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Operator: Good evening. This is the conference operator. Welcome, and thank you for joining the Rexel Fourth Quarter Sales and Full Year 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Guillaume Texier, CEO of Rexel. Please go ahead, sir. Guillaume Jean Texier: Good evening, everyone, and thank you for joining us today for our full year 2025 results presentation. I'm with Laurent Delabarre, our Group CFO, who will take you through the financials and the detailed numbers in a few minutes. And before that, let me briefly set the scene and share the key messages. 2025 was another year of market outperformance and margin resilience, and this is a particularly remarkable outcome as it was delivered in a mixed environment. It also clearly demonstrates the transformation of Rexel's model that is underway and gathering pace. Beyond the results, an additional element of satisfaction is that behind the scenes, we continue to take initiatives to strengthen the group for the next phase. Building momentum in high-growth verticals such as data centers, actively managing the portfolio and accelerating our transformation through digital, AI and productivity initiatives, which supports our confidence in our midterm ambition. With that, let's get started. And let me begin with a quick overview of the key highlights of the year. First of all, as I mentioned, our sales and margin performance offers an important proof point that Rexel's transformed business model is working, not only in favorable macro conditions, but also in a more mixed environment. Second, we adapted quickly to a very different environment in Europe and North America. As conditions evolved through the year, we stayed close to our customers, and we accelerated execution progressively, adjusting priorities and protecting performance. And third, as I said, we stepped up self-help actions through our Axelerate28 strategic plan. These initiatives are very operational and concrete, strengthening discipline, improving efficiency and ensuring we continue to build the foundations for future performance. So overall, resilient results today, rapid adaptation throughout the year and action plans that support the next steps of our journey to reach our midterm ambition. With that, let's move on and take a look at the year in more detail. And turning to our full year achievements on Slide 4. We met or exceeded the guidance we set for the year on all KPIs. First, on top line. We achieved plus 2.5% same-day sales growth, above the initial guidance that we had raised in October. Second, profitability remains very solid. We delivered a current adjusted EBITA margin of 6%, fully in line with our guidance, again, illustrating the resilience of our margins in a challenging environment. And third, cash generation was strong. Our free cash flow conversion before interest and tax reached 76%, well above our guidance of above 65% when excluding the impact of the EUR 124 million French anti-trust fine. So overall, we delivered growth, we maintained margin and generated strong cash, providing a solid base as we move into the next year and execute our priorities. Let me then take a step back on the backdrop. It was not a particularly easy environment. Europe stayed weak, notably in residential, North America was impacted by uncertainty and a delayed recovery in industrial automation. And Asia Pacific remained subdued. The clear area of strength was AI-driven data center investment and favorable pricing in the U.S., supported by trade tariffs. In that context, Rexel did what we set out to do. We outperformed and gained share across our key markets. We are seeing a real payoff from the work we've been doing over the last several years on sales force excellence, higher digital penetration and the ramp-up of advanced services. We also leaned into data centers and broadband infrastructure, particularly in the U.S. with dedicated teams and branches, and we further strengthened our position in the telecom space with Talley acquisition. In addition, we stayed agile on the portfolio with 5 acquisitions and 2 disposals. Overall, top markets but strong execution, and we've continued to build momentum in the right growth areas. From a geographical standpoint, the year really comes down to how we manage the 2 main engines of the group, North America and Europe. In North America, the focus was on managing profitable growth. We captured the trends in higher growth segments. And at the same time, we managed the tariff situation in a disciplined way. And importantly, we kept tight control of the cost base, delivering growth while operating with a broadly similar FTE level. In Europe, the environment was more muted with negative volumes and flat pricing. So we moved fast on costs. We rapidly implemented adaptation plans, leading to a workforce reduction of around 4%, about 600 FTEs in 2025, while keeping a strong focus on margins. Taken together, this is what drove improved margin resilience versus previous cycle downturns. Let me now focus on data centers in North America on Slide 7. What began 3 years ago as a targeted initiative is now achieving scale to become one of our most attractive growth platforms. In the U.S., we are reinforcing our position. We continue to significantly outperform the market with very strong momentum in Q4 and across the year, and data center already represents a meaningful share of our sales. To support that growth, we expanded our footprint and capabilities close to project sites, adding, for example, around 200,000 square feet of storage capacity in key locations like Atlanta, Mesa and Reno, with further potential to scale. Our model is simple, local branches and resources backed by national coordination. That allows us to be close to customers on execution while still bringing the breadth of Rexel expertise, availability and consistency across multiple sites. We also broadened our offering into new product categories that matter for data centers built, and we are continuing to add dedicated resources and expertise to capture the next wave of projects. In Canada, also, we are off to a promising start. Here, the activity for us is concentrated in the Western region. We are active in the gray room offering from UPS to panels and datacom accessories. And we have a strong backlog that supports continued momentum for 2026. So the key takeaways here is that our scale, logistics capabilities and technical expertise give us a clear advantage in this segment. We are well positioned with strong momentum ahead of us. I'm now on Slide 8. Portfolio management remains a key lever of our strategy. 2025 was another year of active portfolio management with 4 acquisitions completed and 2 disposals, further sharpening the group's footprint and profitability profile. We've strengthened our footprint through the additions of Warshauer and Schwing in the U.S. In Canada and Italy, we've expanded into adjacent higher-margin businesses with Jacmar [Technical Difficulty] while completing around EUR 2 billion net of disposals. And in total, we've closed 21 acquisitions over that period, including 4 in 2025. And what I would like to stress is the quality and the direction of this M&A. Around 60% is in our core electrical distribution business, around 40% in adjacencies where we see attractive structural growth and higher value-added opportunities. We have been particularly focused on North America with 14 acquisitions, representing more than 70% of acquired sales, including about EUR 0.5 billion in adjacencies. And this is clear value creation. On average, we see value creation from year 2, earlier than initially targeted. And our combined 2025 performance imply roughly 7x EV to EBITDA multiple after synergies below Rexel valuation multiple. And we also move forward on the other side of the portfolio with 2 targeted divestments completed in 2025, and these actions reinforce the robustness of our balance sheet and provide flexibility to continue investing in growth. Moving to Slide 9. Digital is a very tangible differentiator for Rexel and it continues to gain traction. Today, we are a B2B leader in digital with more than 1/3 of our sales going through digital channels, and this is not slowing down. Digital penetration has been progressing by between 200 and 300 basis points per year over the last 15 years. What's driving it is a mix of constant improvement in the customer experience with more tailor-made features, including AI-powered capabilities, plus continuous data enrichment and also, frankly, a generational shift in how customers want to buy and interact. The benefits of these long-term efforts are very concrete. And I believe this is one also of the explanation of our good set of results recently. Digital increased its customer stickiness and share of wallet. It widens the service gap versus smaller competitors who have increasing difficulties following the pace of the race to more data and more features. And finally, it also improves the efficiency and productivity of our teams, which is critical to our business model. All in all, it's a key engine of differentiation and performance for Rexel. Beyond the short-term environment, we are accelerating a set of deeper transformation to pave the way for future performance as shown on Slide 10. First, we are boosting sales force productivity through organizational changes and increasing adoption of AI-based tools to help our teams spend more time selling and improve the quality of execution. Second, we're optimizing the supply chain through more automation, stronger internal synergies and AI, improving service levels while taking structural costs out. Third, we are resetting parts of the cost base in lower profitability countries. This is about staying disciplined, adapting the model to the reality of the market and protecting margins. Fourth, we are leveraging our full offering, expanding in adjacent product categories and services where we can create more value for customers and capture more of their spend. And finally, we continue to roll out smart pricing programs that leverage data to improve consistency and value capture. Those OpEx are not only to Rexel obviously as we constantly strive to improve, but 2025 was a year of clear acceleration. First of all, because the business environment pushed us to move faster and sometimes think out of the box. And secondly, because we launched our new strategic plan, Axelerate28. And most of those plans we are talking about are multiyear efforts, which means that you will see them progressively delivering benefits to our P&L. Focusing on next slide on AI. AI is another area where we are moving fast. And it's not just -- I'm on Slide 11, and it's not just running pilots, but now scaling real use cases into day-to-day operations. On the left of the slide, you see the main areas where we had identified clear AI opportunities, tools to speed up RFQs, smart automation for order entry, automatic data enrichment and internal category expert capability, customer-facing chatbots. And on the right, you see where we are today, not in terms of shiny proof-of-concept demos but in terms of reduction by the teams and real-life industrial live tools. In the U.S., more than 50% of the quoting teams, for example, are already using the new quotation tools. In France, around 25% of e-mails quotes are handled through AI tools. And on order entry, we now have over 65% of U.S. teams and more than 70% of French teams using AI-powered tools. We are also rolling out internal expert capabilities by categories, deploying customer-facing chatbots across additional countries. So the message here is simple. AI is already improving speed, quality and productivity, and we are scaling it pragmatically use case by use case. And Slide 12 is about productivity, a major KPI for us. The message here is that over the last 5 years, we have lifted the baseline of what we are able to deliver in terms of productivity every year. What differentiates this cycle from previous downturns is the speed and depth of our cost adaptation. Through workforce adjustments, productivity initiatives, tighter cost control, we protected margins despite lower volumes, reinforcing the resilience of our operating model. Historically, between 2016 and 2021, our productivity ratio averaged around 0.9%. Over the last few years, it has stepped up and in 2025, it reached 2.8%. This improvement is not coming from one single level. It's a combination of structural initiatives that I just presented, including the ramp-up of digital and the early impact of AI tools, together with rapid cost adaptations in more challenging markets. So 2025 was another demonstration of Rexel's resilience at the bottom of the cycle. The key takeaway is that we are not just managing through the cycle, we are structurally improving how efficiently the group operates, which supports margin readiness and future performance. With that, let me now hand over to Laurent, who will take you through the detailed 2025 numbers, and I will come back for the guidance. Laurent Delabarre: Thank you, Guillaume, and good morning to all of you. Evening. Good evening, sorry. On Slide 14, you can see how momentum improved throughout the year '24 and '25. With the quarterly same-day sales growth trend at group level and the regional breakdown, we moved from minus 4.6% in Q1 '24 to a progressively better trend quarter after quarter, and we closed 2025 with plus 3.8% in Q4. That's a very clear reflection of better momentum, disciplined execution in the field and better pricing management. First, selling prices contributed positively in Q4 '25 by 1.7%, improving compared to Q3 '25. And more specifically, non-cable pricing were unshaded in Q4 '25 at 0.9%, with improving trends in North America, mainly offset by China. Selling price on cable improved to plus 0.8%, notably thanks to Europe. And briefly on geography that I will highlight in the next 2 slides. North America remains the main growth engine. Growth accelerated through the year and ended it at plus 7.9% in Q4 '25. And Europe remained difficult, but the trend improved sequentially, and we are back to flat sales evolution in Q4 '25. And more specifically for Asia Pacific accounting for 6% of group revenue. China was up 3.1%, supported by industrial automation project in a better environment while selling price were just back to flat in Q4 '25. In Australia, sales growth accelerated in the quarter, notably boosted by solar activity, further supported by subsidies on batteries. Lastly, India, which is small, but sales increased by plus 16.9%, driven by strong growth in our industrial automation activity. I'll now go into more detail in the next 2 slides on Europe and North America. So moving to Slide 15. Europe remained impacted by muted construction environment and delayed electrification trends. Despite this, Rexel gained market share in its most important countries and delivered a resilient performance. Same-day sales in Europe were flat in Q4, improving from minus 0.5% in Q3. Volumes were broadly stable despite the political and macro uncertainties. And we also saw a sequential improvement in pricing in Q4 versus Q3, mainly driven by cable. And to put the underlying trend in perspective, our growth excluding solar, which represents about 4% of our sales in Europe, was up plus 0.5%. By end market, residential was flat, excluding solar, with first sign of recovery in a few countries, notably Sweden and the Netherlands. Non-residential was broadly flat and we saw a slight improvement in industry. Let me highlight the main country dynamics in the quarter. France was up plus 3% despite a challenging environment with broad-based market share gains and strong HVAC contribution. Benelux was up plus 2.6%, driven by electrical distribution activity in the Netherlands, and the acceleration of solar growth in Belgium. DACH was a key offset, deteriorating sequentially on business selectivity in a difficult macro environment. Also, we continue to take market share in Austria. Sweden was flat with a sequential improvement driven by industrial segment and supported by a smaller drag from solar in Q4 compared to Q3. And finally, U.K./Ireland was down minus 6.7%. Ireland remained positive with a favorable industrial market. But the U.K. market stayed tough with London showing the first sign of our recent investment. So overall, still a soft market, but improving trends from Q4 and continued market share gains in several countries. In this context, productivity initiatives helped mitigate the impact of lower activity. And this positioned well to benefit from any market recovery, particularly as leading indicators in some countries begin to stabilize. On Slide 16, we turn to North America, which remains the growth engine in Q4, driven by both volume and pricing where we saw improvement in non-cable, mainly driven by piping and conduit families. First, same-day sales were up strongly in the quarter with Canada driving the acceleration versus Q3 '25, specifically in data center project as presented by Guillaume. We also benefited from strong continued market share gains and positive contribution in datacom. And second, the U.S. continues to be driven by high-growth verticals, particularly data center and broadband infrastructure, which represents more than 55% of the growth in the quarter. We also saw strong activity in solar and EV charging. By end markets, all 3 markets were positive, with non-residential clearly driving the acceleration and the industrial automation up 8%. Lastly, the backlog remains solid, representing 2.7 months of activity at the end of December. Moving now to the full year picture. I'll start on Slide 17 with the bridge of our full year sales, showing how growth was built between scope organic, FX and calendar. We delivered full year '25 sales of EUR 19.4 billion, up 0.7% on a reported basis. Organic performance was the main driver. As we saw, same-day sales growth was plus 2.5% for the year, with volume contributing plus 1.2% and pricing adding plus 0.6% in non-cable and plus 0.7% in cable. So a solid volume contribution plus disciplined pricing across both cable and non-cable. M&A also contributed meaningfully. Acquisition added plus 1.8% more than offsetting the minus 0.9% impact from disposals. These positives were partly offset by external factors. First, the FX was a headwind of minus 2.2%, mainly from weakening of the U.S. and Canadian dollar as well as a calendar impact of minus 0.5%. That was the sales bridge for the year and we'll now move to profitability and margin performance. In this Slide 18, we bridge our adjusted EBITA margin year-on-year and the key message is simple. Record productivity more than compensates what we call the delta inflation headwind. Adjusted EBITA margin increased from 5.9% in full year '24 to 6% in full year '25. First, portfolio and FX were positive, contributing 11 basis points, while the calendar effect was a drag of minus 5 basis points. Second, you see the operating leverage, slightly negative because due -- mainly due to the new European environment and the underabsorption of fixed costs, notably in underperforming countries, mitigated by positive operating leverage in North America. Third, the main headwinds in the year was what we call the delta inflation, which represent the gap between selling price increase and OpEx inflation, 19 basis point headwind, in line with our expectations. Cost inflation was around plus 2.2% in full year '25, while selling price increase were up 1.3%. And these headwinds was more than offset by the 2 following actions: first, the gross margin improvement adding 9 basis points, supported by pricing initiatives; and second, our action plan delivered a further 33 basis points, in line with the expectation and already illustrated by Guillaume in the slide dedicated to productivity. Let me remind you that FTEs was down 2.3%, while volume contribution to sales were up 0.7% in actual days. But operating discipline is what allow us to protect and slightly expand despite inflationary pressure. Lastly, and we are further investing in the business notably through digital and footprint investment that impact our EBITA margin by 11 basis points. On Slide 19, we look at the bottom-line part of our P&L., with a zoom on other income and expense, financial expense, tax rate and recurring net income. Other income and expense stood at EUR 56 million, notably including minus EUR 41.1 million in restructuring, mainly in Europe, more than last year in order to accelerate adaptation to a tougher environment, notably in U.K. and Germany. EUR 36 million of capital gains on disposal. Minus EUR 29.7 million in asset impairment in the U.K. Minus EUR 20 million in others, including integration costs and pension settlement in Canada. Financial expense stood at EUR 214 million, slightly above last year with a rise in gross debt, offsetting the lower cost of debt now at 4% versus 4.4% last year. It includes EUR 72 million of interest on lease liabilities and pure financial cost of EUR 142 million. And for '26, we anticipate financial expense of circa EUR 250 million, including less than EUR 70 million of interest on lease liabilities and around EUR 145 million plus of pure financial expense, excluding one-off. And assuming current interest rate continues, condition remain unchanged. Our income tax rate stood at 30.2% due to the impact of the exceptional tax in France. And going forward, we anticipate the tax rate to be at circa 30% in '26, take into consideration the additional tax in France that will apply for the second year. And for '27 onwards, we anticipate then the tax rate to go back to circa 27% in the absence of exceptional tax renewal in France. And as a result, net income increased by 73% and recurring net income stood at EUR 308 million, up 2.4%. Moving to slide 20. We generated robust cash flow before interest and tax, reaching a high level of EUR 938 million, implying a free cash flow conversion rate of 76%, well above last 4 years' above average, that stood at 69%. This is excluding the EUR 124 million fine imposed by French tax authorities and paid in April '25. The trade working capital as a percentage of the last 12 months of sales increased to 15% versus 14.6% last year, mainly related to the sales growth acceleration in H2 and mainly Q4. In a number of days, embedding the last 3 months of sales, both inventory and receivables improved and were partially offset by lower payables. Indeed, the DOI and DSO decreased by respectively, 1.5 and 1 days and DPO was down 2 days. Non-trade working capital was an inflow of EUR 24 million on an outflow of EUR 100 million, including the payment of the EUR 124 million fine. CapEx remained disciplined at EUR 136 million, with growth CapEx representing 0.7% of sales, stable versus last year. So overall, we converted earnings into cash at a very strong rate, supported by tight working capital and disciplined investment levels. On Slide 21, I want to come back to free cash flow conversion profile over the last 5 years, a key proof point of the quality of our execution. As you can see, we delivered a record level again, above 70% for the third consecutive year. [ 7.6% ] conversion rate is at the top end of what we have delivered in recent years and clearly above our full year guidance of above 65% in our midterm ambition. And this performance is a result of two very disciplined execution. First, a well-balanced investment approach with roughly 55% of our CapEx in digital and about 45% in network and supply chain modernization. Second, active working capital management as we have seen, especially the quality and structure of inventory and receivables. So overall, this strong cash generation built on repeatable levels support our financial flexibility going forward. As shown on Slide 24, our capital allocation focus on both acquisition and return to shareholders. Overall, net debt slightly increased by EUR 147 million, mainly resulting from 2 factors. First, the EUR 227 million impact from net financial investments, mainly the acquisition of Warshauer, Schwing, Jacmar and TECNO BI mentioned earlier by Guillaume. Second, the dividend payment related to the 2024 performance for EUR 355 million, corresponding to EUR 1.20 per share. Lastly, we also bought back shares for EUR 100 million, in line with our midterm objectives. And since mid-2022, we bought back EUR 400 million and reduced the number of outstanding shares to 296 million. All this leads to net debt close to EUR 2.6 billion, including earnout for circa EUR 30 million, and the indebtedness ratio stands at 2x, representing a strong achievement. In short, we continue to invest in value-creating growth while maintaining a healthy balance sheet and a consistent return to shareholders. Let's turn now on Slide 23 to the breakdown of our main debt maturity and liquidity. 