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Operator: Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's Third Quarter 2025 Earnings Conference Call. We would like to inform you that the third Q '25 press release is available to download at the Investor Relations website of Banco Macro, www.macro.com.ar/relaciones-inversores. [Operator Instructions] It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Jorge Scarinci, Chief Financial Officer; and Mr. Nicolas Torres, IR. Now I will turn the conference over to Mr. Nicolas Torres. You may begin your conference, sir. Nicolas Torres: Thank you. Good morning, and welcome to Banco Macro's Third Quarter 2025 Conference Call. Any comments we may make today may include forward-looking statements, which are subject to various conditions, and these are outlined in our 20-F, which was filed to the SEC, and it's available at our website. Third quarter 2025 press release was distributed last Wednesday, and it's available at our website. All figures are in Argentine pesos and have been restated in terms of the measuring unit current at the end of the reporting period. As of 2020, the bank began reporting results applying hyperinflation accounting in accordance with IFRS IAS 29 as established by the Central Bank. For ease of comparison, figures of previous quarters have been restated applying IAS 29 to reflect the accumulated effect of the inflation adjustment for each period through September 30, 2025. I will now briefly comment on the bank's third quarter 2025 financial results. In the third quarter of 2025, Banco Macro's net income totaled ARS 33.1 billion loss, which was ARS 191.5 billion lower than the previous quarter. This result was mainly due to higher loan loss provisions, higher administrative expenses, lower income from government and private securities and lower net fee income that were partially offset by higher other operating income and a lower loss related to the net monetary position. Total comprehensive income for the quarter totaled ARS 28.4 billion loss. And in the first 9 months of 2025 Banco Macro's net income totaled ARS 176.7 billion, 35% below than the same period of last year. When total comprehension income totaled ARS 186.9 billion in the same period. As of the third quarter of 2025, the accumulated annualized ROE and ROA were 4.5% and 1.5%, respectively. Net operating income before general and administrative and personnel expenses was ARS 779.6 billion in the third quarter of 2025, 23% of ARS 233.7 billion lower compared to the second quarter of 2025 due to lower income from government securities. On a yearly basis, net operating income before general and administrative and personnel expenses decreased 29% or ARS 312.9 billion. Provision for loan losses totaled ARS 156.8 billion, 45% or ARS 49.4 billion higher than the second quarter of 2025. On a yearly basis, provision for loan losses increased 424% or ARS 128.4 billion. In the quarter, net interest income totaled ARS 686.2 billion, 7% or ARS 52.2 billion lower than in the second quarter of 2025 and 8% or ARS 63.6 billion lower year-on-year. This result was due to a ARS 113.9 billion increase in interest expense, while interest income increased ARS 61.6 billion. In the third quarter of 2025, interest income totaled ARS 1.32 trillion, 5% or ARS 61.6 billion higher in the second quarter of 2025 and 7% or ARS 84.7 billion higher than in the third quarter of 2024. Income from interest on loans and other financing totaled ARS 930.3 billion, 18% or ARS 139.7 billion higher compared with the previous quarter, mainly due to an 11% increase in the average volume of private sector loans and by a 111 basis point increase in the average lending rate. On a yearly basis, income from interest on loans increased 74% or ARS 396.2 billion. In the third quarter of 2025, interest on loans represented 77% of total interest income. In the third quarter of 2025, income from government and private securities decreased 24% or ARS 85.4 billion quarter-on-quarter mainly due to inflation adjusted bonds and decreased 52% or ARS 292.8 billion compared with the same period last year. This result is explained 97% by income from government and private securities at amortized cost, and the remaining 3% is explained by income from government securities valued at fair value through other comprehensI've income. In the third quarter of 2025, income from repos totaled ARS 6.3 billion, 493% or ARS 5.3 billion higher than the previous quarter and 74% or ARS 18.1 billion lower than a year ago. It is worth noting that as July 22, 2024, the Central Bank decided to terminate repos and replace them with LEFI's, which were issued by the treasury, which then were eventually terminated on July 10, 2025. In the third quarter of 2025, FX income was ARS 13.8 billion loss, ARS 37.5 billion lower than the second quarter of 2025, mainly due to the loss from foreign currency exchange, given the bank's short dollar position. It should be noted that the bank posted a ARS 23.2 billion gain related to investment in derivative financing instruments, which is basically the long futures position that the bank has. Therefore, when considering income from foreign currency exchange plus income from investment in derivative financing instruments, the bank posted a ARS 9.4 billion gain. On a yearly basis, FX income decreased 164% of ARS 35.2 billion. And in the quarter, the Argentine peso depreciated 14.4% against the U.S. dollar after the Central Bank of Argentina replaced the 1% crawling peg, allowing the Argentine peso to float [indiscernible]. In the third quarter of 2025, interest expense totaled ARS 528.4 billion, increasing 27% or ARS 113.9 billion compared to the previous quarter and increased 39% or ARS 148.4 billion compared to the third quarter of 2024. Within interest expenses, interest on deposits represented 94% of the bank's total interest expense, increasing 24% or ARS 96.6 billion quarter-on-quarter due to a 248 basis points increase in the average rate paid on deposits, while the average volume of private sector deposits increased 10%. On a yearly basis, interest on deposits increased 36% or ARS 131.3 billion. In the third quarter of 2025, the bank's net interest margin, including FX, was 18.7%, lower than the 23.5% posted in the second quarter of 2025 and the 31.5% posted in the third quarter of 2024. In the third quarter of 2025, Banco Macro's net fee income totaled ARS 177.3 billion, 7% or ARS 13.9 billion lower than the second quarter of 2025. In the quarter, credit card fees stand out with a 22% or ARS 14.2 billion decrease, followed by credit-related fees, which decreased 27% of ARS 3.1 billion, and were partially offset by a 7% or ARS 1.8 billion increase in corporate services fees. On a yearly basis, net fee income increased 14% or ARS 22.1 billion. In the third quarter of 2025, net income from financial assets and liabilities fair value to profit or loss totaled ARS 19.5 billion gain, decreasing 84% or ARS 101 billion compared to the second quarter of 2025. This result is mainly due to lower income from government securities. On a yearly basis, net income from financial assets and liabilities at fair value to profit or loss decreased 86% or ARS 117 billion. In the quarter, other operating income totaled ARS 69 billion, 42% or ARS 20.5 billion higher than the second quarter of 2025 due to higher credit and debit card income, ARS 14.7 billion. And on a yearly basis, other operating income increased 16% or ARS 9.7 billion. In the third quarter of 2025, Banco Macro's administrative expenses plus employee benefits totaled ARS 331.5 billion, 12% or ARS 35.1 billion higher than the previous quarter due to a 20% increase in employee benefits, while administrative expenses decreased 3%. On a yearly basis, administrative expenses plus employee benefits decreased ARS 431 million. In the third quarter of 2025, employee benefits increased 20% or ARS 38.7 billion, mainly due to a 139% or ARS 23.6 billion increase in compensation and bonuses as the bank builds up provisions for early retirement plans and severance payments. On a yearly basis, employee benefits increased 8% or ARS 16.9 billion. In the third quarter of 2025, the accumulated efficiency ratio reached 39.1%, deteriorating from the 35.9% posted in the second quarter of 2025 and from the 25.5% posted a year ago. In the third quarter of 2025, expenses, which includes employee benefits, general and administrative expenses, depreciation and impairment assets increased 10%, while income, basically net interest income, net fee income, differences in quoted prices of gold and foreign currency plus other operating income, plus net income from financial assets at fair value through profit or loss decreased 19% compared to the second quarter of 2025. In the third quarter of 2025, the result from the net monetary position totaled at ARS 203.1 billion loss, 6% or ARS 13 billion lower than the loss posted in the second quarter of 2025 and 46% or ARS 171 billion lower than the loss posted 1 year ago. Lower inflation was observed during the quarter, basically 4 basis points below the second quarter '25. Inflation reached 5.97% in the third quarter of 2025 versus 6.01% in the second quarter of 2025. In the third quarter of 2025, given Macro's net income, no income tax charge was recorded. Further information is provided in Note 21 of our financial statements. In terms of loan growth, the bank's total financial reached ARS 10.1 trillion, increasing 3% or ARS 332.4 billion quarter-on-quarter and increasing 69% of ARS 4.1 trillion year-on-year. In the third quarter of 2025, private sector loans increased 3% or ARS 278.2 billion, and on a yearly basis, private sector loans increased 67% of ARS 3.94 trillion. Within commercial loans, documents and others stand out with a 4% or ARS 60.4 billion and a 27% or ARS 453.9 billion, respectively. Meanwhile, overdrafts decreased 21% or ARS 364.9 billion. Within consumer lending, almost all product lines increased during the third quarter of 2025, except for credit card loans, which decreased 1% or ARS 21.3 billion. Personal loans, mortgage loans and pledged loans stand out with an 8% or ARS 156.8 billion, 12% or ARS 92.8 billion, 6% or ARS 13.1 billion increase, respectively. In the third quarter of 2025, peso financing decreased 2% or ARS 192.1 billion, while U.S. dollar financing increased 10% or $170 million. It is important to mention that Banco Macro's market share over private sector loans as of September 2025 reached 9%. On the funding side, total deposits increased 5% or ARS 556.4 billion quarter-on-quarter, totaling ARS 11.8 trillion and increase 11% of ARS 1.2 trillion year-on-year. Private sector deposits increased 6% or ARS 604.9 billion quarter-on-quarter, while public sector deposits decreased 5% or ARS 49.6 billion quarter-on-quarter. The increase in private sector deposits was led by demand deposits, which increased 10% or ARS 475.2 billion, while time deposits increased 4% or ARS 202.2 billion quarter-on-quarter. Peso deposits decreased 1% or ARS 48 billion, while U.S. dollar deposits increased 3% or $95 million. As of September 2025, Banco Macro's transactional accounts represented approximately 49% of total deposits. Banco Macro's market share over private deposits as of September 2025 totaled 7.4%. In terms of asset quality, Banco Macro's nonperforming total finance ratio reached 30.2%. The coverage ratio, measured as total allowances under expected credit losses over nonperforming loans under Central Bank rules reached 120.87%. Consumer portfolio nonperforming loans deteriorated 149 basis points, up to 4.3% from 2.81% in the previous quarter while commercial portfolio nonperforming loans deteriorated 33 basis points in the third quarter of 2025, up to 0.85% from 0.52% in the previous quarter. In terms of capitalization, Banco Macro accounted an excess capital of ARS 3.3 trillion, which represented a capital adequacy ratio of 29.9% and a Tier 1 ratio of 29.2%. The bank's aim is to make the best use of this excess capital. The bank's liquidity remained more than appropriate. Liquid assets to total deposit ratio reached 67%. Overall, we have accounted for another positive quarter. We continue showing a solid financial position. We keep a well-optimized deposit base. Asset quality remain under control and closely monitor, and we keep on working to improve more our efficiency standards. At this time, we would like to take the questions you may have. Operator: [Operator Instructions] Our first question comes from Carlos Gomez-Lopez with HSBC. Carlos Gomez-Lopez: I guess 2 questions. The first one is one has a sense that your result is worse than you had anticipated. You did not, I think, expect to have a loss. Was there anything special that we could point to? Or let's say, did you take the opportunity to take any charges to expenses that we haven't discussed? Could you identify anything which was special that perhaps was not forecast a little bit before? And second, what do you expect for next year in terms of loan growth and achievable returns, understanding that there's a lot of uncertainty? Jorge Francisco Scarinci: Thanks for your questions. In relation to your first question well, I think that is quite clear on the press release that there was a combination of different factors, and some of them were a bit more or deeper than what we expected at the beginning. First, in terms of the delinquency rate, we were expecting not such that amount of provisions that finally we have to post. That's a consequence, as you also saw in the other banks that also released results on the past week, that was a kind of an increase or almost peak in terms of NPLs. That is one of the reasons for that. Second reason, there were some additional expenses that we also accounted in the quarter that were not expected before. So -- and also the compression on the margins due to the big increase of roller coaster interest rate behavior during the third quarter. And also, I would say that last but not least, is the performance on the bond prices and the impact on the bond portfolio performance. So that is in relation to your first question. According to your second question in terms of forecast for next year, we are forecasting loans to grow 35% in real terms. Deposits to grow in the area of 25% in real terms, and we continue to expect ROE for 2026 to be in the low tens. Carlos Gomez-Lopez: And could you give some more detail about your extra expenses? Is that related to adjustment to the footprint or any consultant or any system that you have purchased? Anything we could know more about expenses and whether they're recurring or nonrecurring? Jorge Francisco Scarinci: No. Basically, Carlos, those that we posted there that are related to the early retirement plans that were not expected to happen and they finally happened. So that we're described on the press release, basically. Operator: Next question from Ernesto Gabilondo with Bank of America. Ernesto María Gabilondo Márquez: My first question will be on asset quality. So I just want to double check when do you expect the peak on NPLs? And if you can provide us a potential range? And where do you see the peak in cost of risk? And how should we think it for next year? My second question is a follow-up on your ROE. As you said, you're expecting low teens in 2026. But how should we think about the ROE for 2025? And then my last question is on your capital ratio and potential M&A opportunities. You continue to have an important excess in capital. You already have passed the midterm election. So when do you expect to start to have M&A activity? Do you think is something that could come next year? Any color on that will be very helpful. Jorge Francisco Scarinci: On your first question in terms of asset quality, we believe that the peak on NPLs should happen or should happen between October and November. And that is what we are seeing in terms of the delinquency ratio, also in terms of cost of risk. We posted at 6.5% in the third quarter. We expect this number to be maintained approx in the fourth quarter, and we are forecasting to be more close to 5% in 2026. So again, the peak should be between the third and the fourth quarter in terms of delinquency. In terms of ROE for 2025, we continue to maintain the 8% area for 2025 in terms of ROE. On your question about capital ratio, I mean, it is true that we continue to have this high level of capitalization of excess capital. Of course, we are honored and trying to find out if there is an opportunity to make the use of this excess capital in terms of M&A. Of course, you know that any player trying to leave the game is pretty sure that it's going to knock our door. And of course, we are going to analyze the target of the assets. And if it is good, we are going to go for it. If not, we are going to wait for another one. So that's the idea going forward. So we expect to have some news about that in the next maybe 12 to 18 months, basically, but it's not only depending on us. Operator: Our next question comes from Brian Flores with Citi. Brian Flores: I have a question on growth, right, because probably this is the first option in terms of capital allocation, given the wide base of capital. Could you elaborate a bit on where will you focus this growth if you're going to give priority to corporates? Or do you think maybe it is time to gain share, be more aggressive on the consumer side? Just if you could maybe expand this guidance that you provided for 2026 by segment. I think that would be great. And then, Jorge, I think we spoke very recently, we had an event where we participated. I think we discussed sustainable ROE. Just wanted to check if maybe 2026 is part of this transition for, let's say, 15% to 20% of levels of sustainable ROE. Jorge Francisco Scarinci: In terms of the first question about loan growth going forward, I mean, we expect to grow across the board, both commercial and consumer. And the consequence of this is because there is a very low penetration in the Argentine banking sector. It is below 10% of loan to GDP. We're expecting, according to the consensus of the economies, a real GDP growth of around 3% in 2026 with inflation also estimated by the consensus of economies in the area of 20%. So we expect demand to come from both companies and also consumers. So the idea is to grow. If you want to put in that kind of percentages of our loan book, as of today, we are approx 65% consumer, 35% commercial. That could be at the end of 2026, maybe 60-40, but there's not going to be a big change in our loan book composition because we're expecting loan demand to come from every sector in Argentina. In terms of ROE going forward, second question, yes, 2026 is going to continue to be another transition year towards the area of 20% ROE that we are supposed to be delivering 2027 onwards. Brian Flores: No. Super clear. Jorge, maybe just if I can, a quick follow-up on these questions on capital allocation. Would you consider the current stock levels as attractive in terms to continue the buyback activity you showed during the third quarter? Jorge Francisco Scarinci: Well, Brian, that is something that the Board might consider. For the moment, the program that was said it is not more going on basically because of the price that's skyrocketed since then. And as a consequence of the election in the -- of the midterm election that happened here in Argentina, and of course, the mood that turned into positive for Argentina. So for another buyback program, we have to -- I mean the Board has to consider many issues going forward. For the moment, it's not going to be in place anymore. Operator: Our next question comes from Pedro Leduc with Itaú BBA. Pedro Leduc: Two, please. First, on NIMs. Now of course, this quarter, we had this very adverse environment for funding costs and liquidity reserves, et cetera. But we also saw a lot of repricing in local portfolios. So now that funding is normalized, can we expect, for example, 4Q NIMs to be back to, let's say, at least 2Q levels? And if we look at on an aggregate basis, 2026, there's a lot of moving pieces for NIMs in 2025 as well, so this is harder. But on an aggregate basis, should we see NII grow above this 35% real loan book growth in your view and if you can go over the driving forces there. And then last, that's just a follow-up on NPLs. Of course, it's been a trend there. Yours took a little bit longer, and it seems like you're more comfortable in seeing the peak already in 4Q. Some players might be seeing slipping over to 1Q, 2Q. So if you can share with us what you have done there to control this and maybe be out of the peak also already in the fourth quarter in terms of NPLs. Jorge Francisco Scarinci: In relation to the question about NIMs, yes. Basically, what happened with the cost of funding and also other interest rates that were ups and downs in the third quarter. We saw similar to other banks in this third quarter, our NIMs being affected. We posted at 18.7% NIM compared to the 23.5% that we posted in the second quarter. So yes, we hope and we believe that the NIM for the fourth quarter is going to be more similar than the one that we posted in the second quarter. Going forward, we expect in 2026 NIMs to be in the area of 20%, so should be slightly below the average that we are having up to now, that is 21.6% for the first 9 months of 2025. And we believe that the net interest income should be growing slightly above the 35% that we are going to grow in terms of real loan growth that I commented before. In terms of the NPLs, as I mentioned, yes, we could see some of more peak on the fourth Q, and that is going to bring additional provisioning for the moment. We expect these levels to be similar than the one that we posted in the third quarter. Going forward, as I mentioned, the cost of risk should be more in the area of 5% in 2026. And basically, we should be -- or sorry, we have been taking measures since the last part of the first quarter, beginning of the second quarter of 2025, where we became more restrictive in terms of the credit lines on -- basically on consumers. But basically, as we saw, the main consequence of the deterioration of the delinquency rate across the board in the Argentine banking sector was basically the increase in the real interest rates that we saw in the second and third quarter. So now that we are seeing real interest rate more slightly positive. And going forward, we believe that this trend will be maintained. We think that the behavior of the portfolio is going to become a bit more normal. But of course, you have to take into consideration that we grew our loan book 69% in real terms. As of the third quarter of '25, we expect to grow another 35% in real terms in 2026. So we maybe we should accustom to see the past due loans ratio in other levels, I would say, between 2%, 2.5% or maybe more than that compared to the ratio that we were accustomed to see in the Argentine banks when banks didn't grow their loan book as happened in the last maybe 3, 4 years. So now we have to move and to have to see these ratios more in the area of mid-2s with the level of real growth in loans that we are forecasting going forward. Operator: Our next question comes from Tito Labarta with Goldman Sachs. Daer Labarta: I guess a couple of follow-ups. Jorge, are you able to quantify how much additional expenses were related to those early retirement plans you mentioned, just to think about how much of that should go away in 4Q? And then second question, I guess, on the market-related income, which you mentioned was negatively impacted by the bonds and the government losses on the government bond. Do you expect that to sort of reverse in 4Q as things kind of normalize just to get a sense of the magnitude that can maybe improve in 4Q as well? Jorge Francisco Scarinci: In terms of the expenses that we commented there are the ARS 23.5 million that we posted in the expenses line that we explained in the press release, approximately 18.5% were maybe nonrecurrent in the third quarter. Honestly, it's a bit early to say what we are going to do in the fourth quarter but might happen that some of these could appear here. But again, it's a bit early to comment on that on the fourth quarter. In terms of second question, yes, the bond portfolio taking into consideration that approximately, we have 23% to 25% of our bond portfolio tied to market prices or market-related. So going forward, we expect this to reverse in at least for the moment, in the fourth quarter, we are going to have much better performance in the bond portfolio compared to the one that we had in the third quarter where we saw prices going down a lot. Daer Labarta: Okay. No, that's very clear, Jorge. Just could there be additional expenses related to the early retirement plans? Or is that it from last quarter? Jorge Francisco Scarinci: Could be. But again, honestly, it's a bit early to comment on that, but could be. Operator: Next question from Pedro Offenhenden with Latin Securities. Pedro Offenhenden: I wanted to ask what factors could catalyst for the deposit growth on 2026? And how are you seeing liquidity conditions after the elections? Jorge Francisco Scarinci: We're expecting real interest rates to be positive in 2026, similar levels as the one that we are seeing right now. That's why we are forecasting our deposit growth to be in the area of 25% in real terms. This is in relative terms, lower than the rate that we're expecting for loans. But in the case of we did additional funding here, of course, we have a bond portfolio where we can take liquidity. We can issue domestic corporate bonds or bonds on the foreign market. So this is not going to be a problem for the liquidity for Banco Macro. In addition to that, when you look at the liquidity ratios as of today, we have an extremely good liquidity ratios in both dollars and pesos. So going forward, we expect to maintain this performance. Operator: Next question from Alonso Aramburú with BTG. Alonso Aramburú: Just wanted to follow up a little bit on asset quality. You mentioned that NPLs should peak October, November. Maybe you can comment on what you're seeing in new vintages. You saw some deterioration in commercial, some a little bit more in consumer. So what are you seeing lately that gives you this confidence that the peak is now? And when you talk about margins, maybe a little bit longer term, you mentioned 20% ROE 2027 onwards, what sort of margins, what sort of NIMs do you see then, right? You mentioned 20% next year? Is that in the mid-teens? I mean, where do you see them? Jorge Francisco Scarinci: Yes, in terms of NPLs, what we are seeing in our vintages is that there is a stop in the deterioration trend, and we're seeing some stability, and we expect this to become better or improve in the next month or so. So that's why we are expecting to see this kind of a peak maybe early in the fourth quarter. Honestly, at the end of the fourth quarter, we really, for the moment, don't know which is the level of provision that we are going to post. That's why we are supposing that should be in the area of the one that we posted in the third quarter. But we are positive on the trend on the vintages in the next couple of months, and this is going to help, and that's why we commented that the peak should be between October, November. In terms of NIMs going forward, for sure, little by little, we are going to see a decline in the NIMs. Honestly, for 2027 should be in the area of mid-teens. And of course, 2028 onwards, we should be approaching to the low 10s. That is maybe the movie that we are seeing going forward for the Argentine banking sector, and we expect the volume growth to outpace the decline in margins. Operator: Next question from Nicolas Riva with Bank of America. Nicolas Riva: Jorge, I have a question regarding next year, the maturity of your 2026 bond, the $400 million. I understand it counts very little for capital treatment, I think, only 20% maybe. But I wanted to ask if the plan -- given that it's a large size in dollars, $400 million, if the plan would be to replace those dollars and probably do like a senior bond issuance of a similar size? Or what would be the plan regarding those $400 million? Jorge Francisco Scarinci: Yes, this bond is maturing at the end of November 2026. So we still have almost 12 months to figure out what to do. Honestly, we have many options on the table. We understand that markets are pretty positive on Argentina. We have to figure out our plan for future growth in U.S. dollar loans. And depending on all those -- on these assumptions and what happened in by mid-2026, we are going to make a decision whether to cancel it, to roll it to maybe issue another senior bond instead of subordinated. So again, many options on the table. Still, we do not have decided what to do. Operator: Our next question comes from Brian Flores with Citi. Brian Flores: Thank you very much for the opportunity to make a quick follow-up. Jorge, was just running here some back of the envelope math on your comments on ROE. I just wanted to check if what I am seeing here makes sense. You mentioned the 8% level of ROE -- real ROE for 2025 is achievable, right? You're not changing the guidance. But just looking at the run rate, it seems like the fourth quarter would need to be higher than the complete run rate of the first 9 months of the year. So I just wanted to check if, I don't know, there is something one-off that could really help results or if just it's a big spike in volume. Just wanted to understand if this is making sense or I'm missing something here in terms of what could really help the fourth quarter results to achieve the mentioned guidance? Jorge Francisco Scarinci: Well, first of all, the forecast is area 8%. Second, if you assume that we are going to post in the fourth quarter results similar than the one that we posted in the second quarter, we are going to be very close to the 8%. So for the moment, we are maintaining that. We expect, again, recovery in the bond portfolio, increasing in loan volumes and improvement on the NIMs. So these are the main reasons why we're expecting a much better fourth quarter. So we should be very close to the 8%. So that's the idea why we are maintaining the forecast for 2025 ROE. Operator: Our next question comes from [ George Birch Renardson with Oda ]. What is the average age of your workforce? Jorge Francisco Scarinci: Honestly, I have to check that. It's not an easy question. I have to check the data from Human Resources, the first time I received this question. But let me check it. And if you don't mind, I can get back to George later, please. Operator: Great. Next question from Marcos Serú with Allaria. What caused the ARS 28 billion loss on foreign exchange? Jorge Francisco Scarinci: I mean the ARS 28 billion loss in the -- when you look at the complete income on FX, it is -- we got a positive result of almost ARS 9.5 billion. This is a result on a combination of that we -- of the bank was sold in spot FX and the increase in the FX impacted on a loss in that position. However, also the bank was long in futures, and that resulted in a positive result because also futures increased in the third quarter. So the net-net was a positive income of ARS 9.5 billion in the quarter. Operator: There are no more further questions at this time. This concludes the question-and-answer session. I will now turn over to Mr. Nicolas Torres for final considerations. Nicolas Torres: Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again. Have a good day. Operator: This concludes today's presentation. You may disconnect, and have a nice day.
