, it would be sort of around $180 million to $190 million of that target. Owen Birrell: Just to confirm, is that the U.S. entities that you're discussing there? David Fallu: It is. The U.S. properties group effectively sits in stock in terms of their investments, which is obviously not where the historical cost of our Australian land bank sits. Tania Archibald: I think there was one project that was realized in the half. David Fallu: Correct. Operator: Your next question comes from Charles Strong from Jarden. Charles Strong: Just on skills and the West Coast environment, could you comment on what you've seen there? What gives you confidence about improvement into the second half and how you see that medium term? Tania Archibald: Do you want to take that one, David? David Fallu: Yes. So look, I think the team has seen a good opportunity in terms of managing that business through a fairly volatile level of activity. It's an import market. So it obviously had probably the most interruption from the tariff volatility. They've done a good job working through that position. And what we're seeing is they've had an ability to be able to manage the margin in their book in a far more effective way than they've been able to do it at previous periods where they've gone through weakness in their end markets. So I think that position is set up well as we move into the second half under more normalized levels of activity. Charles Strong: Great. And then just on the North Star guidance, what are the moving parts from a conversion cost perspective? And how much should we be thinking about in terms of the energy cost impact? David Fallu: Yes. So the team have done a good job in terms of how they've worked on raw material costs, and we've seen an improvement in those non-benchmark conversion costs that you see in sort of alloys and fluxes. And I think that's been really important in terms of how they manage to offset the increase in energy costs that they had transitioning to their new energy contract. So that's all been incorporated in that space. Operator: Your next question comes from Will Wilson from UBS. William Wilson: Quick one from me. It looks like healthy TRUECORE volume growth and also COLORBOND to a lesser extent in the half. Just on the new Western Sydney metal coating line coming on soon, can you just remind us of the ramp-up here from a tonnes produced perspective? And also just your ability to manage that up or down with market demand? Tania Archibald: Yes. So the total capacity that will come online in Western Sydney is around about 240,000 tonnes. In terms of the ability to ramp it up or down, metal coating lines are pretty straightforward. I mean you can switch them on and switch them off. That's the beauty of them. So we'll obviously have a look at the market conditions as we get closer to the ramp-up. We've also got to think about crewing levels and time frames that it takes to recruit and train new crews. We've obviously got a plan that we'll start off with as we go through the ramp-up period. Generally, there's a period of around about 3 months once you get metal on strip and you work your way towards full operating conditions. But again, there's a lot of flex capability that sits within that model. David Fallu: And Will, I think it's important to point out that we run these metal coating lines as a network. And so the opportunity is not just how we manage MCL7, but how we manage the network that MCL7 enables us to unlock with our newer lines typically being more efficient. William Wilson: Yes. Okay. So if you wanted to, you could effectively bring on the 240,000 tonnes within 6 to 12 months. Tania Archibald: Yes, taking into account the network comment that David just made, yes. Operator: Your next question comes from Keith Chau from MST Marquee. Keith Chau: First one, Tania, maybe I'm hoping this isn't just a matter of semantics, but your answer to Ramoun's question earlier in the briefing around evaluating all options to realize value for shareholders. Is it possible for us to confirm with you that you are actively engaged with third parties as suggested by the media? And I only ask just given there is another offer or there has been another offer for the group. So if we can get a clearer answer, that would be great. Tania Archibald: Sorry, Keith, I might be about to disappoint you because we just simply don't comment on anything that might go to any conversations with any party. I think all I can do is reiterate that we continue to evaluate all options to accelerate the delivery of value to our shareholders. Keith Chau: Okay. Second one, just on your property, maybe one for David. But David, you mentioned before that you've seen a couple of valuations or I guess, a tens of valuation on BlueScope's property portfolio. BlueScope's indicated itself that it could be worth up to $2.8 billion using West Dapto as a read-through. I guess maybe the debate is just around the sensibility of using that as a proxy for as value. So if you can comment on why that $2.8 billion has been published and whether it is sensible for A value? If not, why not? And also one of the key points of contention for property is the level of remediation costs required to get those land lots to market. So I mean my understanding is that remediation has taken place over the years as those properties have come surplus to requirements. But just if you can give us an indication of what remediation expenditures are required across the surplus property portfolio, please? Tania Archibald: Keith, I might start off with a couple of comments, if I can. Where the $2.8 billion comes from very simply was we wanted to highlight that there is very significant value that should be attached to the surplus land portfolio. And all we did was point to what we sold Dapto for and just applied that to the rest of the portfolio. But it wasn't meant to be saying that it's absolutely $2.8 billion on the mark. What it was pointing to is that there is very significant value that sits here. And there's a broad range of opportunities. This is prime industrial land. It has fantastic infrastructure associated with it, road, rail port, energy, et cetera. And so we think there is significant value associated with that. The majority of the land has already been appropriately zoned. In terms of remediation, it's probably worth pointing out, I think it's about 1,000 hectares is actually just buffer lands. It's pads. And so it's not necessarily former sites. So yes, there is -- part of it is former sites. That's the #1 works. And the area around Port Kembla, but there's a lot more land than just that. So the remediation costs, I don't think we could give you a clear number, but I feel like they might be a little bit overblown if there's a conversation going on around remediation costs at this point, bearing in mind that most of the land is -- has not been previously used for -- in an operating environment. David, did you want to add anything to that? David Fallu: No, look, I think that's right. And obviously, sort of the 2 areas that create a challenge around the property realization piece is rezoning and rehabilitation costs, given there hasn't been -- given it's already zoned appropriately for development, and there haven't been intense activities on any of the sites. That's why we feel we're in a position now to actually undertake those master planning partnership discussions to -- and that, I think, Keith, then gives us the opportunity, as I say, to present a more robust view around potential valuation and realization pathway. Keith Chau: Okay. And maybe last one, if I can. The step-up in net debt, obviously, that's a big change from prior targets. We've gone from net cash position to a range of $400 million to $800 million to $1.5 billion. certainly take the point that CapEx requirements and loads ending after this year. But given the significant change in the debt target, are there any changes to the costs associated with the debt, whether that be debt or any changes in covenants on the debt load? David Fallu: Yes. No. So this all sits within existing facilities, Keith. And if you have a look at the maturity profile that we've got, particularly with a recent extension, that's not going to have an implication for us over the short or medium term. Tania Archibald: And let's be clear, we're still aiming to maintain investment grade here, and it's still a pretty prudent level of debt for an organization of our scale. Operator: There are no further questions at this time. I'll now hand back to Tania Archibald for closing remarks. Tania Archibald: Thank you, everyone, for joining us today. I know you've got an exceptionally busy day. Please reach out to the IR team for any questions. And of course, David and I and the team, we look forward to engaging with you over the coming weeks. Thank you.