2024 was a very active year in terms of refinancing. In addition to all operations presented in H1, the second half was also intense, and we further extended our debt maturity profile. As a reminder, we have first issued a new EUR 100 million Schuldschein in July with a '29 maturity. Second issued EUR 400 million senior notes with 4% coupons maturing in 2030 but extended 2 securitization programs for more than EUR 800 million from '25 to '28. And finally, we increased our senior credit agreement by EUR 200 million to EUR 900 million and extended it to 2031. Overall, we have a well-balanced funding structure, extending maturities and comfortable liquidity, and we can stay focused on executing the strategy. As always, we are evaluating market opportunities in the volatile debt market environment. Moving to the next slide, we summarize our shareholder returns through the dividend. For the year, the Board will propose a dividend of EUR 1.20 per share, maintaining our strong track record. This implied payout ratio of 52%, which is at the high end of our guidance and reflect our confidence in the resilience of the business model and in our cash generation. Subject to the general assembly approval in April 22, 2026, the dividend will be payable in cash on May 13. So overall, we remain fully committed to a disciplined capital allocation policy, combining value creation growth investments and an attractive return to shareholders. Let me hand back to Guillaume before we move on to your questions. Guillaume Jean Texier: Thank you, Laurent. And let me now turn to our outlook for 2026, and let me go to Slide 26. It's a busy slide, but it illustrates also well the way we see the short-term future. Many moving parts, a good level of uncertainty, but probably overall, more encouraging trends than the opposite. Starting with North America, prospects are clearer and we continue to expect further growth. Of course, there are still macro uncertainties, including around tariffs, and we see less traction in some electrification solutions. But structurally, the key growth engines remain in place. We expect continued progression in data centers, and we are also seeing more positive signals in industrial automation, supported by reshoring and the One Beautiful Bill. In Europe, the environment is still challenging. Construction remains near the trough and confidence is not yet back. That said, we see more and more encouraging early indicators, and we do expect improving trends, especially in the back part of the year. The comparison base becomes easier for electrification. The lower interest rate environment is starting to improve. And as I said, we see leading indicators in residential improving. And in Germany, finally, the infrastructure plan could begin to materialize later in the year. On pricing and inflation, we still expect OpEx inflation to remain slightly higher than selling price increases. At the same time, we should benefit from the carryover of 2025 pricing in the U.S. We may also see additional price increases reflecting the recent rise in copper and silver, but it is a little bit too early to tell with certainty. And finally, self-help remains a very important part of the equation. We will benefit from the carryover of actions already launched, and we have also new initiatives to implement in 2026. So overall, North America should remain solid and supportive. Europe should gradually improve. And in all cases, we stay focused on execution and self-help to deliver in an uncertain environment, which brings us to our full year 2026 guidance on Slide 27. On the top line, we expect same-day sales growth of 3% to 5%. On profitability, we guide for a current adjusted EBITA margin of around 6.2%. At this stage, we still expect a slightly negative inflation gap with cost inflation running ahead of selling price increases although improving compared to 2025. And that will be offset by a clear set of cost and productivity initiatives, including the continued rollout of digital and AI tools. In addition, copper price rose sharply recently. Of course, as a distributor, we will pass the price increases from suppliers. We don't know yet how much price increase will be passed by those suppliers. And we believe that the situation may vary by country, by suppliers, leading to progressive price increases. We prefer to be cautious that it is very early in the year, which means that we took the equivalent in terms of copper of $11,000 per tonne price of copper to design this guidance. And we will adjust during the year depending on the evolution of the situation. And finally, on cash, we are guiding for free cash flow conversion now above 65%, reflecting our disciplined CapEx policy and continued focus on working capital. So overall, our 2026 guidance reflects continued growth, resilient margins through self-help and strong cash generation in a global environment that remains marked by a little bit of uncertainty. Turning to Slide 28. Before we conclude, I think it's worth taking a step back to consider how Rexel's ongoing transformation has taken roots over time and is still ramping up. Building on foundations laid in 2010 to 2019, particularly when it comes to digital penetration, we have been broadening and accelerating our transformation since 2020 to more dimensions of our operating model. We have raised the bar on operational excellence with more standardization, automation, discipline and execution. We have also made portfolio management much more active using bolt-on M&A and selective disposals to improve the quality of the group. In parallel, we have scaled advanced services and focus more on the market where we see structural acceleration, electrification, energy efficiency and of course, data centers and datacom. And now we're entering a new phase where AI-boosted tools are becoming a real game changer in customer experience and productivity level, not a concept. What matters is that these levels reinforce each other, stronger digital, better operations, a sharper portfolio, more value-added services and higher productivity. So when we talk about Axelerate2028 and our medium-term ambitions, it's the continuation and acceleration of the transformation that has been underway for years. The Axelerate2028 plan is now fully underway. And as I said at the beginning of the presentation, 2025 was a very busy year in a number of new initiatives launched. This gives us great confidence in our ability to deliver on our midterm ambitions, even in a less supportive market environment. And I'm now on Slide 29. Since 2024, when we issued our midterm guidance at our Capital Markets Day, what has first changed is the market backdrop. The macro cycle recovery has been delayed. We faced a delta inflation headwind in 2024 and 2025 and electrification market in Europe has been a little bit more muted than expected. But on the other hand, several factors have moved in the right direction with some of them, many of them being in our control. So first, we are leaning even more into high-growth verticals, especially data centers. Second, the adoption of GenAI is accelerating faster than we initially anticipated, and this will prove clearly beneficial to our business model. Third, we have reinforced our focus on cost initiatives and productivity across the group. And finally, pricing is more supportive in '25 and '26 with higher selling price increases coming from U.S. tariffs, pricing programs and potential impact from copper. So when you put all of that together, there are pluses and minuses, but the combination of that allows us to confirm our medium-term objectives, sales growth of 5% to 8%, including 2% to 3% from acquisitions, an adjusted EBITA margin above 7% and cash conversion of 65%. In other words, the market is certainly not giving us a free ride, but the strategy and the self-help levers are stronger and this is why we are confident in our midterm ambition. And in a way, the fact that we now rely more and more on our own efforts on what is in our hands than on the market is an element of security that is good news for the future. So let me close this presentation with 4 key messages before we open the call for Q&A. First, 2025 was another clear demonstration of Rexel's resilience through the bottom of the cycle, proof that our transformed model is working. Second, the momentum we saw in Q4 in both Europe and North America, that we continue to see in January, has carried into early 2026, which gives us a very good starting point. Third, with the launch of Axelerate2028, we are accelerating transformational change across the group from productivity and cost efficiency to digital and AI adoption to unlock our next phase of performance. And despite slightly less market support, we are keeping a high level of ambition, and we remain fully committed to reaching our midterm guidance. Finally, I'd like to finish by saying, our teams have once again shown remarkable commitment and agility in 2025. And with that, I would like to thank our employees, customers and partners for their continued trust. Thank you for your time and attention. And now Laurent and I are happy to take your questions. Operator: [Operator Instructions] First question is from Daniela Costa, Goldman Sachs. Daniela Costa: I have 2 questions, if possible. I'll ask them one at a time. But the first one is regarding the free cash flow. As you mentioned on the presentation, you've beaten your targets on free cash flow for a few years there. But you're once again guiding for around 65% on the conversion. Can you talk why you don't upgrade that target? And what would drive you back down to a weaker cash conversion than what you have had, for example, this year, excluding the charge? That's number one. And then I'll ask the other one. Guillaume Jean Texier: Okay. Thank you very much, Daniela. And thank you, first of all, to recognize the important effort that we make to optimize free cash flow and to deliver good performance. Now we have upgraded in reality, the free cash flow guidance. You have probably noticed that, but we went to around 65% and then to above 65%, which is the guidance that we are giving. So it's progressing. Now on this one, we prefer to be cautious because, as you know, the free cash flow delivery depends very much on the shape of the last part of the year. In a year of acceleration, which we experienced in Q4 2025, that's always a little bit favorable to free cash flow. And to the opposite, and we have seen that during COVID, for example, in a year of a deceleration, the free cash flow in terms of transformation is always a little bit more challenged because of working capital at the end of the year. So there are many things in the free cash flow delivery that we master, inventory and number of days throughout the years in average is something that we control well. CapEx is something we control very well. But when it comes to payables and receivables, because of this uncertainty, we prefer to be cautious. But you're right, over the last 3 years, we have systematically delivered more than 70%. And in the last 2 years, more than 75%. I mean I don't know, Laurent, if you want to add anything to that. Laurent Delabarre: Maybe on the CapEx side, we had years of more important logistic investment in the past where we were below this 70%. That's why I think the above 65% is a reasonable target. Guillaume Jean Texier: If the question is, does it hide anything in terms of additional expenses or additional CapEx that you will have in mind, no, not really. I mean we feel that 2026 is going to be the same kind of profile in terms of CapEx as 2025. So no, no, no particular -- I don't know if it was your question, but I'm answering it. Daniela Costa: Great. And then just on this AI productivity benefits that you talked about. I was wondering if -- when you planned your targets in 2024, was this what you were already foreseeing would happen in '25? Or should we look at this sort of productivity improvements as over and above what you were expecting back then? And once the market comes, what should be the incremental upside to margin from these extra initiatives or extra productivity that you find if this is extra? Guillaume Jean Texier: So directionally, I think you're absolutely right. This was not completely in our minds, not to this extent when we did our initial midterm guidance in 2024. So the benefits of that, which is double digit in terms of productivity will come on top and above that. We have productivity targets. But clearly, GenAI potentialities are probably adding a layer to those productivity targets. But to the opposite, as we showed on our Slide 29, there are a few things which are probably temporary. I mean when we're talking about delayed cycle recovery, that's probably something, which you're right, in the long term is going to come back. And the same thing about delta inflation headwind. But -- so at some point, it will come over and above. So if you're talking about the absolute potential of Rexel, mid-cycle potential of Rexel, maybe that -- which is going to be an additional benefit to what we guided to in 2024, but I'm very focused on what we call midterm, which was 3 to 5 years. And in this time frame, I think this may be something which will help us offset potential macro delays. That's what we are saying. Operator: Next question is from Akash Gupta, JPMorgan. Akash Gupta: I have 2 as well. My first one is on copper prices dynamics because when I look at movement in copper price in Q4, we had roughly a 20% increase in U.S. We had 9% on LME. And when I look at your copper price, in Q4 of 0.8%, that looks a bit lower than implied by changes in copper prices. So maybe if you can talk about why it is not yet reflected in your growth rates? And then when it comes to the outlook, and thanks for specifying that your guidance is on $11,000 per copper. So if we assume that the current level of $13,000 stay for rest of the year, is it fair to assume that we need to add probably 200 basis points annualized to your growth rates? Guillaume Jean Texier: Laurent? Laurent Delabarre: Yes. First, I mean, the copper is not as mechanical as you see. What we guided in the past is that a $500 increase in copper would drive around 0.4% of top line growth. But with this sharp increase in copper recently and in the current environment, and there are also FX components into that, what we see today is that the supplier, they are lagging effect to pass through the copper improvement into the cable price increase. And we turn also our inventory in 2 months, so there is also this lag. That's why at the end, it will gradually come into our performance into '26, and that the effect in Q4 is slightly lower than what you were calculating. Guillaume Jean Texier: Yes. The wild card is really very much what the manufacturers, what the cable manufacturers and also what the other materials manufacturers, which include copper, are going to do with that. And in the follow-up, I'd say, I understand that it was very automatic. It's been a little bit less the case in the recent past because of strong variations. And so we'll see what happens there. And as far as if things were completely automatic, what would it mean in terms of top line? I think your ballpark calculation is probably approximately right, maybe slightly high because Laurent said that it's a 5:4 ratio, but we are not that precise anyway. So yes... Akash Gupta: And my follow-up is on the growth guidance. So at midpoint, you're guiding 4% organic same-day growth. And can you break it down into what sort of volume assumptions you have assumed in that calculation? And when we look at the margin drop-through, is the margin drop through of additional 1 percentage point growth from volume versus price? Is there any difference on the drop-through on margins, like, let's say, if we have 1% higher growth from volume, would that have any different drop-through than 1% higher pricing? Guillaume Jean Texier: Yes. I mean Laurent, do you want to answer on that. I mean first, I will answer the easy part of the question, which is that the assumption is half-half. Now Laurent, for the more difficult part, which is drop-through volume versus drop-through on price, et cetera. Laurent Delabarre: No, that mechanically, the drop-through on price is a bit higher because you have less variable costs. You have just the commission of the salespeople and some bonuses whereas a drop-through on volume will include transportation costs and other cost, inventory cost. But again, it's -- yes, the drop-through on price is a bit higher. Guillaume Jean Texier: But that's not exactly the way we calculate our bridge. I mean we look at the drop-through on volume. And if we look at -- if we try to do a back-of-the-envelope math, if we look at 2025 to 2026, we look at, let's say, 2% volume, we say, the drop-through on this volume is approximately 20 bps, so that's beneficial. Then you have additional action plans. But on the other hand, as I mentioned in my comments, we also think that our inflation, which should be around -- inflation of our costs, I mean, which should be around 2.5% is going to be higher than the inflation that we assume in our gross margin and in our products, the price content of the gross margin, which is going to be around 2%. So those 2 blocks should offset more or less each other. And that's the reason why, at the end of the day, and the drop-through on price is included in this calculation, in the second calculation between inflation of gross margin and inflation of cost. So that's the reason why at the end of the day, we are guiding for around 20 bps of improvement. Laurent Delabarre: And to be specific, on the bridge '24 to '25 that I presented to the point of Guillaume on the operating leverage, we had a lot with op volume only. The pricing part is in the delta inflation of that, yes. That's the way we do it. So yes. Operator: Next question is from William Mackie, Kepler Cheuvreux. William Mackie: A couple actually, maybe looking at the bridge again. Last year, well, in '24, you made great progress with your action plans in dropping out cost. In '25, I think you've called it out as 33 basis points. Could you put some color or financial color around the expectations for how the action plans in '26 should play out, obviously partly contingent on the market development? Guillaume Jean Texier: Laurent, do you want to take this one? Laurent Delabarre: Yes, it was quite heavier, and you have seen it in the restructuring cost that we have factored in '25 For '26, we expect to have a bit less restructuring costs more in the EUR 20 million range. So meaning that we will have at the end a bit less benefits in terms of cost savings. We have additional initiatives plus the carryover of the initiatives that we implemented in the second half. The carryover is a bit less than 10 basis points, and we'll have additional action next year, but we are in a year which we will grow on the top line. So the productivity will more come from the volume than by the reduction of cost. Guillaume Jean Texier: So I mean the answer is approximately half of what we had last year. We did a lot of the heavy lifting last year. And I think we have now a lean cost structure ready for growth. But still around 10, 15 bps of cost savings. 15 bps. William Mackie: The follow-up would be related to the portfolio or the capital allocation more broadly, 2x net debt after a very positive year of free cash generation. And you've made great progress over 4 years with the portfolio development on acquisitions and disposals. But at this sort of level of leverage and with the portfolio today, is there much that could leave after Finland? And what is the sort of target opportunity looking like? Guillaume Jean Texier: Look, I mean, I will give you -- I will not answer your question, but I will give you a very general and worthy answer, which is that everything is under review all the time. Whenever we are in a situation where we think that we can improve a country or a business to our goals, even if we have to invest, even if it takes some time, we do it. But in some cases, and it was the case in most of the divestments that we have made in Spain, in New Zealand, in Norway and in Finland. There are situations where we feel that either we will not get to it because of the competitive situation of the country or the business or that there is a very attractive offer on the table from somebody who wanted to buy the business. And then we are very pragmatic in terms of value creation. But our preference is to improve organically what we have in general. So which means that, no, we don't have immediate plans of selling something. But then everything is reviewed every year based on those criteria. One, are we able -- do we have a credible plan to the Rexel goals -- to contribute to the Rexel midterm goals? And two, is there a super attractive value creation offer on the table? So that's what we do. But at this stage, we have nothing in preparation in the next few months. William Mackie: And on the buy side, how do you see the sort of valuation range and range of opportunities? Guillaume Jean Texier: On the buy side, we will continue to be active in terms of acquisitions. We have a pipeline which is healthy those days. So you may see a little bit of that. We are talking small and midsized acquisitions. We are talking the same focus as we had in the previous years, which is mostly in North America and mostly focused on the most value-added parts of the business if we can, which are services, et cetera, but not neglecting the potential to do a synergistic consolidation, acquisition. So I think you will see acquisitions in 2025 -- in 2026. If I had to bet, but it's always difficult to bet before the acquisitions are done, I would say that you're going to see slightly more than what we have done in 2025. And in terms of multiple environment, look, I mean, the multiple environment is relatively rich. I mean there is competition out there when it comes to acquisitions. But as you have seen over the last few years, and I think this is in the slides that Laurent mentioned, or in the slides that I commented in terms of acquisitions because we are able usually to add a sizable amount of synergies, we were able, and that's not a forward-looking, but that's a backward-looking calculation. We were able to deliver an average multiple, which is around 7x, which compared to our current multiple, which fortunately at the same time, has increased also to 10x, is a good value creation. So we will continue to be disciplined in that to make sure that we continue to build this track record. Operator: Next question is from George Featherstone, Barclays. George Featherstone: I just wanted to come back to the price versus cost dynamic that you flagged. I mean it sounds like demand is getting better. Are you still flagging this headwind for 2026. So I just wondered what the main reason is that you're unable to sort of match the cost inflation with prices? Or is it simply just a timing? That would be the first question, please. Guillaume Jean Texier: No. I mean let me be clear. When we are talking about that, we are not taking the price versus cost inflation. That's not exactly what we mean. On one hand, we have the price increases from our suppliers. And usually, we are very good because it's our core business, passing through those price increases to the market. Here, the pass-through is extremely good or if not perfect. But that being said, we cannot -- if there is a price increase of 4% by supplier A, we cannot say to the market that the price increase is going to be 6%. We do not have this ability because those price increases are usually well-known in the industry. Now so that's one thing. This is a price effect that we get mostly by decisions of