Henry Birch: Good morning, everyone, and welcome to our strategy update for the Halfords Group. You'll be aware that today, we have also announced a strong set of interim results for the 26 weeks to the 26th of September. And these, together with the webcast are available on our corporate website. I'm very pleased to be setting out my vision for Halfords over the next 5 years and believe that we are at an exciting and compelling moment in time from an investor point of view. I joined Halfords because I believed in its potential. 7 months on, I'm even more convinced in its potential and believe we have a pathway to growing our business and creating value and benefit for all our shareholders, our customers, colleagues and most relevant to this forum, our shareholders. At the heart of my conviction is the unique set of assets and capabilities that Halfords possesses and the dynamics of the markets in which we operate. We have leading positions in fragmented and evolving markets. We have an unmatched and scaled combination of stores, garages, mobile vans and digital capability across Motoring products and services and Cycling. We have a trusted, universally recognized brand and over 12,000 expert trained colleagues. We have structural resilience with a focus on needs-based products and services, and 1/3 of our revenue comes from B2B. We have a debt-free balance sheet together with strong cash flow generation. And in combining assets and capabilities under one roof, the Halfords Group as a whole is much more valuable and has more potential than the sum of its parts. Today, I want to drill down into some of those capabilities and assets. I want to deliver some home truths about our past and where we are today. And most importantly, I want to elaborate on why I am so confident in our future and detail our plans to deliver for all our stakeholders. Jo will talk to how we're going to measure progress and ensure financial discipline, and I will introduce our team and wrap up proceedings. I mentioned scale and breadth of our assets. As a retailer, we have 370 stores across the United Kingdom and the Republic of Ireland, combined with a strong digital platform together generating about GBP 1 billion in annual Retail sales. We have 500 consumer garages delivering service, maintenance and repair together with tires. We have our Halfords Mobile Expert service with 250 vans, and we have our Commercial Fleet Services business with 550 vans serving business customers up and down the country. And we have Avayler, our Software-as-a-Service business, providing garage management software to third parties. Our more than 12,000 colleagues are solutions experts, trained and knowledgeable, and we continue to invest in young people, bringing 150 new apprentices through our doors last year. Amongst many other impressive statistics, that scale means that we serve over 20 million customers a year. It means we sell over half of all bikes in the U.K. and handle a significant share of the U.K.'s car keys. Scale in our business drives competitive advantage and is extremely difficult to replicate. But the power of Halfords is in its combination of assets and capabilities and the additional value that it drives. At the most obvious level, we have a single Halfords brand across all our businesses and services. That drives brand authority, relevance and resonance across all things, Motoring and Cycling, and gives us the potential for service and product extensions. The Halfords brand is served by a single consumer website where customers can buy products or book garage services. We have a combined loyalty program, allowing customers to move seamlessly between our different services, driving higher engagement and subscription revenue. We deploy central specialist functions across our businesses, driving cost and capability advantages. We have buying power, with many of the same suppliers across our divisions. And our B2B efforts, a key and growing part of our business, deliver benefits for corporate clients across the group, whether that is Commercial Fleet Services, Trade Card or Cycle2Work. The power in Halfords is the power of the group and the assets we bring together under one roof. From a customer point of view, we aim to deliver 3 guiding benefits: convenience, value and expertise. The convenience of digital and nationwide coverage with 85% of the population not further than 15 minutes from Halfords. Value, enabled through our scale, supplier relationships and our own brand products and expertise through our dedicated 12,000 colleagues. Our customers are diverse in their makeup, but broadly fall into 2 categories: those we classify as do-it-for-mes and those we classify as do-it-yourselves. Do-it-for-mes are much greater in number and, as their name suggests, are looking for advice or a service. And candidly, Halfords is often the only place they can get that advice or service, whether it's having a wiper blade or roof box fitted or getting advice on which oil to buy. The do-it-for-me population is large, and we have a significant opportunity in greater penetration of this market. DIY customers are typically high-value, high-frequency customers who recognize the depth and breadth of our range and our product and service expertise. Our B2B customers share many of the same priorities: convenience, value and expertise, but place an even greater emphasis on reliability and turnaround speed. Through our national footprint and fleet service capability, we offer a comprehensive single provider solution that keeps businesses moving throughout our nation. Over the last 5 years, we have built a much bigger B2B business across different sectors. This includes our Commercial Fleet Services business, combining what were Lodge, McConechy's and Universal, where we are typically serving HGVs and light commercial vehicles. B2B is also an important demand driver for our consumer garages where we serve fleet cars and light commercial vehicles with a growing proportion of them being electric vehicles. And on the Retail side, our Cycle2Work scheme helps drive bicycle sales with Trade Card also contributing B2B revenue. B2B gives us a reliable source of demand, can drive a higher utilization of our asset base and is more insulated from the volatility of consumer confidence and spending. If we look at the markets in which we operate, Halfords is in a strong position. Our largest market is Garages or Motoring Services, a market which is around GBP 17 billion in size. In this space, small local independents still represent the biggest share, leaving room for Halfords as a scaled professional operator, with the capability and credibility to meet the growing complexity of modern Motoring. Many of these independent garages are owner-operated and may face issues not just with generational succession, but with the scale of investment in equipment and skills needed to meet the changing dynamics of Motoring. So whilst it is early days, we expect competitor garage supply to diminish over time. We've spoken previously about a weak tire market that has struggled for the past 2 years. But the important thing here is that irrespective of growth or decline in the market, with the brand and scale that we have, we should be able to grow and take share in tires. The Motoring products market is worth around GBP 4 billion. We see significant potential in developing our digital offer, but believe our unique strength is in the combination of digital and physical stores. This is illustrated by the fact that 80% of our digital orders are click and collect. Our combination of products with an attached service is not something that Amazon or any other online retailer can easily provide. The Cycling market remains a core part of our proposition and strategically important, both as a significant business in its own right, but also as a gateway to Halfords, from the first bikes that introduce families to our brand to the enthusiasts who invest in the latest innovations through our specialist brand Tredz. This year, we have seen good growth in Cycling, and the market overall seems to be in improving health. Across the group, we represent more than half of the Cycling market in volume terms, including all parts and accessories as well as bikes themselves. Taken all together, the markets we operate in are large, robust and dynamic, providing a strong foundation for Halfords' long-term growth and future strategy. I mentioned that our markets are dynamic, and there are some clear trends that Halfords must navigate. Firstly, and most obviously, is the move to electric, and that's both cars and bikes. Electric vehicles currently constitute about 5% of the U.K. car parc of 35 million cars. Despite successive government inconsistency, we know 2 things with absolute certainty. First, that, that EV number will grow. And second, internal combustion engine cars will be on our roads for many, many years to come. Whatever the growth or scenario, we are well prepared. We have almost 700 EV trained technicians, and the majority of our garages work on EV cars. We're ahead of the curve, investing early and building capability to serve EV customers at scale as the demand arrives. And although there are differences between EVs and internal combustion engine cars, they all need tires, and they all need to be serviced, maintained and repaired. It's worth saying that the same goes for any other car powered by a different technology or fuel. At the end of the day, we are fuel and technology agnostic and are confident that we can navigate any shifts or trends. At the other end of the spectrum, another structural trend to touch on is the aging car parc in the U.K. Despite the rise of EVs and new technology, the average vehicle in the U.K. is now close to 10 years old, shifting demand away from dealer-based early life servicing towards independent aftermarket providers, a space where Halfords is exceptionally strong. Over the last decade, the U.K. has seen the rise of the convenience economy, and this has been reflected in the Motoring products and services market. More than ever, consumers want convenience. They want someone to do it for them, removing hassle and fitting around their busy lives. Today's customers are also more demanding and digitally engaged. With our nationwide reach, integrated service model and advanced digital capability, Halfords is uniquely placed to deliver on this shift towards convenience and service, both in our garages and our stores. Halfords has a long and illustrious history. But similar to most consumer businesses, it has had a fairly volatile decade post Brexit and lastly COVID. In that time, it has had to navigate some choppy waters, but it has made 3 important strategic shifts, which I've mentioned but want to reiterate. First is a shift to a greater proportion of services, with service-related revenue now representing over half the total. Service revenue is typically higher margin and more resilient being more needs based. Secondly, we've grown our B2B business with around 1/3 of revenue now generated by B2B sources. B2B revenue is generally less impacted by economic swings and consumer confidence and is therefore, more consistent and reliable. And thirdly, we executed a material cost reduction program to mitigate the inflationary pressures over the last 3 years. These shifts are the right ones to have made and set us up well for future success. Halfords is a fantastic company, brimming with potential, but arguably over -- our performance over the last 3 years has not matched that potential. And I think an element of candor and self-reflection is needed to ensure that as we map out the years ahead, we take the necessary learnings forward with us. First, as I have said, we have rightly evolved into a services-led business. But with that change, we have failed to deliver the uplift in margin we should expect from services being a higher proportion of revenue. That must and will change. And in particular, we will be targeting margin expansion in our Garages business. Over the last few years, we have made a number of acquisitions. These acquisitions have given us additional scale and capability, but our integration has not been good enough, and we have not driven expected returns. There is more to do here, but I am clear that in the immediate term, any further acquisitions would be a distraction from the task in hand. Halfords is a diversified business with breadth and inherent complexity, but we've often found ourselves spread too thinly chasing too many priorities. That will change, with a simplification of action and a focus on the things that matter and the things that will drive value in our business. Halfords has an enviably rich and powerful data set, which we use effectively for CRM and segmentation, but we are yet to use this data for real-time decisioning, personalization or predictive analytics, and we need to develop our data platform further. Doing so effectively will increase customer lifetime value and drive profit growth. And I talked about the power of the Halfords Group, how the combination of our assets yields considerable benefit, but we have not sufficiently joined these assets from a customer point of view. The customer journey between our group assets is not smooth enough, and it is not evident enough to customers what exactly we offer. We need to better join our assets together and better promote what we offer. If we do this well, there is much to gain. And overall, I believe we need to drive better and more visible returns on the capital we deploy. This is very much front of mind and something we will ensure we get the required focus. So there are both lessons to be learned and challenges to meet, but fundamentally, we have a unique and fantastic business. And while I've been candid about where we need to improve, it's equally important to recognize the many strengths already in place. So hopefully, I've given a clear articulation of where I see our strengths and also some of the home truths that we need to face into. I've also covered some of the dynamics and trends of the markets we play in, but I now want to talk about where we believe we can take our business and the future ahead. When I decided to join Halfords, it was because I could see a business with deep foundations, a strong sense of purpose and a differentiated platform most companies would envy. Now having spent time across the organization, I'm even more convinced. The fundamentals are intact, the potential is significant and the challenges we face are executional, not structural. And it's not just me who believes this. Let's hear from 2 of our newest team members of our executive team. Jess Frame: I joined Halfords because I believe it has the potential to redefine the specialty Retail business model for the future. I've had the privilege of advising many retailers in the U.K. and Europe and all of them were navigating the shift online, fiercely competitive marketplaces, how to create value-add experiences in stores, how to make cross-channel convenience come to life and also how to personalize their proposition for customers. I fundamentally believe that the retailers who thrive over the next decade will be those who successfully fuse products and services to create solutions for customers. And what excites me about Halfords is that we have the required assets and capabilities to drive that new model now. We have the asset to create an ecosystem around customers for all of their car and bike needs. We have the skills and operating model to deliver services in retail and our mobile vans and garages network for more complex jobs. We've got the colleague expertise and culture to offer trusted, helpful in-person advice. We've got the supply chain that can support click and collect within an hour on many of our lines, and the relevance of our store estate is underpinned by the fact that over 80% of our online sales are picked up in store. And finally, our data gives us deep understanding of our customers, their vehicles and bikes, their service history and a predictive view on where they'll need us next. There is still so much more we can do with our data to unlock value for customers and realize that potential. So I'm energized by the significant opportunity I see in Halfords, and I'm looking forward to realizing many of those over the coming few years. Adam Pay: I joined Halfords because I believe in the power of its brand and its unrivaled scale and coverage in the U.K. Halfords really is unique. In fact, there's no one else in the U.K. that can offer customers the same level of convenience and expertise at such scale, all wrapped up in such a trusted brand across stores, garages and mobile. It's a fabulous combination. And what I'm doing now at Halfords feels really familiar. I've done this before, transforming the mycar offer in Australia, and I see so much of the same potential in Halfords, and I can really see where the opportunities lie. Fusion is really exciting. I'm keen to unlock its full potential by creating an exceptional customer experience and driving profitability. I also see huge opportunity by simplifying operations and creating a culture of operational excellence, which will, in turn, drive profit from improved utilization across the existing garage estate. And I'm absolutely clear that our colleagues are indeed our greatest asset. And with focus on developing their skills and expertise and retaining that talent, we can create fantastic career opportunities and really deliver exceptional customer service. I'm incredibly proud to be part of the Halfords team and excited for the future. Henry Birch: Brilliant. So that's Jess, our Retail Managing Director; and Adam, our Garages Managing Director. What I've seen since joining confirms that we don't need to reinvent Halfords though. We need to execute with focus. The opportunity isn't in radical change. It's in doing the important things consistently well and sequencing them properly. Our strategy ahead is simple, disciplined and built around 3 clear phases: optimize, evolve and scale. I'll go into the detail of these phases shortly, but at a summary level, optimize means maximizing what we already have and what we already do. It's about getting more value faster and more consistently from the assets already in place. This is the near-term value creation phase, and the work is already underway. The evolve phase means having a business that is future-proof, lean, effective and efficient. It means strengthening our foundations to deliver sustainable growth and continuing to invest in key areas such as technology, data and our physical estate. And then as our core strengthens and our foundations evolve, we can have the confidence to grow in scale, taking advantage of our operating leverage. And the nature of how we scale will vary across our business divisions, as I will discuss. These 3 phases are time bound with some overlap between them, as you can see on this slide. But the important thing to note is that our optimization is already underway and realizing short-term benefits, contributing to the strong H1 results we announced earlier this morning. And likewise, we see an opportunity for scaling and building real value within a relatively short time frame. So let's have a look at these phases in a bit more detail. The optimize phase is a crucial first step in our strategy designed to establish early momentum and unlock the latent value within our core business. We have 3 focus areas to optimize our Retail business, better category management, services expansion and e-commerce. Firstly, category management. We believe that improved category management has the potential to significantly drive our sales and margin. Candidly, it's not something we currently do well at Halfords. In summary terms, it means taking each major product category and applying a forensic lens to optimize our product assortment, our pricing and promotions to drive relevance for customers and unlock growth. It requires a very keen eye on customer and competitor dynamics and for us, building on our strong own-brand products to create even more differentiation that is unique to Halfords. It's worth mentioning here that we have an amazing track record in own-brand products that is sometimes overlooked or forgotten. In Cycling, we have developed Carrera, the leading mainstream Cycling brand in the U.K. by value and Apollo, the largest brand by volume. Improving our category management will take a little time as we cycle through our categories, but we have started over the last month with Cycling parts and accessories and a few selected areas of Motoring. We expect to start to see results from this initiative as soon as early FY '27, but we have confidence in the scale of impact we can create when we focus on the right need states for customers. Through work in our impulse category, we've already driven over 70% year-on-year growth through much stronger impulse and gifting lines. Our second opportunity is to improve and better promote our services proposition, which sits at the heart of what makes Halfords unique. For millions of customers, we are not just a retailer. We are a trusted expert that solves their problems in one visit. We're therefore, really focusing on optimizing our service offering across both Motoring and Cycling, ensuring we have the right offer, pricing and operating model in place. And we're driving awareness of the full breadth of our services to attract more customers, which you'll start to see in our marketing and media in the coming months. The opportunity is clear. Services are one of our most defensible advantages. They also offer higher-margin revenue and are less price sensitive. They cannot be replicated credibly by online pure players or mass or discount retailers, and they deepen our relationships with customers who increasingly value the convenience and reassurance we bring them. Thirdly, as I mentioned, digital already represents around 25% of our total Retail sales, and around 80% of those orders are collected in store. That shows the strength of our integrated model and the importance of our digital channel in generating customer footfall. But it also highlights a simple truth: with the scale of our online reach and the breadth of our retail and services proposition, we should be capturing more of that demand more consistently. In short, we have an opportunity to grow our online share. Having come from a pure-play online retailer, I know that applying the right focus and resources will yield results. And moving forward, I expect our digital sales growth to outstrip our core physical Retail sales growth. Progress here is about improving core website functionality and performance, and it's also about improving customer journeys and processes. Alongside this, we're sharpening our offer, expanding our online ranges, improving availability, tightening product descriptions and applying a more scientific approach to pricing and presentation. These are the basics of good digital retailing and with our scale, they will have a meaningful impact. If we turn now to our Garages division, there is much we can do to optimize our business over the short term. As I've already explained, Motoring Services is a large fragmented market and our biggest opportunity over the next few years. I'll start with the program you'll know most about, our Fusion rollout. By the end of this financial year, we will have more than 100 Fusion garages in operation, with up to another 50 or so to roll out in FY '27. We have a tried and tested formula that customers love and typically drives a doubling of profitability within 2 years. Over the last 5 years, we have materially changed the shape of our Garages business. Today, we have scale and effective national coverage, but we now need to drive operating standards and improve garage utilization rates to drive margin accretion and profitability. The same principles apply in our mobile van business and our Commercial Fleet Services. Fundamentally, this is about operational excellence and a ruthless focus on efficiency and process improvement. We have a range of activities underpinning this that are all in flight. We're implementing a zonal operating model, which allows us to redeploy labor to high-demand garages rather than recruit new technicians, effectively balancing supply and demand. As well as improving total utilization, we're now focused on ensuring we have the right skills mix in each site, with our master technicians focusing on the complex work, and service and diagnostic technicians picking up the rest. By getting the right people on the right job, we will deliver a better service and reduce the cost per job. We're also bringing in new equipment to reduce job times. For example, we're rolling out new equipment for wheel alignment, which halves the time taken to complete the work. These are just a few examples of the work already in train in our garage business that I'm confident will create a more profitable garage and mobile business and deliver an even better customer experience. I mentioned that the power in Halfords is the power of the group and the fact that our assets are stronger together than alone, and there is much we can do to optimize that group dynamic. Uniting the Group is the Halfords brand, trusted and well recognized. But for understandable reasons over the last few years, we have not sufficiently invested in our brand. That has meant that we've lost ground in terms of consideration and some of our performance marketing channels such as Google and PPC have lacked cut through. We've been running localized trials in certain geographic areas, and we have a high degree of confidence that an investment in advertising will strengthen the foundations of the Halfords brand and yield a rapid payback. This is not about a big bet marketing campaign. This is iterative, spending little, proving return and driving overall business performance. We'll measure our success and returns here in customer numbers and in our brand health metrics and transaction volumes. Halfords Motoring Club has been a standout achievement over the last few years. From a standing start, we've built a loyalty base of 6 million customers, with over 400,000 of those taking up a paid subscription in premium membership. They generate about GBP 20 million of annual recurring revenue for an MOT subscription, which also offers a host of other benefits while providing us with valuable vehicle data. Over the medium term, we have plans to transform club and make it the central destination for our customers to manage all their motoring and cycling needs. But in the short term, we'll continue to prioritize premium and ensure that our promotional mechanics are driving incremental margin through our standard membership. We'll measure success here in the numbers and contribution of premium membership. So there is a lot to get our teeth into in optimizing our business. What I've mentioned today are some of the key parts of our optimize phase, but it is not exhaustive, and there are other aspects of what we need to tackle. None of this, though, is revolutionary or rocket science, and that is good news. It's all clearly within our grasp, and we are on with it with clear plans and associated resources. But we also need to think about how we drive value over the medium and longer term, how we strengthen and evolve our business. Some of this will require investment, but we are very clear on 2 things. First, we need to earn the right to invest further. That means that we need to show progress in optimizing the business, and we need to show improved financial performance. And second, if we do invest, we have to show a very clear line between investment and returns. So there is a phasing here, optimize first and earn the right to invest and evolve. The evolve phase, though, is not just about investment. It's about self-help and business improvement. There are 2 clear areas or pillars that will help drive value. First is having a lean and effective business being fit for the future. Second is evolving our tech and data capability, and I'll take each of these in turn. As a business, we've managed our costs over the last few years, but there is an element of painting the Forth Road Bridge here. As soon as you finish running a cost program, you need to go again. And frankly, that should be part of any well-run business. But I believe there are bigger opportunities to structurally reduce our costs and realize ongoing annual savings as well as having a more effective business. Having driven a GBP 20 million annualized supply chain benefit in my previous business, I believe we have a compelling opportunity to improve our supply chain logistics, take out cost and improve productivity. We will need to work through cost and benefit details, but we believe there will be a clear business case and compelling returns here. And likewise, we see an opportunity to reengineer our back office, build better business intelligence and reduce costs by upgrading our enterprise resource planning, or ERP system. These programs of work once ground businesses to a halt in their scope and enormity, but this will likely be an upgrade, not a replacement, and we will take a phased and iterative approach rather than in one big bang. This will also be an important enabler of our future scale phase, which I'll come on and talk about in a minute. Finally, we believe that there is an opportunity to improve effectiveness and reduce cost by looking at our organizational structure and how we work with outsourcers. It's worth saying that in all of these areas, we are highly functional today, so there are choices that we can make. But to be crystal clear, we will only proceed with a clear and quantified line between spend and return. However, with a debt-free balance sheet, we should have the confidence to pursue projects with clear returns that give us an uplift in our long-term profitability. Technology and data have the potential to fuel significant growth in our business. In the medium term, there are tech projects that we have already clearly identified that will drive value. Amongst these, we plan to fully roll out Avayler, our proprietary garages management software, to all parts of our Garages business. This will further drive utilization, improve margins and provide a better customer experience. And in time, in Retail, we want to upgrade our current point-of-sale system, iServe, improving speed to serve and freeing up colleagues to spend more time helping and advising customers. I mentioned earlier as part of our home truth that we had not yet made full use of our data potential and that we had work to do. Today, we use data effectively to reward loyalty and drive CRM. And this activity drives both spend and customer engagement, but we have the potential to do much more with significant benefit by further developing our data platform. Through our evolve stage, we'll build the capability for real-time decisioning and much greater personalization. We see an opportunity for predictive analytics for customers and their cars, allowing us to anticipate issues before they arise, provide proactive maintenance and deliver a rapid, seamless service. This will differentiate our customer experience, drive sales and reduce our cost to serve. We will also improve how we use data to inform business reporting and decision-making, enabling faster evidence-based decisions across the business. In particular, we see the potential to improve marketing effectiveness, pricing and use of promo. We have a lot of data. 20 million customers engage with us every year. We have 12 million vehicle registration numbers with owner data. And in Halfords Motoring Club, we're building an even richer data set with marketing permissions. Utilizing that data for our own purposes and in partnership with others, such as through a retail media network or through introducing other services will be a key area of focus for us. The next 5 years will likely see the widespread adoption of AI in businesses, and those who have workable data are likely to be the ones who benefit the most. Whilst we don't have a crystal ball, we see AI as being much more of an opportunity than a threat. We see significant opportunity in automating processes, improving back-office efficiency and in improving insight, and we're on with it. We started at a small scale to experiment and change things using both internal and external resource. But this is test and learn rather than anything transformational at this point, but we are enthused and excited about the potential, and we'll continue to look at ways in which we can harness AI. But at the other end of the spectrum, we do not believe our business or the services we provide risk being made redundant or being disintermediated. Much of the physical work in a garage is difficult to automate and likewise, AI or automation would struggle with many of the services we perform in our retail stores. Indeed, it's not just our opinion, in October of this year, Microsoft published a list of the top 40 jobs likely to be replaced by AI and the top 40 with most resilience. These included tire and garage technicians. Our services and products are unlikely to be made redundant, but AI should help us be much more efficient and free up our colleagues to spend more time supporting customers and so generating revenue. The third and final phase of our strategy is about the scaling of the business. Clearly, we're trying to scale our business organically every day of the week. But our strong belief is that as we optimize and evolve and invest in our business, we'll be in a position to scale at much greater pace. From a Garages' perspective, this will mean opening more garages, but only once our estate is at optimum utilization. More garages can be achieved through organic openings, but more likely, we will scale through acquisition. The dynamics here play in our favor, and we expect there to continue to be a number of opportunities on the market that will allow us to scale rapidly. For Retail, scaling is likely to come via our digital channel, where we see significant opportunity to grow our existing business, but also expand our markets and range in a low-risk CapEx-light fashion. We also believe we can ultimately broaden our offer in partnership to become the digital go-to destination for all things, Motoring and Cycling, a digital one-stop shop, a single point where you can access products and services for all things, Motoring and Cycling, under one brand, one account with a singular website or access. Today, we offer products, and we offer servicing, maintenance, repair and MOTs. In partnership, we see the potential to offer breakdown, insurance, financing, parking and many other benefits. From a customer point of view, the hassle of car ownership is removed. You have one entity to deal with and one monthly or annual fee that covers all your motoring needs. This is not an unachievable pipe dream. We've built the core component parts and have a working model in our Halfords Motoring Club Premium tier. But there is much more we can do and need to do before we really push and scale this. But ultimately, we believe we are by far and away the best positioned company to achieve this, and we see real value and potential here. So I've outlined the 3 phases of execution that we will implement and what those will mean in practice, but I now wanted to hand over to Jo to talk about how we will measure success and the financial performance and returns we can expect and the disciplines we will look to adhere to. Jo Hartley: Thank you, Henry, and good morning, everyone. Last time we talked about strategy was at our CMD in April 2023. We shared in detail our future targets and the building blocks that would get us there. The reality since then is that while we've worked hard to deliver the cost savings and market share growth we targeted, we struggled to meaningfully grow profits against the challenging consumer and inflationary backdrop. Our markets have been slower to recover to pre-COVID levels than anticipated, and the GBP 90 million of cost savings delivered in the last 3 years to March '25 have not quite mitigated over GBP 98 million of cost inflation during the same period. We have, however, manage cash and working capital well and strengthened our balance sheet throughout this period. Notwithstanding the challenges of the last few years, I'm pleased to say I'm more optimistic about our future. While I'm not going to share a detailed forecast today, I will lay out how we will measure success, the trajectory we anticipate and how we will allocate capital and manage our balance sheet going forward. As we move through the next few years, we will consistently come back to the same measures to indicate progress. Financially, we expect to deliver like-for-like sales growth, with faster growth through our digital channels, operating margin expansion, underlying PBT progression and a return on capital that grows to exceed the cost of capital. Clearly, as we look forward, we cannot predict the external forces that may impact us, specifically, how consumer spending patterns may change, what successive governments and budgets may bring, or how geopolitics will evolve, and the impact this may have on our cost base. But we do know our business, the strength of our brand, the attractive markets we operate in and the unmatched scale we have through our unique combination of digital and physical assets. We have a hugely differentiated service-led customer proposition, delivered through 12,000 skilled colleagues and led by a new and experienced management team. We also know we're starting from a relatively low profit base and the opportunity from data and technology is significant. And importantly, we have a strong balance sheet and a cash-generative business which gives us not only resilience, but the ability to invest in projects that will drive growth in underlying profit and returns for shareholders. As such, we do believe that with discipline we can deliver against these measures sustainably and over time. That said, each phase of the plan will have slightly different dynamics. Throughout the plan, we anticipate CapEx to maintain and drive optimization improvements within our existing business, continuing at broadly similar levels to those seen historically, with investment between GBP 55 million and GBP 65 million per annum. In the evolve phase, we see opportunity to deliver returns from additional investments to drive efficiency and cost savings in our supply chain and in our central overhead, including through upgrading our ERP. In this phase, we will make incremental investment where we see attractive and incremental returns. And we won't move beyond the previously mentioned GBP 55 million to GBP 65 million per annum investment range until we earn the right to do so by showing good momentum in our underlying business. We'll come back to you with more detail on these programs and their costs and benefits once we're confident in the business case returns and ready to get started. Finally, and to be clear, only once our model is optimized and our investments are paying off, will we enter the scale phase, using our balance sheet to enable investment in acquisitions, expansion and further growth. We will operate with discipline throughout all phases of the plan, delivering progress on the KPIs I've described and always operating within our previously guided net debt-to-EBITDA range of 0 to 0.8x, excluding leases. One of our strengths today is undoubtedly our strong balance sheet. We have GBP 180 million debt facility committed to April '29, our balance sheet is currently in a net cash position of GBP 18.6 million as reported this morning. And our lease lengths and therefore, liabilities are low. Leverage, including lease debt is 1.3x. We, therefore, have resilience in uncertain times and the financial firepower to invest where there's opportunity to deliver compelling returns. As we have updated the strategy, we've revisited our capital allocation priorities, and there is very little change. Maintaining a strong balance sheet remains our core guardrail and #1 priority as we look forward. We will continue to operate such that leverage, excluding lease, that does not exceed 0.8x underlying EBITDA at any stage through the plan. Secondly, we continue to see opportunity to invest to maintain and grow our business, as Henry has described. The dividend becomes our third priority, now ahead of M&A. This switch reflects our focus on growing the core business and returning to shareholders through an intention that the dividend progresses as underlying profit progresses. As such, our dividend policy remains unchanged in that we will pay a dividend that's covered 1.5x to 2.5x by underlying profit after tax. M&A, therefore, becomes our fourth priority, most likely once we get to the scale phase of our plan. And thereafter, we would return surplus cash to shareholders. To conclude, the plan Henry has described is clear and compelling. There's a refreshed leadership team in place with clear priorities and a focus on execution and as a team, we're all excited about this next chapter. I believe the potential in this business is enormous, and there are clear opportunities to drive shareholder value in the years to come. We will report consistently on the measures I've laid out today in