our suppliers about how they are going to go to the market. And then there is the second part, which is completely separated, which is our own cost equation. In our SG&A, 2/3 of our costs are salaries. The rest is occupation costs with leases, et cetera. And that we also try to optimize, but we are also bound by different arrays of constraints, which are basically the average salary increase in the given country. We always try to optimize, but that's a little bit what it is. And what we are saying, for example, for next year is that we think that our OpEx inflation, salaries, rents, et cetera, transportation costs, is going to increase around 2.5%. And that as far as we see today, based on what we see from our suppliers, but it's the early beginning of the year, and it may change. We think that the price increases, which is the price component of the gross margin is going to be around 2%. So to be clear, what we are saying is certainly not that we are not able to pass the price to the market, which is what I heard a little bit in your sentence, but more than this particular equation, sometimes it's very favorable when there is a strong inflation in the industry because, for example, of shortages. And in this case, the salaries continue to increase with general inflation and the price of product is increasing by 5%. It happened to us in the past. And sometimes in other years, the price increases passed by the suppliers are a little bit more shy because they want to protect their market shares. And in this case, we have to work on our self-help action plans, productivity, et cetera, to offset that. That's a little bit the way it works and the way we try to explain it. I hope I was clear. George Featherstone: No, that's perfect. That's makes total sense. Then maybe just a question on the backlog in the U.S. I just wondered how much of this is data center versus projects in other end markets? And just whether you can comment at all on how that backlog has evolved sort of data center versus non-data center, if it is split like that? Guillaume Jean Texier: Look, you're asking a question to which I was not prepared, unfortunately. I think -- I don't know. I don't know in the backlog, how much is data center, how much is the rest. What I know is that overall, the backlog remains at the North American level, very stable, higher than the historical average, with maybe Canada increasing a little bit which may be the effects of data centers and the U.S. being a little bit lower than Q3, but very incrementally. Now what I can tell qualitatively is that in data centers, we have a good degree of confidence that we will continue to deliver a good growth rate. And when I say the growth rate, you saw that our data center growth was more than 50% for the year and more than that in Q4. We think that we -- you can safely say that our data center growth next year is going to be at least north of 20%. Operator: Next question is from Andre Kukhnin, UBS. Andre Kukhnin: I'll just go one at a time. Firstly, on pricing, just to clarify what you said, if you talk about non-cable pricing specifically, and kind of low voltage and automation products, we've seen evidence of price increase letters being sent to customers by major suppliers in China. But your comments suggest that this hasn't happened in European countries or in the U.S. Is that the case? Guillaume Jean Texier: Can you repeat your last sentence, our comments? Andre Kukhnin: Yes. We've seen there was press that kind of published letters to customers announcing price increases by major international and local vendors in the voltage and industrial automation in China. And from your comments, it sounds like this hasn't happened in France, Germany, Netherlands, U.K. or the U.S. So I just wondered if that's the case, if I've got the right reading of that. Guillaume Jean Texier: I mean first of all, we think that we are going to see price increases during the year. We talk to suppliers, and we feel that they are willing to increase price. Now what we don't know is the extent of that and by how much it's going to be proportional to the copper evolution when it comes to cable, et cetera. So that's what we are saying. We're not saying that suppliers are not going to increase price. And as we said, we have an hypothesis of price increase for next year, which is around 2%. Now what I would say also is that the dynamics between the Chinese market and the other markets is totally different in terms of price. Price, especially when it comes to -- I mean, China, especially when it comes to industrial automation, has experienced a price war around -- during the last 2 years, which is coming down in the second part of 2025. And it's not a surprise that the suppliers would want to catch up and to increase price. So no, I want to be clear. If my comments were read as, we don't see suppliers wanting to increase price. It's not what I wanted to say. We think that there are going to be price increases very clearly. We have evidence -- I don't know if the letters were sent, but we have evidence of suppliers telling us that they will increase the price very clearly. Now the uncertainty is really about the quantum. Andre Kukhnin: Got it. Got it. And then the other question I had is along the lines of a couple of sort of questions on the delta inflation or the inflation gap. I'm just trying to think about a macro sort of external scenario where you could have your margins expanding like really meaningfully by, say, 30, 50 basis points in the year. What would you need to see for that to happen? Does it just need faster growth than 3% to 5% for that to take place? Guillaume Jean Texier: Look, I mean, that's very easy. If you look at the guidance for next year, we are guiding for 20 bps of drop-through improvement in volume on a reasonable year, which is a 2% growth year. I think a 2% growth year is a reasonable average year. So that's one thing. And we are guiding also to, as I said, 15 bps of cost savings improvement. So that's already 35 bps if you are in a balanced situation, which is going to happen on a given cycle between those 2 inflation figures. So right there, on a year like 2026, you're delivering -- I mean, it's not done. I mean we have to deliver it, but you're delivering 35 bps of improvement. If you have a little bit more growth, which is not crazy to think of when you think about all the prospects of data centers, electrification, et cetera, and the recovery in Europe. If you have a little bit more growth, you're going to easily get to 50 bps. So I think it's not crazy to imagine a scenario like that because what I should say is that when I look at the 15 bps of cost savings, I am quite confident that this is something which is sustainable on a yearly basis. You have seen our figures about productivity evolution. We are quite proud of what we have done in terms of setting the bar higher in terms of productivity. And when we come to cost savings, productivity is a good proxy of what we are doing. And we will continue to do that. And AI is a potential help in that. So yes, absolutely. I mean that's a good question because when you look at the 20 bps improvement between '25 and '26, you may think, okay, 7% is far away. But in reality, when we look at the prospects of a recovery in Europe or the prospects of having a normalization of this effect of differential between our cost inflation and the rest, we are quite confident. And when we look also at the acceleration of our action plans, we are quite confident about that. Andre Kukhnin: That's really helpful. If I may, just a very quick one. You mentioned solar and EV charging sort of prebuy in the U.S., I think, is what the comments implied ahead of some regulation change. Is that something we need to -- could you quantify that? Guillaume Jean Texier: Mostly on solar. I mean overall, solar, if I look at the solar business, the solar business in the U.S. grew by 4.2% in Q4 2025, which is the first time that we had -- I mean, no, I mean, I think it's at a group level, it grew by 4.2%, which is the first time in many quarters that it grew, and that's because of this U.S. effect. Now in the U.S., the situation is that there is on one hand some of the federal subsidies, which are going to disappear at some point during the year. So there is a little bit of to pre-buy to qualify the project, and it will be going to continue to go on for commercial projects during the year. And there is a fact also that there is also a lot of regulations which happen at state level and a bulk of our business is done in California, which means that on the other hand, I think California wants to try to offset that and to push solar. So we see where it goes. But at the end of the day, we got good figures in solar in Q4 '25 and positive figures. Now that being said, you know that solar today in our mix of businesses represents approximately 3.5% of our total sales. A few years ago, it used to be at 6% when there was a boom in Europe. We continue to see -- we will continue to see growth in the future. Is it going to come back to 6%, I don't think so. Not anytime soon, but that's a little bit the situation. Operator: [Operator Instructions] Next question is from Aron Ceccarelli, Bank of America. Aron Ceccarelli: I have 2, please. The first one is on Europe, in the presentation, you called out market share gains in a challenging market in France, but also in Austria. I was wondering if you can expand a little bit about how you think about the sustainability of these market share gains as we enter 2026, please? Guillaume Jean Texier: Look, I mean, first of all, I'm always quite cautious about market share gains. Now what I feel comfortable with is that those gains were not acquired by price. And you have seen that, and we have been able to be quite disciplined in terms of margin overall at group level. But I can tell you that in France and in Austria, we didn't buy market share. We gained market share through better service and competition, through better value add that we bring to our customers. And you have to understand that our B2B customers, they are obviously focused on the price of the products. But they are very interested in the value that we can add and in the value that they can lose if the distributor is not providing the right level of expertise, service, et cetera. So because of that, I'm quite encouraged by that to the fact that it's going to be durable. Is it going to last forever? Certainly not. We have good competitors. They will do their homework. And at some point, in the midterm, they will rebalance things probably. But right now, I think we are on the momentum, which is going to last for a few more quarters, I hope. And I have a good degree of confidence because of the way we have gained market share. Aron Ceccarelli: Got it. My second question is on your opening remarks. You mentioned several times, good momentum in industrial automation in different countries. Could you perhaps expand a little bit on this topic and how you see industrial automation at the moment for you? Guillaume Jean Texier: Look, I mean, first of all, I should give you an exposure to where we are big in industrial automation. We are big in industrial automation in the U.S., in Canada, a little bit in Europe, in China and in India. And I can also give you figures, our industrial automation business in Q1, Q2, Q3, Q4 in the U.S., which is the most important country, was minus 4%, 1%, 3%, 8%. We saw a clear acceleration during the year of industrial automation, which is due to the fact that when you look at the recent publications, the [ ISM ] is now, for the first time, significantly above 50, which is a good sign. You have the clear effect starting to kick in of the tariffs, which is triggering reshoring. We flagged since the beginning, the fact that at some point, it would happen. When I look at the prospects of the industrial automation suppliers, they seem to be quite encouraging also. So at the end of the day, what is happening is not a surprise. And because we are big in industrial automation in the U.S., we benefit from that. When it comes to other countries, I think we commented a little bit on China and on the price effect in the second part of the year. Now that being said, in terms of volume, it continues to be relatively subdued, and let's put it this way. India is good, but it's small. And in Europe, the topic is the overall industrial investment, which is not great, the level of confidence in many countries in Europe, including in Germany and in France, which are 2 big countries where we have industrial automation is not yet mid-cycle to say the at least. So there is potential in there. Aron Ceccarelli: If I may, just a clarification on pricing. So you -- am I correct saying you mentioned 2% is coming from the suppliers so the cable one, and then the remaining is going to be flat? Is that the guidance for the year? Guillaume Jean Texier: No. We said 2% overall average, including copper, including suppliers, including all suppliers. We think that there is going to be price in almost all categories. It's going to depend once again on the specific category, supplier/country situation, but we think there's going to be price a little bit everywhere. Operator: Last question is from Eric Lemarie, CIC Market Solutions. Eric Lemarié: I've got 2. The first one, you mentioned at the last strategic update. You said roughly that 10% of the data centers market is addressable by distributors? Is it still the case today? Or is it now more than 10%? And my second question regarding the so-called acceleration businesses you presented at the last Capital Markets Day this time. Could you tell us the growth generated by these businesses in 2025 and maybe the weight in the sales from acceleration businesses? Guillaume Jean Texier: Yes. So I don't remember saying 10% of the market of data centers was addressable by distribution. And if said it, it was more order of magnitude. I don't think that I had in mind precise studies saying that. What I can tell you is that, first of all, the proportion of data centers in our business is growing. When you look at North America, when you look at the U.S., I think it's North America, we are now at 7% of our business, which is data centers. So it's starting to be sizable. I mean a few quarters ago, we were talking about 3%. We are now at 7%. The second thing I would say is that the range of products that we supply to the data centers industry is expanding. We started with -- and it may be particular to Rexel. Some other competitors may be more advanced than us, but I think we are catching up fast. We started with cable, and now we get a little bit more into more advanced things, like switch gear, et cetera. Now we are staying in the gray part of the data centers. I don't think it's going to be easy for us to enter into the white part of the data center, which is very much going direct or through specialized players. But we are expanding the proportion that we were able to address and we're expanding that quarter after quarter, which I mean, first of all, the opportunity is growing fast and our ability to grab a bigger part of this opportunity is also progressing. I think on the acceleration businesses, I can give you the figure for Q4 because I have it under my eyes. I don't have the full year, maybe I'll find it back for the next opportunity. Basically, the total business accelerators, including solar, HVAC, EV, industrial automation, datacom, utilities, is representing in Q4, 30% of our mix, and it's growing at 3.9% which is very slightly above the overall growth of the group in Q4 2025, which was 3.8%. And so the fact is that data centers are not included in that. The datacom part is included in that, but data centers because we try to be consistent with what we have given you in 2024 is not included in that. If I was to add data centers, obviously, we would add 3% at group level, and we would add a 3%, which grew in Q4 at north of 50%. So it would improve a little bit the accelerating part of it. And I think that's the beauty also of those acceleration businesses. There are years where things are accelerating in solar. And then the next year it's going to be less good in solar, but it's going to be good in data centers, et cetera. And the good thing is because there is not one trend, but 5 or 10 trends supporting the acceleration of our business, we're always going to see the benefit of that. I hope I gave sufficient answer even if I didn't find the full year results. Eric Lemarié: Can I ask a follow-up one? Guillaume Jean Texier: Sure. Eric Lemarié: Yes. Could you -- you mentioned that your range of products are expanding for data centers, but could you tell us whether Rexel will be well placed in your view for the future deployment of 800 VDC solution within data centers. Is it something that you will be able to? Guillaume Jean Texier: Can I come back to you later on that because I don't have the answer to that. I need to talk with my teams. Operator: Mr. Texier, there are no more questions registered at this time. Guillaume Jean Texier: Look, I mean, thank you very much for your questions and your interest in Rexel. As you can tell, we had solid results in 2025. We are proud of those results. And we think that we're entering 2026 with good momentum, both on the market side and also on our internal momentum side, so we have confidence in the future. And we'll talk to you for the Q1 sales in April. Thank you very much, and have a good evening. Bye-bye.
Operator: Hello, everyone, and welcome to Yara's Fourth Quarter Results Call. Please note that this call is being recorded. I will now hand over the call to Maria Gabrielsen, Head of Investor Relations in Yara. Please go ahead. Maria Gabrielsen: Thank you, operator, and welcome to everyone for joining us for this conference call for our fourth quarter results. And I'm here together with the representatives in Yara's management, our CFO, Magnus Krogh Ankarstrand; Head of Market Intelligence, on Dag Tore Mo, well is the representative from Yara. We're not planning to give a presentation or further opening remarks as we hope you all just watched our webcast, and we will therefore go straight into questions. And I will ask operator, if you may please open the first line. Operator: Our first question comes from the line of Joel Jackson of BMO Capital Markets. Joel Jackson: I'll ask a couple of questions, maybe one by one. Can you talk a little bit about the difference in Q4 between Europe and the Americas. You had a lot of buying in Q4 in Europe. Was that ahead of CBAM, and the Americas was flat. Was that weather? Can you talk about that, please? Dag Mo: Yes. Yes, in Europe, we had a strong Q4, both when it comes to our own sales, but also the market in general, both up because we think a large part of that was due to positioning ahead of CBAM already from November, in particular, there was quite strong interest in buying, importing as well as from domestic producers to avoid the CBAM charge from January 1, and it's actually led to a price increase across the products already in Q4 because of that partly then reflecting the CBAM charge already in Q4. In the U.S., I think it's more -- there has been [indiscernible]. The norms of the recent seasons has been quite a lot of late buying in North America and the U.S. with a lot of imports focused in, let's say, the February through April period. And this season looks to be similar. It's just slightly ahead. But I would say that's not more than just more or less random variation. I have not seen anything kind of specific or any structure when it comes to that. There's a lot of buying from the U.S. that remains. Joel Jackson: Okay. And then I'm trying to reconcile your comments around Q1. So you talk about how -- because there is some pre-bond in Q4 in Europe, your Q1 is ahead of [ a season ]. You kind of talk about, yes, but there's lots of products still to buy in Europe. So in one hand, you're kind of saying like, oh, people have bought ahead, but oh, they haven't bought enough. I'm just trying to understand your comments. And then can you -- as part of that, with some of the uncertainties around CBAM, whether there might be some offsets or not, can you try to sort of talk about that and how it's affecting the market and your strategy? Dag Mo: I can start with some comments, and then Magnus can add if he wish. First of all, given that we -- as our estimate, that deliveries are 7% ahead as of end December compared to last year, even if not, you would think that the first application for the farmers are generally already purchased. And now we still have winter. So until there is a kind of a movement in the field there is no real need for farmers to replenish their inventories or further buying in order to -- for the subsequent applications. So -- and also, as you hint that there is now a CBAM in force. There's some political uncertainties that has kind of surfaced through January around this. So it's logical then that as we start the new year that we have a relative slowdown -- a little bit of a slowdown in the market after Christmas. But 7% ahead, almost half of the seasonal demand has yet to be bought. And we think that imports is slowing now in Q1. So that's where we are kind of coming from that, yes, it's a little bit slow start. No, we are kind of depending a little bit on spring arriving. And then it could be a very -- quite a busy period actually, and it depends a little bit on how much will be imported. Just for your reference, urea is the main product on the nitrogen side that is imported, less for nitrates. And Q1 last year, EU imported 2.2 million tonnes of urea. That's quite a lot. So even if imports is down, there is quite a lot needed. So that's kind of -- I can understand that you are a little bit puzzled by the formulations maybe. But -- so yes, the market is a little bit ahead by the end of December, but it's a lot that remains and we'll see how that plays out in a market where imports is now more expensive. Magnus Ankarstrand: Yes. No. I think that's the key point. And obviously, with the prospect of CBAM in Q4, there was a bit of a rush on the import side, which is also reflected on the pricing or in prices. But I think it's also key to remember that CBAM is still enforced. I mean every ton that goes into Europe now faces CBAM. And of course, by the time any changes to that would be in place. Of course, that project will have been sold and probably applied a long time ago. So I mean we don't really see that. From a market perspective, this spring that any CBAM changes would impact anything on prices as such. And then also we believe it's highly questionable that there will be any changes to the CBAM at all. Joel Jackson: Okay. Just to fit one more in. Would you expect '26 -- for ammonia production, would you expect '26 to play out largely like 2025 and 2024, where you're producing 1.7 million, 1.8 million tonnes a quarter, except for Q3, where you produce significantly more. Should it be similar kind of ranges across the quarters this year? Magnus Ankarstrand: I think when -- if you're referring to Yara's ammonia production, I mean, we... Joel Jackson: Yara. Just Yara, 1.7%, 1.8% a quarter except for Q3, where you produce more. Magnus Ankarstrand: Well, I mean, we run our facilities 24/7 all year around, if there's a positive cash margin. So -- and then, of course, there are some turnarounds that impact the schedule. And of course, from now and then, there's a plan to stop as well. But in general, our uptime is very, very strong. So I think our plan is to produce sort of the practical production rate that we have. Right now, there is strong -- right now, there is good cash margin in all our production facilities. Joel Jackson: So do you have any special turnarounds or any additions this year in '26, that would be significantly different than '25, excluding unplanned adages? Magnus Ankarstrand: No. No. I mean I think we distribute our turnarounds fairly evenly. So there's nothing special compared to other years. Operator: Next question comes from the line of Christian Faitz of Kepler Cheuvreux. Christian Faitz: Two questions, please. First, your scheduled maintenance CapEx for '26, some USD 200 million higher versus '25. I'm aware of the phasing that you mentioned in the webcast, but can you elucidate this a bit, for example, which plants are mainly concerned? And the second question would be, can I ask whether the sequential property plant equipment increase over the past few quarters is largely U.S. dollar driven? Magnus Ankarstrand: Yes. No, I think on the first question, our maintenance schedule is basically driven by the turnaround. So we do have a few turnarounds this year, which have a bigger scope. I think in referring to the previous question in terms of sort of how much we will produce this year or not produce because of turnarounds, that's pretty stable, but some turnaround are more expensive than others because scope change from turnaround to turnaround. So that's why the maintenance for 2026 is somewhat higher than the sort of the -- or in the upper part of the range that we've given from sort of USD 700 million to USD 850 million per year. And then that includes -- a small portion of that includes a little bit of phasing from 2025 as well, but that's not much. And could you repeat your question on PP&E, please? Christian Faitz: Your plant, property and equipment in your balance sheet seems to be going up sequentially over the past 3 quarters or so. Is that largely U.S. dollar driven? Maria Gabrielsen: Yes. Most of the increase is -- most of our assets are booked in euros across Europe. So that will likely reflect the currency rate. Operator: Your next question comes from the line of Lisa De Neve of Morgan Stanley. Lisa Hortense De Neve: I want to follow up on the first question around spring demand. If you can give us an idea of what you think current channel inventories are across the Americas and Europe? Some idea on that would be great. That's my first question. And my second question would be around CBAM. I mean to which extent have you been involved with European policymakers around what your view is on the importance of CBAM and what sort of variables are being discussed to make the -- potentially move ahead with banning CBAM for fertilizers or maintaining that structure? Dag Mo: On your first question, when it comes to North America, I mean players supplying nitrogen to the U.S. or North American markets are normally coming down with their feet on the ground, playing this out quite well. And I can say that already now, U.S. Gulf pricing for urea is up at $500, which is kind of sufficient to attract quite a lot of tonnage. So it seems -- to us, it seems like it is fairly normal. It's one of the reasons why the market globally is so tight, I mean it's $500 basically, is part of that reason is outstanding U.S. demand. And there is also activity into Europe from North Africa, in particular. You've probably seen last week, there was quite a substantial volume that was bought. So there is also that's going on in anticipation of the spring that will come. So I would say it's fairly normal, both in North America and Europe in that sense. And now you have Indian addition that is trying to fight for March availability by announcing a 1.5 million tonne tender as we probably saw. So it's fairly busy in the very short term. Magnus Ankarstrand: And on CBAM, I think what's important, first and foremost, is to kind of be accurate on what's actually happening, right? So right now, CBAM as per EU legislation is in force. Then there is a proposal, Paragraph 27a, which is passed was open for temporary suspension or give the commission a temporary suspension opportunity. If there are unforeseen impact on the single market or something like that. For that to even be a possibility, that paragraph has to be passed by the European Parliament, which is obviously not a given -- this is not something that either the member states or the commission can decide on their own. So obviously, and referring to your questions, we are, of course, in close contact with at the political level, in several member states with the EU Commission and also the EU Parliament to voice our view on that. And I think our CEO has been very clear on that, of course, there's absolutely nothing with CBAM that is unforeseen. I think it should be evident that prices will go up equivalent to the import tax you put on ag. So it's very difficult from our perspective to see any logic in implementing such a paragraph. But of course, politics is politics. And this will then -- we will see what the mood in Europe and how receptive the MEP will be for that. But as a reference, in the same -- same event where this was introduced, the commission also and the member state agreed on Mercosur, which was later rejected by the MEP. So, there is certainly no guarantee that the proposal from the EU Commission is approved by the European Parliament. Operator: Your next question comes from the line of John Campbell of Bank of America. John Campbell: Maybe sticking with CBAM. So do you have a sense within Yara of the potential time line for when the EU could pass or not pass this modification to the suspension tool, et cetera, number one. Number two, on your Air Products projects, sort of what confidence do you have at this stage that it can be delivered within the NOK 8 billion to NOK 9 billion budget. I think it's probably fair to say the projects have seen numerous costs increases. Air Products, I think, are quite clear on their calls that there's a lot of construction market labor bids from data centers. I think Air Products has tried to basically split up the construction to several different tenders, et cetera. Maybe you could tell us how that's going? But I can tell you, at least from the Air Product call, they said 90% of the missing puzzle piece to reach FID relates to the cost. So is there any reassurance you can offer that NOK 8 billion to NOK 9 billion figure will be achieved? Magnus Ankarstrand: Yes. I think on your CBAM question, I mean it's difficult for us to sort of give us sort of a fair estimate on how much time EU need to pass this through parliament. So that's, of course, something that we are watching closely. However, we do note that there is significant resistance both in the European parliament, but also from several member states as well as the industry as well as commissioners against this proposal of opening for a possibility of suspension. So at least, I think it's fair to say that it's going to be a fight -- pretty good fight. I think -- and whether that sort of comes in time or how that sort of matches up with our time line for the Air Products project is, of course, equally difficult to say. But of course, next month, we'll hopefully, provide some direct entities in terms of what the political mood is and where this is going. On the cost increases, we don't have any sort of further update to what we and Air Products have stated earlier in terms of the range that we are looking at. I think, of course, as you say, from the original outset of that project from a product side, CapEx has gone up, but it's also important to remember that the technical maturity of the work detailed engineering, et cetera, has developed a lot as well, right? So I think sort of costs that -- comparing cost estimates, is not like comparing apples and apples necessarily, right? It's a big difference between cost estimate after detailed engineering and the cost estimate that you do on your first FID as an example. So they are working diligently to get these estimates in place. We are supporting that as well with our expertise. And as you said, there is competition for this, but there are also not many ammonia plants being actually being built in the U.S. So we will see how that works out over the next month. And of course, a very important element in the decision making as Air Products have pointed out. And of course, that will case for us as well. Operator: The question comes from the line of David Symonds of BNP Paribas. David Symonds: So 2 questions for me, please. Firstly, you mentioned strong demand fundamentals, but you're showing optimal nitrogen application on Slide 29 for a wheat farmer. As being 4% lower versus this time last year. And I think if you scale that up to the whole nitrogen market, the equipment of losing maybe 5 million tonnes of urea demand in 2026 ex-China. Now I know you're not just selling to wheat farmers, but soy and corn, economics are very weak as well. So could you comment on expectations for supply and demand balances in 2026 based on current farmer economics as opposed to long-term averages that you show on the slide? That's question one. And then question two, the NPK margins have come down, and you mentioned that's normal in a type and nitrogen market. But I noticed that compound NPK inventories also look like they've built in the 3Q and 4Q. So are you seeing farmers down trading to straight nutrients? Or what's behind that larger than usual inventory build in compound NPKs? Dag Mo: Yes. As you mentioned, the example we showed there is, kind of, course, a little bit of a theoretic issue where we have a yield curve that we have, kind of, based ourselves on from a research center in Germany. And it, as you say, if a farmer already is at optimal application rate, it does show what hold that optimal application rate is changing with the price ratio between wheat and fertilizer. And the fertilizer is clearly expensive. I mean, affordability issues is high on the agenda, both on nitrogen, even more on phosphate. So it's a limiting factor. I think that if not for relatively modest or low grain prices, we will have even higher prices for N and P than what we have today. And if you look at, as you said, demand, has this led to lower global demand, this pressure on affordability, it hasn't. And that's, of course, maybe it can be more or less surprised by that. If you look at 2025, with that increase in Chinese exports of 5 million tonnes, even if you then take away some production outside China due to India producing less, due to Iran and Egypt producing less, due to the conflict and also gas diverted to other purposes, I think you'll find that fairly healthy supply growth for nitrogen in 2025 and into '26 and even despite that we are having $500 urea prices now. So -- and I think that has taken some players by surprise. If you look at -- if you look, let's say, a year ago at forecast for 2025 and 2026 pricing from most players, consultants, et cetera, they will be considerably lower than what we have been realizing. So yes, we have a very strong and tight supply demand balance despite relatively poor affordability. Magnus Ankarstrand: On the NPK side, I think what's important to remember is that most of our NPKs goes into what we call premium products, where, of course, the value of those products on yield quality and several other aspects, is kind of what determines price and the willingness to pay, which is, of course, on the absolute price that the farmers pay. When we talk about premiums, we refer to that price less sort of commodity value of the 3 nutrients in the product. So in that scenario, even though sort of NPK prices go up when NP&K go up as well, when they go up as much as they do now, it's natural to sort of see some contraction in the premium in the way we measure it. And I think if you look at across nitros and NPK, premiums that actually hold up very well, I would say, considering the high commodity price environment that we have. But we have, as we reported, seen some tightening on the premium side, particularly in Asia, whereas sort of margins, which is Yara margin, are not down in the same way. When it comes to inventories, actually, our sales in Q4 and the year in total are slightly up. But our production levels are also significantly up due to improvements in productivity in our production system. So that has led to I would say, a fairly slight inventory buildup, which we believe that -- which we are working hard to, of course, sell the additional tonnages that we get out of our plants now in the spring. Operator: Your next question comes from the line of Bengt Jonassen of ABG Sundal Collier. Bengt Jonassen: I have 2, if I may, both related to Q4. If you take your EBITDA bridge year-over-year, prices had a tailwind of [ 140 ], looking at your nitrate price realization is [ 358 ] versus your own pre-quarter material list prices at [ 370 ]. Could you talk a little bit about the price realization and if it's timing or discounting. Maria Gabrielsen: So the prices for fourth quarter realized slightly lower than publication prices, but it actually was last year as well. So we typically -- that's why we typically recommend using the delta for publication prices or delta realized prices, I think you will end up with roughly the same impact in the EBITDA bridge. But then the other part is also that if you look at the publication prices for CAN, it's not a fully liquid reference in the sense that publications aren't able to capture the exact price that every trade goes. And I'm sure that could expand on that. And also they aren't volume weighted. So it means that you will always have these deviations a bit between publication prices and realized prices, which are also linked to how they make their estimates and not only commercial performance. So the biggest impact in the price margin compared to the outside in if you use pure publication prices is really related to the NPK premiums that were pressured, especially in Asia, China and Thailand, and that we estimate to be roughly $20 million, $30 million impact this quarter compared to same quarter last year. Magnus Ankarstrand: And then I think it's fair to say that the impact the risk in Europe is mostly due to timing in the quarter. Bengt Jonassen: Yes. Okay. But let me ask the question the other way around that. If you take your official publication prices, your list prices to your clients, it's much higher than your price realization implies. And then back to the question, why our realized price is so much lower than the prices that you're actually announces to your client? There seems to be some kind of either increased competition or discounting or timing independent of the EBITDA bridge year-over-year. Magnus Ankarstrand: The biggest factor in that regard is timing, right? That's -- and in a way, that's difficult to predict from year-to-year for us as well as for you guys, of course, as well. I mean there are -- it depends on a lot of different factors when the markets move, right, when buyers step in to buy, when imports come in and so on. So there are a lot of factors there that impact what -- how we have -- I mean, how our sales team have to determine what's the optimal volume to sell at each point in time. We can have an idea of where we think prices are going or will go. But if the market moves, you have to move with it to some extent in order to stay a part of the market. So I think of the factors you mentioned, I would say sort of timing is the key one. Maria Gabrielsen: Also you're right, when we announce prices, which we do from time to time, but it depends a bit on how often we do it publicly through official announcements and how much do we announce at a certain point in time and ongoing negotiation. So -- and that's really typically based on Germany and France, right? And then there can be other deviations from that in the other markets, which can then lead us to deviate from those which prices you're correct [indiscernible]. Bengt Jonassen: And on that topic, how should we view current publication prices? Are they a reflection of the actual market or is the softness that you are communicating, maybe delaying some purchases on the price realization for the current quarter? Magnus Ankarstrand: Yes. No, list prices, we have a reflection of the current market. Dag Mo: Here CAN around EUR 350 that we think is pretty close to where it's actually. Operator: Your next question comes from the line of Angelina Glazova of JPMorgan. Angelina Glazova: I will also have 2. And my first question is on free cash flow dynamics. We have noticed that in the past couple of quarters, there was a sizable working capital buildup. And I'm wondering how you the working capital to develop into 2026? And we, of course, know that the working capital trend is impacted by seasonality, can be path on a quarterly basis. But I'm just wondering, in general, if you could give us some color on next year? And also because you now have a free cash flow target. So just wondering how you think of working capital as a variable in achieving that target? And my second question would just be a follow-up on CBAM. Apologies again on this topic, but I just wanted to make sure I understand correctly what you have said earlier in the call. I believe you have mentioned that [ you doubt ] there will be any meaningful changes to CBAM in principle. So I just wanted to understand, is this something that you're seeing based on the discussions that maybe you have had with regulators so far? Or what is this view based on? Magnus Ankarstrand: Yes. Thank you for your questions. I think on the first one on working capital. So I mean, first half is the -- as you know, the season in the Western Northern Hemisphere, right, and that forget that's the biggest part of the global application as well. So that's where we have higher deliveries. And so that -- in that you see typically see a buildup of inventories somewhat and working capital before season. And then we release indices. So that's kind of the, I would say, the price neutral view. But then, of course, when prices go up or down, that impacts working capital as well. And when prices go up like they have done through Q4, which is, of course, very good for Yara. But that, of course, also means that the value of receivables and so on is higher, also then working capital goes up. But there's nothing uncommon on credit days or inventory days or anything like that, that will constitute a change. So this is kind of purely seasonality as such. And then of course, there are, from time to time, some sort of changes on when prepayments happen and so on. So I think as well as season starts and also let's see if prices stabilize at this level, it's fair to think that everything else equal, is the release of working capital. If prices go up, it will -- there will be a buildup, it also will, of course, be released from sales done in Q4 but nothing uncommon compared to the previous years. And that, of course, also plays a little bit into -- when you talk about improvement or how to sort of think about working capital from a value perspective, then you, of course, think about sort of the average for the year or average towards the season, which is kind of what matters. That being said, of course, working capital improvement in itself is an important topic, but that's not something we sort of improve by moving things around between the quarters. That's more a question of working on the different aspects of working capital such as reducing credit days, optimizing product flows based on inventory days, obviously, products we sell close to our plants, generally typically tend to have lower working capital and so on. So that's really something that we work on as well. And which, of course, we have to measure against the premiums we achieved for some of these products in markets far away from the plant. On CBAM, just to be precise because I think I've seen a lot of different comments on this. And I think you sometimes read it as if either CBAM has been suspended, which is absolutely not the case. Or as if it's something that the EU commission or a member state could just decide on their own tomorrow. So what I said was that the commission has proposed a new paragraph, which does not take us today or it's not in part of the legislation today. That allows them to suspend CBAM not only for fertilizer, for any product, temporarily if there are unforeseen negative impact on the single market. Now for them to even have that possibility, that paragraph needs to be included in the legislation and that will require sort of the full legislative process, including an approval by the European Parliament. And then when it comes to sort of what the likelihood of that happening, that's, of course, anybody's guess. But if you read the media, there have been both several members of the European Parliament who've spoken out against these changes. There have been people from the commission stating that CBAM is the cornerstone of the European decarbonization policy and so on. So I mean there's clearly in all -- in all camps, strong resistance of even contemplating this, even though the proposal is there. But of course, as we then in politics, it's very difficult to sort of predict what that outcome could be. But I think what's important also to emphasize is that even if that was implemented, then unforeseen consequence, it's very hard to see how a price increase equivalent to a tariff could be unforeseen. That's -- so I mean, at least judging by the letter of the law, even if it was implemented, that shouldn't really open the opportunity for any suspension of CBAM on product fertilizer due to the grounds of being unforeseen. But of course, that's my personal interpretation not necessarily the interpretation of the European Commission. Operator: Your next question comes from the line of Tristan Lamotte of Deutsche Bank. Tristan Lamotte: Kind of CBAM adjacent, but I'm just wondering on proposed changes to ETFs and the phaseouts of free emissions. Can you just remind us of your position there? And I think you mentioned in the past that you have credits that you could start at some point. So could you also talk about your exposure to the need to buy credits over time? And then second question is, just given whether net debt is now sitting, which I think is below your range, what's your view on kind of capital allocation and buybacks? Magnus Ankarstrand: Yes. When it comes to ETFs, we have -- we take before around 6 million credits in our bank, so to speak. And then I mean we -- the way it works, of course, is that you -- we get a certain fee allowance per year that matches so far -- has matched or exceeded our need to buy ETF [ quotas ] and then now free allowances will be gradually phased out at least according to the current plan. And I think -- I mean you can think about the credits that we hold in different ways, but just sort of a measuring it physically, that kind of takes us to 2029 or something like that -- through 2029, kind of where we could cover our need for actually buying credits with what we have in the bank. And of course, I mean, given that your question was adjacent to CBAM, obviously, we would -- we almost assume that in the event that the EU Commission would take away or suspend CBAM temporarily. I would also almost they were granted that they would suspend or extend free allowances for the same period. Of course, it's not -- it would be treating domestic industry very, very unfavorably compared to imports. And did you repeat your second question, please? Maria Gabrielsen: Can I just add a comment to the -- so if we have then a slower phase out, Tristan, right? So basically, it means that the deficit we expect in 2029 and 2030, that won't increase as much as we would have otherwise done until 2034, right? But whether we use those closes in the bank or whether we sell them, that's a pure financial decision ultimately depending on where prices are and where we think they're going because they have a cost regardless of when we materialize the cash effect related to them. Tristan Lamotte: And yes, the second question was just around your net debt-to-EBITDA level, which I think is below the range and your thoughts around kind of buybacks or what you would do with extra headroom. Magnus Ankarstrand: Yes. No, I think we outlined our capital allocation policy in our CMD month ago. And our main priority on the investment side or on the growth investment side is clearly U.S. projects and reducing our energy costs or investments into ammonia. I think that beyond that capital discipline will be very strict. Of course, if we have smaller value very value-accretive opportunities, that's of course, something that we'll always consider. And then we sort of stick to our dividend policy of 50% cash dividend of net income. Of course, as we also said earlier today, if there is headroom or availability for it, we will always also consider additional buybacks depending on what we believe is the most accretive for the shareholder. Operator: Your next question comes from