future announcements, and we'll lay out our quantified investment plans and anticipated returns when we've earned the right to move into the next phase. The results going forward should speak for themselves. I'll hand you back now to Henry. Henry Birch: Fantastic. Thank you, Jo. So what I hope I have shown is that we have a clear, achievable and compelling plan for Halfords over the next 5 years. It may not be as shiny or gimmicky as the Tesla Cybertruck or Robotaxi launch, but we're okay with that. We're not pulling rabbits out of hats here, and we do not need to. Success and growth will be achieved by a clear focus and execution of a plan. But it does ask the question, "Who is executing that plan, and why will things be different moving forward?" Well, I'm very excited to be working alongside a very talented team of people, some of whom are new to Halfords, and all of them bring relevant experience and a track record of success as well as genuine leadership and drive. Earlier this year, we hired Adam Pay as the Managing Director of our Garages business. Adam spent 10 years of his career at Kwik Fit and most recently was the Managing Director of mycar, Australia's largest garages business. Over the course of 10 years there, he transformed the business from loss-making to market leader. Adam brings energy, leadership and hands-on experience, and he's the only person I know who can change a fan belt and read a balance sheet and at the same time. Jess Frame joined us 4 months ago as Managing Director of our Retail business. Jess was previously the Managing Partner of BCG's London office, advising many of the U.K.'s largest retailers. And she's done stints at Tesco and as Chief Executive of a PE-backed veterinary business. Jess has landed with pace and drive and has high ambitions for our Retail business. And most recently, Sarah Haywood joined us as our Chief Information Officer. Sarah had previously been the global CIO for the Carlsberg Group and brings a wealth of experience. Sarah's leadership will be key in navigating a changing tech world and guiding us through change. Our 3 newest executives join an existing team with huge experience and capability alongside Jo, our CFO; Paul O'Hara, our Chief People Officer; Karen Bellairs, our Chief Customer Officer; and Chris McShane, our B2B and Avayler MD, all of whom make up our team. And with the exception of Karen, all are here today, and Jess and Adam will join our Q&A in a minute. And culturally and stylistically, we intend for things to be different. In addition to driving more of a performance culture, we're pushing a simplification of activity, focusing on the core levers that matter, that create customer benefit or drive performance. Halfords is a broad and complex business. But over the years, I think we've made it unnecessarily complicated and have added too many new initiatives and projects. These have stretched us, spread us too thinly and distracted us from the basics of the business. We're looking to bring simplicity, focus and clear prioritization to what we do. Part of that is governance and cadence. Part of it is having the right people and leadership, and it's about creating the right culture. The good news here is that we are pushing against an open door when it comes to our people and the change, agenda we want to implement. As Jo outlined, we also want to make sure that we are disciplined and rigorous in spending capital and driving returns, and if we're not getting the returns, to be transparent and explain why. I also want to shift our narrative from sharing plans that then struggle to materialize to reporting on what we have actually done and achieved and the associated financial outcome. So I wanted to draw matters to a conclusion and summarize some of the key points that you've heard today. I believe we have a unique and valuable business, capable of sustained top and bottom line growth. No one else has our asset base, and we are operating in markets that play to our strengths. Although there are explainable reasons, I recognize our more recent financial performance has been underwhelming compared to our potential. I also recognize that the Halfords machine is not yet humming. We have a fantastic group of assets, but both in isolation and as a combination, they are some way away from their potential. But we do not need a strategic pivot. We need delivery of the basics. There is nothing broken, but we need to apply focus, simplicity and disciplined operational execution. In the short term, this focus will deliver progression in our profit performance across all our divisions. As we drive improved performance, we earn the right to further invest and evolve our business, building additional foundations for growth. We see a significant opportunity to better utilize the data at our disposal and harness technology. And as we optimize and evolve, we will significantly increase our ability to scale. It is a phased approach, but one that delivers returns along the way and will drive value. We're purposely not giving detailed forecast today, but we will consistently track and report on key performance indicators that will measure our progress. But we are clear. Our first job is to build confidence in our investor base that we can consistently deliver results and drive required returns on capital. We have clear plans to do this. We have a great senior team, and we have over 12,000 colleagues who are committed and passionate about the business. I'm excited for what together we can achieve. So that concludes today's presentation. And I'd like to invite Jo, Adam and Jess to join us for Q&A. And I think in terms of asking questions, if you can identify who you are and what organization you're from. Henry Birch: Kate? Kate Calvert: I'm Kate Calvert from Investec. Three questions from me. On the fiscal estate, does Halfords have too many retail stores? And what is the ideal sort of number of Autocentres over the longer term? In terms of my second question, I know you're not giving your forecast, but could you talk a little bit about the margin recovery opportunity? You did talk about expansion of margins within Autocentres, but you didn't mention Retail. So is the sort of 7% historic Autocentres profit margin that's being talked about, is that still valid? And what are your thoughts on Retail? And I think my third question is, when I go into a retail store in 3 to 5 years' time, how different is it going to look versus today? What sort of new product categories might there be or service proposition? Henry Birch: Okay. Brilliant. So just the one question, Kate. Kate Calvert: Yes. Henry Birch: Brilliant. Okay. So we -- if I tackle the first bit around size of estate and then maybe get some commentary from Adam and Jess on that, too. Jo, you talked to the margin point on -- I can't read that. The margin point... Jo Hartley: Margin recovery. Henry Birch: Margin recovery. And then what was the last bit? Jo Hartley: Retail store, how will they look. Henry Birch: What they will look? I'll let Jess take that. So I think, look, in terms of the Retail estate, important thing to note today is that they are all profitable and they're all on short leases. And broadly, we're comfortable with that. I think moving forward, there may be some change to that, but nothing radical. And I think on the Garages estate, post-acquisition, we've done a little bit of trimming in terms of ensuring that we've got the right garages in the right local markets. But again, we don't see significant change there. In any given year, there may be a few closures and a few openings. Indeed, we opened a new store this year in Reading. But fundamentally, those won't change significantly. I think over the longer term, and I think we've made kind of mention of like 800 garages. My view actually is that there shouldn't necessarily be an upper limit because actually, the Garages market is typically very local. So actually, one of the attractive things about Garages is that, frankly, we can continue to scale up and up and up, but it does require opening more units, whereas clearly, with digital retail, you don't need to do that. But yes, broadly speaking, I don't think there'll be a significant change. Jo, do you want to do the margin point and then maybe Adam and Jess can talk about... Jo Hartley: Yes, absolutely. So in terms of the margin opportunity in Autocentres, I think the numbers we previously had out there were 5% to 6%, Kate. And I think we do continue to believe that's an achievable target for our Autocentre business. The opportunity lies in driving utilization and reducing effectively the cost to serve as well as adding more high-margin add-on services, particularly within our tire business. And we've had a very successful first half of the year in terms of increasing income per tire and growing our wheel balance and alignment services using some of the equipment that Henry described earlier. So I do believe we can get to those targets in time. Adam, I don't know if you've got anything to add on that. Adam Pay: No. Spot on, Jo. I think they're realistic numbers. I think the work that we're doing to simplify processes, improve equipment, speed things up in Garages will help us get there in the short to medium term. Jo Hartley: Do you want to take Retail? Henry Birch: Jess, do you want to tackle the Retail bit? Jess Frame: I think your question on have we got too many shops is sort of the same in terms of what you're going to see. So just sort of reinforce Henry's point. So Halfords has had real discipline over the size of its estate over the last few years. So we've actually exited 100 shops since 2018. So what you see today is a tight footprint, which, as Henry said, positively contributes across the estate. And as Henry mentioned in his presentation, our network, our footprint is what gives us this convenience offer and the route of the omnichannel proposition. We must remember that Halfords, as we move more and more into services, our stores don't play a traditional role as they do for many retailers. This is where our service events are taking place in the car parc essentially. So it's a really important role. It's a huge part of the omnichannel proposition. And at the same time, there are clearly opportunities to drive sales densities out of our stores. So it's not necessarily about fewer, but it's certainly about making that space work much harder. In terms of how different we look today, I don't want to presuppose the answer of sort of 4 months in. I can say that my current point of view is that format innovation is not going to be where we see a lot of value in the short to medium term. There's a huge amount we can do. You alluded to it, Kate, with our categories driving more sales densities, really focusing our core range to create space for newness and innovation and frankly more reasons for customers to come and shop with us. I won't predict ahead what those categ going to look like. We will absolutely stay core to the motoring and cycling needs that we surround our customer with, but there is plenty of opportunity that we see to do that. Jonathan Pritchard: Jonathan Pritchard at Peel Hunt. You said the brand is extremely well known, recognition of the brand is high. What are the bits that people don't get? What don't they associate Halfords with that they should? And how are you going to change that? And then, just as it's a one rule, but I'll add another one, just a one word answer. A cycle membership club, feasible in the short term or more medium or long term? Henry Birch: Yes. So I think -- on the brand and what people don't necessarily get, I think there are 2 things. One, I think, our Garages offering, I'm not sure everyone fully understands that. And then I think the other piece is the services element, the convenience of actually going to a retail store and being able to have a wiper blade fitted or get advice or do more of this kind of do-it-for-me. So we talked about broadly our kind of DIY customers who I think are fully knowledgeable about what Halfords offers, but I think they can also go to a Halfords and kind of serve themselves. The do-it-for-me customers, I think, just don't understand the full range of our proposition, either in terms of into Garages or the fact that actually they can bring any motoring or cycling problem to us, and we will fix it. So I think it's those kind of core things. Cycling Club, I would say, is not a priority for us right now. And I think kind of going back to -- it would be very easy for me to say, yes, a great idea. We're trying to drive this prioritization and simplification of focus. So it is not a high priority right now. Ben, sorry, did you... Benedict Anthony John Hunt: Just a couple of questions. Firstly, just on the emphasis on online seems to be coming more through Retail. How does that sort of square with the whole sort of cross-selling more into the Garages? And are there any margin implications? And I guess you've answered Kate's question on the size of the Retail, but any sort of thoughts how you're going to sort of square that? Secondly, just on Motoring Club, it seems to have accelerated really strongly. What's been necessarily driving that? Has that actually been incremental customers who are new to Halfords who are coming in or -- anything really you can add to that? And I guess the third question is on the evolve side. It looks like there's sort of quite a lot of work to be done in the supply chain and how you are going to maintain your CapEx and the guide rails. It feels like there's quite a lot to spend there. But really, any thoughts there would be great. Jo Hartley: So would you mind repeating the first question? Henry Birch: Sorry, Ben. Benedict Anthony John Hunt: First question is just on, there seems to be an emphasis on online within the Retail and how that squares with the need to cross-sell services into Garages? Henry Birch: Yes. So look, I think overall, we have a -- we've got one website, which our customers go to, whether they want to buy a roof box or screen wash or put their car in for an MOT. So there is a big focus for us in terms of making sure that those kind of digital customer journeys are improved. So when we talk about digital, it's both the kind of experience, which hits all part of our business. For Retail, we then have kind of e-commerce where we're selling those products. For Garages, people will find and pay for services, but they will also then book to have that service in a garage. So for Garages, it tends to be more about the journey to the physical unit, whereas in e-commerce, people can buy from us without actually setting foot in one of our physical outlets. But absolutely, digital is important for Garages as well, but there is that distinction in terms of products and services. The Halfords Motoring Club, we haven't done anything particularly to drive that. It is something that we do push in our stores and in our garages. So I think it's just a reflection of successful execution of that. But yes, it is growing. And yes, it is important for us. And the... Jo Hartley: The third question was on the CapEx, to evolve the supply chain. The CapEx guidance that I gave of GBP 55 million to GBP 65 million is really the CapEx that we need to maintain and optimize our core business. What we said was we would only move beyond that GBP 55 million to GBP 65 million investment envelope once we've earned the right to do so by showing momentum in our underlying business. And then we would come back with the investment opportunities and clear line of sight to the returns that they would generate. So I think we would expect to invest beyond that to optimize the supply chain, but only when there's clear line of sight to returns, and whether that's a CapEx or OpEx investment, remains to be seen. Henry Birch: Manjari. Manjari Dhar: It's Manjari Dhar, RBC. I just had 2 sort of broader ones and maybe one quick one. Just on the sort of garage optimization work, I was just wondering how much of that is -- needs to be done on sort of the existing Halfords garages, and how much is it needs to be done on the garages you've acquired over the last few years? Just trying to get a sense of sort of where that integration stands now. And then secondly, I think you mentioned it very briefly about in the sort of evolve stage about retail media and other opportunities. I was just wondering if you could give some more color on what that could look like, what that means for the proposition? And then just finally, Jo, I think in the prerecorded presentation, you gave the H1 FX hedge rates. I just wonder if you could give some -- give the H2 rates as well. Henry Birch: Okay. Adam, do you want to talk to the -- in terms of where we need the optimization, is it existing Halfords or acquisition areas? I mean the answer is both, but you'll give more color. Adam Pay: It is both, and there are a lot more together than they were previously now. So we're not talking about them internally any differently. The opportunity to work through improving processes, providing equipment, providing tooling and training that we need to smooth through at the front end is exactly the same, whether it's a Halfords, also center or one of the acquisitions. It's working really well for us now. And I think the fact that we've got so much unity across those brands now is really helping. Henry Birch: And I think it's worth noting that National was predominantly a tire brand. One of the things that we've done is moved more service maintenance repair into that, which has driven higher-margin revenue. So that's been a kind of clear and obvious thing to do. On the retail media network, we do actually have a -- we do actually use retail media today, but it is predominantly with existing suppliers. So if you think on the kind of battery side, we work with Yuasa, you'll find online and with our customers, we are promoting Yuasa and various other existing suppliers. There is an opportunity to go beyond our supplier base. So I'm kind of making it up, but a Nissan or a Toyota, if they want to access 20 million U.K. customers, car buying U.K. customers, then obviously, Halfords would be a kind of important partner. We don't currently do that at the moment. So I think there is a much bigger opportunity. We do make money today from a kind of limited, what you call, a retail media network, but there is a potential above that. Is there anything, Jess, sorry, that you want to talk about? Jess Frame: No, no. Obviously, I think the third party in offsite is actually really exciting and much bigger, but that won't be until sort of medium, longer term. Jo Hartley: Your last question on FX, Manjari. So yes, in half 1 this year, we saw a hedge rate in cost of goods sold coming through at $1.28 versus $1.24 in the prior year, which was obviously helpful and supportive of our margin progression during the first half. In the second half of the year, we expect broadly similar. It all depends on the stock turn really that comes through. We bought all of our currency requirements for the purchases we'll make in FY '26 at around $1.29, and we bought about 60% of what we need for our purchases next year at about $1.32. So we should continue to expect to see a bit of a tailwind from FX as we look forward. Henry Birch: Russell. Russell Pointon: Russell Pointon from Edison. Two questions. Going back to your criticisms at the start, Henry. First one was on the category management. You said you haven't done a good job of that. How quickly will you actually get through reviewing all the categories? Will it be done pretty quickly over 12 months? And the second one was, you also criticized the lack of synergies between the businesses, so do you need to incentivize staff in a slightly different way to push that through? Henry Birch: Yes. I wouldn't necessarily classify them as criticisms, more maybe observations. But maybe if Jess can talk to category management and the speed there. I think on the synergy point, we do -- I mean, Fusion, actually, our garage model, is a really good example of actually how assets work within Halfords, in Garages, in Retail, in as much as the model is driving Retail customers into our Garages. So we are doing that to good effect. I think my point is there is more that we can do. I'm not sure it's necessarily about incentives, but that is one way that we could do it. I think it's more around actually removing any kind of points of friction and making sure that our colleagues kind of understand how we drive value in the business. So I think it's more about operational management and communication. Jess, do you want to talk to the category management? Jess Frame: Yes, sure. Very happy to. I mean the short version is this will be pulsing. It will go through waves through all of the categories. This is an 18- to 24-month job. This is a massive, massive rebuild of all those ranges, starting with what does the customer need, how do we provide that. And within that, undoubtedly, there'll be a real opportunity for own-brand development. So Halfords has got incredible heritage in own brand, which is both higher quality and much, much better margin. So when we think about category management, it's not just a quick range review that really, really is challenging, bottom up, all of those ranges. So we're very excited. We've already started the first 2, but this is real sort of heavy lifting that will go on over the next 2 years essentially. Carl Smith: Carl Smith from Zeus. Two questions, please. First is on Fusion town. So previously, earlier this year, you talked about sort of doubling of profitability at the sites you invested in. Now you're sort of over halfway through your 150. Are those return rates sort of still applying now that you're getting a bit further along? And sort of expanding on that, do you think you'll go beyond 150 sites in the into the evolve phase even if the return rates become a bit lower for the incremental ones beyond 150? And then the next question is about the Motoring Club. How do you sort of intend to get more people on to premium? Is it more incentives? Is it more marketing or lower pricing? Or what's going to get more people to shift to premium? Henry Birch: So on the return rates for Fusion, the short answer is no, we haven't seen any deterioration. And clearly, we've kind of gone back and checked that prior to coming out today. So no, we're in good shape there. In terms of whether we can go beyond the 150, I mean, Adam is maybe best placed to talk to that. But I think there is then the question of what do we do beyond? We've got 600-odd garages. But Adam, do you see an opportunity for Fusion be extended or kind of Fusion light or... Adam Pay: Well, it's interesting. I mean if I think about the reason -- part of the reason that I joined the Halfords Group was the Fusion concept. I was really excited by that, and I continue to be excited. The fact that we can largely double profit in 2 years is absolutely fabulous. I mean we're going to have 100 by the end of this year, somewhere near, another 50. It'll get us to the 150. I think for me, the customer experience and the colleague experience is something that really stands out. So I think the broader question is not Fusion past 150; it's kind of what elements can we take forward into the rest of the estate moving forward. And I think there's some real benefits and some great learnings. So yes, it's very positive. Henry Birch: And on Halfords Motoring Club, look, I think we -- to my mind, we've made a brilliant start. And you may query me saying start when we've already got 6 million customers. But I think there is a piece of work that we need to do in terms of saying actually how do we drive premium more, what are the mechanics to drive membership, to drive value from that. So I think this is a kind of ongoing project that we are going to kind of drill down into, but it is an absolutely brilliant kind of asset and base to start from. Benedict Anthony John Hunt: So just one more question. First was club and less on strategy. But I'm wondering if we could just dwell a little bit on the [ sick job being ] tires. You mentioned that you think you can reenergize that. What's been going on there? And where do you see that turning around? Henry Birch: So look, I think, without question, tires, over the last couple of years, have been struggling in the U.K. in terms of growth. I think we've seen some improvement in that. I think as a company and talking to investors, I want to kind of change the narrative from talking about the tire market to talking about our performance because I fundamentally think that actually even in a static or declining market, we've got the potential to take share. And I think actually some of the stuff that we're doing, and I'm going to ask Adam to talk about, wheel balancing and alignment and actually how you can sell a tire and make money not just on the tire, but the services around it and the margin that, that drives is something which actually we're starting to do, to kind of good effect. So I think my kind of headline is I don't want to be talking about the kind of tire market endlessly. I want to talk about our overall Garages performance and within that, that actually we're running a kind of healthy and growing tire business. It may not be immediately, but we're getting there. Adam, do you want to talk about your specialist subject maybe? Adam Pay: Yes, I'll come dip off to one side and fit a fan belt in a second, too. Yes. I mean the opportunity for tires that I've seen since I've landed is significant for Halfords. The market has been tricky. There's no doubt about that. I don't want to go into all of the technical detail that sits behind that. But we are only 9% of that market, and it's a very, very attractive segment. And there's a lot that we can do internally to smooth the path for tires. So there's work underway around training for our colleagues. That's technical and soft skills. There's also different ranges being put into Garages right now. We've got different equipment that speeds up that process. So I think over the next short to medium term, we're going to start to see an uplift in our tire performance despite whether the market is in decline or in growth, I think we can certainly take market share and grow. Mark Photiades: It's Mark Photiades from Canaccord. Just on Cycling, you talked about pushing into premium and parts and accessories. Could you maybe just give us a sense of what those 2 categories represent in terms of the GBP 1 billion market? And the group has moved into that area before, particularly premium. It didn't necessarily go to plan. I just wonder what gives you confidence that you can make inroads this time around? Henry Birch: Jo, do you want to talk to that? Jo Hartley: Yes, I'll talk to that, and Jess may have some points to add on it. But if we sort of start at your last point, we were in premium cycling several years ago, and we owned -- we sort of had -- we came out of specific premium cycling shops actually some time ago. Our move back into premium cycling is not, to be clear, opening a load of premium cycling shops that are separate from our own Halfords business today. What we have seen though over the last 6 months is really good growth in those premium price bikes, in e-bikes and also in those slightly higher price point bikes. And it's really noticeable that Tredz, our performance Cycling business, which to be clear, just has 3 shops and a big online business, had the strongest growth in the group in the first half of the year with double-digit like-for-like sales growth. So that market is definitely coming back, and it's really where enthusiasts want to play -- are playing. We've got quite a lot of innovation that's been happening in that space, and I'll let Jess talk a little bit more about that in a second. But we're confident that there's a good growth opportunity for us there as we look forward. Jess Frame: Yes. Just to build on what Jo said, I think it's really important that there's nuance in terms of what is premium cycling and what is not. And the reality is there's an entire spectrum where we see a lot more people trading up than we used to do. And so actually, with our Tredz business and Halfords' core, it's a really, really exciting opportunity for us to actually serve across the set of need states. And we've identified some areas that aren't currently served across those 2 areas. There's some really interesting white space opportunity. And back to the point on own brands, we've developed and have just started to launch now. You'll see them drop into shops over the next 3, 4 months, a really, really impressive range of more premium e-bikes that we're very, very proud of, that we've developed with integrated technology and so forth, which again, so that sort of Halfords' product capability and own brand actually allows us to take features that are typically premium-only and bring that more into the mass market and make it more accessible for customers. So I think we have a really exciting role to play on that one. Henry Birch: I think we're nearly -- Rupert, you had a question? We're nearly up on time. Unknown Analyst: I was just going to ask a question on Cycling, too. Henry Birch: Okay. Unknown Analyst: And you've largely covered it. Sorry. The 9% like-for-likes, I just wonder whether that was aided by price promotion? In a challenged consumer environment, that feels like a good number. And a bit of color on what was behind it, please? Henry Birch: I mean Jess can talk to it in a bit more detail. We didn't do anything massively promotionally. I think you'll remember, earlier in the summer, we had warm weather that came in the kind of spring, which I think probably helped some of that performance, maybe pulled forward some of the Cycling sales from later in the year. But no, there wasn't anything we did promotionally. Jess Frame: We did outperform the market quite significantly, but that wasn't through Tredz, and essentially, we've got a great range. Tredz is the #2 online player in premium cycling, right? So across that when the market wants to buy, Halfords is the place to come. Jo Hartley: And particularly strong in Kids and Electric in the first half of the year from a Cycling perspective. Kate Calvert: All right. First and last. I was just going to come back on the garage utilization. What are the sort of main levers short term to improve utilization? Is it all about systems and processes? Or is there a skill issue and equipment issue in some of these centers? Adam Pay: No. It's a really good question. So the processes are the underlying piece. But what you've got then is making sure that we've got the right headcount and skills mix, to your point, in each and every one of our garages that meets the market needs and gives us the opportunity to grow. There's also an opportunity for us to really accelerate our apprentice programs to get more colleagues into Garages and make sure that we've got more people on the ground in the right place at the right time, but also protecting the future health of the workforce for us, too. Henry Birch: Brilliant. Thank you very much, everyone, for attending today. Thank you for those joining online. This concludes our presentation. Thank you.