the line of Magnus Rasmussen of SEB. Magnus Rasmussen: I have 2, if I may. Firstly, when you announced the Air Products project, you said that you could do that within your $1.2 billion CapEx frame. I assume that implies you have to be quite a bit below that level towards 2030, still guide for $1.2 billion '26. So I'm just wondering sort of what's your thinking here? And how should we think about that beyond 2026? And the other question I had was whether you could talk about -- a bit about the factors impacting your earnings, which are not captured in your sensitivities such as NPK premiums, phosphate margins, et cetera? Where are we now relative to '25? And how does '25 compare to sort of historical averages? Magnus Ankarstrand: I'm not sure I capture your full first question. But I think what we've said is that the Air Products project is within our capital allocation policy. We've also indicated that we see sort of CapEx spend in real terms around $1.2 billion next year -- sorry, in the coming years. And then, of course, if you sort of deduct the maintenance level that we've indicated as well, that there should be within that also sufficient space for the project portfolio that we are looking at towards 2030. And then -- yes, and then of course, as in the previous question, that also opens up for the dividend policy that we have and, of course, evaluating buybacks versus very accretive opportunities that might arise in addition. But I think, again, U.S. projects will be a priority, and of course, also CapEx discipline is critical. In terms of variables beyond the one that we've given the sensitivity, I'll give the word to Maria. Maria Gabrielsen: Yes. Just to mention, I think the largest one, we have the phosphate upgrading margin which we used to have a sensitivity on but don't have currently, but it has had an impact in 2025 compared to 2024,,in general on the positive side, even though prices have been following for the later half. In the case premiums, for example, it tends to be fairly stable, but we do see some variations like we did in this quarter. So that will also impact us even though not covered in the bridge as such. And then you could also -- because we have gas exposure mainly to TTF and Henry Hub, but we have some class exposed to other gas costs, which tends to be more stable. But in the degree they vary, they wouldn't typically reflected in our sensitivities. And fixed costs, for example, which obviously has been the impact for the year that to be the main drivers where most of them have contributed positively for '25 as such. Dag Mo: I don't know if it's helpful, but you have this -- the phosphate upgrading depends on sulfur as a raw material for most production processes. And sulfur has been so volatile. So far, let's say, for a phosphoric acid base, which is a normal route phosphate upgrader. There has been a very strong cost increase on the sulfur part, which we don't have with our nitrate phosphate process, that is the NPK plant in Norway. So that may also make it a little bit more complicated for you to make that assessment because phosphate upgrading margins are a little bit different depending on which processing route you are using. Maria Gabrielsen: We could also -- since we are talking a lot about CBAM today, for 2026, that will also have an impact. So CBAM costs doesn't impact our EBITDA as long as we're utilizing credits that we have. But the price effect will be there, of course, then dependent on whether it's in Europe or outside Europe, that will have different effects. So as we mentioned in CMD, we will pre-quarter package, we will update sensitivities to reflect that in due course before 1Q '26. Operator: Our final question comes from the line of John Campbell of Bank of America. John Campbell: I just had 1 or 2 follow-ups, if I could. Could you maybe give us a sense on your view in terms of the potential resumption of Chinese urea exports in '26? How many million tons basically, you're expecting? Number one. And number two, coming back, I guess, to Air Products, have you -- presumably you've done some sort of levelized cost analysis in terms of delivering that ammonia resuming the project can be built for [ $8 billion or $9 billion ] or whatever it is. And I thought maybe one way to think about it is how that compares to something like the gray cash cost have delivered U.S. ammonia and maybe what carbon price would be required or sustained to actually kind of make the blue ammonia projects look cost competitive with just importing gray ammonia and just paying for the CBAM? Have you kind of got a view on that? I think I came out to $160. Of course that's just a ballpark figure, but do you have a sense maybe on the longer-term carbon price? Dag Mo: On your first question, I think we don't have a very specific opinion exactly how much that will be exported. We have just said that it's certainly a very important factor in the global balance how much that volume will be, but we are also referring to some external opinions around this in the press, where last year, it was, let's say, it was in second half April, that this was addressed initially by the Chinese Government and NDRC, I think it will be logical for something similar that when it gets to second half April, maybe there will be -- that will be on the agenda of the Chinese government. We observed that some of the consultants are working on that kind of baseline around 6 million tonnes, maybe a little bit higher than 2025. But of course, nobody knows all that is going to play out. Magnus Ankarstrand: And I think -- I mean, obviously, that's very difficult to predict exactly what you're going to do, right? But I think more important than the actual number of tons as such is what would it potentially do to the global market and global pricing, right? And then there, I think it's just important to keep in mind that at least so far, it seems that the main policy from the Chinese government has been to keep urea prices low. And obviously, the more you export, the more you impacted the global pricing and if you export to the extent that you impact global pricing. And of course, it's very likely to assume that it will impact domestic prices as well. And as we've talked about in our Capital Markets Day and as we see there's nothing that would point to sort of a softening to try demand balance outside China, meaning that sort of any opening to exports will sort of face quite high price environment globally. And I think it's sort of safe to assume that they will sort of exports to the extent that it doesn't impact domestic prices very much. And of course, I think it's also logical to assume then that at least from funding perspective, that shouldn't impact global prices too much either. But of course, things are difficult to predict. And on the Air Products question or the U.S. project question, yes, I mean, we have, of course, our internal views on sort of what different levels of CBAM with due to more in the pricing into Europe and so on and how that impacts the project. But that's not something that we can share publicly. But I think as we have said before, it is -- I mean, it is an ammonia -- it is a regular ammonia plant with very high scale and certain advantages that we talked about in our Capital Markets Day and sort of there's a great sort of price comparison to that. And then there's added premium, obviously, from CBAM as well. And I think as we've said also that -- just when we see from a total project perspective, sort of the CO2 capture park in itself is more than covered by the 45Q tax credit. From that perspective, this is something that even without a CBAM premium, should be profitable. But obviously, the CBAM adds that up to the profitability of building a decarbonized plant. Operator: [Operator Instructions] Your next question comes from the line of Julian Galliard of PGGM Investments. Unknown Analyst: I have 2 questions. So first, on your capital allocation framework, you highlighted maintenance and growth CapEx, but there was no explicit mention of sustainability or the transition CapEx. Could you explain how decarbonization investments are reflected and prioritized within the framework? Magnus Ankarstrand: Well, I think -- as we've said, the U.S. projects would be the lion's share of that growth CapEx, right? And sort of even though they represent lower gas costs, more scale over fixed cost per tonne, they also are key to the carbonization. So I think from that perspective, you can sort of say -- I mean, the benefit that we have, right, is that a project like that and our position in the ammonia market means that we can do the decarbonization profitably and have -- because we have the other benefits as well, right? So I think that part is fairly sort of, I would say, covering that. And I think when it comes to the maintenance CapEx, part of that go into improvements in our plant that are also related ESG related, such as energy efficiency, which also has a good momentary impact by using less energy and lowering costs. But I think in general, Yara does not do ESG investments unless they are profitable. So there's no separate budgets for that. Unknown Analyst: Okay. Okay. Okay, that's clear. It would be helpful, though, if you would include a figure that would show that officially because now it's just maintenance and growth. Also to my second question. It stated that Yara's capital allocation policy is based on maximizing shareholder value. while maintaining a mid-investment grade profile. I'm wondering how do you operationally ensure that capital allocation decisions are still consistent with either a 1.5 degrees line pathway or a well below 2 degrees of pathway? Magnus Ankarstrand: Yes. No, I think we have set targets for 2025, which we achieved in 2030 that we're working hard to achieve. And these are based on exactly that. And then we -- in our CapEx allocation, we I mean -- or to be different to achieve those targets, like we have done for 2025, we have a portfolio of different projects and of course, the U.S. ammonia investments being by far the biggest one, but also other projects like electrification project, we have our CCS project in Sluiskil that we complete this year and so on. So we look at our portfolio in totality and then we look at whether our CapEx or sort of the capital investment that we do provide a sufficient return or a strong return to our shareholders as well as how it sort of meets targets such as the ones we've set, right on the ESG side. But I think what's important to remember is that in order for that to be possible, there needs to be a firm sort of economic value drivers, right? So of course, our investment in [indiscernible] CCS, which contributes significantly to our targets, would not have been possible unless there was a carbon pricing in Europe, right? And I have to say, if the type of uncertainties, even though we believe firmly that CBAM will remain in place, would I think it's safe to say that is this kind of uncertainty would have come exactly when we were to do our investment decision on that project. It's just a guarantee that we would have actually approved that. So I think that's important to keep in mind as well. However, we do believe that, that project will make us very competitive in the European context. And that's kind of the basis for all the projects. They need to be -- they need -- so basically, what I'm saying is that the regulatory side needs to be in place so that these projects are profitable. Some of them are profitable, no matter what because saving electricity is typically possible. But some others will not be a profit on that -- yes, the regulatory side is in place. Operator: Our next question comes from the line of Mazahir Mammadli of Rothchild. Mazahir Mammadli: So my question is on CBAM. Basically, I wanted to ask. So we saw the benchmark values published by the EU on CO2 intensity of mitogen production in various countries. When you compare those benchmarks to the CO2 intensity of your own production. Do you see an advantage? If so, how big is it? Maria Gabrielsen: Yes. So for urea, we will have a variation between our plants naturally, some will be very efficient and some will be less efficient. But in general, Yara's plant will be more efficient than the [indiscernible] average European, but more so the global averages and the benchmark for imports. Yes is the short answer. Magnus Ankarstrand: Absolutely. And I would say, particularly in our nitrate production with the investments that we've done there over a long period of time, we are significantly more advantaged on the carbon footprint side. So that's, of course, a huge advantage on nitrates in Europe, particularly when you compare to imports of urea. And I think since this was the last question on the CBAM, many questions on CBAM, which, of course, is a very hot topic these days. I think you also sort of in its place to add that we are very concerned about sort of the impact on the farmer, obviously, not only from increased cost of fertilizer, but also on a lot of the other regulation that's put on the particular European farmers. But I think, it is a very easy way to solve that problem for the EU, particularly when it comes to CBAM, and that would simply be to give that the CBAM revenue as a subsidy back to the farmer who buy the fertilizer. I can see no better use of that money than that sort of the train of thought that you would sort of suspend CBAM. So that 30 imports from outside Europe can outcompete European industry is clearly not the best route of achieving that. So I think there is a very easy way for the EU to help farmers and not negatively impact European industries as well. Operator: We have reached the end of our Q&A session. I'd now like to hand the call back to Maria for final remarks. Maria Gabrielsen: Thank you for everyone for joining. No further comments from our side. But our Investor Relations is available for further questions, please feel free to have follow-up. Thank you and goodbye. Operator: Thank you for attending today's call. You may now disconnect. Goodbye.
Operator: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Burcon NutraScience Corporation Fiscal 2026 Third Quarter Conference Call. Joining us today are Kip Underwood, Burcon's Chief Executive Officer; and Alex Varty, the company's Interim Chief Financial Officer. [Operator Instructions] Then before we conclude today's call, I'll provide the company's safe harbor statement with important cautions regarding the forward-looking statements made during this call. Now I would like to turn the call over to CEO of Burcon, Mr. Kip Underwood. Sir, please go ahead. Kip Underwood: Thanks, John. Good morning, good afternoon and good evening to all on the call, and thank you for your time today and your investment in Burcon. At the conclusion of our presentation, we hope you walk away with three really important takeaways. The first is we are targeting an exciting growing market. The second is customer responses, either with their time in projects or in their purchase decision and buying our products validates both our strategy and the performance of our products. And lastly, maybe most importantly, we're on plan. Today, we will walk through that we had performance within our calendar 2025 guidance, and we will certainly affirm our calendar '26 guidance of double-digit revenue and cash flow positive by the end of calendar 2026. Our standard safe harbor statement. To walk through this discussion today, obviously, we'll go through the highlights of our fiscal Q3. We'll test on our technology platform. We'll talk about the exciting market we are targeting I just mentioned. A little update on sales, our sales growth. Our current raise, which we expect to close here in a matter of a few weeks, why we believe Burcon is really a tremendous investment opportunity and look for what is our path to profitability. At the end, we will have plenty of time for questions and closing remarks. For our fiscal Q3, the operational highlights. With sales growth, it's not just sales growth, it's the underlying multiple customers, across multiple products, across multiple food types. So diversity of growth that is all fully aligned with our strategy. We've launched scaled, optimized multiple products with our partner at our manufacturing facility. And really, through our customer project funnel, we talk a lot when customer projects take 9 to 18 months to come to fruition from a contact to converting to business. So we are always building for the future. Those projects we develop today, as you can see, over 200 customer projects, those projects we build today truly drive sales tomorrow. With that, I'll turn it over to Alex, our CFO, for the financial highlights. Alex, take it away. Alex Varty: Thank you, Kip. Starting off, Burcon had a strong quarter, generating $740,000 of revenue in Q3, which represents a doubling of the revenues generated in Q2. At the end of calendar 2025, we generated cumulative revenues of $1.4 million, which meets our revenue guidance. Pausing on that for a moment, I want to underscore the progress made through calendar 2025. We started that calendar year without a production facility, and we're ending the calendar year meeting our revenue target and with a 100% quarter-over-quarter growth rate in revenues. Looking forward, we further expect substantial revenue growth through calendar 2026, and we have a robust customer order book for sales that support that growth. As we focus our efforts and our resources on production and on sales, we've also reduced our other spending. So in respect of research and development, we see a 44% year-over-year decrease of Q3 spend. And in general and administrative expenses, we see a 22% reduction when you compare it to fiscal Q3 in the prior year. Lastly, we've announced the offering of our convertible note of up to $6.9 million, which is supported by -- with significant participation from insiders and owners of our manufacturing partner. On December 31, we closed the first tranche of this offering, raising proceeds of $1.25 million and we expect the final tranche to close in the last week of February following the special shareholder meeting to be held on February 20, 2026. We'll speak a bit more about this offering in detail later on. I'll turn it back to Kip now to talk through our technology platform. Kip Underwood: Thanks, Alex. Our technology platform is the foundation for our success. And this is really the foundation for our growth in our future. And what our technology platform fundamentally does is delivers purity, the highest purity we see in the marketplace today for plant proteins. And that purity leads to performance. Performance means we work with food companies to deliver better tasting products to consumers, the ones that we eventually -- you and I eventually buy the grocery to the restaurant. That technology platforms apply to multiple products. You see here the 4 we have talked about. So we have Solatein from sunflower protein from the sun, Peazazz, our pea protein, FavaPro, our fava protein and Puratein, our canola protein. These are all highly differentiated based upon that purity. And when you look at things like FavaPro and into Solatein, our sunflower protein, you're looking into really new to the world type products. What's even more exciting, we don't talk about it very much now is there is an R&D pipeline behind these of future innovations to come that will drive growth into the future. And lastly, it's important to note this technology is fully protected by an intellectual property moat to ensure we can drive growth -- protected growth not just today, but into tomorrow. At the outset, I mentioned we are targeting an exciting market, and short protein is hot. If you've watched television commercials or you have been in a grocery store, you have seen a substantial change or improvement or more products with protein positioning. And that's truly driven fundamentally by health benefits, the benefits of a higher protein diet from a strength, from a health, from a everyday life perspective. And then that growth is accelerated by those consumers who are on GLP-1 weight loss medication. Those consumers need more protein across less calories and food companies are reacting to that end consumer need. Where food companies are reacting is a bull's eye for our technology platform, our differentiation. Our differentiation is spot on with what food companies are trying to do and it's highly relevant in helping them meet those new consumers' needs. As evidence of that, we see our customers voting with their pocketbook. So significant quarter-on-quarter growth, as you can see, over 200 active customer projects. And I think it's really important to see these are -- these have great diversity. So a lot of these projects and our current sales are with more entrepreneurial cutting-edge brands. Those brands that are on the edge of the trend, their values are typically better aligned with ours. They move quickly and they make decisions quickly, think faster cash for us, very aligned. There are also some customers and brands in there that everybody in the phone here would probably recognize. Beyond the types of customers, it's types of foods. So think about a ready-to-mix powder that somebody makes it home. Think about a ready-to-drink beverage, liquid beverage that has a protein positioning, maybe 10 or 15 grams per serving. They buy nutrition bars. All of those are areas where we're working with customers where our protein differentiation is relevant. And then lastly, in plant-based foods, where companies are trying to make plant-based foods just better to attract more consumers, our technology are purity helps them deliver against the taste expectations of new consumers. So certainly, strong sales growth with our robust sales funnel, more to come, and we look forward to talking more about customers in the future. Alex mentioned the current fundraise we have going on. We expect to close this right after our shareholder meeting on February 20. And beyond the details, what we get asked a lot is why? And at its core, this is to accelerate growth. We see the customers we have today. We see the recurring sales today. As to remind everybody, sales in this industry, once you achieve a sale, it's pretty much always a recurring sale. So as a food company makes the product month-on-month, they come back and buy ingredients from us month-on-month. So we see the recurring sales growth. We look at our robust sales funnel. We see that protein is hot in the market and with our Board, we need to accelerate investment to get ahead of the sales growth. And that is what this raise is all about. So how do we build operating days sooner. How do we expand capacity sooner? How do we build to ensure as we close these customer projects and that growth comes that we are there and ready to meet, if not exceed those customers' expectations? As I mentioned, exciting market pet platform foundational delivering a highly differentiated offering to that market. We're seeing that we have customers right now. We're seeing that growth with recurring sales. And we put that together and we believe -- I believe that Burcon is an exciting investment opportunity. We're substantially derisked from where we were 9 months ago, Alex went through the progression over the last year. We can see the tremendous opportunity in front of us. And I think we're also hopefully building a track record. It's important to us that we say what we do and we do what we say. So we've laid out our guidance for calendar '25, the first time we've done that, and we're right in the middle of the range, and we are certainly affirming our guidance for 2026 double-digit revenue and cash flow positive by the end of calendar '26. Certainly believe exciting times are on the horizon for us and hope those who aren't invested in this come along with us for this ride. I mentioned our guidance for calendar '26. The two headlines here are double-digit revenue and cash flow positive and fundamentally what drives that. We are very focused on the basics of production and sales. The market is there, the demand is there, and it's on us to deliver. As we close more customer projects, these are recurring sales, they build on each other. We're targeting these types of customers where we're highly differentiated. Allows