Operator: Welcome to Hafnia's Third Quarter 2025 Financial Results Presentation. We will begin shortly. We will be brought through today's presentation by Hafnia's CEO, Mikael Skov; CFO, Perry Van Echtelt; Soren Winther, VP, Commercial; and Thomas Andersen, EVP, Head of Investor Relations. They will be pleased to address any questions after the presentation. [Operator Instructions] During this conference call, some statements may be considered forward-looking, reflecting management's current expectations. These statements involve risks, uncertainties and other factors, many of which are beyond Hafnia's control that could cause actual results, performance or plans to differ significantly from those expressed or implied. Additionally, this conference call does not constitute an offer or solicitation to buy or sell any securities. With that, I'm pleased to turn the call over to Hafnia's CEO, Mikael Skov. Mikael Opstun Skov: Thank you, and hello, everyone. We appreciate you joining in Hafnia's third quarter 2025 earnings call. My name is Mikael Skov, CEO of Hafnia. And with me today is our CFO, Perry Van Echtelt; our VP of Commercial, Soren Winther; and our EVP and Head of Investor Relations, Thomas Andersen. Earlier today, we released our Q3 2025 results, which are now available on our website. During this call, we will walk you through our quarterly performance, discuss key market developments and share updates on our financial position. We will also present our sustainability initiatives before opening the call for questions. Let's move to the next slide. Slide #2. Before we proceed, I would like to go through our safe harbor statement. The information discussed on this call is based on information we have today, which may include forward-looking statements that involve risks and uncertainties. Actual results may differ materially from these statements. Nothing presented on this call should be construed as an offer to buy or sell securities. Thank you for your attention. With that, let's begin with a review of our results for the quarter. Next slide, Slide #4. The product tanker market started out this year on a softer note, but it strengthened significantly through the third quarter. Higher trading volumes and strong refinery margins drove this. Much of the growth came from increased export flows out of the Middle East and Asia with clean petroleum products on water continuing to rise throughout the quarter. This strong backdrop supported the spot market, and I'm pleased to share that Hafnia delivered another excellent quarter. For Q3, we achieved $150.5 million in adjusted EBITDA and a net profit of $91.5 million, our best quarter so far this year. As part of our fleet renewal strategy, we also sold four older vessels, all built between 2010 and 2012. Finally, in September, we announced a preliminary agreement to acquire 14.45% of TORM shares from Oaktree. This was followed by a binding share purchase agreement, and we are now waiting for the appointment of a new independent board chair at TORM before we can complete the acquisition. Moving on to Slide #5. Next, I'd like to give you a brief overview of Hafnia and highlight our key investment attributes. Hafnia is a global leader in the product and chemical tanker space. We operate one of the largest and most diversified fleets in the industry. As of the third quarter, we own and chartered in 126 vessels with an average fleet age of 9.6 years, significantly younger than the industry average. At the end of the quarter, our net asset value was approximately $3.4 billion, translating to $6.76 per share or NOK 67.55. Beyond our core fleet operations, we continue to give strength through our complementary business platforms. We commercially manage about 80 third-party vessels across 8 pools, and our bunkering procurement platform supports both Hafnia's vessels and external partners, creating additional scale and efficiency benefits. Let's move to the next slide, which is Slide #6. Another key investment attribute of Hafnia is our transparent and consistent dividend policy. We have delivered dividend consistently over the past several years, and our goal has always been to make them sustainable and predictable across the market cycle. Our net loan-to-value ratio improved from 24.1% in the second quarter to 20.5%, supported by strong operational cash flows. Approximately $100 million was used to repurchase vessels on the sale and leaseback financings. In addition, vessel market values have also recorded a slight uptick compared to the previous quarter. In line with our dividend policy, we are declaring a payout ratio of 80% for the quarter. This corresponds to a total cash dividend of $73.2 million or $0.1470 per share. For shareholders receiving dividends in Norwegian kroner, the exchange rate will be based on the value date, which is two business days before the payment date. With this quarter, we now mark 15 consecutive quarters of dividend payments, underscoring our commitment to consistent shareholder returns and long-term value creation. Soren Winther, our VP of Commercial, will now share the industry review and market outlook. Søren Winther: Thank you, Mikael. Let me begin with a review of third quarter market conditions within the product tanker market segment, where Hafnia primarily operates and then share our outlook for the months ahead. The product tanker market started 2025 on a softer note, but showed countercyclical strength throughout the third quarter, supported by higher trading activity and tonne-miles. Clean petroleum product volumes on water for 2025, continue to track above the 4-year average, with Q3 showing an unseasonal increase compared to previous years. Importantly, the corresponding rise in daily loaded volumes suggest that total oil and water is being driven by higher export demand rather than longer voice distances. Moving on to Slide 9. While high clean petroleum product volumes usually correlate with stronger earnings, the earnings recovery this quarter was more modest, yet 18% stronger for [indiscernible]. We also saw a strong rebound and ton-days during the third quarter, supported by tight gasoline and distillate supply in Europe, stemming from ongoing refinery closures. This dynamic has driven tonne-miles and supported strong trading margins out of the U.S. and the Eastern basin. Moving on to Slide 10. On the supply side, despite continued newbuild deliveries in 2025, overall fleet growth has remained limited. This primarily is driven by continued vessel sanctions, and the migration of LR2s into Aframax dirty trading. Year-to-date, roughly 88% of the coated LR2 newbuilds have migrated into the dirty market, supported by a stronger crude earnings environment. In effect, the Crude segment has absorbed about 45% of the 2025 coated newbuild program, significantly minimizing increases in clean trading deadweight. Moving on to Slide 11. Beyond the LR2 migration, sanctioned vessels also play a significant role in tightening fleet supply in 2025. The U.K., UN and OFAC have collectively sanctioned more than 400 tankers this year, with roughly 25% of them operate in product segments. This is supportive for product tankers. As it effectively reduces available supply and also limits crude cannibalization, contributing to a tighter overall supply-demand balance. EUs 19th sanctions package, adds another 19 vessels to this list with the new addition split evenly between dirty and clean trading. We estimate that approximately 280 additional vessels have engaged in trade with sanctioned regions, signaling the potential for further sanctions. The dark fleet refers to targets with questionable ownership and an older age profile, while the grey fleet is associated with more reputable ownership. Moving on to Slide 12. Bringing together the topics of LR2 migration and vessel sanctions detailed in the previous two slides, overall, clean petroleum product capacity growth in 2025 has been unlimited. Year-to-date, around 12 million coated deadweight has been delivered. We had only about 1.1 million deadweight has effectively entered clean trading. This translates to approximately 0.5% net growth in clean product tanker supply. Moving on to Slide 13. Looking ahead, the supply outlook is less concerning than initially feared or reported. If we apply a 72.5% crude migration factor to future coated LR2 deliveries over the next 3 years, this implies roughly 11% fleet growth based on the current order book. However, nearly half of that growth is concentrated in 2026 driven by a heavier delivery schedule in the first quarter. Slide 14. Clean product cannibalization remained a real threat in Q3 with cannibalization volumes exceeding the 3-year average. Despite this, clean product earnings proved resilient throughout the quarter. On a positive note and looking ahead, the current strong earnings environment in the VLCC and Suezmax segments has reduced cannibalization volumes for November to nearly zero. This sets the stage for a robust outlook for the remainder of 2025 into Q1 2026. Moving on to Slide 15. Apart from the factors we have discussed, the continued aging of vessels and potential scrapping also supports a positive supply outlook. Between 2025 and 2028, we expect around 114 million deadweight of newbuilds across Handy to VLCC segments. Over the same period, potential scrapping could approximately be around 167 million deadweight based on typical scrapping ages. Looking further ahead, an additional 87 million deadweight could exit the fleet between 2029 and '30-'31. It is important to note that these estimates do not account for differences in utilization between newbuilds and older vessels. Slide 16. Inventory levels are an important indicator within the product tanker market. European diesel inventories have seen significant draws in 2025. With the winter season approaching, Europe will look to replenish inventory. The end of refinery turnarounds in the U.S. Gulf, Far East and Middle East during November will free up additional export capacity to support the supply. As I'll explain in later slides, it's also worth noting that South America will rely on increased North American supply over the next two quarters, leaving the Eastern Hemisphere to cover the European import shortfall. This dynamic is expected to drive higher volumes and longer tonne-miles. Slide 17. With continued drawdowns and refinery turnarounds, refinery margins have been on the rise in 2025. This typically correlates with higher earnings, further supporting the underlying market strength over the first quarter of 2026. Slide 18. The longevity of strong refining margins and resulting transportation demand is set to continue in Q1 2026. Fundamentally, European supply and rising transportation volumes depends on sufficient oil availability and the pricing structure that supports underlying arbitrages. Forward arbitrage from the U.S. Gulf and the East to Europe, is trending high for the remainder of 2025 into 2026. This supports forward trading volumes and underscores the real and sustained demand from Europe to cover for the winter season and replenish low inventories. Slide 19. Geopolitical tensions continue to influence the product tanker market. Following Ukraine's drone strikes on Russian refineries, clean petroleum product exports from Russia have declined significantly, while crude exports have correspondingly increased. This leads Russia's ability to supply clean petroleum products to South America and West Africa, prompting substitute barrels from the U.S. Gulf and Europe. These shifts drive higher tonne-miles on the non-sanctioned fleet, pushing the overall utilization. We're already seeing a decline in South American imports from Russia, accompanied by corresponding increases in imports from the U.S. Gulf. Moving on to Slide 20. Further on geopolitical tensions. In early Q4, the Trump administration facilitated a piece plan between Israel and Hamas, aimed at ending hostilities. While this could eventually lead to a gradual reopening of the Red Sea, we expect the process to take time. Our analysis suggests that the potential impact of a Red Sea reopening may be less than initially anticipated. If Red Sea transits return to normal, Suez canal traffic could regain the equivalent of roughly 180 MRs in transportation demand. While tonnage demand loss via the Cape of Good Hope are projected at around 230 MRs. The net effect on total arbitrage transportation volumes, while the Suez canal is about 43 MR equivalents. This implies a minimal negative market impact of approximately 6 MR units. Moving on to the next slide, where Perry, our CFO, now will bring you through the financial developments. Perry Van Echtelt: Thanks, Soren. If we move to next page, 22. We indeed had another strong quarter as market conditions strengthened, fueled by higher trading activity and firm refinery margins. For Q3, we reported adjusted EBITDA of $150.5 million and a net profit of $91.5 million, which is our best quarterly results of 2025 so far. Our Fee-based business in the pools remained steady, contributing $7.1 million in fee income. And we maintained strong profitability metrics with an annualized return on equity of 15.9% and a return on invested capital of 12.8%. Moving on to the operating summary. We continue to generate strong operating cash flows, supported by a boost balance sheet and further declining breakeven levels. For the quarter, TCE income stood at $247 million with an average TCE of $26,040 per day. A meaningful portion of our fleet was built in 2015 and 2016, leading to a relatively high number of drydockings. And this quarter's performance also reflected the impact of several vessels undergoing drydocking. We recorded approximately 740 off-hire days in Q3, which is about 230 days above our initial expectations, primarily due to drydock glass and two vessels undergoing special cargo tank recoating. Across the first three quarters of '25, we have drydocked 32 vessels and expect to complete another 14 in the fourth quarter. While we still have several vessels scheduled for drydocking in the coming quarters, we do expect off-hire days to decline and taper down to around 440 in the fourth quarter. This positions us well for stronger utilization and earnings momentum heading into 2016. And turning to the balance sheet. We made significant progress this quarter. Our net LTV ratio based on our 100% owned fleet improved from 24.1% at the end of Q2 to 20.5%, supported by strong operational cash flows. Across 2025, we have also reduced our weighted average debt margins by more than 50 basis points, further strengthening our financial position by securing very attractive pricing on new financings. During the quarter, we have used $100 million of our excess liquidity alongside debt refinancing to repurchase 14 vessels that are under -- that were under sale and leasebacks. Vessel market values remained stable, showing a slight uptick from the previous quarter. On the right, you can see our liquidity position. Following the signing of our $750 million revolving credit facility, we ended the quarter with over $630 million in total available liquidity, consisting of around $130 million in cash and $500 million in undrawn financing capacity. As mentioned earlier, we recently announced the agreement to acquire 14.45% of TORM shares. And let me clarify how this will be reflected in our net LTV calculation upon effectiveness of that transaction. In addition to broker valuations for our wholly owned vessels, we will incorporate the lower of the investments market value or its purchase price. This ensures that the investment is reflected in our leverage metric, while also maintaining the integrity of our dividend policy, which is designed to balance our capital structure and our asset strength. Looking ahead, our solid financial position and effective cost structure supports an operational cash flow breakeven of below $13,000 per day for 2026. Given the current market environment, this positions us very well for another year of strong earnings. If we look for that on the next page. So we look towards conclusion of Q4, as of the 14th of November, we have secured 71% of our Q4 earnings days at an average rate of $25,610 per day. For 2026, we already have 15% of our earning days covered at an average rate of $24,506 per day, giving us a strong head start to the year ahead. If you look at that based on the Q4 covered rates and also the analyst consensus, 2025 points toward net profits for the full year in the range of $300 million to $350 million. This positions us exceptionally well as we also move into 2026. And Mikael, over to you for the next few slides. Mikael Opstun Skov: Thank you for this. And let me now turn to Hafnia sustainability strategy and goals, and we are on Slide 27. As a global leader in the product tanker segment, we do recognize the critical role we play in shaping the maritime ecosystem. We hold ourselves to the highest operational and environmental standards with a clear commitment to creating a positive difference. Across the value chain, we are deepening collaboration with strategic partners, regulators and key international bodies to codevelop solutions to the challenges our industry faces. These efforts ensure that Hafnia remains firmly positioned at the forefront of the energy transition, not just adapting, but leading the way forward. Moving to Slide 28. Here, we showcased some of the strategic initiatives we've been working on to strengthen our competitive edge. Take Seascale Energy, for example, this joint venture creates powerful synergies with our existing operations and enables us to deliver reliable, scalable solutions across the maritime sector. In parallel, we're advancing our technological capabilities through our strategic investment in Complexio. Complexio leverages both structured and unstructured data to create a detailed operational landscape, enabling automation of recurring processes such as chartering, ship clearance, finance management and contract negotiation. These initiatives reinforce Hafnia's position at the forefront of innovation in the maritime sector, ensuring we remain agile, efficient and future-ready. Slide 29. Looking ahead, Hafnia remains well positioned for the remainder of the year. With winter approaching, seasonal demand is expected to support the oil market, driving higher earnings through increased tonnes-miles activity and strong operational dynamics. I'm encouraged by the underlying market strength and proud that we've delivered solid results while maintaining our 80% dividend payout ratio. We will continue to exercise disciplined financial management and pursue strategic opportunities that enhance our competitive position. Before concluding, I want to stress an important concern. As Ukrainian ceasefire discussions progress, policymakers and the shipping industry must ensure the vessels from the dark fleet often operating with poor safety standards are not allowed back into mainstream trade. Doing so would undermine regulatory trust and create serious risks to people and the environment. With that, this concludes our presentation. I'd now like to open the call for questions. Operator: [Operator Instructions] Frode, I see you're having hand up? Can you please unmute yourself? Frode Morkedal: So the first question is on this coverage slide you had, I noticed you had booked 67% of the LR2 fleet in 2026. So maybe you can shed some color on that? Have you booked -- what type of contracts are you booked and the duration, I see the rate there, like $30,000 a day basically. Søren Winther: Hi, Frode, Soren here. Yes, that's correct that we, during Q3 and into Q4, have covered more of our LR2 fleet for three years. You're talking four ships, where three with 3-year deals and one is a 2-year deal, about the numbers you're talking about. Frode Morkedal: Okay. That's good. I guess coming back to Mikael's point in his final remarks. I want to ask about this Russian, see the key export decline we've seen, right? So you showed it in the slides, exports are down, probably been good for U.S. more liftings, right? Have you also seen like an offsetting effect from, let's say, shadow fleet coming back, let's say, drifting back into the conventional fleet. What's your data showing? Mikael Opstun Skov: Maybe more on the DPP side than on the actual CPP side. So probably on this DPP, I'd say that the supply into South America has gone back to the conventional tonnage, adding a little bit more tonne-mile there, whereby on the DPP trading side, especially on Aframax', you have seen some more influx of not sanction tonnage, of course, but the grey fleet entering into an already busy Aframax market on the dirty trade. Frode Morkedal: For CPP, it's a positive result. Mikael Opstun Skov: Yes, you can say it certainly feels like a positive for now, and we don't seem to find a lot of competition from the dark fleet yet, at least. Operator: Omar, I can see you have your hand up? Can you unmute yourself, please? Omar Nokta: Thanks for the update. I did have just maybe a couple of questions and perhaps maybe first, just on the -- do you mind revisiting that Red Sea slide? I thought that was quite interesting. You mentioned the opening would perhaps not be as significant to fleet supply as initially thought. And just want to get a sense of if you wouldn't mind just explaining a bit more how you got to those figures, especially that part about the 43 cross hemisphere regains. Søren Winther: Yes. Soren again, here. So the analysis we have done is based on historic data on a general note. So if you take pre-battle [indiscernible] closing volumes and anticipate that those volumes would come back the market if Suez reopened in the sense that Middle East will then be the more competitive supplier into Northwest Europe and Mediterranean again in the event of a reopening. So what you're looking at is that it's taking the volumes that you would regain out of Suez or trading by Suez again, and we have offset the full gains that we have had for trading via the Cape of Good Hope and added the volume to come back to normal averages of East to West volumes, which then boils down to a limited impact on the market. What you can see on that slide is what is that going to do to trade flows on a general note. Is that going to be a positive for the U.S. Gulf, which has been a big driver over Q3 for sure. And if you have more supply out of the Middle East, that's probably positive for the LR1s and LR2s, whereby there will be other trade flows out of the U.S. gold for the MRs and probably more tuned towards the South American region. Omar Nokta: Okay. That's quite helpful. And maybe just touching on that point in terms of just transiting and what compels that you or maybe the industry do want to return. Obviously, I think a big part of it is perhaps insurance premiums. Have you seen any kind of shift or change in insurance costs, what's being quoted to transit in the region? Søren Winther: Not really yet, the big -- well, the big, I mean, at least the well-known owners on the clean side is not yet transiting. So there's not a lot of movement there. You have seen other parts of the lead, for instance, some Middle Eastern traders, that is sending their tonnage through the Red Sea. So I think you would see a mild increase in the volume that actually goes through the Red Sea today. But on an insurance and on a general willingness to try it out, not so much, to be honest. Operator: So Clement, can you unmute yourself, please? Unknown Analyst: I wanted to start by asking about the exercise of purchase options you pursued on vessels under sale and lease back. Could you talk a bit about the effect you expect this to have on your all-in cash breakeven for the vessels involved? Perry Van Echtelt: Hi, Clement. Good question. It's Perry here. I don't have the effect on the specific vessels. We purchased -- we had quite good and regular frequent purchase options on those leases. So as part of our refinancing, we took them out across the board with all the refinancings that we've done since the summer, that has improved our cash flow breakeven quite significantly. I think for next year, that will bring us somewhere below the $13,000 a day. But we don't have anything for on a per vessel basis. It's also less relevant. Unknown Analyst: Makes sense. The color is still helpful. And you've continued divesting the older end of the fleet in recent months. How are you thinking about potential fleet renewal growth at current pricing? And secondly, should we consider the acquisition of TORM shares, likes that kind of fleet expansion, or how do you view it? Søren Winther: Hi, it's Soren, again. You can say that our strategy over the past couple of years on the newbuild purchase side has always been linked to bigger projects, will cover somewhat forward. Perry -- and looking at newbuild prices now, that will probably be our strategy still. But -- well, yes, it's I guess, it all boils down to a better market than this, I think we are probably not in a situation now where we would look at a big newbuild program at current levels. Thomas Andersen: And I'm actually not seeing any more raise hands, actually, so Omar -- so Clement, if you can take your hands down if you finished, and then Omar, can you unmute yourself? Omar Nokta: Yes, can you hear me? Operator: Yes. Mikael Opstun Skov: Yes. Omar Nokta: Just wanted a follow-up on just a net LTV for half year at 3Q, obviously, a very nice drop from 24% to 20%. Obviously, precise like quarter over quarter. It seems that you're pace to perhaps get below 20% at the end of the fourth quarter, which, I guess, presumably triggers you back into that 90% payout threshold. Do you forecast that happening, or do you take into account the pro forma acquisition of the TORM stake at that point? Perry Van Echtelt: Yes. Hi, Omar, it's Perry. Good question. Net LTV at the end of Q3 is 20.5%. As we always do, we are consistent with our dividend policy and our dividend payout ratio. So of course, that would depend on where values are in the quarter. As we've also announced earlier in September that when we include -- once that deal closes, we include TORM stake at market value and purchase price, low of the both and then also including the debt. So that obviously will bring the net LTV all in all some -- probably somewhere in the middle of that range. Operator: I don't see any more raised hands. So I'm actually going to move on to the chats and the Q&A. So we have a question in our chat, which I will direct to Perry, regarding whether we plan on purchasing further shares in TORM? Perry Van Echtelt: Yes, that's not so much to come down. We've mentioned also in the earnings release that there's one more condition outstanding for the close of the stake that we've announced for 40.45%, and can't really comment or add on questions or suggestion of further purchases. Operator: Moving on to the next question. So we have someone asking that we mentioned in our detailed release the pool earnings for the week beginning 17th of November 2025. Is it only the week's earnings, or is it from the first of October to the 17th of November 2025? Thomas Andersen: Thank you for the question. That's for the week of -- starting November 17, so that week's earnings only. Operator: Thank you, Thomas. I'm just giving it a few more seconds to see if we receive anymore raise hands or any more questions in the Q&A or the chat. All right. Well, thank you, everyone. So today, we've come to the end of today's presentation. So thank you for attending Hafnia's third quarter to 2025 financial results conference call. You can find more information available on our website at www.hafnia.com. Thank you, everyone.
Operator: Good morning, and welcome to the Tharisa plc results investor presentation. [Operator Instructions] I'd now like to hand you over to CEO, Phoevos Pouroulis. Good morning, sir. Phoevos Pouroulis: Good morning, and welcome, everyone, to this -- our year-end results for the financial year ending 2025 September. I'd like to start off with our mission statement or benevolent intent, which is clearly articulated on the slide, which states that we look to redefine resources, we innovate with purpose and we look to empower futures. And really, this is the theme that I'd like to carry through while we run through this results presentation. This is the agenda for this morning, running through primarily the financial highlights, but also looking at our business as a whole and the strategic imperatives in the Vision 2030. So if we look at our business, we believe that we are resilient today. We are future-ready. We have a strong balance sheet that supports our Vision 2030. And what is our Vision 2030? It's to deliver on our expansion and growth plans and opportunities and to commercialize the technologies and solutions that we've been working on through our novel processes, which we'll unpack later on in this presentation. So when we talk about empowering futures responsibly, it really is core to our values. And underpinning this is safety. We're an integrated resources group that covers the full value chain of exploration, mining, processing, beneficiation, marketing, sales and logistics for both platinum group metals and chrome concentrates. Our commitment to sustainable growth and impactful investment not only returns value to shareholders, but lifts performance, strengthens community relationships and builds long-term sustaining partnerships. And with this comes our disciplined growth strategy, which ultimately leads to disciplined returns. ensuring that we have sustainable multigenerational value. So we just touch on our key highlights for the financial year 2025. Safety is our core value, really excelled. We had a lost time injury frequency rate at the Tharisa mine of 0.03 incidents per 200,000 man hours worked and 0 incidents at the Karo Platinum mine site, which is a hive of activity, which we'll share with you later in the presentation. We were also acknowledged at 2 events, the MineSAFE awards here in South Africa for the best improved safety performance for open cast mining over the past 3 years and a double silver award at the 2025 NSSA Safety and Health Workers Award in Zimbabwe Harare. Also very pleasing to note is that the Tharisa mine is the first Level 9 compliant mine in South Africa and in fact, is a test site and a role model for other open cast miners to come and see technology and the advantages that it does provide in terms of safety and well-being and general efficiency improvements. Later on, we'll unpack in a lot more detail the developments that we've undertaken during this financial year. But just to highlight them, we've commenced and begun our transition to underground at the Tharisa mine. We've committed a massive $547 million worth of investment over the next decade. This is underpinned by a new facility of the $130 million that was signed with Standard Bank and Absa Bank. And our Karo Platinum mine site is developing in line with the capital that we've allocated, and we continue to derisk that project. So when we talk about redefining resources, it really talks to our co-production model, which is unique in its inception and in its origination, and that is the co-production of platinum group metals and chrome concentrates from the middle group reef horizons. But to set the context for the year, we averaged a PGM basket price of some $1,615 per ounce for the year, which was up 18.6% from the prior year. Contrary to that, our metallurgical chrome grade price was down some 11% to $266 per tonne. So this set the scene then for our revenue, which came in at $602.9 million, EBITDA at $187.3 million, with a net profit after tax of $80.8 million for the year. Pleasing to note is net cash from operating activities at some $94 million with a vast and extensive capital expenditure for the year of some $118.5 million, which includes $33.5 million invested into Karo Platinum. We ended the financial year with cash and cash equivalents of $175.1 million. All of this resulting in headline earnings per share of some USD 0.275. And we're pleased to note that the Board have approved and recommend to the shareholders an additional USD 0.015 final year-end dividend, coupled with a half year USD 0.015 already paid out to a total of USD 0.03 for the year. And this, including the share buyback is a return of 17.2% of net profit after tax to shareholders. I think Michael will unpack in some detail the favorable mining royalty credit that we achieved in a landmark victory in terms of the reversal of our mining royalty at some $67.3 million. When we look at the impact we have and the jobs that we create through our investments, which have a major impact, our group employees and contractors amounted to some 4,483 people for the financial year, of which 27% of those were female employees. We provided 35 adult learnership, bursaries and internships for the year. And this is something very close to our heart where we look to share, educate and allow upliftment in terms of adult education for those that are interested from our communities and our employees. In terms of our impact to the fiscus, currency inflows of some $430.5 million, that's direct and indirect inflows with global direct, indirect taxes and royalties of some $31.7 million. I think an astounding number and something we're very proud of is the amount of money we spend on BEE, historically disadvantaged individuals, women and BBBEE compliant procurement of some $331.1 million, a significant contribution to these up-and-coming growing enterprises. We spent on local and host community suppliers, some $2.6 million. And also, we attract most of our employment from the host communities, in excess of 40% of our employees come from the host communities. Included in that is our commitment to our SLP programs and CSI initiatives where we spent some $1.1 million during the financial year. So moving on to our commodities and really what underpins our investment case. And we look at the spot prices today of the Tharisa PGM basket, which sits at $2,215 compared to a price for the financial year of just over $1,600, a pleasing improvement in terms of that PGM basket price as well as the Karo PGM basket price at some $2,024. And we'll unpack the prill splits and the differences between the Bushveld Complex, particularly on the MG reefs and the main sulfide zone of the Great Dyke in Zimbabwe. But ultimately, you can see here the fundamental nature of PGMs and the role they have played and they will play in decarbonizing the planet. And if we look at the catalytic properties and applications, they are vast and varied, but what's really supported platinum and palladium demand is really the rollback of battery electric vehicle penetration, the tightening of global emission standards and the pivot to hybrid vehicle production and demand. And this has really supported the baseloads demand of those very key and fundamental platinum group metals, including rhodium. But also, we've seen resilient industrial demand from the chemical and petrochemical, electronic sectors, fiberglass and glass sectors, supporting rhodium amongst platinum and palladium as well. We're very heartened by future technologies, particularly hydrogen, electrolyzers, fuel cells, which have a strong outlook for demand for platinum and iridium. Ruthenium is an interesting test case because it has always been used in hard disk storage. And with the advent of data centers proliferating and the investment that we see going into artificial intelligence has been a big demand driver for data storage and rhodium has a massive role to play. And we've seen that with the price appreciation over the last 12 months, and we believe there's a lot more upside potential for that. I think what really shocked the market and really supported platinum was the investment demand and jewelry demand primarily coming out of China. And we continue to see continuous supply deficits and what this means that above-ground inventories are being destocked and we're starting to see tightness in the market, supporting the higher PGM basket prices that we're seeing. So if we come closer to home now and we look at the favorable Tharisa Minerals prill split on a 6E basis, you'll see that platinum constitutes almost 53%, palladium at just under 16%, but quite remarkably, rhodium at 10.5%. And Michael will talk about the impact of that 10.5% in terms of our revenue. Very little gold, very nice ruthenium at 16%, iridium at 4.5%. Moving to the Great Dyke, you'll see that there's quite a different makeup with platinum at 43.5%, palladium at 38.3%, rhodium at 3.8%, gold significantly more at 8.6%, ruthenium at 3.8% and iridium at 1.9%. So a very nice blend and basket across both jurisdictions. Moving on to our other key commodity, which is chrome, which is really pivotal to decarbonizing the planet. Again, if we look at the applications in terms of construction steels, white good manufacturing and infrastructure, special alloys, special steels application, heat and corrosion resistant applications, we see a continued growth in terms of stainless steel, which is surprised always to the upside in terms of manufacturing as well as demand. And this is not just an Asia-centric story, it is a global growth phenomenon. And we start seeing applications in renewable energies as well in the desalination plants, solar, wind, hydro, Redox Flow, which we'll unpack later, one of our key investments and huge upside potentials, electrolysis storage of energy as well as pollution control. And what makes stainless steel and chrome hugely environmentally friendly is that it's 100% recyclable. So South Africa plays a vital role, as we know, the Bushveld Complex contains more than 72% of the world's resources. And what's really been interesting to note is that we've had a fantastic growth story in terms of our South African chrome manufacturing of concentrates and chrome ores at some 9.6% compounded annual growth rate over the last decade. And this is in the context of a struggling ferrochrome industry. And there's been a lot of talk and noise around intervention from government in the form of either a quota or a tax. And ultimately, we, along with our peer group, believe that any intervention is most probably misguided and really doesn't talk to the root cause of the challenge, which is the cost of electricity. We know that electricity prices over the last decade have gone up some 900%. And really, the answer to enable the sustainability of the existing ferrochrome producers whom we support and really look to find a solution for their current challenges is really the cost of electricity. And that not only will enable and support existing capacity, but will also stimulate beneficiation. And as you'll see later on, we have a very clear beneficiation strategy, which looks at some unique and novel approaches to beneficiation of both PGMs and chrome concentrates in South Africa and the region. I'd like to hand over now to Michael, who will run through the financial highlights of the year. Michael, over to you. Michael Jones: Thank you, Phoevos, and good morning, and welcome to all those who have joined for our financial results presentation for this financial year ended 30 September 2025. When I reflect back on this year, I think one of the key themes to me was our continued investment, not only sustainability of operations, but also in the growth of our projects and for multi generations to come. And that includes underground transition at the Tharisa Minerals mine, the Karo Platinum project and the commercialization of the R&D at Arxo Metals. Again, our co-product business model has reinforced our resilience effectively with the PGM basket price, as Phoevos mentioned, strengthening by some 18.4% year-on-year and the chrome price while staying basically range bound, reducing by some 11%. We have continued to be net cash flow generative with cash flow from operations of $94 million. And our cash and cash equivalents standing at $175.1 million as at 30 September. We have continued to maintain our capital discipline, and we've invested, as mentioned, beyond 2030 with multigenerational sustainability. And to support this, and we'll touch it in more detail later, we have secured an additional $130 million of term loan and revolving credit facilities, principally to fund the underground transition and the mining fleet. Final proposed dividend for the year, $0.015, which matches interim dividend and aligns with our dividend policy. And we're in the process of successfully concluding our second $5 million share repurchase program, which as of 30 September was 87% complete. Looking at revenue for the year, the revenue for the year at $602.9 million, again, key contributor being the chrome at 57.2%. And this is on an FCA basis. In other words, we strip out the costs of inland logistics and freight, which is the prime destination for that chrome is the Chinese market. Just touching on the graph on the bottom right, you'll see the major production output is on the metallurgical grade, just under 87% and the balance of specialty grade at 11.3%, which is a higher value item. Just in terms of the actual numbers themselves, the sales just under 1.4 million tonnes at an average price of $266 per tonne, and that's on a CIF main ports China basis. The PGMs contributed just under 40% to our overall revenue. And if you look at the graph on the bottom left, you'll see that platinum remained a major contributor at 38%. And while rhodium comprised less than 10% of our prill split, the very strong price performance has resulted in it contributing in excess of 36% to our overall revenue from PGMs. Numbers again, 137,500 ounces sold at an average PGM basket price of $1,615 per ounce. If we look at the spot price today, this morning was trading at $2,215. So