us to continue to drive good margins, always working on capacity and always working on efficiency, both to control costs, but more importantly, to move faster to stay ahead of the growth curve. With that, John, I will turn it over back to you for any questions from our audience. Operator: [Operator Instructions] Your first question comes from the line of Dave Storms from Stonegate. David Storms: I wanted to start with the efficiency comments that you made towards end of your prepared remarks there. Is there any more you can tell us about maybe the J curve that you're seeing? As it relates to sales and startup costs associated with bringing on new customers? And maybe if there's any shallowing of that J curve as you continue to learn? Kip Underwood: Well, I think we're at a point in growth, what I can say is our fundamental costs don't change all that much as we grow from here forward. So we have the staff on site to drive and run the facility. We have the infrastructure to go run the business. So the growth that happens between now and the end of the year really comes with obviously increasing variable costs but really very little increase in other costs associated. So when we drive efficiencies, that's a lot of that piece. And then just the operational side, we're 9 months in. We've learned a lot. We're just better at operating by hour, by shift by day by week. David Storms: That's great color. I appreciate it. I did also want to then turn to maybe some of the puts and takes on your stated plans for double-digit revenue growth in the year. Maybe just -- if you could help us understand a little more about how much of that might come from expansion within customers, acquiring new customers? And then maybe just any visibility. Is that a 6 months visibility you have? Is that a 3-year visibility? Anything there would be very helpful. Kip Underwood: Sure. So thinking about the -- so first, we would -- our customer -- our sales funnel is of a size and scope that fully discounted for probably success easily drives the growth. So that's the first piece. The second piece from a growth perspective, 65%, 70% of that growth, those customers have already bought at least something from a recurring perspective And then the balance is late-stage customer work. Again, I always say when we say late stage, we've been working with these customers for 9 or 12 months right now. So we have very good line of sight of what their plans are. Therefore, we have good line of sight if they're not buying right now when they will start. And then I would say -- and they build, right? So again, these are recurring sales. So if you take a run rate for any quarter, think about that's the baseline going into the next quarter and then it goes from there. And then the last thing, you mentioned growth. The customers we are working with are all targeting and launching new products in this growing market that I've talked about. So we would also anticipate that most of them will then have success and capture that growth. So as they grow, obviously, we grow as well. David Storms: Understood. That's incredibly helpful. And just so I'm clear on that. When you've mentioned customers targeting and launching new products, how much or is there any interplay across your entire portfolio? Or do you tend to see customers think into one form of protein? If that question makes sense. Kip Underwood: Actually, I think what we see, which is great for us, I think traditionally, it has been one form of protein. What we're seeing in the marketplace right now is blends of proteins because each protein from each plant has a little bit different strengths. And oftentimes, when you add a pea protein to a canola protein to, let's say, a fiber protein, one plus one plus one, could be five. The strengths actually really are synergistic together. And we're seeing food companies take advantage of that which is also good for us because we are one of the few companies out there that have truly a technology platform that can be applied and is applied to multiple products. So we could become kind of a one-stop shop. You want to do a blended protein, is great. We can cover that. David Storms: Understood. I really appreciate that. One more, if I could. Would just love to touch on any thoughts around financing needs in the balance sheet. I know you have that upsized private placement coming down the pipe. There was the release about extending your warrants. Just maybe any further comments about your comfortability with your balance sheet. And if you think there's enough there to continue the growth if you'll need to hit the markets again? Kip Underwood: We believe once we close the raise here in a few weeks, we'll have the balance sheet to accelerate growth. So we don't have anything planned on the horizon at all. We will always, at the same time, always look for like if there's a way to grow faster, to do something fundamentally different, then we'll evaluate that. But on the current plan, we're in good shape, days. Operator: [Operator Instructions] There are no further questions at this time on the phone lines. I will now turn the call over to Paul Lam, Director of Investor Relations and Communications for our webcast questions. Please continue. Paul Lam: Thanks, John. We have a few questions from the webcast today. This one coming from Bruce Lazenby, Private Investor. In terms of revenue, what is the maximum the existing facility could deliver, assuming a 24/7 shifts and realistic improvements in processes and equipment? Kip Underwood: Thanks, Bruce. What we can say is that the facility as it sits, and especially with the last 10 months of experience, has the size and the scope and the revenue to do a few things. One, delivers us well into profitability and well into a very good margin space. Two, a size and scope that is relevant not just to the customers are targeting today, those entrepreneurial, more cutting-edge brands but also highly relevant to a scale of a major food company that all of us might know top of mind. So what we can say certainly fully gets us well into profitability and well beyond the guidance of double-digit revenue in 2026. Paul Lam: That answer actually leads us into the next question, which comes from David [ Gatan ], private investor. What is the targeted time for corporate profitability? And I know we touched on that before, but do you have any further insight into that? Kip Underwood: Yes. I think it's good to read. So our guidance for kind of calendar '26 is double-digit revenue and cash flow positive. And fundamentally, we have certainly the capacity and the people on site with our manufacturing partner to do that. We have the combination of the order book and our sales funnel to drive the demand side. So really to get to profitability, cash flow positive in calendar '26. What we basically do is execute our plan, and that's what we intend to do. Paul Lam: Next question comes from a private investor. Congratulations on the sales momentum. Can you give us more color on the product mix of your current sales? Are you selling more pea protein, canola protein or fava protein? And do you expect this mix to change going forward? Kip Underwood: Thank you for the question. So at the current time, we sell more pea protein. This was certainly our ongoing strategy. Pea protein is the largest current market. As we move forward over time, let's think year 2, year 3, we believe we will see more of a growth from our sunflower protein, new to the world, highly differentiated, very exciting and more growth in our fiber protein, also more differentiated, more new to the world technology. So we start with pea protein, current largest market. That was our strategy to begin with, quicker to sales. And then as we move forward into year 2, year 3, we'll see a larger presence for sunflower protein, it's protein from the sun, that's fantastic and our FiberPro our fiber protein. Paul Lam: Okay. Next question comes from Harry H. Congrats on the successful quarter. As a shareholder, my concern is the share price. The volume is extremely low and the stock price has stalled. Without major partnership announcements, the stock price is not expected to be close to historic highs. What are you planning to do? Do you think -- and this is part of his question as well, too. Do you think with $30 million in revenue, we could get close enough to historic highs? Kip Underwood: Harry, thanks for the question. So what we believe and what we're being told is in the market today and even as a food technology company that what we really have to do is deliver results, right? So it's the market rewards less on hope and more on results. So we're very focused on the commercialization of technology, the proven technology and really turning that into production and sales. And we believe as we continue to say what we do, do what we say, hit our numbers, drive revenue growth, drive to profitability that the market over time will take notice. That being said, we're also always looking at how do we do a better job of getting the word out to ensure that the capital markets, the investment community is aware of us and believes what we're capable of and hopefully makes an investment decision to join us. Paul Lam: Okay. Thank you, Kip. I think this might be the last question from the webcast. Is it reasonable to expect revenues to continue growing quarter-over-quarter from here on out? And if yes, will the growth be primarily attributed to protein sales versus contract manufacturing revenue? Kip Underwood: Yes, it is reasonable. We have to drive quarter-on-quarter growth in sales. And we would expect the vast, vast, vast majority of that to be growth of our own products. So again, we have existing recurring sales, existing customers whose sales we expect to grow, and we have a robust sales funnel of all customers evaluating our products, our technology, and we expect that to drive 95%, if not 100% of the growth from here on out. Paul Lam: Okay. Thank you, Kip. And that's all for questions from the webcast. John, passing it back over to you. Operator: Thank you, everyone. That's all the time we have for questions today. At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Underwood for any closing remarks. Please go ahead. Kip Underwood: Thanks, John. And first and foremost, thank you to our shareholders for your continued support and investment in Burcon. The confidence you place in us is not lost on us, and we take that responsibility very seriously. A special thanks to our teams, the teams on the ground, they're working their tail off. They're dedicated. They're committed to delivering the results that we've all committed to. We put the support from our shareholders together with the work effort and commitment from our team, and we believe we are well on our way to becoming a profitable food tech company, and thanks everybody again for coming along that journey with us. Back to you, John. Operator: Before we conclude today's call, I would like to take a moment to read the company's safe harbor statement. This call contains forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements or forward-looking information involve risks, uncertainties and other factors that could cause actual results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements or forward-looking information can be identified by words such as anticipate, intend, plan, goal, project, estimate, expect, believe future likely, can, may, should, could, will, potentially, and similar references to future periods. All statements other than the statements of historical facts included during the call are forward-looking statements. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements or information. Important factors that could cause actual results to differ materially from Burcon's plans and expectations include the actual results of business negotiations, marketing activities, adverse general economic, market and business conditions regulatory changes and other risks and factors detailed herein and from time to time in the filings made by Burcon with the securities regulators and stock exchanges including in the section entitled Risk Factors in Burcon's annual information form filed with the Canadian Securities Administrators on www.sedar.com. Any forward-looking statement or information only speaks as of the date which it was made and except as may be required by applicable securities laws. Burcon disclaims any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Although Burcon believes that the assumptions inherent in the forward-looking statements are reasonable forward-looking statements are not guarantees of future performance, and accordingly, investors should not rely on such statements. Finally, I would like to remind everyone that this call is being recorded, and the webcast will be available for replay on the company's website starting later this evening. Thank you, ladies and gentlemen, for joining us today for our presentation. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Northern Star Fiscal Year '26 Half Year Financial Results. [Operator Instructions] I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead. Stuart Tonkin: Good morning, and thanks for joining us to discuss our first half FY '26 financial results. We will be referring to the presentation as published on the ASX this morning. With me on the call today is our Chief Financial Officer, Ryan Gurner. This first half result demonstrates the resilience and growing returns we are embedding in our business. Our balance sheet remains in a net cash position, notwithstanding the significant investments we are making to transform Northern Star into a lowest half-cost global gold producer. Given our positive outlook for the company, the Board has declared a fully franked $0.25 per share interim dividend whilst recognizing a soft operating performance in the second quarter. The KCGM mill expansion remains on schedule for commissioning in early FY '27 with the actions of increasing labor being positive there. I want to assure our investors that Northern Star remains committed to improving our operating performance. Notwithstanding recent challenges, we reaffirm our commitment to operational excellence. We continue to prioritize medium-term production growth while advancing initiatives to reduce unit costs. Our diversified portfolio provides a pipeline of options that underpins long-term value creation and returns for shareholders. While today is about the half year financial results, I would like to briefly touch on the operational performances so far this year. At KCGM, milling performance is stabilizing, but will continue to be disruptive until we transition to the new plant. At Jundee, remedy works are expected to be completed this month in line with expectations with milling throughput normalizing and focus now turning to mine volumes and grades. Pleasingly, at Pogo, mine grades have increased, but I'd still like to see further improvement and focus on dilution. Our team remains firmly focused on driving productivity improvements and strengthening cost discipline to deliver a stronger second half for our shareholders. Before I hand over to Ryan, I would like to take this opportunity to thank our team for their efforts and commitments over 2025 as it was a challenging period. With that, over to Ryan, who will discuss the first half FY '26 results in more detail. Ryan Gurner: Thanks, Stu. Good morning, all. I'll step you now through the first half financials. So I'd like to begin on Slide 4, which outlines our key financial metrics for the group, being the company delivering a record underlying EBITDA of $1.9 billion for the first half of FY '26, which was up 34% from the previous corresponding period. Underlying free cash flow was impacted by soft operational performance during Q2, tax payments relating to FY '25 and investment in our growth projects to drive our future cash flows higher. Looking ahead over the next 6 to 12 months, we expect free cash flow to improve with a stronger second half operational outlook, normalized tax payments and the commissioning of the KCGM mill expansion project in early FY '27. Adjusting for abnormal items, our underlying earnings of $0.53 per share grew 19% over the prior corresponding period, and we recorded strong first half cash earnings of $1.1 billion, which has enabled our Board to declare a fully franked interim dividend of $0.25 per share. Over to Slide 5. Our balance sheet supports our strategy and gives us flexibility through the cycle to fund opportunities that may arise to enhance our portfolio to deliver long-term superior shareholder returns. Our investment-grade balance sheet remains strong and in a net cash position of $293 million at 31 December. And we have significant liquidity totaling $2.7 billion, which includes $1.5 billion of facilities, which remain undrawn. Now Slide 6. As mentioned, we continue our strong track record of returning funds to shareholders with the Board declaring a fully franked interim dividend of $0.25 per share, totaling $358 million. The record date of the dividend is 5 March and payment date of 26th of March. A reminder that the company's dividend policy is 20% to 30% of full year cash earnings. Over to Slide 7, where we highlight the EBITDA margin achieved by the group for the half year ending 31 December and the preceding half year for each production center. All 3 production centers are achieving healthy EBITDA margins, resulting in a group margin of 55% for the period. Yandal Production Center experienced disruptions over the December quarter and higher associated operating costs, which impacted margins in the period. With these disruptions behind us, we expect margins to lift in the second half at this production center. Similarly, at Pogo, we are forecasting a lift in mining grades, which in turn will drive margin improvement over the second half of the financial year. And across the Kalgoorlie Production Center, our focus remains on completing the final stages of our mill expansion at KCGM with commissioning on track for early FY '27. This milestone will mark the beginning of a step change in returns and cash flow at this asset. Before I hand over to Stu to finish the presentation, I'd like to step you through Slide 8. It's pleasing to see our improving return on capital employed, which has been a focus since the merger in FY '21. We are confident this will continue to grow over the near term with stronger production forecast in the second half of this financial year as well as the commissioning of the expanded KCGM mill. This reflects progress on our multi-year strategy and focus on allocating shareholder funds to generate superior returns. It also highlights the strength of our first half underlying earnings before interest and tax, which is up 47% from the prior year to $1.1 billion. Thank you. I'll now hand back to Stu. Stuart Tonkin: Thanks, Ryan. Turning to Slide 9. We're nearing completion of the 3-year build for our KCGM mill expansion, which remains on track for commissioning early FY '27. KCGM is positioning the business for a significant uplift in cash generation and return on capital employed from FY '27. This enhanced cash flow outlook strengthens our ability to deliver attractive returns on investment, supports capital management and allows us to advance further growth options in the portfolio. At the January quarterly call, we announced an increase to the project's total capital investment to $1.65 billion to $1.69 billion, reflecting a lower-than-planned rate of productivity and the addition of labor to keep the project on schedule. I'm pleased to report that we are seeing benefits to this additional labor at the end of January, and the project build was 86% complete on schedule. As we near the final stages to commissioning, labor levels will reduce. Turning to Slide 10. We continue to advance the Hemi Development Project in a disciplined manner. The state and federal permits continue to progress, which will then enable secondary approvals to be sought. I'd like to remind everyone that both primary and secondary approvals are required prior to early works commencing. And given some of that uncertainty and things out of our control, the approval of timing, we now expect final investment decision to be sometime during FY '27. With an estimated 2.5-year build, this corresponds to first gold being forecast for FY '30 at the earliest. This timing also allows our internal project team to smoothly transition following the completion of the KCGM expansion to focus on Hemi. Further, it provides time for our balance sheet to strengthen from the uplift of free cash flow at KCGM. Now to Slide 11. Slide 11 reiterates our revised FY '26 guidance as disclosed on the 22nd of January. We have also provided financial guidance at the bottom of the slide in green to reflect first half FY '26 actuals. To Slide 12. Northern Star's exploration program remains a highly attractive approach to value creation to support our purpose to deliver superior shareholder returns. And since March '22, our average cost of resource addition is a compelling $37 an ounce. We are in the enviable position where we have over 70 million ounces of mineral resources and 22 million ounces of ore reserves, excluding Hemi. This corresponds to over a 10-year reserve-backed production profile. And in May, we look forward to including the Hemi mineral resource and ore reserves into our group's annual statement. And finally, on Slide 13, our business is set for a structural uplift in portfolio quality over the coming years. The company cash flow is forecast to grow significantly with increased production, lower costs and lowering CapEx over the coming years. We are confident that our return on capital employed will increase as we bring on projects that are long life and low cost while improving stability and reliability of the assets in our portfolio today. Our balance sheet is strong and of investment-grade quality. We continue to review the portfolio to sustain high-margin production. Now that concludes the formal part of our presentation, and I'd now like to hand back to the moderator for Q&A. Operator: [Operator Instructions] The first question comes from Daniel Morgan with Barrenjoey. Daniel Morgan: Just on Hemi and approvals, can you just expand on -- I know approvals are an issue across the industry and the time lines tend to extend. But what are the major works that are outstanding on the approvals front? What are the major risks to the time line? And it appears that you are flagging that this is taking a little bit longer than expected, and it's just you're flagging that FID is going to potentially move back further into FY '27. Stuart Tonkin: Yes. Thanks, Dan. I guess the final investment decision, we don't want to rush. We need adequate time to consider that. So we're really anticipating the timing and to reprice the capital, put that into the business case to present and consider. On the primary approvals, so state, we expect essentially this quarter, the submissions have been in the public comments being sought and returns of those -- that information for the regulators is there. The primary approvals on the federal EPBC, again, expecting that to be published for public comment soon. It will be a 4-week public comment period, and then there'll be iterations of request for information back and forth between the regulators. So we don't really control that time frame. The processes have those time locks that you enter into. So again, we expect that during this year, ideally this financial year, but we can't be certain on that process. And history has told us things do slip they don't go quicker. The secondary approvals around the dewatering and other clearances that we're working on. Again, we expect and plan for those things to occur this calendar year. And therefore, we just want that time to prudently go through and present that case to the Board. I think the couple of things I've said, which we would like to do, obviously, once the approvals and the timing is clear to us, we reprice the capital. That's what goes in with some pretty hard firm all-encompassing numbers into the financial case that is considered by our Board. And then ideally, that's subsequent to the KCGM commissioning. So learnings from KCGM can go across to Hemi and the cash flow generation from Hemi is generating to fund organically the growth of KCGM funds Hemi. Daniel Morgan: And do you anticipate a delay between like -- well, KCGM coming on, the mill expansion and then the FID, like is there going to be a period of time? Do you anticipate of, say, 6 months or more where the business has the opportunity to generate significant free cash flow from the KCGM expansion? And then the second part of that question is just what would the business do with that period of cash harvest? Stuart Tonkin: I think that the 2 will occur. The timing -- the balance sheet is already healthy net cash and that will grow so that we're not concerned around the funding aspects of Hemi or the profile of its spend. We're certainly not concerned around the considerations around hedging and those types of things we've spoken about that we needed to do for KCGM years ago. I agree that if there was a period of 6 months where KCGM is on full noise and we haven't been investing in Hemi, there's some surplus cash there. So all those capital management concepts will be considered by our Board, including all the usual aspects that we consider from time to time. Daniel Morgan: And just last question, still on Hemi. You stated resources and reserves are going to be included in the update in May '26, which is from a Northern Star perspective. Can you just talk through what conceptual changes from De Grey we might expect, i.e., could it benefit from more drilling that you've undertaken, a potential change to the gold price assumption? Or might there be more conservatism around mining shapes and the fact that you're actually going to be delivering an operational project rather than a concept? Stuart Tonkin: I think a blend of everything there, Dan. We certainly will adjust gold price across the group, reflecting where our costs are and where the spot is. It will still be modest. There'll still be a lot of headroom to spot prices and long-term forecasts. We probably have stricter views on mining shapes and scrutiny, wall angles, all those things on the resource. So certainly be a stricter cut on some of the designs. There has been some infill drilling occurring, which is really around the classifications and confidence of the resources there. So that's what we have been doing in recent months. So a blend of all that, pluses and minuses. We're trying to make this as bulletproof as we can for the consideration for entry into FID. Operator: The next question is from Matthew Frydman with MST Financial. Matthew Frydman: Can I ask a question on Slide 9 there where you've reaffirmed some guidance you've given previously on what KCGM looks like post the expansion and the ramp-up. Maybe just starting with the FY '27 range, 750,000 to 800,000 ounces. That seems like a pretty narrow range given obviously some uncertainties around commissioning and the cutover period and all that sort of stuff. Is it right to think that the -- I suppose, the marginal tonne of feed into KCGM in FY '27 is going to be low-grade stockpiles. And so therefore, that the actual production impact from some of those risk factors like the exact timing of the cutover or the pace of the ramp-up isn't as significant? Or I guess to put the question another way, is the real driver of your production in FY '27 and over the medium term at KCGM more about the high-grade material from the pit and the mining sequence, which is ultimately why you're comfortable with that fairly narrow range. I hope that is sort of a clear question. Ryan Gurner: Yes, it is. The -- yes, the outlook is -- it's narrow for the asset. I appreciate that. The concept is that the best grade goes in first and that if there's any throughput reduction either through later commissioning and/or greater planned or unplanned downtime throughout the year and 23 million tonnes wasn't met that the last 1 million tonnes is that 0.6 low-grade stockpile. So the incremental grade incremental ounces are minimal. And then any of the main primary Golden Pike higher-grade material plus the underground Fimiston, Charlotte material is milled that goes first. And then that's the buffer and thinking. We'll obviously update FY '27 guidance later this -- or end of this financial year such that we've got delivery schedules, planned, stockpiles as we have -- there's 82 million ounces stockpiled on the ROM there in the last month. That gives us the greater confidence of how narrow that band could be. But you're right in saying it's less about the overall throughput. That's more a sign of the confidence that the build is correct as opposed to the grade going into it. Matthew Frydman: Okay. Got it. And then I guess in that vein is -- halfway through the quarter, is there any more info that you can give us in terms of how that grade performance is coming out of the pit. Ultimately, what the bottom of the pit looks like now that it's fully destacked, et cetera? Any sort of incremental update since the quarterly would be appreciated. Stuart Tonkin: Yes. We believe we're still pulling that sort of 1.8-gram material high grade out of the Golden Pike North. As I said, we've got a large stockpile of that material on the ROM in front of the mill. It's been the mill that's held us up with that unplanned disruptions. So really, it's a game of just keeping that managed along until the cutover. But yes, the mining volumes, and we've had some record tonnage movements over the period. So it's been great to see not just ore but ore and waste in that fleet being very efficient. There's about 8 million tonnes moved in January, which again is well above the rate that we forecast there. So very happy with the mining activity. And the grade, we always -- until it goes through the mill intensity into a gold bar, that's the element we -- it's all theory until it goes through based on that drilling. Operator: The next question is from Adam Baker with Macquarie. Adam Baker: Just firstly, on dividends. It looks like it's around 33% of cash earnings for the first half. Was this just a driver from your considerations of expected stronger second half? Or -- just keen to hear your thoughts on why you elected to go above that range for the first half? Stuart Tonkin: Yes. Thanks, Adam. Look, we look at it on a full year basis. So we're aware of where it sits against policy in the half. But again, given we had a very strong second half forecast and outlook, we believe that we'd stay within that band and policy over the full year. We'll obviously consider that on the full year results, but we appreciate it departs from that in the midpoint. Adam Baker: And just secondly, looking to the uplift in free cash flow expected in the second half and with heavy being pushed out furthermore. Just wondering if you've given any thoughts to pre-delivering into your hedge book similar to what some of your peers have done, maybe some of those longer-dated hedges in FY '28 to get unencumbered free cash flow earlier on in the piece. Ryan Gurner: Yes. Look, Adam, it's been a consideration. I think what I'd say is we want to be flexible to that. It's probably unlikely. Any additional cash flow, we'll consider it. We've been thinking about it, but it's probably unlikely at this stage. Operator: The next question is from Alex Barkley with RBC. Alexander Barkley: Quick one on the upcoming resource update. Is there likely to be any impact from the KCGM expansion lifting the mill and lowering your cost base? Does that bring new ounces to life? Or is that maybe going to be seen in later iterations of your resource updates? Stuart Tonkin: I think it will be in later iterations. We'll absolutely -- we kind of look at understanding that cutoff grade of material that's coming out currently as waste or mineralized waste out of the pit. You appreciate that the stockpile is 0.6, there's nearly 3 million ounces sitting in low-grade stockpiles of 0.6 grams per tonne, taking rehandle costs and the value of gold today, 0.5 coming up in the back of a truck out of the pit could be financially better than that stockpile rehandled and milled. So that's fascinating when you look at the overall mill cost. It's going to be -- the milling cost is essentially 0.1 of a gram. So if that's already been moved, it's waste, it's in the back of a truck, it's moving to the surface. It could go direct tip into the crusher into the mill and be very economic. So yes, 0.35 starts to really produce a significant margin out of the pit, which today may be called waste, but in the future, it could be ore. We're not changing that into the resource at the moment. But I think over the future years, it will be pretty important to look at what the overall ounces are. Appreciating all-in sustaining costs lift, so you start bringing that low-grade material in. So we've got to be quite sensitive to that. Operator: The next question is from Hugo Nicolaci with Goldman Sachs. Hugo Nicolaci: First one for me, just are you able to provide any update in terms of the grade reconciliation work at some of the Yandal mines? And maybe any commentary there on how we should think about the medium-term mine plan relative to the existing reserve grades? Stuart Tonkin: Yes. So the areas for Yandal, I think one of the concerns was the Orelia open pit reconciling. We're getting a lot of that material coming down into the feed of reconciling well. It's about 1.4 grams. There's about 215,000 ounces remaining. So it's only less than 2 years of feed contribution. So that will be something that we'll keep a close eye on. But at the moment, yes, pretty pleased with what's coming out of Wonder underground, what's coming out of the TBO underground and obviously, Orelia's contribution to it. So yes, 1.3 to 1.6 has been the Bannockburn that's also going to be a feed in the future. We're doing all the waste stripping in that at the moment. That will start to be a better grade than the current sources for the Thunderbox. In the north at Jundee, there's new mines being developed and opened at Griffin Cook (sic) [ Cook-Griffin]. So once they start to come into the feed, we'll get greater feel on the reconciliations. And then the paste plant that's being commissioned allows us to get back into some of those secondary tertiary stopes that are the pillars from the higher grade at the upper levels. That will help us as well start to lift overall average grades at Jundee. Hugo Nicolaci: And then just maybe one for Ryan. You noted earlier in your piece that the balance sheet strength allows you to fund opportunities that may arise. Should we interpret that as organic and operational improvement opportunities? Or are you perhaps signaling that Northern Star is open to further acquisitions? Ryan Gurner: No, I think the former, Hugo. We've got plenty on our plate. We're focused on delivering the mill expansion, heavy will be upon us. So plenty on our plate, looking to get the best return for our capital deployed. Hugo Nicolaci: Fantastic. So that might be the case, but just worth clarifying. And then last one for me. Has there been any progress in considering either some of the portfolio rationalization you've previously talked to or maybe the ability to bring some of that regional material into the expanded KCGM? Stuart Tonkin: You're talking divestments, sorry, Hugo? Hugo Nicolaci: Yes, both sort of divestments or maybe bringing some of the higher-grade mines that you have in the region into the KCGM and displacing some of that low-grade stockpile feed? Stuart Tonkin: Yes. Look, we certainly see that in the medium- to long-term benefit, things like Hercules, Red Hill, et cetera. We'd be pleased to see how that could overall improve the ounce profile for KCGM. I think we want to -- before we run here, really get it commissioned, get it bedded in and delivering growth. I think it was as per Slide 9, those step-ups in production from that new plant from the KCGM sources before we cloud it with some of the regional stuff. There's still quite a bit of an approval time frame on some of those additional feeds regionally. Rationalization, I think over the years, we certainly are migrating towards these longer life, lower cost, higher-margin production centers, simplifying the business. We've always done it. You'll see subsequent to the half year, we sold our interest in the Central Tanami joint venture for $50 million. You see us regularly doing this over time anyway. So that's probably a natural course of our business. Operator: There are no further questions at this time. I'll now hand back to Mr. Tonkin for closing remarks. Stuart Tonkin: Great. Thank you so much for joining us on the call today, and I appreciate your interest in our company on what is a busy day. Have a good day. Thank you. Operator: This does conclude our conference for today. Thank you for participating. You may now disconnect.
Geraldine J. M. Picaud: Well, good morning, everyone. Thank you for being here for our annual 2025 results presentation. So let me start now here with our first performance. Marta and I will go through the full financial presentations. But here, I would like to start with a couple of remarks. As we know, for the whole world, 2025 has been a challenging year, marked by international conflicts and fluctuating or volatility in economy. I'm happy to say that at SGS, we've kept the course and even executed our best financial performance ever. We have recorded the highest sales in Swiss francs, highest adjusted operating income and highest free cash flow in the group history. Sales grew by 2.2% despite a strong adverse ForEx during the year, again, offset by a strong organic growth of 5.6% and good contribution from acquisitions. The adjusted operating income margin has reached 16%, boosted by operational performance and cost saving plans. Cash generation and earnings per share have recorded excellent growth, and Marta will give more color about this. For 2026 now, we expect to follow the same trends. Organic growth should remain between 5% and 7%. You may remember that we signed the acquisition of Applied Technical Services in July 2025. ATS deal was successfully closed early January 2026. And together with the bolt-on acquisitions, we will exceed an additional 5% sales coming from acquisitions. In terms of margin now, we want to keep full flexibility to invest in innovative solutions. Therefore, we don't want to put more pressure on profitability for 2026, which I remind you is also subject to ForEx fluctuations. Therefore, we will maintain 16% adjusted operating income margin minimum in reported terms. And similarly, cash generation will remain high. On top of our excellent 2025 results, I'm also very proud of how we have executed our Strategy 27. I can now say that we have achieved all necessary milestones to reach all of our initial objectives. We have launched -- for sustainability and digital trust, we have launched powerful offerings designed to match client needs. And these offers are the foundation of double-digit organic growth. Together with a targeted bolt-on policy, we are already in 2025, close to where we are expecting to be in 2 years. In July, I already had the opportunity to share with you that we had achieved 80% of our objective to double sales in North America compared to the baseline of 2023. And now ATS is closed. So it's a great achievement that we have accomplished. And this will be obviously an excellent complementary of expertise and services for SGS. Finally, as you know, we've completed the reorganization that gives us more agility and performance. So with all these actions, we have reached the excellent level of profitability, cash flow and balance sheet that we report today. So focusing on sustainability, we have recorded about 15% growth. The 4 pillars of Impact now strongly contributed, leading to a very strong performance on an organic basis, and we also added complementary offers through bolt-on acquisitions, especially in environmental testing. Digital trust services are really at the heart of our strategy more than ever. And in this area, we have a very solid basis to our clients' growing needs in connectivity, cybersecurity and in AI. Here, we also recorded a very strong organic growth and a double-digit growth from acquisitions. In our Strategic Plan 2027, we included the objective to significantly increase our presence in North America. We believe that North America will provide the foundations for sustainable growth on a long-term basis. The reasons for this are that it's a market with high consumption levels. There is high consumer demand and regulatory requirements, notably for life sciences. In addition, a few years ago, as you know, the country entered into a phase of reindustrialization, which is now further accelerating. So we definitely needed to be there. We definitely need to be there, and this is done with the acquisition of ATS. Now let me give you a short update on bolt-on acquisitions. Since our last sales update call in October, we have acquired 7 additional companies. Let me go briefly into these companies. And I remind you that all these bolt-ons represent CHF 190 million of additional sales on an annual basis. So who are the new covers? Semi in France, essentially a carbon accounting platform. Australian Superintendence Company provides inspection and laboratory services for exported agricultural products. Information Quality, again in Australia, is a digital engineering services company. Panacea Infosec is a leading cybersecurity services company based in India. MSMIN in Chile provides asset reliability and integrity services for the mining sector. Murray-Brown Laboratories is specialized in food safety in the U.S. Cyanre, finally, is a digital trust player with an expertise in digital forensic in South Africa. So I'm very excited to welcome the talented employees of these companies. So before reviewing the business drivers of 2025 in more detail, we wanted to give you a sense of the group development since we implemented our Strategy 27. Sales has regularly expanded, sustained by organic growth between 5% and 7%. Adjusted operating income and free cash flow have both grown over proportionally to the sales growth and also benefited from improved organizations and improved operations. Earnings per share has followed the same positive trend. Now let's start with Industries & Environment. The business here delivered strong organic sales growth of 6.5% and an improved adjusted operating income margin of 13.1%, driven by inspection, safety and supervision. Safety, for instance, delivered double-digit organic growth, fueled by robust demand in the Americas and in Eastern Europe, Middle East, Africa. Inspection & Supervision of construction projects recorded also a double-digit growth. It was driven by new project wins and robust execution, particularly in Latin America as well as Asia Pacific, which benefited from infrastructure development and energy transition-related activity. Industrial Testing delivered solid performance across all regions, supported by construction material testing. And finally, Environmental testing achieved solid organic growth with sustained momentum in field monitoring and sustainability-related services like PFAS, supported by tighter regulation and growing customer focus on environmental quality. Let's now move on to Natural Resources. Natural Resources delivered a solid performance in the year with organic sales growth of 3.4% and an adjusted operating income margin of 13.6%. Minerals delivered solid growth led by trade services in Europe, Latin America and Asia Pacific. This growth was supported by strong demand for metals, including gold and copper and critical minerals. This demand, as you know, was driven by electric vehicles, battery-related regulations. When we look at oil, gas and chemicals, they achieved a solid growth, reflecting resilient demand, particularly in Asia Pacific and also in Latin America. Finally, Agriculture grew moderately with strong activity in the Americas, but that was partly offset by softer market conditions, notably in Europe. If we look at Connectivity & Products now, they delivered a strong organic sales growth of 6.4% and an improved margin of 22.8%. That was driven by positive momentum across all the business segments of Connectivity & Products. And let's start with connectivity, which delivered strong organic growth led by product safety, continued electric vehicle momentum in Asia Pacific and robust wireless demand in North America. The demand for technology, security and compliance continues to increase as connectivity requirements expand across devices, platforms and networks. This reflects the strong demand for digital trust services. Hardlines achieved excellent organic growth, benefiting from strong demand for home appliances. When we look at Softlines, they posted a very strong organic growth driven by performance testing in what we call athleisure, athletic leisure and all the wellness products, alongside with high demand for eco-friendly products. Government services also recorded solid organic growth that was led by anti-fraud and conformity assessment services as authorities continue to strengthen consumer protection and trade compliance. Let's turn to Health & Nutrition. This business line recorded a strong performance with 7.3% organic sales growth and an improved adjusted operating income margin of 14.1%. Food delivered double-digit organic growth was supported by strong demand for food safety services and contaminant testing that was across all regions. This growth reflects tightening regulation and an increased focus on food toxicology, rising consumer health awareness and growing expectation around the product safety and transparency. We have continued to invest in analytical capabilities, particularly in Southeast Asia to support this growing demand. Pharma. Pharma delivered a solid growth. It was led by clinical research activity in Europe, which was partly offset by softer performance in drug development despite improving pipeline conditions in the United States. Here, we continue to focus investment on higher-value areas, including biologics and advanced drug development, and that will support our long-term growth in Pharma. Cosmetics & Personal Care recorded solid organic growth. Performance was partly impacted by midyear tariffs followed by a recovery in activity towards the end of the year. That was supported by new project wins and an improving demand. Let's now turn on to Business Assurance. Business Assurance delivered organic growth of 4.2% and adjusted operating income margin of 19.6%. Performance was led by sustainability and Digital Trust. Digging into more details, all the quality management systems, the ISO certification schemes were impacted by a high comparable of last year that was coming out of a post-certification cycle. Consulting also remained soft in Business Assurance. But by contrast, sustainability continued to deliver double-digit growth, driven by strong demand for supply chain audits and greenhouse gas emissions verification. It was also supported by increasing regulatory requirements and stakeholders' expectation there. Food and Medical Devices certification also maintained double-digit growth, reflecting tightening regulation. And you know that certification here plays an absolute key role in protecting product integrity, safety and market access. Digital Trust delivered strong double-digit growth as demand for cyber resilience and data protection continues to accelerate. So with that, I will now hand over to Marta to review our 2025 financial performance. Marta Vlatchkova: Thank you, Geraldine, and a very warm welcome to everyone. Let me start with the main financial indicators of 2025. Sales reached a record high of CHF 6.95 billion, supported by the strong organic growth of 5.6%. Adjusted operating income also hit a record high of CHF 1.1 billion or a 16% margin on sales. This is an excellent improvement of 70 basis points compared to 2024 and 130 basis points when compared to 2023, which is the baseline of Strategy 27. Earnings per share before the gain on disposal of our former headquarters in Geneva amounted to CHF 3.21, up 3.5%. Lastly, the record results were confirmed by a record free cash flow generation of CHF 774 million, representing 57% cash conversion, in line with the already very strong cash conversion in last year. Moving to the sales bridge. You can see the strong 