it has continued its upward trend. This is quite a busy slide. I'm just going to touch on some of the numbers on it. I think very pleasing, the reef tonnes mined, up 15.3% at 5.3 million tonnes. And if you look at the graph along side, you'll start seeing the benefit of that from the cost side or purchases were only less than 4% of our on-mine cash cost, and that's a direct consequence of the improvements in our reef tonnes mined. Cost per reef tonne mined, very well maintained from a cost perspective, up 3.5% at $41.7 per tonne. Tonnes milled relatively flat at 5.5 million tonnes. And then the on-mine cash cost per tonne milled increasing 12.9% to $59.7 per tonne. Our logistics team has done a remarkable job over the year and well managed on our inland logistics and freight costs with a slight reduction year-on-year at $83.2 per tonne. We do operate in a rand environment for Tharisa Minerals and normally benefit from a weakening of the exchange rate. We had no such benefit over this past year with, in fact, a marginal strengthening in the average exchange rate to ZAR 18.1 to the dollar, an effect of some 2.4%. We are a coproducer of both platinum group metals and chrome concentrates. If we just say what is the all-in cost per platinum ounce sold. So in others, we take the credits from chrome and all the other platinum group elements, including the palladium and rhodium and such like, you get a negative $445 per platinum ounce. When we calculate that sustaining cost, we do take out the cost of the transition to underground mining as well as the Karo Platinum project. If we then turn around and say, let's look on an all-in cost per PGM ounce sold, that's on a 6E basis. We apply the same metrics and calculations, you get a cost of $571 per ounce. I really like this graph because I do believe that it reflects very nicely the history of the company over the past year. We started with EBITDA of 2024, and that was $177.6 million. You'll see the favorable impact of the PGM prices, offset by reduction in chrome volumes and then the impact of the chrome price, fairly significant, but take into account the overall volumes sold, and that is a reduction in price of 11%. Increase in absolute mining costs, and you would have seen on the previous slide, the increase in the reef tonnes mined. And that really offsets a lot of the mining commodities, which is purchased run-of-mine ore. So there's almost an offset on that basis. And then savings on the processing costs and selling expenses, and we'll touch shortly on the mining royalties, resulting overall increase in our EBITDA by 5.5% to $187.3 million. Our gross profit for the year amounted to $191.3 million and a gross profit margin of 31.7%. If, however, we do offset the mining royalty credit, it does impact on the gross profit percent, reducing it to 20.6% year-on-year, but still a very healthy gross profit percentage in those circumstances. I'm going to touch briefly on the mining royalty credit. But I think before we start really just to touch on the accounting side of it. The mining royalty itself is not a tax. It is a lease charge paid for the consumption of the resource to the government. And therefore, it is a charge to the cost of sales on the income statement and not on the tax charge. The matter at hand relates to a 2015 and 2017 dispute with the South African Revenue Services on the interpretation application of the Mining Royalty Act. This eventually ended up in a tax court. We're very pleased to get a favorable ruling from the tax authorities and also engaged with the South African Revenue Services there afterwards, and we have agreed the basis of implementing the court judgment. And this is resulting in a reversal of a previous provision that we had of some $67.3 million, which is a credit to cost of sales. As a consequence, you have a royalty receivable of some $13.6 million and of course the increased income tax and income tax impact of some $18.2 million. But a very favorable outcome and one that is going to stand us in good stead in the years to come. In effect, what it did is it reduced the mining royalty payable to the minimum percentage over this period to 0.5%. Over this past year, we spent $118.5 million in our capital expenditure, and that is both in sustaining operations as well as growth projects. I'm just touching some of the key numbers there, $33.5 million invested in Karo Platinum, $12.6 million, which is a fairly nominal amount to date on the underground development as we commence that transition and then $9.8 million on the deferred stripping. The prior year was some $65 million on deferred stripping. Group capital commitments as of 30 September, $79.6 million, of which Karo Platinum comprised $25 million. Just look at the year ahead, capital budget of $165.9 million. This excludes Karo Platinum. We'll touch on Karo Platinum in more detail in the presentation. But effectively, once the funding is closed, there will be a strong acceleration in the spend on Karo Platinum. And we also excluded the deferred stripping to really focus on the actual capital items that we're investing in. You'll notice there on the chart on the right that the largest expenditure at the moment is underground development at $76.7 million as we accelerate that capital spend. There's also an increase in assets and infrastructure and importantly, the R&D and innovation as we start commercializing some of the downstream research results from the Arxo Metals. Our balance sheet has remained strong through this period with cash and cash equivalents of $175.1 million. generation of cash from operations, $94 million and net cash of $69.8 million. The table on the right, I think, really reflects it quite nicely if you have a look at the depiction there. So net cash from operations, $94 million, sustaining capital of $77 million. So free cash flow after investing in sustaining operations of $17 million. The $44-odd million on the growth projects and a marginal negative free cash flow for the year of $27 million. Total debt is $105.3 million, of which short term is $74 million. You'll note on the pie charts on the bottom right, that's the bond of 26.2% is a large portion of that. Subsequent to the financial reporting period, we have negotiated and agreed with the bondholders to extend that bond by a further 3 years with redemption 1 December 2028. So that will be transferred back into a long-term debt facility. Our commodity prices are dollar-based. That's both platinum group metals and chrome concentrates. So we have a tendency to have a bias towards dollar-based debt. 67.4% is U.S. dollar-denominated. It does have a natural hedge element. As mentioned, our balance sheet remains healthy, current ratio of 2x and a net debt to equity of a favorable 8.2%. We do have undrawn facilities as at 30 September of $76.6 million, and that excludes the trade finance facilities. We pride ourselves on our commitment to capital discipline, in particular, the return of funds to shareholders. We have proposed interim dividend of $0.015 per share aligns with the -- sorry, a final dividend of $0.015 per share. It aligns with interim dividend and after due consideration for the mining royalty credit, which is, to a large extent, a noncash flow item. If we include the share repurchase program, it is a payment of 17.2% of our consolidated net profit after tax. Over the past 10 years, we have distributed $119.8 million as distributions to shareholders. This excludes the 2 share repurchase programs. The one completed, I think it was last year at $5 million, and we're 87% complete as at the end of the financial year on the second one, which is again has been a very successful outcome overall. I'd like to now hand over back to Phoevos. Thank you. Phoevos Pouroulis: Thank you, Michael. So we move on now to our expansion projects and really taking a snapshot view of our facilities across the globe. So Redox One, which is our long-duration energy storage business is situated in Dortmund in Germany. Moving south to Harare, where we have our Karo Platinum project situated on the Great Dyke. And then into Tharisa Minerals in the Southwestern limb of the Bushveld Complex. Adjacent to the mine is the Arxo Metals Renewable Energy Center, where we do renewable energy projects as well as the manufacturing of the e-Lite for the Redox One batteries. And then in Brits, not too far from the mine, we have our Arxo Metals beneficiation site. And then we utilize 3 ports for the export of our commodities, Maputo in Mozambique, Richards Bay and Durban from South Africa. So as mentioned, we look to unlock multigenerational value. And the transition to underground was always envisaged when we embarked on the Tharisa Minerals mine. We will start in a phased approach on the West mine, which is illustrated in the photograph there, and we are currently busy with the portal makesafe, and we envisage that our first ore from the Apollo complex portal will be delivered in Q2 of this financial year, financial year 2026, achieving steady state 3 years thereafter in Q3 of FY 2029. The Apollo Portal complex, just to remind everybody, is a dual reef complex on the MG2 and MG4 seams with a 3-meter cut, respectively, in each of those portal developments. The average monthly run-of-mine or reef production will be 255,000 tonnes per month at that steady-state level. As we transition and start depleting the open pit, we will commence with the Orion portal development in the East Mine, and that will deliver our first ore in the fourth quarter of financial year 2031, thereafter, reaching steady state in Q3 of financial year 2033. At that point in time, the Tharisa complex and mine will be fully underground and will be sustainable for at least 50 to 60 years in terms of the current mine plans on that trajectory. You'll see that the Orion portal complex is limited to 210,000 tonnes per month, and that's purely a function of our nameplate processing capacity, which is 5.6 million tonnes. However, it is designed to match the Apollo at 255,000 tonnes, and there is potential for us to increase our throughput to over 6 million tonnes per annum of processing capacity. So just to look at the numbers and the strategic capital investment over the next decade. The capital allocated to Apollo is some $363 million, followed thereafter in the time line I just outlined by the Orion complex at $184 million. Due to the fact that we're doing on reef development and we'll be generating income, we have a peak funding number that is considerably lower at some $173 million over the period of the underground development. Our DFS has given us an all-in sustaining cost of mining, including capital development of $40.8 per tonne. Michael has mentioned the cash on hand at $175 million and the ring-fenced funding of $130 million for the underground, coupled with asset-backed finance of some $45 million. Even though we are going with the contractor mining model, we will be acquiring and purchasing the mining fleet for the underground. So that will remain our assets. I think what's pleasing to note is that the DFS kicked out an IRR of 25%, assuming a PGM basket price of $1,633 per ounce. You can imagine that today's $2,200 per ounce, the IRR is significantly improved. So when we look at the Tharisa Minerals and the Tharisa mine annual output, you can see us incrementally growing as we transition to less diluted, more consistent fresh ore from the underground, achieving our 2 million tonnes of chrome concentrate and 200,000 ounce per year of PGMs on a sustainable basis from 2033 onwards. And we believe we can maintain that run rate for the duration of the underground operations, some 50 years, as mentioned. So moving to the Great Dyke of Zimbabwe. We really have been blessed and endowed with a Tier 1 resource. It is only 1 of 2 major PGM projects under construction worldwide in a sector that we well know is facing growing deficit. What is our vision here is to become a globally significant low-cost producer of these very key and precious metals, including some significant base metal credits of copper, nickel and cobalt. When we talk about responsible growth, we talk about balancing profitability with environmental care and importantly, the community benefit and upliftment that a project and an ecosystem of this magnitude can provide. The long-term impact here is that we'll be positioned very much like the Tharisa mine to provide multigenerational output and value creation. So we're situated in the middle chamber of the Great Dyke complex in Zimbabwe, some 100 kilometers southwest of Harare. The Phase 1 operation is planned to produce 2.64 million tonnes of run-of-mine per annum, generating some 220,000 PGM ounces on an annualized basis. Our resources and reserves in the open pit, which is a 10-year life, which is our Phase 1, 12 million ounces of resource, 2.3 million ounces of reserve with a total resource that includes underground of 96 million ounces with a potential again of some 50 years. In terms of infrastructure, we've secured the water, electricity supply agreement is secured. We have a renewable energy program of 40 MVA solar to be installed post commissioning, and we have very easy access from -- with tie roads from Harare. What is really pleasing to note is that this project has substantially been derisked. We've drilled some 60 kilometers of diamond core geological exploration drilling with a high confidence. We have already defined a 10-year open pit mine, and that plan is complete with an underground drilling infill program to confirm the 50-year potential as well as the feasibility study, which will follow the infill drilling campaign, which is well underway. All metallurgical test work has been concluded, and we have a great degree of confidence in our recoveries of both PGMs and base metals from the lock cycle test work that has been completed. In terms of infrastructure and mining, you'll see an aerial photo there. Substantial work has been done to date. Design and engineering is complete. Earthworks are complete. Civil works are some 68% complete. 90% of all long lead equipment items have been procured and in storage and some have been delivered to site like the mills, which have been installed as well as bulk water and power being secured. We did complete a pilot open pit mining with equipment being tested and selected for the type of open pit mining that we'll be doing. So we've invested to date some $193 million, substantially derisking this project. And the capital and operating costs that we have are confirmed well beyond a definitive feasibility study level. When we look at the concentrator area and the infrastructure, we have a vast program to increase the Chirundazi Dam. We commenced that earlier in this year. We're at 27% completion, and that is forecast to be completed in June of next year. The Mill building, the steel work is some 78% complete, forecast to be complete in January. The overhead line, the 132 kV line, 25% of the base stations are complete, 28 of the 130 poles have been installed in terms of the bottom sections, and we forecast this very key and important power supply from the Salu Substation to be complete in February next year. The MV building is 37% complete, complete -- forecast completion in June next year and the LV building on the wet end is 100% complete. Just some photographs just to illustrate some of the work that I outlined on the previous presentation. And you'll see the substations, the MV building and the complete LV substation building on the bottom left-hand side. The aerial view shows the vast footprint that this processing plant and adjacent facilities occupies. You'll see that the primary and secondary mills have been installed on their plants with the steel work and support structures being installed as we speak. You'll see on the top right-hand and bottom right-hand images, the Chirundazi dam, which is an existing dam, and we're expanding that dam, which has a real material positive impact for farmers, rural farmers in the area, providing them with security of water supply as well as securing our water requirements for the Karo project for decades to come. We're very pleased to announce that we've awarded the mining contract to EPSA, who are a Tier 1 global mining company that have been in existence since 1962. They're a global enterprise. They do operate in Africa, but this will be their first contract in Zimbabwe. Mobilization has commenced and as well as site establishment, and they've commenced with the onboarding of all the regulatory approvals as well as employees in country. Equipment assembly and delivery will commence early in the new year. And the first phase is really early waste stripping, which will commence towards the end of Q1 2026. And this was a major milestone achievement for us attracting a mining contractor of this caliber that has a growing track record from South America to Australia and Africa and Europe. I'd like to hand back to Michael now just to touch on the funding update and to provide a context of the current PGM market for you. Thank you. Michael Jones: Good. Thank you, Phoevos. If we have a look at the Karo Platinum Project and the funding, Tharisa plc itself has committed equity of $178 million. We have secured funding through the bond that's listed on the Victoria Falls Stock Exchange. As mentioned earlier, that has been extended by a 3-year term. That's $37 million. Very pleasing, our senior debt is well advanced. We recently received the -- I suppose, the final outstanding work, which was the technical advisers report on the project received by the lenders and ourselves. That's busy being worked through. So the next step is effectively taking it through to credit. The disappointing thing is credit committees closed in about 9 days' time, so it will probably roll over into the new year. In conjunction with that senior debt, one of the parties providing mezzanine debt of $25 million, so that will run in parallel. And then also to ensure that we have a fully funded project, we are in discussions with both a strategic investment as well as a gold stream as an alternative to secure some $125 million to ensure that the project is fully funded. I think we look at the bar charts, the little charts on the bottom below the graph, you'll see that the spot price at the moment, $2,008 per ounce. That's for the Karo Platinum Prill split. The financial model with an all-in sustaining cost of $850 per ounce and therefore, very healthy margin at some 45% going forward. I think we also look at the graph above. You'll also notice that a number of the analysts, analysts 1 and analyst 2 in particular, are really forecasting further strong recoveries in the PGM basket price, and I think that will all go well for the project going forward. That is a very brief overview of that financing. I'll hand back to Phoevos. Thank you. Phoevos Pouroulis: Thanks, Michael. So the third -- or the second pillar of our benevolent intent is innovating with purpose. And this is something we're very passionate about, and we capture this in our wholly owned subsidiary, Arxo Metals, where we've challenged convention over the past decade, and we are busy commercializing 5 novel mine-to-metal beneficiation processes. I think for a business our size, the commitment and the capital that we've deployed responsibly and in a measured fashion will really bear fruit in the future. These processes have been developed in-house from ideation to laboratory scale test work and to commercial scale operations, including pyromet as well as hydromet operations that exist across multiple sites that we occupy or we share with the institutions. So we are constantly looking and evaluating the potential of additional metals and the full value chain contained within our basket of commodities, the polymetallic nature of the ore bodies that we mine. The Vulcan complex, I think, is most probably the first full-scale commercialization of an in-house grown technology where we've successfully commercialized the ultrafine chrome recovery at the Tharisa mine and are looking at further opportunities of deployment of these technologies. When we look at the 3 routes here of beneficiation, we have the PGM beneficiation route, which looks at us taking our concentrate that historically we've sold, putting it through a pyromet process and then processing it and refining it through a novel patented process called the Chloroplat process, and we're busy installing our first commercial reactor to pilot and demonstrate the end-to-end production of 495 purity PGM metals. In terms of the novel chrome alloy route, we have 2 routes there. One is a stainless steel route and the other is a grinding media route, and we've produced both products and in fact, sold some of the grinding media alloy to producers of that media. In terms of the energy applications, we have our wholly owned subsidiary, Redox One, which I will unpack on this slide here. And we really see a lot of excitement and interest in battery energy storage. And one of the key challenges the world is facing is how do you store all this additional energy that is being generated from renewable energy, be it solar, wind and even hydro to a lesser degree to provide baseload power. And this is where long-duration energy storage systems come in. And Redox Flow in particular. So we've been working on this technology since 2018. And one of the key developments and IPs that we have is the ability for us to produce electrolyte from the chrome concentrate that we produce. That electrolyte is a chrome chemical and an iron chemical. And we're taking the cheapest form of the metals, and we're converting them into highly cost competitive electrolyte. Key to these system is that they are inert, there are no environmental challenges, and they're 100% recyclable. They have a long duration life of some 20 years at minimum, and we believe that the electrolyte will continue to perform beyond that. But in the event that they are decommissioned, they can be recycled and utilized in multiple industries. We have undergone rigorous component and electrolyte system testing. And in 2026, we're very excited to deploy the first megawatt scale battery at the Tharisa Mine, at Tharisa Minerals and with a further 5 demonstration units to be deployed globally. As I say, there's huge interest from multiple jurisdictions and regions around the globe for cost-effective, sustainable long energy duration. When we look at the third pillar, empowering futures, this is something very close to our heart, and we can see the impact that we have not only in the form of employment and sustainable employment at that, but the impact that the supply chain has as well as the multiplier effect and the micro ecosystem that is created around these mining communities. And we're in a very privileged position where we have these long-life resources that allow us to invest in people, in the environment and into sustainable security of supply. And as we've seen from the geopolitics and the scramble for these critical minerals, we, as Tharisa are strategically positioned to provide a secure supply line of these key strategic materials for generations to come. And not only being a secure supplier, but also to be a continuous impact and force for change and positivity in terms of sustainable jobs, sustainable impact and value creation for all stakeholders. So if we look at our core investment thesis, why invest in Tharisa. We have an entrenched footprint in strategic commodities that have long-life asset bases, and we have exposure to these very unique and special polymetallics of platinum group metals as well as chrome. We have a clear visibility growth to Vision 2030 and beyond to deliver and commercialize on our downstream initiatives. We have a resilient balance sheet that is geared for growth, and we're positioned to leverage this efficiently and effectively. Our capital discipline has been enforced for over a decade where we've returned significant value to shareholders, and we've been able to fund our pipeline growth. And importantly, where we are positioned today, we see fundamental deep value, and this is consistent with delivery and profitability. If you look at our multiples on a price-to-earnings basis at spot, we're trading at a 4.4x multiple, price to NAV at 0.4x NAV, a significant discount to our peers who are trading at least 3x higher on those multiples. So when we look at where we'll be in 2030, unlocking multigenerational value, will be a smarter operation with lower emissions reduced by 30%. The Apollo mine will be fully operational and at steady state. Orion will be under development. Karo Platinum producing 220,000 ounces per annum and with some base metal co-extraction commencing at Karo Platinum. Arxo Metals will have commercialized and produced final PGMs from the Tharisa mine as well as chrome alloy and electrolyte production. Redox One, we would look to deploy 1 gigawatts of energy storage and be deployed globally. With that, I'd like to recap on our next 5 years' worth of journey, which is to deliver on expansion in terms of our growth opportunities at the Tharisa mine and Karo as well as commercialize our technological solutions, redefining resources, innovating with purpose and empowering futures. I'd like to thank you for your time and hand over to Ilja for the Q&A. Thank you. Ilja Graulich: Thank you, Phoevos. Let me start straight with you. We've had a question here on the operations. What drove the strong increase in the reef mined and obviously, following through on to the EBITDA and how will you build on this momentum? Phoevos Pouroulis: Yes. Thanks for that question. So if you recall that we were mining a backlog of waste stripping in the financial year 2024. We introduced the contracted Trollope mining on site to help us with that backlog. And part of that was opening up more strike length in the East pit, which then materialized and allowed us to access a broader reef horizon and have more flexibility in the open pit, which then enabled that increase of some 15.3% in our reef mining to 5.3 million tonnes. Ilja Graulich: Thank you. Staying with you, Phoevos, I know we discussed what the all-in sustaining cost at Karo is on the one slide, but what we didn't maybe highlight in detail is how long should it take to get Karo to first production. Phoevos Pouroulis: So on the current time line, and as Michael mentioned, assuming the funding comes in, in Q1 of the next calendar year, we anticipate putting first ore in mill in Q1 2027. So some 15 months or so from now. Ilja Graulich: Okay. Just a high-level question for you, Phoevos staying with you, the existing share buyback. I know we mentioned that we had roughly 87% complete. Is there an update on whether this will be extended? Phoevos Pouroulis: So at this stage, when considering the capital for the next year with the underground development as well as the Karo commitments, we elected at the Board to continue with the dividend and pause until this buyback is complete. We'll reconsider at the half year again, dependent on performance, production and commodity prices. Ilja Graulich: Okay. Switching over to you, Michael, in the interim to give Phoevos a break. Can you talk about the dividend policy? Is there still a policy of paying out a minimum 15% of net profit after tax? I think this relates to what you explained earlier with regards to the write-up of the $67 million versus where we should be standing. And I guess it also applies to previous years where we could have potentially paid a little bit more of normal tax had the royalty been applied the way it should have been. Michael Jones: Sure. The Board at the moment hasn't changed its dividend policy. So the dividend policy stands at 15% of consolidated net profit after tax. I mean it's reviewed at both the half year and the year-end period. It really depends on where you are, as Phoevos mentioned earlier, on commodity prices, your results and where the capital expenditure program is going. But we have consistently committed ourselves to capital discipline. That capital discipline includes returning funds to shareholders as we proceed. So there's been no change at this point in time. Ilja Graulich: Thank you. Michael, I have a question here with regards to the bond that has been extended. The question relates to why was there an increase in the interest rate payable on this bond? Michael Jones: That was painful. It went from 9.5% to 11%. There's a lot of negotiation around it. And what it really boils down to is the shortage of dollar liquidity in Zimbabwe itself. So while the external funders were still happy at the 9.5% and thereabouts, within Zimbabwe itself, we had significant investors from them. And I think that's strategic going forward. We have to build relationships with them and the confidence with them. There was really -- as we looked their cost of funding, the best we would be able to negotiate was at that 11% that we got away with. So in summary, shortage of dollars in Zimbabwe and also from a Zimbabwe perspective, a 3-year investment is a relatively long-term investment from a banking perspective. So very appreciative of the continued commitment, and this was unfortunately one of the giveaways that we had to do to ensure we got it across the line. Ilja Graulich: Fantastic. Phoevos, a question for you. One is more direct. We obviously saw the announcement last week by the Zimbabwean government of potentially changing the royalty rate with regards to gold from 5% to 10%. So how do we see that impacting on Karo? But that ties in with a sort of high-level question with regards to how you're finding working in Zimbabwe? Are you confident in the sustainability and reliability of the jurisdiction to maybe highlight the fiscal work we've done in Zim. Phoevos Pouroulis: Yes. Thank you. And I think it's a very important question to answer. So as you may know the government of Zimbabwe are shareholders in the Karo Platinum project at some 15% and they're fully aligned with the strategic imperative and the investment of this project. To that end, we've had a number of agreements over the years with the government and investment framework agreement thereafter special economic zone status, which was later revoked for mining companies. And the process that we followed was to enshrine those provisions in a special mining lease. And we're pleased to report that we've made great progress in terms of agreement on that special mining lease. Part of the agreement there is fiscal stability. And it's key in terms of securing our debt funding as well as strategic investment and gold streaming. And so part of what we, with the government are trying to ensure is enshrined in that document is fiscal stability and provisions that allow the bankability of this project over a period of time. We do know that the current economic environment in Zimbabwe is challenging, as Michael mentioned, with a lack of foreign currency or U.S. dollars in this case and the Zig conversion being one of the major challenges for operators in country. So I think from a fiscal stability provision, we are trying to protect our investment as well as future stability through the provisions we're negotiating, and we believe we'll be finalizing in short order. In terms of operating in country, it's a very pleasing experience. We have a highly skilled labor force, very effective, very efficient, diligent environment. And you can see by the quality of the site and the cleanliness as well as the safety record that it really is a highly productive environment. So we look forward to moving beyond these short-term challenges and getting into steady-state production and ensuring that sustainability that I think all stakeholders are aligned on. Ilja Graulich: Thank you. Michael, a quick one for you. Can you please elaborate on the Bank of China ForEx trade facility? If applicable, what is the maturity and coupon for this loan? Michael Jones: I will just quickly skim through, so I can refresh myself with the interest rate. It is a 2-year facility. It has a bullet payment. And I'll just pop back to you afterwards on the interest rate to give you the exact answer on that. Ilja Graulich: Thank you. Michael, maybe sticking with you, there was a question here. Could you reiterate Karo financing time lines and milestones? It was mentioned senior debt will likely roll over into the new year. I'm assuming that simply relates to the Christmas period coming up when we need to finalize documents and credit committees. Michael Jones: Correct. I think where we are at the moment is we've got the last requirement from the lenders, which was the technical report that has been circulated. They now need to finalize their packages for credit committee. I mean it has gone through a process that haven't gone blind up to this stage, getting necessary approvals. So I expect in new year we'll get to credit and then start the drafting of those particular documents as we go forward. If everything is aligned, I'd look at towards the end of the first quarter of the next calendar year. What we do, however, have to remember is that we do need to have a fully funded package for the lenders to draw down the senior debt facilities. And there's 2 work streams we're working on there, one a strategic investor and that is progressing well. But in parallel, we're doing a gold stream. Gold streams are notoriously expensive as far as I'm concerned, but it's also not a bad time with the commodity pricing to properly entertain a gold stream that would fund that shortfall. In the interim, we at Tharisa plc are still committed to providing ongoing funding to the project in this intervening period. Ilja Graulich: I'll give you a breather. Let me ask this question to Phoevos before I get back to you. How is your cost structure exposed to PGM and chrome metal prices? And do you have part of costs directly tied in with the metal prices, I think it's just a high level question on our costs. Phoevos Pouroulis: Yes. So I think we pride ourselves in being in the lowest cost quartile, and you can see that clearly illustrated when you look at the all-in sustaining costs that Michael ran through in terms of PGMs. So our co-product business model has proved resilient through the cyclicality of both chrome and PGM markets and prices. So we do focus on our costs, and it's down to the unit costs and the more productive we are, the lower the unit -- the cost per unit. And we strive continuously to manage those costs and reduce them through efficiencies, and that's where our innovative approach and optimization kicks in where we look at recovering more of the metal that we mine. I always say that we spend a huge amount of cost effort, time and energy to extract one cube of rock from our open pit finite resource. So we might as well maximize the amount of opportunity and metal we can get out of that cube, hence us reprocessing continuously through the various stages, be it Voyager, Challenger, Genesis and Vulcan, Vulcan X to extract that maximum value. So it's one area where I think we are very focused on and manage. We are obviously subject to the macroeconomics of commodity prices, and we can't control those, but we certainly can control our cost structure and efficiencies. Michael Jones: For the previous answer, I can give the answer on the cost of debt funding. So for the senior debt and the term loan, I just want to make sure it's correct that they both are the same interest rate. It is the South African JIBAR plus 220 basis points. And of course, that will change as our own year end in the new year once that's implemented. And it's a rand-based facility, it's not a dollar facility. Ilja Graulich: I'm going to split the one question here into 2 because it relates to sort of the CapEx that we're going to be spending over the next decade and how much we still need to spend at Karo and what the timing of it is. So there's a question here relating to the $547 million where that is being spent. And I guess how much do we need to spend at Karo to get to full production? So I'll let you answer that one. Phoevos Pouroulis: Yes. So I think if you look at the numbers holistically, they look daunting. But over a continuous period, if we look at the $547 million over a 10-year period, it's not too dissimilar to what we're spending in terms of replacement cost of our yellow mining fleet over the previous decade and you look at the deferred stripping capitalized asset. So as we transition, yes, there will be a double up of both stay in business in the open pit as well as the development cost, but it generates a peak funding of $173 million. And I think that's the key number to take away over the decade for us to transition to underground. Now when we move to Karo, the balance is just over $300 million that needs to be invested to complete the full project there. And one has to remember that we're putting in infrastructure, water, power, camp sites, reticulation around the mine that survives well beyond the 10-year life of the first phase of the open pit. So it is capital-intensive upfront, but you're really enabling the ability to continue mining and processing for 60 years. And that's really where the conviction comes in into the underlying fundamentals around platinum group metals, their unique nature, the constraints around new supply, dwindling capacity as well as what we believe is a very positive outlook for new demand drivers for platinum group metals. So we've got to look at it strategically and understand that these are not short-term quarter-to-quarter investments, and they are measured in decades. And so when you look at it on that basis, the numbers look large, but stretched out over a period of time, they are appropriate for the scale of the resources that we have under our control. Ilja Graulich: Thank you. Michael, a quick question for you here on the capital expenditure at Tharisa mine actual versus planned. And I guess if you have a sort of holistic number of what we still need to spend at Karo in terms of dollar terms. I know we showed on the financing slide, but maybe sort of delve into that. Michael Jones: Sure. I think I saw one of the questions come up here about the large-scale projects and the CapEx that we have going forward. I think previously touched on the key point is that on the transition to underground, while the CapEx is $547 million, that is over a 10-year period. And also that the peak funding requirement is about $173 million because of the quick access to the reef itself. And the plant has already been built, the infrastructure is in place and so forth for that. So the question is, are we comfortable with the large-scale projects, the capital size required based on the market capitalization? I think we have proved ourselves over the years to be -- or to manage our capital and our capital spend. If you look at the strength of our balance sheet, yes, we're leveraging it for growth now, but it will not be over leveraged as we go forward in terms of, I suppose, comparable metrics. And yes, I'm comfortable with where it goes. You always have to bear in mind that commodity prices move up and down, and we, of course, take advantage of those cycles as well. In terms of capital spend for the '25 year, substantially in line, except the deferred stripping, which was probably behind where I expected it to be. We had a higher number budgeted for that work, but we're already accessing those deep horizons. So going forward this next year, I would expect that capital expenditure on deferred stripping to be significantly higher than the $9.8 million, but also not as high as the prior period at $65 million as we continue with that stripping and access those deep horizons. I think that may have answered that question. Ilja Graulich: Yes, absolutely. Staying with you, Michael, last question before you can hand back to Phoevos to close off. And with regards, I guess, the question in the mining industry generally is sort of cost inflationary pressures. What guidance have we got for cash cost per tonne milled given we were roughly at $60. I think it's more about what the increases could be than the actual number and what pressures we are seeing or not seeing. Michael Jones: Sure. I think if we look at the cost pressures coming through, I mean, diesel is very well -- It's a big expenditure of ours from a power generation point of view. I think we all see that in the market. It's really stabilized. I don't see much cost pressure increases coming from there. Eskom needed for the mills. Unfortunately, they seem to continue to require above inflation increases. On the labor front, we have a wage agreement with our unions, which is largely inflation linked. So I do not see much cost pressure increases coming through from there. So overall, except for probably the electricity side, I'd probably be looking at inflation type increases just north of the 3% is what I would expect in dollar terms. Ilja Graulich: Phoevos? Phoevos Pouroulis: Yes. Great. So thank you all for your time this morning. We really are proud of what we've achieved at Tharisa, and we are excited about the next 5 years and 10 years beyond that, where we'll be able to deliver on these very exciting projects, the Tharisa underground, the Karo Platinum mine hitting steady-state production as well as commercializing our Redox Flow battery, our PGM beneficiation strategy as well as our chrome alloy downstream endeavors and initiatives. So with that, I'd like to thank you for your time and wish you all a wonderful day further. Operator: That's great. Well, thank you for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. On behalf the management team of Tharisa plc, we'd like to thank you for attending today's presentation.
Henry Birch: Good morning, everyone, and welcome to our strategy update for the Halfords Group. You'll be aware that today, we have also announced a strong set of interim results for the 26 weeks to the 26th of September. And these, together with the webcast are available on our corporate website. I'm very pleased to be setting out my vision for Halfords over the next 5 years and believe that we are at an exciting and compelling moment in time from an investor point of view. I joined Halfords because I believed in its potential. 7 months on, I'm even more convinced in its potential and believe we have a pathway to growing our business and creating value and benefit for all our shareholders, our customers, colleagues and most relevant to this forum, our shareholders. At the heart of my conviction is the unique set of assets and capabilities that Halfords possesses and the dynamics of the markets in which we operate. We have leading positions in fragmented and evolving markets. We have an unmatched and scaled combination of stores, garages, mobile vans and digital capability across Motoring products and services and Cycling. We have a trusted, universally recognized brand and over 12,000 expert trained colleagues. We have structural resilience with a focus on needs-based products and services, and 1/3 of our revenue comes from B2B. We have a debt-free balance sheet together with strong cash flow generation. And in combining assets and capabilities under one roof, the Halfords Group as a whole is much more valuable and has more potential than the sum of its parts. Today, I want to drill down into some of those capabilities and assets. I want to deliver some home truths about our past and where we are today. And most importantly, I want to elaborate on why I am so confident in our future and detail our plans to deliver for all our stakeholders. Jo will talk to how we're going to measure progress and ensure financial discipline, and I will introduce our team and wrap up proceedings. I mentioned scale and breadth of our assets. As a retailer, we have 370 stores across the United Kingdom and the Republic of Ireland, combined with a strong digital platform together generating about GBP 1 billion in annual Retail sales. We have 500 consumer garages delivering service, maintenance and repair together with tires. We have our Halfords Mobile Expert service with 250 vans, and we have our Commercial Fleet Services business with 550 vans serving business customers up and down the country. And we have Avayler, our Software-as-a-Service business, providing garage management software to third parties. Our more than 12,000 colleagues are solutions experts, trained and knowledgeable, and we continue to invest in young people, bringing 150 new apprentices through our doors last year. Amongst many other impressive statistics, that scale means that we serve over 20 million customers a year. It means we sell over half of all bikes in the U.K. and handle a significant share of the U.K.'s car keys. Scale in our business drives competitive advantage and is extremely difficult to replicate. But the power of Halfords is in its combination of assets and capabilities and the additional value that it drives. At the most obvious level, we have a single Halfords brand across all our businesses and services. That drives brand authority, relevance and resonance across all things, Motoring and Cycling, and gives us the potential for service and product extensions. The Halfords brand is served by a single consumer website where customers can buy products or book garage services. We have a combined loyalty program, allowing customers to move seamlessly between our different services, driving higher engagement and subscription revenue. We deploy central specialist functions across our businesses, driving cost and capability advantages. We have buying power, with many of the same suppliers across our divisions. And our B2B efforts, a key and growing part of our business, deliver benefits for corporate clients across the group, whether that is Commercial Fleet Services, Trade Card or Cycle2Work. The power in Halfords is the power of the group and the assets we bring together under one roof. From a customer point of view, we aim to deliver 3 guiding benefits: convenience, value and expertise. The convenience of digital and nationwide coverage with 85% of the population not further than 15 minutes from Halfords. Value, enabled through our scale, supplier relationships and our own brand products and expertise through our dedicated 12,000 colleagues. Our customers are diverse in their makeup, but broadly fall into 2 categories: those we classify as do-it-for-mes and those we classify as do-it-yourselves. Do-it-for-mes are much greater in number and, as their name suggests, are looking for advice or a service. And candidly, Halfords is often the only place they can get that advice or service, whether it's having a wiper blade or roof box fitted or getting advice on which oil to buy. The do-it-for-me population is large, and we have a significant opportunity in greater penetration of this market. DIY customers are typically high-value, high-frequency customers who recognize the depth and breadth of our range and our product and service expertise. Our B2B customers share many of the same priorities: convenience, value and expertise, but place an even greater emphasis on reliability and turnaround speed. Through our national footprint and fleet service capability, we offer a comprehensive single provider solution that keeps businesses moving throughout our nation. Over the last 5 years, we have built a much bigger B2B business across different sectors. This includes our Commercial Fleet Services business, combining what were Lodge, McConechy's and Universal, where we are typically serving HGVs and light commercial vehicles. B2B is also an important demand driver for our consumer garages where we serve fleet cars and light commercial vehicles with a growing proportion of them being electric vehicles. And on the Retail side, our Cycle2Work scheme helps drive bicycle sales with Trade Card also contributing B2B revenue. B2B gives us a reliable source of demand, can drive a higher utilization of our asset base and is more insulated from the volatility of consumer confidence and spending. If we look at the markets in which we operate, Halfords is in a strong position. Our largest market is Garages or Motoring Services, a market which is around GBP 17 billion in size. In this space, small local independents still represent the biggest share, leaving room for Halfords as a scaled professional operator, with the capability and credibility to meet the growing complexity of modern Motoring. Many of these independent garages are owner-operated and may face issues not just with generational succession, but with the scale of investment in equipment and skills needed to meet the changing dynamics of Motoring. So whilst it is early days, we expect competitor garage supply to diminish over time. We've spoken previously about a weak tire market that has struggled for the past 2 years. But the important thing here is that irrespective of growth or decline in the market, with the brand and scale that we have, we should be able to grow and take share in tires. The Motoring products market is worth around GBP 4 billion. We see significant potential in developing our digital offer, but believe our unique strength is in the combination of digital and physical stores. This is illustrated by the fact that 80% of our digital orders are click and collect. Our combination of products with an attached service is not something that Amazon or any other online retailer can easily provide. The Cycling market remains a core part of our proposition and strategically important, both as a significant business in its own right, but also as a gateway to Halfords, from the first bikes that introduce families to our brand to the enthusiasts who invest in the latest innovations through our specialist brand Tredz. This year, we have seen good growth in Cycling, and the market overall seems to be in improving health. Across the group, we represent more than half of the Cycling market in volume terms, including all parts and accessories as well as bikes themselves. Taken all together, the markets we operate in are large, robust and dynamic, providing a strong foundation for Halfords' long-term growth and future strategy. I mentioned that our markets are dynamic, and there are some clear trends that Halfords must navigate. Firstly, and most obviously, is the move to electric, and that's both cars and bikes. Electric vehicles currently constitute about 5% of the U.K. car parc of 35 million cars. Despite successive government inconsistency, we know 2 things with absolute certainty. First, that, that EV number will grow. And second, internal combustion engine cars will be on our roads for many, many years to come. Whatever the growth or scenario, we are well prepared. We have almost 700 EV trained technicians, and the majority of our garages work on EV cars. We're ahead of the curve, investing early and building capability to serve EV customers at scale as the demand arrives. And although there are differences between EVs and internal combustion engine cars, they all need tires, and they all need to be serviced, maintained and repaired. It's worth saying that the same goes for any other car powered by a different technology or fuel. At the end of the day, we are fuel and technology agnostic and are confident that we can navigate any shifts or trends. At the other end of the spectrum, another structural trend to touch on is the aging car parc in the U.K. Despite the rise of EVs and new technology, the average vehicle in the U.K. is now close to 10 years old, shifting demand away from dealer-based early life servicing towards independent aftermarket providers, a space where Halfords is exceptionally strong. Over the last decade, the U.K. has seen the rise of the convenience economy, and this has been reflected in the Motoring products and services market. More than ever, consumers want convenience. They want someone to do it for them, removing hassle and fitting around their busy lives. Today's customers are also more demanding and digitally engaged. With our nationwide reach, integrated service model and advanced digital capability, Halfords is uniquely placed to deliver on this shift towards convenience and service, both in our garages and our stores. Halfords has a long and illustrious history. But similar to most consumer businesses, it has had a fairly volatile decade post Brexit and lastly COVID. In that time, it has had to navigate some choppy waters, but it has made 3 important strategic shifts, which I've mentioned but want to reiterate. First is a shift to a greater proportion of services, with service-related revenue now representing over half the total. Service revenue is typically higher margin and more resilient being more needs based. Secondly, we've grown our B2B business with around 1/3 of revenue now generated by B2B sources. B2B revenue is generally less impacted by economic swings and consumer confidence and is therefore, more consistent and reliable. And thirdly, we executed a material cost reduction program to mitigate the inflationary pressures over the last 3 years. These shifts are the right ones to have made and set us up well for future success. Halfords is a fantastic company, brimming with potential, but arguably over -- our performance over the last 3 years has not matched that potential. And I think an element of candor and self-reflection is needed to ensure that as we map out the years ahead, we take the necessary learnings forward with us. First, as I have said, we have rightly evolved into a services-led business. But with that change, we have failed to deliver the uplift in margin we should expect from services being a higher proportion of revenue. That must and will change. And in particular, we will be targeting margin expansion in our Garages business. Over the last few years, we have made a number of acquisitions. These acquisitions have given us additional scale and capability, but our integration has not been good enough, and we have not driven expected returns. There is more to do here, but I am clear that in the immediate term, any further acquisitions would be a distraction from the task in hand. Halfords is a diversified business with breadth and inherent complexity, but we've often found ourselves spread too thinly chasing too many priorities. That will change, with a simplification of action and a focus on the things that matter and the things that will drive value in our business. Halfords has an enviably rich and powerful data set, which we use effectively for CRM and segmentation, but we are yet to use this data for real-time decisioning, personalization or predictive analytics, and we need to develop our data platform further. Doing so effectively will increase customer lifetime value and drive profit growth. And I talked about the power of the Halfords Group, how the combination of our assets yields considerable benefit, but we have not sufficiently joined these assets from a customer point of view. The customer journey between our group assets is not smooth enough, and it is not evident enough to customers what exactly we offer. We need to better join our assets together and better promote what we offer. If we do this well, there is much to gain. And overall, I believe we need to drive better and more visible returns on the capital we deploy. This is very much front of mind and something we will ensure we get the required focus. So there are both lessons to be learned and challenges to meet, but fundamentally, we have a unique and fantastic business. And while I've been candid about where we need to improve, it's equally important to recognize the many strengths already in place. So hopefully, I've given a clear articulation of where I see our strengths and also some of the home truths that we need to face into. I've also covered some of the dynamics and trends of the markets we play in, but I now want to talk about where we believe we can take our business and the future ahead. When I decided to join Halfords, it was because I could see a business with deep foundations, a strong sense of purpose and a differentiated platform most companies would envy. Now having spent time across the organization, I'm even more convinced. The fundamentals are intact, the potential is significant and the challenges we face are executional, not structural. And it's not just me who believes this. Let's hear from 2 of our newest team members of our executive team. Jess Frame: I joined Halfords because I believe it has the potential to redefine the specialty Retail business model for the future. I've had the privilege of advising many retailers in the U.K. and Europe and all of them were navigating the shift online, fiercely competitive marketplaces, how to create value-add experiences in stores, how to make cross-channel convenience come to life and also how to personalize their proposition for customers. I fundamentally believe that the retailers who thrive over the next decade will be those who successfully fuse products and services to create solutions for customers. And what excites me about Halfords is that we have the required assets and capabilities to drive that new model now. We have the asset to create an ecosystem around customers for all of their car and bike needs. We have the skills and operating model to deliver services in retail and our mobile vans and garages network for more complex jobs. We've got the colleague expertise and culture to offer trusted, helpful in-person advice. We've got the supply chain that can support click and collect within an hour on many of our lines, and the relevance of our store estate is underpinned by the fact that over 80% of our online sales are picked up in store. And finally, our data gives us deep understanding of our customers, their vehicles and bikes, their service history and a predictive view on where they'll need us next. There is still so much more we can do with our data to unlock value for customers and realize that potential. So I'm energized by the significant opportunity I see in Halfords, and I'm looking forward to realizing many of those over the coming few years. Adam Pay: I joined Halfords because I believe in the power of its brand and its unrivaled scale and coverage in the U.K. Halfords really is unique. In fact, there's no one else in the U.K. that can offer customers the same level of convenience and expertise at such scale, all wrapped up in such a trusted brand across stores, garages and mobile. It's a fabulous combination. And what I'm doing now at Halfords feels really familiar. I've done this before, transforming the mycar offer in Australia, and I see so much of the same potential in Halfords, and I can really see where the opportunities lie. Fusion is really exciting. I'm keen to unlock its full potential by creating an exceptional customer experience and driving profitability. I also see huge opportunity by simplifying operations and creating a culture of operational excellence, which will, in turn, drive profit from improved utilization across the existing garage estate. And I'm absolutely clear that our colleagues are indeed our greatest asset. And with focus on developing their skills and expertise and retaining that talent, we can create fantastic career opportunities and really deliver exceptional customer service. I'm incredibly proud to be part of the Halfords team and excited for the future. Henry Birch: Brilliant. So that's Jess, our Retail Managing Director; and Adam, our Garages Managing Director. What I've seen since joining confirms that we don't need to reinvent Halfords though. We need to execute with focus. The opportunity isn't in radical change. It's in doing the important things consistently well and sequencing them properly. Our strategy ahead is simple, disciplined and built around 3 clear phases: optimize, evolve and scale. I'll go into the detail of these phases shortly, but at a summary level, optimize means maximizing what we already have and what we already do. It's about getting more value faster and more consistently from the assets already in place. This is the near-term value creation phase, and the work is already underway. The evolve phase means having a business that is future-proof, lean, effective and efficient. It means strengthening our foundations to deliver sustainable growth and continuing to invest in key areas such as technology, data and our physical estate. And then as our core strengthens and our foundations evolve, we can have the confidence to grow in scale, taking advantage of our operating leverage. And the nature of how we scale will vary across our business divisions, as I will discuss. These 3 phases are time bound with some overlap between them, as you can see on this slide. But the important thing to note is that our optimization is already underway and realizing short-term benefits, contributing to the strong H1 results we announced earlier this morning. And likewise, we see an opportunity for scaling and building real value within a relatively short time frame. So let's have a look at these phases in a bit more detail. The optimize phase is a crucial first step in our strategy designed to establish early momentum and unlock the latent value within our core business. We have 3 focus areas to optimize our Retail business, better category management, services expansion and e-commerce. Firstly, category management. We believe that improved category management has the potential to significantly drive our sales and margin. Candidly, it's not something we currently do well at Halfords. In summary terms, it means taking each major product category and applying a forensic lens to optimize our product assortment, our pricing and promotions to drive relevance for customers and unlock growth. It requires a very keen eye on customer and competitor dynamics and for us, building on our strong own-brand products to create even more differentiation that is unique to Halfords. It's worth mentioning here that we have an amazing track record in own-brand products that is sometimes overlooked or forgotten. In Cycling, we have developed Carrera, the leading mainstream Cycling brand in the U.K. by value and Apollo, the largest brand by volume. Improving our category management will take a little time as we cycle through our categories, but we have started over the last month with Cycling parts and accessories and a few selected areas of Motoring. We expect to start to see results from this initiative as soon as early FY '27, but we have confidence in the scale of impact we can create when we focus on the right need states for customers. Through work in our impulse category, we've already driven over 70% year-on-year growth through much stronger impulse and gifting lines. Our second opportunity is to improve and better promote our services proposition, which sits at the heart of what makes Halfords unique. For millions of customers, we are not just a retailer. We are a trusted expert that solves their problems in one visit. We're therefore, really focusing on optimizing our service offering across both Motoring and Cycling, ensuring we have the right offer, pricing and operating model in place. And we're driving awareness of the full breadth of our services to attract more customers, which you'll start to see in our marketing and media in the coming months. The opportunity is clear. Services are one of our most defensible advantages. They also offer higher-margin revenue and are less price sensitive. They cannot be replicated credibly by online pure players or mass or discount retailers, and they deepen our relationships with customers who increasingly value the convenience and reassurance we bring them. Thirdly, as I mentioned, digital already represents around 25% of our total Retail sales, and around 80% of those orders are collected in store. That shows the strength of our integrated model and the importance of our digital channel in generating customer footfall. But it also highlights a simple truth: with the scale of our online reach and the breadth of our retail and services proposition, we should be capturing more of that demand more consistently. In short, we have an opportunity to grow our online share. Having come from a pure-play online retailer, I know that applying the right focus and resources will yield results. And moving forward, I expect our digital sales growth to outstrip our core physical Retail sales growth. Progress here is about improving core website functionality and performance, and it's also about improving customer journeys and processes. Alongside this, we're sharpening our offer, expanding our online ranges, improving availability, tightening product descriptions and applying a more scientific approach to pricing and presentation. These are the basics of good digital retailing and with our scale, they will have a meaningful impact. If we turn now to our Garages division, there is much we can do to optimize our business over the short term. As I've already explained, Motoring Services is a large fragmented market and our biggest opportunity over the next few years. I'll start with the program you'll know most about, our Fusion rollout. By the end of this financial year, we will have more than 100 Fusion garages in operation, with up to another 50 or so to roll out in FY '27. We have a tried and tested formula that customers love and typically drives a doubling of profitability within 2 years. Over the last 5 years, we have materially changed the shape of our Garages business. Today, we have scale and effective national coverage, but we now need to drive operating standards and improve garage utilization rates to drive margin accretion and profitability. The same principles apply in our mobile van business and our Commercial Fleet Services. Fundamentally, this is about operational excellence and a ruthless focus on efficiency and process improvement. We have a range of activities underpinning this that are all in flight. We're implementing a zonal operating model, which allows us to redeploy labor to high-demand garages rather than recruit new technicians, effectively balancing supply and demand. As well as improving total utilization, we're now focused on ensuring we have the right skills mix in each site, with our master technicians focusing on the complex work, and service and diagnostic technicians picking up the rest. By getting the right people on the right job, we will deliver a better service and reduce the cost per job. We're also bringing in new equipment to reduce job times. For example, we're rolling out new equipment for wheel alignment, which halves the time taken to complete the work. These are just a few examples of the work already in train in our garage business that I'm confident will create a more profitable garage and mobile business and deliver an even better customer experience. I mentioned that the power in Halfords is the power of the group and the fact that our assets are stronger together than alone, and there is much we can do to optimize that group dynamic. Uniting the Group is the Halfords brand, trusted and well recognized. But for understandable reasons over the last few years, we have not sufficiently invested in our brand. That has meant that we've lost ground in terms of consideration and some of our performance marketing channels such as Google and PPC have lacked cut through. We've been running localized trials in certain geographic areas, and we have a high degree of confidence that an investment in advertising will strengthen the foundations of the Halfords brand and yield a rapid payback. This is not about a big bet marketing campaign. This is iterative, spending little, proving return and driving overall business performance. We'll measure our success and returns here in customer numbers and in our brand health metrics and transaction volumes. Halfords Motoring Club has been a standout achievement over the last few years. From a standing start, we've built a loyalty base of 6 million customers, with over 400,000 of those taking up a paid subscription in premium membership. They generate about GBP 20 million of annual recurring revenue for an MOT subscription, which also offers a host of other benefits while providing us with valuable vehicle data. Over the medium term, we have plans to transform club and make it the central destination for our customers to manage all their motoring and cycling needs. But in the short term, we'll continue to prioritize premium and ensure that our promotional mechanics are driving incremental margin through our standard membership. We'll measure success here in the numbers and contribution of premium membership. So there is a lot to get our teeth into in optimizing our business. What I've mentioned today are some of the key parts of our optimize phase, but it is not exhaustive, and there are other aspects of what we need to tackle. None of this, though, is revolutionary or rocket science, and that is good news. It's all clearly within our grasp, and we are on with it with clear plans and associated resources. But we also need to think about how we drive value over the medium and longer term, how we strengthen and evolve our business. Some of this will require investment, but we are very clear on 2 things. First, we need to earn the right to invest further. That means that we need to show progress in optimizing the business, and we need to show improved financial performance. And second, if we do invest, we have to show a very clear line between investment and returns. So there is a phasing here, optimize first and earn the right to invest and evolve. The evolve phase, though, is not just about investment. It's about self-help and business improvement. There are 2 clear areas or pillars that will help drive value. First is having a lean and effective business being fit for the future. Second is evolving our tech and data capability, and I'll take each of these in turn. As a business, we've managed our costs over the last few years, but there is an element of painting the Forth Road Bridge here. As soon as you finish running a cost program, you need to go again. And frankly, that should be part of any well-run business. But I believe there are bigger opportunities to structurally reduce our costs and realize ongoing annual savings as well as having a more effective business. Having driven a GBP 20 million annualized supply chain benefit in my previous business, I believe we have a compelling opportunity to improve our supply chain logistics, take out cost and improve productivity. We will need to work through cost and benefit details, but we believe there will be a clear business case and compelling returns here. And likewise, we see an opportunity to reengineer our back office, build better business intelligence and reduce costs by upgrading our enterprise resource planning, or ERP system. These programs of work once ground businesses to a halt in their scope and enormity, but this will likely be an upgrade, not a replacement, and we will take a phased and iterative approach rather than in one big bang. This will also be an important enabler of our future scale phase, which I'll come on and talk about in a minute. Finally, we believe that there is an opportunity to improve effectiveness and reduce cost by looking at our organizational structure and how we work with outsourcers. It's worth saying that in all of these areas, we are highly functional today, so there are choices that we can make. But to be crystal clear, we will only proceed with a clear and quantified line between spend and return. However, with a debt-free balance sheet, we should have the confidence to pursue projects with clear returns that give us an uplift in our long-term profitability. Technology and data have the potential to fuel significant growth in our business. In the medium term, there are tech projects that we have already clearly identified that will drive value. Amongst these, we plan to fully roll out Avayler, our proprietary garages management software, to all parts of our Garages business. This will further drive utilization, improve margins and provide a better customer experience. And in time, in Retail, we want to upgrade our current point-of-sale system, iServe, improving speed to serve and freeing up colleagues to spend more time helping and advising customers. I mentioned earlier as part of our home truth that we had not yet made full use of our data potential and that we had work to do. Today, we use data effectively to reward loyalty and drive CRM. And this activity drives both spend and customer engagement, but we have the potential to do much more with significant benefit by further developing our data platform. Through our evolve stage, we'll build the capability for real-time decisioning and much greater personalization. We see an opportunity for predictive analytics for customers and their cars, allowing us to anticipate issues before they arise, provide proactive maintenance and deliver a rapid, seamless service. This will differentiate our customer experience, drive sales and reduce our cost to serve. We will also improve how we use data to inform business reporting and decision-making, enabling faster evidence-based decisions across the business. In particular, we see the potential to improve marketing effectiveness, pricing and use of promo. We have a lot of data. 20 million customers engage with us every year. We have 12 million vehicle registration numbers with owner data. And in Halfords Motoring Club, we're building an even richer data set with marketing permissions. Utilizing that data for our own purposes and in partnership with others, such as through a retail media network or through introducing other services will be a key area of focus for us. The next 5 years will likely see the widespread adoption of AI in businesses, and those who have workable data are likely to be the ones who benefit the most. Whilst we don't have a crystal ball, we see AI as being much more of an opportunity than a threat. We see significant opportunity in automating processes, improving back-office efficiency and in improving insight, and we're on with it. We started at a small scale to experiment and change things using both internal and external resource. But this is test and learn rather than anything transformational at this point, but we are enthused and excited about the potential, and we'll continue to look at ways in which we can harness AI. But at the other end of the spectrum, we do not believe our business or the services we provide risk being made redundant or being disintermediated. Much of the physical work in a garage is difficult to automate and likewise, AI or automation would struggle with many of the services we perform in our retail stores. Indeed, it's not just our opinion, in October of this year, Microsoft published a list of the top 40 jobs likely to be replaced by AI and the top 40 with most resilience. These included tire and garage technicians. Our services and products are unlikely to be made redundant, but AI should help us be much more efficient and free up our colleagues to spend more time supporting customers and so generating revenue. The third and final phase of our strategy is about the scaling of the business. Clearly, we're trying to scale our business organically every day of the week. But our strong belief is that as we optimize and evolve and invest in our business, we'll be in a position to scale at much greater pace. From a Garages' perspective, this will mean opening more garages, but only once our estate is at optimum utilization. More garages can be achieved through organic openings, but more likely, we will scale through acquisition. The dynamics here play in our favor, and we expect there to continue to be a number of opportunities on the market that will allow us to scale rapidly. For Retail, scaling is likely to come via our digital channel, where we see significant opportunity to grow our existing business, but also expand our markets and range in a low-risk CapEx-light fashion. We also believe we can ultimately broaden our offer in partnership to become the digital go-to destination for all things, Motoring and Cycling, a digital one-stop shop, a single point where you can access products and services for all things, Motoring and Cycling, under one brand, one account with a singular website or access. Today, we offer products, and we offer servicing, maintenance, repair and MOTs. In partnership, we see the potential to offer breakdown, insurance, financing, parking and many other benefits. From a customer point of view, the hassle of car ownership is removed. You have one entity to deal with and one monthly or annual fee that covers all your motoring needs. This is not an unachievable pipe dream. We've built the core component parts and have a working model in our Halfords Motoring Club Premium tier. But there is much more we can do and need to do before we really push and scale this. But ultimately, we believe we are by far and away the best positioned company to achieve this, and we see real value and potential here. So I've outlined the 3 phases of execution that we will implement and what those will mean in practice, but I now wanted to hand over to Jo to talk about how we will measure success and the financial performance and returns we can expect and the disciplines we will look to adhere to. Jo Hartley: Thank you, Henry, and good morning, everyone. Last time we talked about strategy was at our CMD in April 2023. We shared in detail our future targets and the building blocks that would get us there. The reality since then is that while we've worked hard to deliver the cost savings and market share growth we targeted, we struggled to meaningfully grow profits against the challenging consumer and inflationary backdrop. Our markets have been slower to recover to pre-COVID levels than anticipated, and the GBP 90 million of cost savings delivered in the last 3 years to March '25 have not quite mitigated over GBP 98 million of cost inflation during the same period. We have, however, manage cash and working capital well and strengthened our balance sheet throughout this period. Notwithstanding the challenges of the last few years, I'm pleased to say I'm more optimistic about our future. While I'm not going to share a detailed forecast today, I will lay out how we will measure success, the trajectory we anticipate and how we will allocate capital and manage our balance sheet going forward. As we move through the next few years, we will consistently come back to the same measures to indicate progress. Financially, we expect to deliver like-for-like sales growth, with faster growth through our digital channels, operating margin expansion, underlying PBT progression and a return on capital that grows to exceed the cost of capital. Clearly, as we look forward, we cannot predict the external forces that may impact us, specifically, how consumer spending patterns may change, what successive governments and budgets may bring, or how geopolitics will evolve, and the impact this may have on our cost base. But we do know our business, the strength of our brand, the attractive markets we operate in and the unmatched scale we have through our unique combination of digital and physical assets. We have a hugely differentiated service-led customer proposition, delivered through 12,000 skilled colleagues and led by a new and experienced management team. We also know we're starting from a relatively low profit base and the opportunity from data and technology is significant. And importantly, we have a strong balance sheet and a cash-generative business which gives us not only resilience, but the ability to invest in projects that will drive growth in underlying profit and returns for shareholders. As such, we do believe that with discipline we can deliver against these measures sustainably and over time. That said, each phase of the plan will have slightly different dynamics. Throughout the plan, we anticipate CapEx to maintain and drive optimization improvements within our existing business, continuing at broadly similar levels to those seen historically, with investment between GBP 55 million and GBP 65 million per annum. In the evolve phase, we see opportunity to deliver returns from additional investments to drive efficiency and cost savings in our supply chain and in our central overhead, including through upgrading our ERP. In this phase, we will make incremental investment where we see attractive and incremental returns. And we won't move beyond the previously mentioned GBP 55 million to GBP 65 million per annum investment range until we earn the right to do so by showing good momentum in our underlying business. We'll come back to you with more detail on these programs and their costs and benefits once we're confident in the business case returns and ready to get started. Finally, and to be clear, only once our model is optimized and our investments are paying off, will we enter the scale phase, using our balance sheet to enable investment in acquisitions, expansion and further growth. We will operate with discipline throughout all phases of the plan, delivering progress on the KPIs I've described and always operating within our previously guided net debt-to-EBITDA range of 0 to 0.8x, excluding leases. One of our strengths today is undoubtedly our strong balance sheet. We have GBP 180 million debt facility committed to April '29, our balance sheet is currently in a net cash position of GBP 18.6 million as reported this morning. And our lease lengths and therefore, liabilities are low. Leverage, including lease debt is 1.3x. We, therefore, have resilience in uncertain times and the financial firepower to invest where there's opportunity to deliver compelling returns. As we have updated the strategy, we've revisited our capital allocation priorities, and there is very little change. Maintaining a strong balance sheet remains our core guardrail and #1 priority as we look forward. We will continue to operate such that leverage, excluding lease, that does not exceed 0.8x underlying EBITDA at any stage through the plan. Secondly, we continue to see opportunity to invest to maintain and grow our business, as Henry has described. The dividend becomes our third priority, now ahead of M&A. This switch reflects our focus on growing the core business and returning to shareholders through an intention that the dividend progresses as underlying profit progresses. As such, our dividend policy remains unchanged in that we will pay a dividend that's covered 1.5x to 2.5x by underlying profit after tax. M&A, therefore, becomes our fourth priority, most likely once we get to the scale phase of our plan. And thereafter, we would return surplus cash to shareholders. To conclude, the plan Henry has described is clear and compelling. There's a refreshed leadership team in place with clear priorities and a focus on execution and as a team, we're all excited about this next chapter. I believe the potential in this business is enormous, and there are clear opportunities to drive shareholder value in the years to come. We will report consistently on the measures I've laid out today in future announcements, and we'll lay out our quantified investment plans and anticipated returns when we've earned the right to move into the next phase. The results going forward should speak for themselves. I'll hand you back now to Henry. Henry Birch: Fantastic. Thank you, Jo. So what I hope I have shown is that we have a clear, achievable and compelling plan for Halfords over the next 5 years. It may not be as shiny or gimmicky as the Tesla Cybertruck or Robotaxi launch, but we're okay with that. We're not pulling rabbits out of hats here, and we do not need to. Success and growth will be achieved by a clear focus and execution of a plan. But it does ask the question, "Who is executing that plan, and why will things be different moving forward?" Well, I'm very excited to be working alongside a very talented team of people, some of whom are new to Halfords, and all of them bring relevant experience and a track record of success as well as genuine leadership and drive. Earlier this year, we hired Adam Pay as the Managing Director of our Garages business. Adam spent 10 years of his career at Kwik Fit and most recently was the Managing Director of mycar, Australia's largest garages business. Over the course of 10 years there, he transformed the business from loss-making to market leader. Adam brings energy, leadership and hands-on experience, and he's the only person I know who can change a fan belt and read a balance sheet and at the same time. Jess Frame joined us 4 months ago as Managing Director of our Retail business. Jess was previously the Managing Partner of BCG's London office, advising many of the U.K.'s largest retailers. And she's done stints at Tesco and as Chief Executive of a PE-backed veterinary business. Jess has landed with pace and drive and has high ambitions for our Retail business. And most recently, Sarah Haywood joined us as our Chief Information Officer. Sarah had previously been the global CIO for the Carlsberg Group and brings a wealth of experience. Sarah's leadership will be key in navigating a changing tech world and guiding us through change. Our 3 newest executives join an existing team with huge experience and capability alongside Jo, our CFO; Paul O'Hara, our Chief People Officer; Karen Bellairs, our Chief Customer Officer; and Chris McShane, our B2B and Avayler MD, all of whom make up our team. And with the exception of Karen, all are here today, and Jess and Adam will join our Q&A in a minute. And culturally and stylistically, we intend for things to be different. In addition to driving more of a performance culture, we're pushing a simplification of activity, focusing on the core levers that matter, that create customer benefit or drive performance. Halfords is a broad and complex business. But over the years, I think we've made it unnecessarily complicated and have added too many new initiatives and projects. These have stretched us, spread us too thinly and distracted us from the basics of the business. We're looking to bring simplicity, focus and clear prioritization to what we do. Part of that is governance and cadence. Part of it is having the right people and leadership, and it's about creating the right culture. The good news here is that we are pushing against an open door when it comes to our people and the change, agenda we want to implement. As Jo outlined, we also want to make sure that we are disciplined and rigorous in spending capital and driving returns, and if we're not getting the returns, to be transparent and explain why. I also want to shift our narrative from sharing plans that then struggle to materialize to reporting on what we have actually done and achieved and the associated financial outcome. So I wanted to draw matters to a conclusion and summarize some of the key points that you've heard today. I believe we have a unique and valuable business, capable of sustained top and bottom line growth. No one else has our asset base, and we are operating in markets that play to our strengths. Although there are explainable reasons, I recognize our more recent financial performance has been underwhelming compared to our potential. I also recognize that the Halfords machine is not yet humming. We have a fantastic group of assets, but both in isolation and as a combination, they are some way away from their potential. But we do not need a strategic pivot. We need delivery of the basics. There is nothing broken, but we need to apply focus, simplicity and disciplined operational execution. In the short term, this focus will deliver progression in our profit performance across all our divisions. As we drive improved performance, we earn the right to further invest and evolve our business, building additional foundations for growth. We see a significant opportunity to better utilize the data at our disposal and harness technology. And as we optimize and evolve, we will significantly increase our ability to scale. It is a phased approach, but one that delivers returns along the way and will drive value. We're purposely not giving detailed forecast today, but we will consistently track and report on key performance indicators that will measure our progress. But we are clear. Our first job is to build confidence in our investor base that we can consistently deliver results and drive required returns on capital. We have clear plans to do this. We have a great senior team, and we have over 12,000 colleagues who are committed and passionate about the business. I'm excited for what together we can achieve. So that concludes today's presentation. And I'd like to invite Jo, Adam and Jess to join us for Q&A. And I think in terms of asking questions, if you can identify who you are and what organization you're from. Henry Birch: Kate? Kate Calvert: I'm Kate Calvert from Investec. Three questions from me. On the fiscal estate, does Halfords have too many retail stores? And what is the ideal sort of number of Autocentres over the longer term? In terms of my second question, I know you're not giving your forecast, but could you talk a little bit about the margin recovery opportunity? You did talk about expansion of margins within Autocentres, but you didn't mention Retail. So is the sort of 7% historic Autocentres profit margin that's being talked about, is that still valid? And what are your thoughts on Retail? And I think my third question is, when I go into a retail store in 3 to 5 years' time, how different is it going to look versus today? What sort of new product categories might there be or service proposition? Henry Birch: Okay. Brilliant. So just the one question, Kate. Kate Calvert: Yes. Henry Birch: Brilliant. Okay. So we -- if I tackle the first bit around size of estate and then maybe get some commentary from Adam and Jess on that, too. Jo, you talked to the margin point on -- I can't read that. The margin point... Jo Hartley: Margin recovery. Henry Birch: Margin recovery. And then what was the last bit? Jo Hartley: Retail store, how will they look. Henry Birch: What they will look? I'll let Jess take that. So I think, look, in terms of the Retail estate, important thing to note today is that they are all profitable and they're all on short leases. And broadly, we're comfortable with that. I think moving forward, there may be some change to that, but nothing radical. And I think on the Garages estate, post-acquisition, we've done a little bit of trimming in terms of ensuring that we've got the right garages in the right local markets. But again, we don't see significant change there. In any given year, there may be a few closures and a few openings. Indeed, we opened a new store this year in Reading. But fundamentally, those won't change significantly. I think over the longer term, and I think we've made kind of mention of like 800 garages. My view actually is that there shouldn't necessarily be an upper limit because actually, the Garages market is typically very local. So actually, one of the attractive things about Garages is that, frankly, we can continue to scale up and up and up, but it does require opening more units, whereas clearly, with digital retail, you don't need to do that. But yes, broadly speaking, I don't think there'll be a significant change. Jo, do you want to do the margin point and then maybe Adam and Jess can talk about... Jo Hartley: Yes, absolutely. So in terms of the margin opportunity in Autocentres, I think the numbers we previously had out there were 5% to 6%, Kate. And I think we do continue to believe that's an achievable target for our Autocentre business. The opportunity lies in driving utilization and reducing effectively the cost to serve as well as adding more high-margin add-on services, particularly within our tire business. And we've had a very successful first half of the year in terms of increasing income per tire and growing our wheel balance and alignment services using some of the equipment that Henry described earlier. So I do believe we can get to those targets in time. Adam, I don't know if you've got anything to add on that. Adam Pay: No. Spot on, Jo. I think they're realistic numbers. I think the work that we're doing to simplify processes, improve equipment, speed things up in Garages will help us get there in the short to medium term. Jo Hartley: Do you want to take Retail? Henry Birch: Jess, do you want to tackle the Retail bit? Jess Frame: I think your question on have we got too many shops is sort of the same in terms of what you're going to see. So just sort of reinforce Henry's point. So Halfords has had real discipline over the size of its estate over the last few years. So we've actually exited 100 shops since 2018. So what you see today is a tight footprint, which, as Henry said, positively contributes across the estate. And as Henry mentioned in his presentation, our network, our footprint is what gives us this convenience offer and the route of the omnichannel proposition. We must remember that Halfords, as we move more and more into services, our stores don't play a traditional role as they do for many retailers. This is where our service events are taking place in the car parc essentially. So it's a really important role. It's a huge part of the omnichannel proposition. And at the same time, there are clearly opportunities to drive sales densities out of our stores. So it's not necessarily about fewer, but it's certainly about making that space work much harder. In terms of how different we look today, I don't want to presuppose the answer of sort of 4 months in. I can say that my current point of view is that format innovation is not going to be where we see a lot of value in the short to medium term. There's a huge amount we can do. You alluded to it, Kate, with our categories driving more sales densities, really focusing our core range to create space for newness and innovation and frankly more reasons for customers to come and shop with us. I won't predict ahead what those categ going to look like. We will absolutely stay core to the motoring and cycling needs that we surround our customer with, but there is plenty of opportunity that we see to do that. Jonathan Pritchard: Jonathan Pritchard at Peel Hunt. You said the brand is extremely well known, recognition of the brand is high. What are the bits that people don't get? What don't they associate Halfords with that they should? And how are you going to change that? And then, just as it's a one rule, but I'll add another one, just a one word answer. A cycle membership club, feasible in the short term or more medium or long term? Henry Birch: Yes. So I think -- on the brand and what people don't necessarily get, I think there are 2 things. One, I think, our Garages offering, I'm not sure everyone fully understands that. And then I think the other piece is the services element, the convenience of actually going to a retail store and being able to have a wiper blade fitted or get advice or do more of this kind of do-it-for-me. So we talked about broadly our kind of DIY customers who I think are fully knowledgeable about what Halfords offers, but I think they can also go to a Halfords and kind of serve themselves. The do-it-for-me customers, I think, just don't understand the full range of our proposition, either in terms of into Garages or the fact that actually they can bring any motoring or cycling problem to us, and we will fix it. So I think it's those kind of core things. Cycling Club, I would say, is not a priority for us right now. And I think kind of going back to -- it would be very easy for me to say, yes, a great idea. We're trying to drive this prioritization and simplification of focus. So it is not a high priority right now. Ben, sorry, did you... Benedict Anthony John Hunt: Just a couple of questions. Firstly, just on the emphasis on online seems to be coming more through Retail. How does that sort of square with the whole sort of cross-selling more into the Garages? And are there any margin implications? And I guess you've answered Kate's question on the size of the Retail, but any sort of thoughts how you're going to sort of square that? Secondly, just on Motoring Club, it seems to have accelerated really strongly. What's been necessarily driving that? Has that actually been incremental customers who are new to Halfords who are coming in or -- anything really you can add to that? And I guess the third question is on the evolve side. It looks like there's sort of quite a lot of work to be done in the supply chain and how you are going to maintain your CapEx and the guide rails. It feels like there's quite a lot to spend there. But really, any thoughts there would be great. Jo Hartley: So would you mind repeating the first question? Henry Birch: Sorry, Ben. Benedict Anthony John Hunt: First question is just on, there seems to be an emphasis on online within the Retail and how that squares with the need to cross-sell services into Garages? Henry Birch: Yes. So look, I think overall, we have a -- we've got one website, which our customers go to, whether they want to buy a roof box or screen wash or put their car in for an MOT. So there is a big focus for us in terms of making sure that those kind of digital customer journeys are improved. So when we talk about digital, it's both the kind of experience, which hits all part of our business. For Retail, we then have kind of e-commerce where we're selling those products. For Garages, people will find and pay for services, but they will also then book to have that service in a garage. So for Garages, it tends to be more about the journey to the physical unit, whereas in e-commerce, people can buy from us without actually setting foot in one of our physical outlets. But absolutely, digital is important for Garages as well, but there is that distinction in terms of products and services. The Halfords Motoring Club, we haven't done anything particularly to drive that. It is something that we do push in our stores and in our garages. So I think it's just a reflection of successful execution of that. But yes, it is growing. And yes, it is important for us. And the... Jo Hartley: The third question was on the CapEx, to evolve the supply chain. The CapEx guidance that I gave of GBP 55 million to GBP 65 million is really the CapEx that we need to maintain and optimize our core business. What we said was we would only move beyond that GBP 55 million to GBP 65 million investment envelope once we've earned the right to do so by showing momentum in our underlying business. And then we would come back with the investment opportunities and clear line of sight to the returns that they would generate. So I think we would expect to invest beyond that to optimize the supply chain, but only when there's clear line of sight to returns, and whether that's a CapEx or OpEx investment, remains to be seen. Henry Birch: Manjari. Manjari Dhar: It's Manjari Dhar, RBC. I just had 2 sort of broader ones and maybe one quick one. Just on the sort of garage optimization work, I was just wondering how much of that is -- needs to be done on sort of the existing Halfords garages, and how much is it needs to be done on the garages you've acquired over the last few years? Just trying to get a sense of sort of where that integration stands now. And then secondly, I think you mentioned it very briefly about in the sort of evolve stage about retail media and other opportunities. I was just wondering if you could give some more color on what that could look like, what that means for the proposition? And then just finally, Jo, I think in the prerecorded presentation, you gave the H1 FX hedge rates. I just wonder if you could give some -- give the H2 rates as well. Henry Birch: Okay. Adam, do you want to talk to the -- in terms of where we need the optimization, is it existing Halfords or acquisition areas? I mean the answer is both, but you'll give more color. Adam Pay: It is both, and there are a lot more together than they were previously now. So we're not talking about them internally any differently. The opportunity to work through improving processes, providing equipment, providing tooling and training that we need to smooth through at the front end is exactly the same, whether it's a Halfords, also center or one of the acquisitions. It's working really well for us now. And I think the fact that we've got so much unity across those brands now is really helping. Henry Birch: And I think it's worth noting that National was predominantly a tire brand. One of the things that we've done is moved more service maintenance repair into that, which has driven higher-margin revenue. So that's been a kind of clear and obvious thing to do. On the retail media network, we do actually have a -- we do actually use retail media today, but it is predominantly with existing suppliers. So if you think on the kind of battery side, we work with Yuasa, you'll find online and with our customers, we are promoting Yuasa and various other existing suppliers. There is an opportunity to go beyond our supplier base. So I'm kind of making it up, but a Nissan or a Toyota, if they want to access 20 million U.K. customers, car buying U.K. customers, then obviously, Halfords would be a kind of important partner. We don't currently do that at the moment. So I think there is a much bigger opportunity. We do make money today from a kind of limited, what you call, a retail media network, but there is a potential above that. Is there anything, Jess, sorry, that you want to talk about? Jess Frame: No, no. Obviously, I think the third party in offsite is actually really exciting and much bigger, but that won't be until sort of medium, longer term. Jo Hartley: Your last question on FX, Manjari. So yes, in half 1 this year, we saw a hedge rate in cost of goods sold coming through at $1.28 versus $1.24 in the prior year, which was obviously helpful and supportive of our margin progression during the first half. In the second half of the year, we expect broadly similar. It all depends on the stock turn really that comes through. We bought all of our currency requirements for the purchases we'll make in FY '26 at around $1.29, and we bought about 60% of what we need for our purchases next year at about $1.32. So we should continue to expect to see a bit of a tailwind from FX as we look forward. Henry Birch: Russell. Russell Pointon: Russell Pointon from Edison. Two questions. Going back to your criticisms at the start, Henry. First one was on the category management. You said you haven't done a good job of that. How quickly will you actually get through reviewing all the categories? Will it be done pretty quickly over 12 months? And the second one was, you also criticized the lack of synergies between the businesses, so do you need to incentivize staff in a slightly different way to push that through? Henry Birch: Yes. I wouldn't necessarily classify them as criticisms, more maybe observations. But maybe if Jess can talk to category management and the speed there. I think on the synergy point, we do -- I mean, Fusion, actually, our garage model, is a really good example of actually how assets work within Halfords, in Garages, in Retail, in as much as the model is driving Retail customers into our Garages. So we are doing that to good effect. I think my point is there is more that we can do. I'm not sure it's necessarily about incentives, but that is one way that we could do it. I think it's more around actually removing any kind of points of friction and making sure that our colleagues kind of understand how we drive value in the business. So I think it's more about operational management and communication. Jess, do you want to talk to the category management? Jess Frame: Yes, sure. Very happy to. I mean the short version is this will be pulsing. It will go through waves through all of the categories. This is an 18- to 24-month job. This is a massive, massive rebuild of all those ranges, starting with what does the customer need, how do we provide that. And within that, undoubtedly, there'll be a real opportunity for own-brand development. So Halfords has got incredible heritage in own brand, which is both higher quality and much, much better margin. So when we think about category management, it's not just a quick range review that really, really is challenging, bottom up, all of those ranges. So we're very excited. We've already started the first 2, but this is real sort of heavy lifting that will go on over the next 2 years essentially. Carl Smith: Carl Smith from Zeus. Two questions, please. First is on Fusion town. So previously, earlier this year, you talked about sort of doubling of profitability at the sites you invested in. Now you're sort of over halfway through your 150. Are those return rates sort of still applying now that you're getting a bit further along? And sort of expanding on that, do you think you'll go beyond 150 sites in the into the evolve phase even if the return rates become a bit lower for the incremental ones beyond 150? And then the next question is about the Motoring Club. How do you sort of intend to get more people on to premium? Is it more incentives? Is it more marketing or lower pricing? Or what's going to get more people to shift to premium? Henry Birch: So on the return rates for Fusion, the short answer is no, we haven't seen any deterioration. And clearly, we've kind of gone back and checked that prior to coming out today. So no, we're in good shape there. In terms of whether we can go beyond the 150, I mean, Adam is maybe best placed to talk to that. But I think there is then the question of what do we do beyond? We've got 600-odd garages. But Adam, do you see an opportunity for Fusion be extended or kind of Fusion light or... Adam Pay: Well, it's interesting. I mean if I think about the reason -- part of the reason that I joined the Halfords Group was the Fusion concept. I was really excited by that, and I continue to be excited. The fact that we can largely double profit in 2 years is absolutely fabulous. I mean we're going to have 100 by the end of this year, somewhere near, another 50. It'll get us to the 150. I think for me, the customer experience and the colleague experience is something that really stands out. So I think the broader question is not Fusion past 150; it's kind of what elements can we take forward into the rest of the estate moving forward. And I think there's some real benefits and some great learnings. So yes, it's very positive. Henry Birch: And on Halfords Motoring Club, look, I think we -- to my mind, we've made a brilliant start. And you may query me saying start when we've already got 6 million customers. But I think there is a piece of work that we need to do in terms of saying actually how do we drive premium more, what are the mechanics to drive membership, to drive value from that. So I think this is a kind of ongoing project that we are going to kind of drill down into, but it is an absolutely brilliant kind of asset and base to start from. Benedict Anthony John Hunt: So just one more question. First was club and less on strategy. But I'm wondering if we could just dwell a little bit on the [ sick job being ] tires. You mentioned that you think you can reenergize that. What's been going on there? And where do you see that turning around? Henry Birch: So look, I think, without question, tires, over the last couple of years, have been struggling in the U.K. in terms of growth. I think we've seen some improvement in that. I think as a company and talking to investors, I want to kind of change the narrative from talking about the tire market to talking about our performance because I fundamentally think that actually even in a static or declining market, we've got the potential to take share. And I think actually some of the stuff that we're doing, and I'm going to ask Adam to talk about, wheel balancing and alignment and actually how you can sell a tire and make money not just on the tire, but the services around it and the margin that, that drives is something which actually we're starting to do, to kind of good effect. So I think my kind of headline is I don't want to be talking about the kind of tire market endlessly. I want to talk about our overall Garages performance and within that, that actually we're running a kind of healthy and growing tire business. It may not be immediately, but we're getting there. Adam, do you want to talk about your specialist subject maybe? Adam Pay: Yes, I'll come dip off to one side and fit a fan belt in a second, too. Yes. I mean the opportunity for tires that I've seen since I've landed is significant for Halfords. The market has been tricky. There's no doubt about that. I don't want to go into all of the technical detail that sits behind that. But we are only 9% of that market, and it's a very, very attractive segment. And there's a lot that we can do internally to smooth the path for tires. So there's work underway around training for our colleagues. That's technical and soft skills. There's also different ranges being put into Garages right now. We've got different equipment that speeds up that process. So I think over the next short to medium term, we're going to start to see an uplift in our tire performance despite whether the market is in decline or in growth, I think we can certainly take market share and grow. Mark Photiades: It's Mark Photiades from Canaccord. Just on Cycling, you talked about pushing into premium and parts and accessories. Could you maybe just give us a sense of what those 2 categories represent in terms of the GBP 1 billion market? And the group has moved into that area before, particularly premium. It didn't necessarily go to plan. I just wonder what gives you confidence that you can make inroads this time around? Henry Birch: Jo, do you want to talk to that? Jo Hartley: Yes, I'll talk to that, and Jess may have some points to add on it. But if we sort of start at your last point, we were in premium cycling several years ago, and we owned -- we sort of had -- we came out of specific premium cycling shops actually some time ago. Our move back into premium cycling is not, to be clear, opening a load of premium cycling shops that are separate from our own Halfords business today. What we have seen though over the last 6 months is really good growth in those premium price bikes, in e-bikes and also in those slightly higher price point bikes. And it's really noticeable that Tredz, our performance Cycling business, which to be clear, just has 3 shops and a big online business, had the strongest growth in the group in the first half of the year with double-digit like-for-like sales growth. So that market is definitely coming back, and it's really where enthusiasts want to play -- are playing. We've got quite a lot of innovation that's been happening in that space, and I'll let Jess talk a little bit more about that in a second. But we're confident that there's a good growth opportunity for us there as we look forward. Jess Frame: Yes. Just to build on what Jo said, I think it's really important that there's nuance in terms of what is premium cycling and what is not. And the reality is there's an entire spectrum where we see a lot more people trading up than we used to do. And so actually, with our Tredz business and Halfords' core, it's a really, really exciting opportunity for us to actually serve across the set of need states. And we've identified some areas that aren't currently served across those 2 areas. There's some really interesting white space opportunity. And back to the point on own brands, we've developed and have just started to launch now. You'll see them drop into shops over the next 3, 4 months, a really, really impressive range of more premium e-bikes that we're very, very proud of, that we've developed with integrated technology and so forth, which again, so that sort of Halfords' product capability and own brand actually allows us to take features that are typically premium-only and bring that more into the mass market and make it more accessible for customers. So I think we have a really exciting role to play on that one. Henry Birch: I think we're nearly -- Rupert, you had a question? We're nearly up on time. Unknown Analyst: I was just going to ask a question on Cycling, too. Henry Birch: Okay. Unknown Analyst: And you've largely covered it. Sorry. The 9% like-for-likes, I just wonder whether that was aided by price promotion? In a challenged consumer environment, that feels like a good number. And a bit of color on what was behind it, please? Henry Birch: I mean Jess can talk to it in a bit more detail. We didn't do anything massively promotionally. I think you'll remember, earlier in the summer, we had warm weather that came in the kind of spring, which I think probably helped some of that performance, maybe pulled forward some of the Cycling sales from later in the year. But no, there wasn't anything we did promotionally. Jess Frame: We did outperform the market quite significantly, but that wasn't through Tredz, and essentially, we've got a great range. Tredz is the #2 online player in premium cycling, right? So across that when the market wants to buy, Halfords is the place to come. Jo Hartley: And particularly strong in Kids and Electric in the first half of the year from a Cycling perspective. Kate Calvert: All right. First and last. I was just going to come back on the garage utilization. What are the sort of main levers short term to improve utilization? Is it all about systems and processes? Or is there a skill issue and equipment issue in some of these centers? Adam Pay: No. It's a really good question. So the processes are the underlying piece. But what you've got then is making sure that we've got the right headcount and skills mix, to your point, in each and every one of our garages that meets the market needs and gives us the opportunity to grow. There's also an opportunity for us to really accelerate our apprentice programs to get more colleagues into Garages and make sure that we've got more people on the ground in the right place at the right time, but also protecting the future health of the workforce for us, too. Henry Birch: Brilliant. Thank you very much, everyone, for attending today. Thank you for those joining online. This concludes our presentation. Thank you.
Operator: Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Banco Macro's Third Quarter 2025 Earnings Conference Call. We would like to inform you that the third Q '25 press release is available to download at the Investor Relations website of Banco Macro, www.macro.com.ar/relaciones-inversores. [Operator Instructions] It is now my pleasure to introduce our speakers. Joining us from Argentina are Mr. Jorge Scarinci, Chief Financial Officer; and Mr. Nicolas Torres, IR. Now I will turn the conference over to Mr. Nicolas Torres. You may begin your conference, sir. Nicolas Torres: Thank you. Good morning, and welcome to Banco Macro's Third Quarter 2025 Conference Call. Any comments we may make today may include forward-looking statements, which are subject to various conditions, and these are outlined in our 20-F, which was filed to the SEC, and it's available at our website. Third quarter 2025 press release was distributed last Wednesday, and it's available at our website. All figures are in Argentine pesos and have been restated in terms of the measuring unit current at the end of the reporting period. As of 2020, the bank began reporting results applying hyperinflation accounting in accordance with IFRS IAS 29 as established by the Central Bank. For ease of comparison, figures of previous quarters have been restated applying IAS 29 to reflect the accumulated effect of the inflation adjustment for each period through September 30, 2025. I will now briefly comment on the bank's third quarter 2025 financial results. In the third quarter of 2025, Banco Macro's net income totaled ARS 33.1 billion loss, which was ARS 191.5 billion lower than the previous quarter. This result was mainly due to higher loan loss provisions, higher administrative expenses, lower income from government and private securities and lower net fee income that were partially offset by higher other operating income and a lower loss related to the net monetary position. Total comprehensive income for the quarter totaled ARS 28.4 billion loss. And in the first 9 months of 2025 Banco Macro's net income totaled ARS 176.7 billion, 35% below than the same period of last year. When total comprehension income totaled ARS 186.9 billion in the same period. As of the third quarter of 2025, the accumulated annualized ROE and ROA were 4.5% and 1.5%, respectively. Net operating income before general and administrative and personnel expenses was ARS 779.6 billion in the third quarter of 2025, 23% of ARS 233.7 billion lower compared to the second quarter of 2025 due to lower income from government securities. On a yearly basis, net operating income before general and administrative and personnel expenses decreased 29% or ARS 312.9 billion. Provision for loan losses totaled ARS 156.8 billion, 45% or ARS 49.4 billion higher than the second quarter of 2025. On a yearly basis, provision for loan losses increased 424% or ARS 128.4 billion. In the quarter, net interest income totaled ARS 686.2 billion, 7% or ARS 52.2 billion lower than in the second quarter of 2025 and 8% or ARS 63.6 billion lower year-on-year. This result was due to a ARS 113.9 billion increase in interest expense, while interest income increased ARS 61.6 billion. In the third quarter of 2025, interest income totaled ARS 1.32 trillion, 5% or ARS 61.6 billion higher in the second quarter of 2025 and 7% or ARS 84.7 billion higher than in the third quarter of 2024. Income from interest on loans and other financing totaled ARS 930.3 billion, 18% or ARS 139.7 billion higher compared with the previous quarter, mainly due to an 11% increase in the average volume of private sector loans and by a 111 basis point increase in the average lending rate. On a yearly basis, income from interest on loans increased 74% or ARS 396.2 billion. In the third quarter of 2025, interest on loans represented 77% of total interest income. In the third quarter of 2025, income from government and private securities decreased 24% or ARS 85.4 billion quarter-on-quarter mainly due to inflation adjusted bonds and decreased 52% or ARS 292.8 billion compared with the same period last year. This result is explained 97% by income from government and private securities at amortized cost, and the remaining 3% is explained by income from government securities valued at fair value through other comprehensI've income. In the third quarter of 2025, income from repos totaled ARS 6.3 billion, 493% or ARS 5.3 billion higher than the previous quarter and 74% or ARS 18.1 billion lower than a year ago. It is worth noting that as July 22, 2024, the Central Bank decided to terminate repos and replace them with LEFI's, which were issued by the treasury, which then were eventually terminated on July 10, 2025. In the third quarter of 2025, FX income was ARS 13.8 billion loss, ARS 37.5 billion lower than the second quarter of 2025, mainly due to the loss from foreign currency exchange, given the bank's short dollar position. It should be noted that the bank posted a ARS 23.2 billion gain related to investment in derivative financing instruments, which is basically the long futures position that the bank has. Therefore, when considering income from foreign currency exchange plus income from investment in derivative financing instruments, the bank posted a ARS 9.4 billion gain. On a yearly basis, FX income decreased 164% of ARS 35.2 billion. And in the quarter, the Argentine peso depreciated 14.4% against the U.S. dollar after the Central Bank of Argentina replaced the 1% crawling peg, allowing the Argentine peso to float [indiscernible]. In the third quarter of 2025, interest expense totaled ARS 528.4 billion, increasing 27% or ARS 113.9 billion compared to the previous quarter and increased 39% or ARS 148.4 billion compared to the third quarter of 2024. Within interest expenses, interest on deposits represented 94% of the bank's total interest expense, increasing 24% or ARS 96.6 billion quarter-on-quarter due to a 248 basis points increase in the average rate paid on deposits, while the average volume of private sector deposits increased 10%. On a yearly basis, interest on deposits increased 36% or ARS 131.3 billion. In the third quarter of 2025, the bank's net interest margin, including FX, was 18.7%, lower than the 23.5% posted in the second quarter of 2025 and the 31.5% posted in the third quarter of 2024. In the third quarter of 2025, Banco Macro's net fee income totaled ARS 177.3 billion, 7% or ARS 13.9 billion lower than the second quarter of 2025. In the quarter, credit card fees stand out with a 22% or ARS 14.2 billion decrease, followed by credit-related fees, which decreased 27% of ARS 3.1 billion, and were partially offset by a 7% or ARS 1.8 billion increase in corporate services fees. On a yearly basis, net fee income increased 14% or ARS 22.1 billion. In the third quarter of 2025, net income from financial assets and liabilities fair value to profit or loss totaled ARS 19.5 billion gain, decreasing 84% or ARS 101 billion compared to the second quarter of 2025. This result is mainly due to lower income from government securities. On a yearly basis, net income from financial assets and liabilities at fair value to profit or loss decreased 86% or ARS 117 billion. In the quarter, other operating income totaled ARS 69 billion, 42% or ARS 20.5 billion higher than the second quarter of 2025 due to higher credit and debit card income, ARS 14.7 billion. And on a yearly basis, other operating income increased 16% or ARS 9.7 billion. In the third quarter of 2025, Banco Macro's administrative expenses plus employee benefits totaled ARS 331.5 billion, 12% or ARS 35.1 billion higher than the previous quarter due to a 20% increase in employee benefits, while administrative expenses decreased 3%. On a yearly basis, administrative expenses plus employee benefits decreased ARS 431 million. In the third quarter of 2025, employee benefits increased 20% or ARS 38.7 billion, mainly due to a 139% or ARS 23.6 billion increase in compensation and bonuses as the bank builds up provisions for early retirement plans and severance payments. On a yearly basis, employee benefits increased 8% or ARS 16.9 billion. In the third quarter of 2025, the accumulated efficiency ratio reached 39.1%, deteriorating from the 35.9% posted in the second quarter of 2025 and from the 25.5% posted a year ago. In the third quarter of 2025, expenses, which includes employee benefits, general and administrative expenses, depreciation and impairment assets increased 10%, while income, basically net interest income, net fee income, differences in quoted prices of gold and foreign currency plus other operating income, plus net income from financial assets at fair value through profit or loss decreased 19% compared to the second quarter of 2025. In the third quarter of 2025, the result from the net monetary position totaled at ARS 203.1 billion loss, 6% or ARS 13 billion lower than the loss posted in the second quarter of 2025 and 46% or ARS 171 billion lower than the loss posted 1 year ago. Lower inflation was observed during the quarter, basically 4 basis points below the second quarter '25. Inflation reached 5.97% in the third quarter of 2025 versus 6.01% in the second quarter of 2025. In the third quarter of 2025, given Macro's net income, no income tax charge was recorded. Further information is provided in Note 21 of our financial statements. In terms of loan growth, the bank's total financial reached ARS 10.1 trillion, increasing 3% or ARS 332.4 billion quarter-on-quarter and increasing 69% of ARS 4.1 trillion year-on-year. In the third quarter of 2025, private sector loans increased 3% or ARS 278.2 billion, and on a yearly basis, private sector loans increased 67% of ARS 3.94 trillion. Within commercial loans, documents and others stand out with a 4% or ARS 60.4 billion and a 27% or ARS 453.9 billion, respectively. Meanwhile, overdrafts decreased 21% or ARS 364.9 billion. Within consumer lending, almost all product lines increased during the third quarter of 2025, except for credit card loans, which decreased 1% or ARS 21.3 billion. Personal loans, mortgage loans and pledged loans stand out with an 8% or ARS 156.8 billion, 12% or ARS 92.8 billion, 6% or ARS 13.1 billion increase, respectively. In the third quarter of 2025, peso financing decreased 2% or ARS 192.1 billion, while U.S. dollar financing increased 10% or $170 million. It is important to mention that Banco Macro's market share over private sector loans as of September 2025 reached 9%. On the funding side, total deposits increased 5% or ARS 556.4 billion quarter-on-quarter, totaling ARS 11.8 trillion and increase 11% of ARS 1.2 trillion year-on-year. Private sector deposits increased 6% or ARS 604.9 billion quarter-on-quarter, while public sector deposits decreased 5% or ARS 49.6 billion quarter-on-quarter. The increase in private sector deposits was led by demand deposits, which increased 10% or ARS 475.2 billion, while time deposits increased 4% or ARS 202.2 billion quarter-on-quarter. Peso deposits decreased 1% or ARS 48 billion, while U.S. dollar deposits increased 3% or $95 million. As of September 2025, Banco Macro's transactional accounts represented approximately 49% of total deposits. Banco Macro's market share over private deposits as of September 2025 totaled 7.4%. In terms of asset quality, Banco Macro's nonperforming total finance ratio reached 30.2%. The coverage ratio, measured as total allowances under expected credit losses over nonperforming loans under Central Bank rules reached 120.87%. Consumer portfolio nonperforming loans deteriorated 149 basis points, up to 4.3% from 2.81% in the previous quarter while commercial portfolio nonperforming loans deteriorated 33 basis points in the third quarter of 2025, up to 0.85% from 0.52% in the previous quarter. In terms of capitalization, Banco Macro accounted an excess capital of ARS 3.3 trillion, which represented a capital adequacy ratio of 29.9% and a Tier 1 ratio of 29.2%. The bank's aim is to make the best use of this excess capital. The bank's liquidity remained more than appropriate. Liquid assets to total deposit ratio reached 67%. Overall, we have accounted for another positive quarter. We continue showing a solid financial position. We keep a well-optimized deposit base. Asset quality remain under control and closely monitor, and we keep on working to improve more our efficiency standards. At this time, we would like to take the questions you may have. Operator: [Operator Instructions] Our first question comes from Carlos Gomez-Lopez with HSBC. Carlos Gomez-Lopez: I guess 2 questions. The first one is one has a sense that your result is worse than you had anticipated. You did not, I think, expect to have a loss. Was there anything special that we could point to? Or let's say, did you take the opportunity to take any charges to expenses that we haven't discussed? Could you identify anything which was special that perhaps was not forecast a little bit before? And second, what do you expect for next year in terms of loan growth and achievable returns, understanding that there's a lot of uncertainty? Jorge Francisco Scarinci: Thanks for your questions. In relation to your first question well, I think that is quite clear on the press release that there was a combination of different factors, and some of them were a bit more or deeper than what we expected at the beginning. First, in terms of the delinquency rate, we were expecting not such that amount of provisions that finally we have to post. That's a consequence, as you also saw in the other banks that also released results on the past week, that was a kind of an increase or almost peak in terms of NPLs. That is one of the reasons for that. Second reason, there were some additional expenses that we also accounted in the quarter that were not expected before. So -- and also the compression on the margins due to the big increase of roller coaster interest rate behavior during the third quarter. And also, I would say that last but not least, is the performance on the bond prices and the impact on the bond portfolio performance. So that is in relation to your first question. According to your second question in terms of forecast for next year, we are forecasting loans to grow 35% in real terms. Deposits to grow in the area of 25% in real terms, and we continue to expect ROE for 2026 to be in the low tens. Carlos Gomez-Lopez: And could you give some more detail about your extra expenses? Is that related to adjustment to the footprint or any consultant or any system that you have purchased? Anything we could know more about expenses and whether they're recurring or nonrecurring? Jorge Francisco Scarinci: No. Basically, Carlos, those that we posted there that are related to the early retirement plans that were not expected to happen and they finally happened. So that we're described on the press release, basically. Operator: Next question from Ernesto Gabilondo with Bank of America. Ernesto María Gabilondo Márquez: My first question will be on asset quality. So I just want to double check when do you expect the peak on NPLs? And if you can provide us a potential range? And where do you see the peak in cost of risk? And how should we think it for next year? My second question is a follow-up on your ROE. As you said, you're expecting low teens in 2026. But how should we think about the ROE for 2025? And then my last question is on your capital ratio and potential M&A opportunities. You continue to have an important excess in capital. You already have passed the midterm election. So when do you expect to start to have M&A activity? Do you think is something that could come next year? Any color on that will be very helpful. Jorge Francisco Scarinci: On your first question in terms of asset quality, we believe that the peak on NPLs should happen or should happen between October and November. And that is what we are seeing in terms of the delinquency ratio, also in terms of cost of risk. We posted at 6.5% in the third quarter. We expect this number to be maintained approx in the fourth quarter, and we are forecasting to be more close to 5% in 2026. So again, the peak should be between the third and the fourth quarter in terms of delinquency. In terms of ROE for 2025, we continue to maintain the 8% area for 2025 in terms of ROE. On your question about capital ratio, I mean, it is true that we continue to have this high level of capitalization of excess capital. Of course, we are honored and trying to find out if there is an opportunity to make the use of this excess capital in terms of M&A. Of course, you know that any player trying to leave the game is pretty sure that it's going to knock our door. And of course, we are going to analyze the target of the assets. And if it is good, we are going to go for it. If not, we are going to wait for another one. So that's the idea going forward. So we expect to have some news about that in the next maybe 12 to 18 months, basically, but it's not only depending on us. Operator: Our next question comes from Brian Flores with Citi. Brian Flores: I have a question on growth, right, because probably this is the first option in terms of capital allocation, given the wide base of capital. Could you elaborate a bit on where will you focus this growth if you're going to give priority to corporates? Or do you think maybe it is time to gain share, be more aggressive on the consumer side? Just if you could maybe expand this guidance that you provided for 2026 by segment. I think that would be great. And then, Jorge, I think we spoke very recently, we had an event where we participated. I think we discussed sustainable ROE. Just wanted to check if maybe 2026 is part of this transition for, let's say, 15% to 20% of levels of sustainable ROE. Jorge Francisco Scarinci: In terms of the first question about loan growth going forward, I mean, we expect to grow across the board, both commercial and consumer. And the consequence of this is because there is a very low penetration in the Argentine banking sector. It is below 10% of loan to GDP. We're expecting, according to the consensus of the economies, a real GDP growth of around 3% in 2026 with inflation also estimated by the consensus of economies in the area of 20%. So we expect demand to come from both companies and also consumers. So the idea is to grow. If you want to put in that kind of percentages of our loan book, as of today, we are approx 65% consumer, 35% commercial. That could be at the end of 2026, maybe 60-40, but there's not going to be a big change in our loan book composition because we're expecting loan demand to come from every sector in Argentina. In terms of ROE going forward, second question, yes, 2026 is going to continue to be another transition year towards the area of 20% ROE that we are supposed to be delivering 2027 onwards. Brian Flores: No. Super clear. Jorge, maybe just if I can, a quick follow-up on these questions on capital allocation. Would you consider the current stock levels as attractive in terms to continue the buyback activity you showed during the third quarter? Jorge Francisco Scarinci: Well, Brian, that is something that the Board might consider. For the moment, the program that was said it is not more going on basically because of the price that's skyrocketed since then. And as a consequence of the election in the -- of the midterm election that happened here in Argentina, and of course, the mood that turned into positive for Argentina. So for another buyback program, we have to -- I mean the Board has to consider many issues going forward. For the moment, it's not going to be in place anymore. Operator: Our next question comes from Pedro Leduc with Itaú BBA. Pedro Leduc: Two, please. First, on NIMs. Now of course, this quarter, we had this very adverse environment for funding costs and liquidity reserves, et cetera. But we also saw a lot of repricing in local portfolios. So now that funding is normalized, can we expect, for example, 4Q NIMs to be back to, let's say, at least 2Q levels? And if we look at on an aggregate basis, 2026, there's a lot of moving pieces for NIMs in 2025 as well, so this is harder. But on an aggregate basis, should we see NII grow above this 35% real loan book growth in your view and if you can go over the driving forces there. And then last, that's just a follow-up on NPLs. Of course, it's been a trend there. Yours took a little bit longer, and it seems like you're more comfortable in seeing the peak already in 4Q. Some players might be seeing slipping over to 1Q, 2Q. So if you can share with us what you have done there to control this and maybe be out of the peak also already in the fourth quarter in terms of NPLs. Jorge Francisco Scarinci: In relation to the question about NIMs, yes. Basically, what happened with the cost of funding and also other interest rates that were ups and downs in the third quarter. We saw similar to other banks in this third quarter, our NIMs being affected. We posted at 18.7% NIM compared to the 23.5% that we posted in the second quarter. So yes, we hope and we believe that the NIM for the fourth quarter is going to be more similar than the one that we posted in the second quarter. Going forward, we expect in 2026 NIMs to be in the area of 20%, so should be slightly below the average that we are having up to now, that is 21.6% for the first 9 months of 2025. And we believe that the net interest income should be growing slightly above the 35% that we are going to grow in terms of real loan growth that I commented before. In terms of the NPLs, as I mentioned, yes, we could see some of more peak on the fourth Q, and that is going to bring additional provisioning for the moment. We expect these levels to be similar than the one that we posted in the third quarter. Going forward, as I mentioned, the cost of risk should be more in the area of 5% in 2026. And basically, we should be -- or sorry, we have been taking measures since the last part of the first quarter, beginning of the second quarter of 2025, where we became more restrictive in terms of the credit lines on -- basically on consumers. But basically, as we saw, the main consequence of the deterioration of the delinquency rate across the board in the Argentine banking sector was basically the increase in the real interest rates that we saw in the second and third quarter. So now that we are seeing real interest rate more slightly positive. And going forward, we believe that this trend will be maintained. We think that the behavior of the portfolio is going to become a bit more normal. But of course, you have to take into consideration that we grew our loan book 69% in real terms. As of the third quarter of '25, we expect to grow another 35% in real terms in 2026. So we maybe we should accustom to see the past due loans ratio in other levels, I would say, between 2%, 2.5% or maybe more than that compared to the ratio that we were accustomed to see in the Argentine banks when banks didn't grow their loan book as happened in the last maybe 3, 4 years. So now we have to move and to have to see these ratios more in the area of mid-2s with the level of real growth in loans that we are forecasting going forward. Operator: Our next question comes from Tito Labarta with Goldman Sachs. Daer Labarta: I guess a couple of follow-ups. Jorge, are you able to quantify how much additional expenses were related to those early retirement plans you mentioned, just to think about how much of that should go away in 4Q? And then second question, I guess, on the market-related income, which you mentioned was negatively impacted by the bonds and the government losses on the government bond. Do you expect that to sort of reverse in 4Q as things kind of normalize just to get a sense of the magnitude that can maybe improve in 4Q as well? Jorge Francisco Scarinci: In terms of the expenses that we commented there are the ARS 23.5 million that we posted in the expenses line that we explained in the press release, approximately 18.5% were maybe nonrecurrent in the third quarter. Honestly, it's a bit early to say what we are going to do in the fourth quarter but might happen that some of these could appear here. But again, it's a bit early to comment on that on the fourth quarter. In terms of second question, yes, the bond portfolio taking into consideration that approximately, we have 23% to 25% of our bond portfolio tied to market prices or market-related. So going forward, we expect this to reverse in at least for the moment, in the fourth quarter, we are going to have much better performance in the bond portfolio compared to the one that we had in the third quarter where we saw prices going down a lot. Daer Labarta: Okay. No, that's very clear, Jorge. Just could there be additional expenses related to the early retirement plans? Or is that it from last quarter? Jorge Francisco Scarinci: Could be. But again, honestly, it's a bit early to comment on that, but could be. Operator: Next question from Pedro Offenhenden with Latin Securities. Pedro Offenhenden: I wanted to ask what factors could catalyst for the deposit growth on 2026? And how are you seeing liquidity conditions after the elections? Jorge Francisco Scarinci: We're expecting real interest rates to be positive in 2026, similar levels as the one that we are seeing right now. That's why we are forecasting our deposit growth to be in the area of 25% in real terms. This is in relative terms, lower than the rate that we're expecting for loans. But in the case of we did additional funding here, of course, we have a bond portfolio where we can take liquidity. We can issue domestic corporate bonds or bonds on the foreign market. So this is not going to be a problem for the liquidity for Banco Macro. In addition to that, when you look at the liquidity ratios as of today, we have an extremely good liquidity ratios in both dollars and pesos. So going forward, we expect to maintain this performance. Operator: Next question from Alonso Aramburú with BTG. Alonso Aramburú: Just wanted to follow up a little bit on asset quality. You mentioned that NPLs should peak October, November. Maybe you can comment on what you're seeing in new vintages. You saw some deterioration in commercial, some a little bit more in consumer. So what are you seeing lately that gives you this confidence that the peak is now? And when you talk about margins, maybe a little bit longer term, you mentioned 20% ROE 2027 onwards, what sort of margins, what sort of NIMs do you see then, right? You mentioned 20% next year? Is that in the mid-teens? I mean, where do you see them? Jorge Francisco Scarinci: Yes, in terms of NPLs, what we are seeing in our vintages is that there is a stop in the deterioration trend, and we're seeing some stability, and we expect this to become better or improve in the next month or so. So that's why we are expecting to see this kind of a peak maybe early in the fourth quarter. Honestly, at the end of the fourth quarter, we really, for the moment, don't know which is the level of provision that we are going to post. That's why we are supposing that should be in the area of the one that we posted in the third quarter. But we are positive on the trend on the vintages in the next couple of months, and this is going to help, and that's why we commented that the peak should be between October, November. In terms of NIMs going forward, for sure, little by little, we are going to see a decline in the NIMs. Honestly, for 2027 should be in the area of mid-teens. And of course, 2028 onwards, we should be approaching to the low 10s. That is maybe the movie that we are seeing going forward for the Argentine banking sector, and we expect the volume growth to outpace the decline in margins. Operator: Next question from Nicolas Riva with Bank of America. Nicolas Riva: Jorge, I have a question regarding next year, the maturity of your 2026 bond, the $400 million. I understand it counts very little for capital treatment, I think, only 20% maybe. But I wanted to ask if the plan -- given that it's a large size in dollars, $400 million, if the plan would be to replace those dollars and probably do like a senior bond issuance of a similar size? Or what would be the plan regarding those $400 million? Jorge Francisco Scarinci: Yes, this bond is maturing at the end of November 2026. So we still have almost 12 months to figure out what to do. Honestly, we have many options on the table. We understand that markets are pretty positive on Argentina. We have to figure out our plan for future growth in U.S. dollar loans. And depending on all those -- on these assumptions and what happened in by mid-2026, we are going to make a decision whether to cancel it, to roll it to maybe issue another senior bond instead of subordinated. So again, many options on the table. Still, we do not have decided what to do. Operator: Our next question comes from Brian Flores with Citi. Brian Flores: Thank you very much for the opportunity to make a quick follow-up. Jorge, was just running here some back of the envelope math on your comments on ROE. I just wanted to check if what I am seeing here makes sense. You mentioned the 8% level of ROE -- real ROE for 2025 is achievable, right? You're not changing the guidance. But just looking at the run rate, it seems like the fourth quarter would need to be higher than the complete run rate of the first 9 months of the year. So I just wanted to check if, I don't know, there is something one-off that could really help results or if just it's a big spike in volume. Just wanted to understand if this is making sense or I'm missing something here in terms of what could really help the fourth quarter results to achieve the mentioned guidance? Jorge Francisco Scarinci: Well, first of all, the forecast is area 8%. Second, if you assume that we are going to post in the fourth quarter results similar than the one that we posted in the second quarter, we are going to be very close to the 8%. So for the moment, we are maintaining that. We expect, again, recovery in the bond portfolio, increasing in loan volumes and improvement on the NIMs. So these are the main reasons why we're expecting a much better fourth quarter. So we should be very close to the 8%. So that's the idea why we are maintaining the forecast for 2025 ROE. Operator: Our next question comes from [ George Birch Renardson with Oda ]. What is the average age of your workforce? Jorge Francisco Scarinci: Honestly, I have to check that. It's not an easy question. I have to check the data from Human Resources, the first time I received this question. But let me check it. And if you don't mind, I can get back to George later, please. Operator: Great. Next question from Marcos Serú with Allaria. What caused the ARS 28 billion loss on foreign exchange? Jorge Francisco Scarinci: I mean the ARS 28 billion loss in the -- when you look at the complete income on FX, it is -- we got a positive result of almost ARS 9.5 billion. This is a result on a combination of that we -- of the bank was sold in spot FX and the increase in the FX impacted on a loss in that position. However, also the bank was long in futures, and that resulted in a positive result because also futures increased in the third quarter. So the net-net was a positive income of ARS 9.5 billion in the quarter. Operator: There are no more further questions at this time. This concludes the question-and-answer session. I will now turn over to Mr. Nicolas Torres for final considerations. Nicolas Torres: Thank you all for your interest in Banco Macro. We appreciate your time and look forward to speaking with you again. Have a good day. Operator: This concludes today's presentation. You may disconnect, and have a nice day.
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