7.3% growth in constant currency, comprising of 5.6% organic growth and 1.7% from M&A. The Swiss franc continued its appreciation, generating 5.1% negative ForEx, reducing the growth to 2.2% in reported terms. As you can see, sales growth was supported by all regions. In Testing & Inspection, Europe added 2.4% organically with solid growth in Health & Nutrition and Industries & Environment. This was partially offset by low trading volumes in Natural Resources and Connectivity & Products. Asia Pacific delivered high 7.7% organic growth with strong performance across all business lines and in particular, double-digit growth in Food and high single digits in Connectivity & Products. North America expanded 3.9% organically, led by a double-digit growth in Safety, Connectivity and Food and moderate growth in Environment. Minerals and Pharma remained stable. Eastern Europe, Middle East and Africa grew by 5.3% despite low trading volumes in Natural Resources, impacted by the political uncertainty in the region. Latin America added 13.6% organically, supported by new project wins in Chile. We saw double-digit growth in Inspection & Supervision, Environment, Safety and Food. And finally, as presented earlier by Geraldine, Business Assurance delivered 4.2% organic growth, led by sustainability and Digital Trust services, while quality management systems were impacted by a high comparable from a post-certification year. Consulting remained soft. Looking now at the adjusted operating income of CHF 1.1 billion, which is 16% margin on sales. It expanded organically by CHF 108 million, equivalent to 70 basis points of margin improvement, boosted by the successful execution of the organizational efficiencies plan. Accretive bolt-on acquisitions added CHF 26 million, contributing 20 basis points of margin progression. Lastly, the negative ForEx impact of CHF 66 million, equivalent to minus 20 basis points was driven, as commented earlier, by the strength of the Swiss franc. Looking now at the ForEx, which remains a headwind. You can see here the main currency impact. Overall, the negative 5.1% ForEx on sales was equivalent to minus 6.4% on adjusted operating income or 20 basis points in the AOI margin, as commented earlier. Moving at our efficiency plans update. We are proud to confirm that both the lean operating model and the procurement savings plans are now fully executed. They delivered CHF 115 million visible in the P&L since 2024, with CHF 150 million run rate reached at the end of 2025. In terms of savings, you remember that in 2024, we already accounted for CHF 50 million savings. This was followed by CHF 65 million in 2025, bringing the cumulative impact to CHF 115 million. The remaining part of the savings will flow through the P&L in 2026. Let's now dig into the full P&L. As presented earlier, sales grew by 2.2% and the adjusted operating income expanded over proportionately by 6.5% or CHF 68 million in absolute. When we look below the adjusted operating income, you can see the decrease in restructuring expenses as the lean operating program is now fully executed. The other nonrecurring items and transaction costs include the gain on the HQ disposal, which was offset by acquisitions and legal costs and loss on divestments from noncore businesses in Eastern Europe, Middle East and Africa. The financial expenses improved slightly, thanks to the net debt decrease. And the effective tax rate improved as well to 25% from 26% in prior year. Thanks to all that, the earnings per share reached CHF 3.48 or an increase by 12.3%. When we exclude the HQ disposal gain, this becomes 3.5% expansion. Now -- and as we report in Swiss francs, often regarded as the strongest currency in the world, especially today, we wanted to show how this compares when presented in euro or U.S. dollars. In terms of sales growth, the 2.2% in Swiss francs corresponds to 3.9% in euros and 8.3% should we report in U.S. dollars. The earnings per share before HQ disposal, which grew by 3.5% in Swiss francs translates to 5.3% in euros and close to 10% in U.S. dollars. Coming to the free cash flow, where I'm happy to report that the record '25 results were confirmed by the strong free cash flow, a record high as well of CHF 774 million. This is 57% cash conversion on adjusted EBITDA, in line with last year. Furthermore, the net proceeds from the former Geneva HQ disposal brought additional CHF 67 million, bringing the total free cash flow to CHF 841 million. Moving now at the return of invested capital ratio. In 2025, the ROIC remained at the industry-leading 24%. This illustrates our highly efficient operating model and disciplined M&A program execution. Now in terms of debt leverage, the excellent profitability and high cash conversion further improved the ratio, which stood at 1.7x of net debt on adjusted EBITDA. This improvement reflects our commitment to maintaining a solid financial profile, which is crucial for supporting growth initiatives. Finally, our excellent results allow us to maintain a highly attractive dividend of CHF 3.20 per share. This will be proposed as a scrip dividend, giving shareholders the option to receive it in cash or shares. 2025 was also a year of big progress in terms of ESG. Most notably, customer satisfaction increased to 92%, and we provided 7.7 million training hours to our customers and employees. We also maintained our leading ESG ratings position, and SGS was included for a second consecutive year in Times World's most Sustainable Companies list. And with that, I hand over to you, Geraldine. Geraldine J. M. Picaud: Thank you, Marta. So now let's turn on the outlook again. And for 2026, I see that part of our megatrends becoming even more stronger and stronger. More precisely, cybersecurity and AI as well as customer awareness and well-being, also called conscientiousness that will drive growth in the future. And this will especially benefit digital trust services and life science activities and we will provide more color at our next capital market event. So thank you for listening. And with that, we will now move to Q&A. Thank you. Operator: [Operator Instructions] Annelies Vermeulen: Annelies Vermeulen from Morgan Stanley. Firstly, just on the margins, you've clearly delivered more rapid progress than you originally guided for. So could you talk a little bit more specifically about what contributed more positively to that margin expansion than you originally anticipated when you set the plan 2 years ago? And if you think about margin progress from here, do you still see further upside opportunity from cost cutting, productivity gains, et cetera, as you think about the future? And then secondly, on organic growth and the guidance, you had quite a range between the divisions in 2025. Do you expect growth to be more balanced between the divisions in 2026? And if not, where do you see the strongest and lowest growth? Geraldine J. M. Picaud: Thank you, Andy. So on your first question about the margins, when you start to have cost saving plans, you better execute them fast. So that's what we've done and not communicate on that year-on-year. So that's what we've done, and that's just the speed of the execution that lead us to basically get to our 2027 target faster than planned initially. So we have overperformed in terms of, let's say, in terms of speed of execution, we are ahead of schedule. That's clear. That's also why we are positioning a new capital market event at the end of this year. So basically, speed of execution is key. When it comes to the future, you're asking what the future margins are going to look like. And I think I have said at least for 2026 that we want to maintain at least, again, at least a 16% adjusted operating income margin. And remember that I'm guiding in reported terms. And you've seen the slide of Marta, there was 20 basis points as a headwind this year on the margin on top. So that's not going to fade away. There's going to be some headwind on the margins next year. So that means we need to get efficiencies. We need to go always for more efficiencies, and there are some that we can get. So we will get the surplus. But my message here is that I'm keeping the right to investing this surplus into innovative solutions as we need to provide more digitalization and offering and so on and so forth. And then I want to keep that possibility. That's why you have this guidance. And then you mentioned about the organic growth. We are just at the beginning of the year. It's a bit too early to say. I think the megatrends that I described are here to fuel the growth, right? So that's where -- when you look at it, these megatrends are selected because they are impacting our customer the most and therefore, are propelling and fueling our own growth, right? You see. And this is where, of course, we need to always see how things are evolving because things are evolving and accelerating very fast. So you need also to adapt. That's also a good reason for doing another capital markets event at the end of this year. But let us enter the year, and we'll give more color for the Q1, right? Thomas Burlton: Tom Burlton here from BNP Paribas. I just had a couple of questions. One on the U.S. You talked about signs of -- or at least the theme of U.S. reindustrialization. Just curious as we think about that U.S. up cycle, what evidence are you seeing already within your business of the early signs or sort of green shoots of that? And then separately, if I think about your Health & Nutrition business, I wonder if you could comment on your exposure to this building infant formula recall issue that we're seeing from some of the staples companies. What exposure you might have already there? What services you might provide or what services you could in theory provide as that crisis builds? Geraldine J. M. Picaud: Sure. So in the U.S., we see a lot of demand around all the energy needs with regards to data centers and obviously, in AI. And that provides a need for safety, a need for compliance, the need for ensuring that the environment -- environmental testing needs are also required there. So that is driving the demand. All -- everything around digital is also very, very strong in the U.S., all the cyber resilience, AI -- well, is the AI true it's sake is the algorithm proper? Is it biased or not based and so on and so forth? So we see a lot of demand in the U.S., as I said. And in terms of reindustrialization, it's basically all the building construction sites for sure, but also -- all the aerospace, military, industry, defense industry are also effectively driving this reindustrialization that has taken place already for some years. It's just not yesterday, but it's accelerating. On the infant formula recall, well, first, I mean, it's a big topic. I mean we're talking about nutrition for babies. So our goal here is to be side-by-side with our customers and to accompany them and obviously, to help them to do the new test in the new -- fulfill the regulations requirements that are effectively changing and becoming strengthened, are stronger. And we are there all over our network to accompany our clients and be with them so that they can ensure safety for the consumers. William Kirkness: It's Will from Bernstein. If I could just go back to the margin point. So just thinking about the bridge for '25, because I think the CHF 115 million of cost savings would give you a decent uplift, maybe 170 bps, 20 off for FX. So there's still a bit to bridge that gap, which I guess is sort of investments M&A. So if you could to run through what that is? And then how we think for '26 as well. So I guess you've got 50 basis points that should flow through just from the incremental cost savings to come in. And then secondly, I just wonder if you could talk a bit about AI tooling, so how that's driving efficiency in the business, where those efficiencies are and whether it's really realistic to think about them as margin accretive? Geraldine J. M. Picaud: On the AI efficiency? William Kirkness: On the AI efficiency. Geraldine J. M. Picaud: Yes. So I'll let the first question to Marta. He's going to go through the bridge for you. Yes. I'll take the second one. Marta Vlatchkova: So indeed, if you look at the 2025 margin bridge, you have 70 basis points coming from the organic growth of the margin. Into that, a bit more than 80 basis points are coming from the lean operating model and procurement savings. And then the difference is to be attributed to the investments we did in commercial excellence in marketing and also building new service offerings, especially in digital trust. Geraldine J. M. Picaud: So on AI, obviously, we are looking at it to generate more efficiency and more productivity. We are a people business. So there is a potential, as you can imagine, to optimize greatly SGS. Now the first thing we see is there's going to be an upskilling. So as we put AI into more and more of our business lines, it's going to be an upskilling. And then we will obviously identify productivity gains clearly. And that's part of the journey and part of the constant improvement and efficiencies that I've mentioned that we have to produce each year, and we are committed, obviously, to use AI also for ourselves. But also for our customers, it's also a source of growth as we're putting AI into our services that we're rendering to our customers. So you have to see it both ways, externally and internally. Arthur Truslove: Arthur from Citi. So a couple of questions from me. So the first one was just around the scrip dividend. So I was just wondering where you think -- when you think that will stop? And where do you want the net debt EBITDA to go to kind of within that context? And then second question, going to sort of Softlines, Hardlines within Connectivity & Products. Obviously, there has been some sense in the market that, that has been performing sort of unusually strongly in the last couple of years. How are you thinking about that as it progresses forward into 2026? And are you seeing any sign of any sort of slowing or tough comps or any of that? Geraldine J. M. Picaud: Thank you, Arthur. Look, on the Softlines and Hardlines, we're very happy about the performance. It's very strong in effectively in Asia Pacific region. It continues. We see it continuing actually. We don't see it slowing down as we are also enhancing our services here. Connectivity also is a part that remains particularly strong as you have more and more cyber resilience required, AI sometimes embedded into the devices that you're using. So we see also a strong demand part of this digital trust megatrend. And on the scrip dividend, do you want to comment on our ideal net debt to EBITDA level? Marta Vlatchkova: Yes. You have seen we started in the baseline year 2023 with 2x debt leverage. This improved to 1.8 in '24, now at 1.7. Of course, we have closed ATS at the beginning of 2026. So the net debt leverage will temporarily go up to around 2.1, 2.2x and then gradually reduce in the years following the acquisition. Now you have seen also the attractive dividend we have committed and we distribute of CHF 3.20 per share. So it's important for us. It's important to keep this highly attractive remuneration to shareholders. And the elegant way to reconcile growth and investments with attractive remuneration is the scrip dividend. It's optional. Taking shares is also tax effective, so proven successfully over the last 2 years with more than 60% take-up. So yes, we are happy with that setup and our investors as well. Arthur Truslove: [indiscernible] with the scrip beyond '25 year-end, would you expect to be doing a scrip for the summer '27 as well? Geraldine J. M. Picaud: I remind you that's part of the Strategy 27 to ensure a solid financial profile. So that's part of the strategy was announced in January. So at the moment, yes. Allen Wells: Allen Wells from Jefferies. Just a couple from me. I'd like to follow up on Will's question on the margin progression in 2026. If I look at 2025 and as you kindly provided, you strip out the investment, the savings, it looks like underlying margins are broadly flat, which is explained by the reinvestment you're putting in the business. How should we think about the underlying margin progression in 2026? I mean the savings will come through, there will be an FX will be what it is. But would you expect underlying margins to broadly be flat again as you reinvest most of that back into growth? And maybe you can elaborate on building blocks there to what extent you think mix, operating leverage, reinvestment will play a part in that? And then second question, just on M&A. Obviously, post the ATS deal, could you maybe just talk about appetite for slightly larger deals in 2026, what the pipeline looks like? I guess it feels like with the 5% to 7% guidance, 1% to 2% from additional deals, it's maybe a bit more of a year of bolt-ons, but any expansion would be helpful. Geraldine J. M. Picaud: Yes, I'll take your second question. And Marta, you can maybe build on all the positive actions that we have to boost our margins and underlying margins. Even though I don't like this underlying margins because it looks like you're slicing down everything. But when a lab manager make an effort to reduce costs, it's not a bucket separately. It is part of his operating leverage. When it increases the business, it's part of this operating leverage. So slicing it down to bits and pieces like that is not really how we look at it, but Marta will answer you. So about a big acquisition, another one. Look, we will continue certainly our bolt-on acquisition program. And you've seen that we've done already 5 or 6 already since the beginning of the year. And that is something we want to continue to do because it's accretive to the growth. It's accretive to our margins. We have to consolidate our offering into the megatrends that I described in the right geographies and the right segments. So that's something we will continue to do. And look, if something happens that we have or we can't miss, then we'll see in due course. I don't have a crystal ball for now, but who knows. Marta Vlatchkova: And on 2026 margin, you have seen that we have another CHF 35 million to flow through the P&L from the CHF 150 million operational efficiency plan. So that is there. That's secured. Then, of course, we are, you may say, a fixed cost business to a big extent, especially for the testing part of the business. Then naturally, when we grow volumes, when sales are growing, this drives positive operating leverage. But now we are also a high-growth business and it's services. So you have to see the investment in the business on one side as CapEx for our facilities in our testing labs. But on the other hand, as pure OpEx investments to build those new service offerings. And our ambition, and this is constantly the feedback I give, don't expect from us to be a business at 17%, 18% margin, but flopping sales. So right now, I think we are lean, we are agile. We are hungry to continue growing fast. and that's our focus. So we will continue to reinvest and it is not margin at all cost. We have now bridged the gap with peers if you had to compare us. We are happy with that. Important to remain at those levels to keep agility. And again, I'm confident if it is the case. I think the key word is keeping flexibility about the same. So yes, we'll get the surplus. We'll get more than 16%. But the point, we want the flexibility to invest that surplus and we will or we will not, but we want that flexibility. Daniel Bürki: Daniel from Z�rcher Kantonalbank. I have 2 questions. One, about the extraordinary costs, you had like CHF 90 million in '25 plus the headquarter, so it was about CHF 150 million. Could you give a run rate on extraordinary cost restructuring? And the second one, could you remind us of the integration plan you have for ATS, how you can get stronger growth in the U.S. because of it and also of the CHF 30 million savings you plan there when they will come through? Geraldine J. M. Picaud: Yes. I'll come with the -- I'll start with the ATS and give the first question to Marta. So we were ready day 1. We appointed an SGS talented director to lead ATS, lead the 4 P&L leaders of ATS that you remember are testing, inspection, calibration, forensic in order to ensure that we can get the cross-selling synergies and we can get the best of the 2 worlds between SGS North America and ATS. So it's not an integration where you're putting a bolt-on into your systems here, they are a big group. They have already very good and very best practices. It was important to have things going both ways. And this is ensured through a governance, which is Marcus is taking the lead on ATS and he reports directly to me. Marta Vlatchkova: Regarding the items below the adjusted operating income. So the first big line is restructuring expenses, right, where you saw the peak in 2024 with the lean operating model program, which is now in 2025 reduced to around CHF 45 million level. In 2026, again, you should expect there CHF 20 million to CHF 40 million restructuring expenses, which is continuing the business to operate. They are already -- they are always a need of some level of restructuring expenses. Then the level below what we call other nonrecurring items or extraordinary items, we don't usually guide on that. Again, a reasonable level. If you look at the historical trend over the average few years, you will be at a level of CHF 120 million, something like that, but it can fluctuate. So again, we don't guide on that. Those are items that are not easy to forecast. They wouldn't be extraordinary otherwise. Geraldine J. M. Picaud: So in short, the restructuring costs are going to continue to decrease. They've already halved by compared to '24, and we are going to continue to lower this. The rest is noncash cost that Marta has and that might not have in the years to come or it's kind of difficult to predict. But in any case, what does imply the free cash flow. Victoria Chang: Victoria Chang from JPMorgan. My first question is on the margin phasing between first half and second half. So given that you still have the run rate savings from the procurement done in 2025 to be seen in the first half, would you expect first half margin expansion to be higher year-on-year versus second half? And my second question is on Natural Resources and on the margin specifically. Marta, I think you mentioned in your opening remarks that there was some political uncertainty impacting growth in the Middle East within Natural Resources. Could you also expand a little bit more on the key drivers on the margin in 2025 and the weakness there? Geraldine J. M. Picaud: Okay. Marta, do you want to start with the Natural Resources maybe and what... Marta Vlatchkova: Yes. So you see all the news, be it in the Middle East or in Africa. So again, this leads to uncertainty. This leads to less trading volumes, and it's reflected in the slower growth of natural resources, specifically in the Middle East. Now the margin, it's a business. There is an inspection component and, of course, testing. But when the top line is temporarily down, we have chosen not to reduce our inspectors because it's a cyclical business by definition. So Natural Resources, if you also look back at the historical data, it fluctuates. But it always come back because it's driven eventually by consumption. You can have temporary slowdown. Inventories are depleted, then it has to pick up. So you see it that way. And again, Eastern Europe, Middle East and Africa is a difficult region politically. Geraldine J. M. Picaud: It's been fairly challenging on the political uncertainties, and you've got 3 components on Natural Resources. So you've got agriculture, you've got minerals and you've got oil and gas and chemicals. And we really have suffered from a very bad crop in Europe for agriculture. So that has really lowered our performance in agriculture. Minerals has done super well. Metallurgical testing is booming because of gold, copper, critical minerals that has been offset by a, I would say, sluggish or slowdown in oil gas chemicals, but -- and this crop is agricultural. But as Marta said, it's bouncing back. And 2 years ago, that was almost the opposite. So it's changing. And the fact that we are having this exposure to these 3 areas makes it -- makes us quite resilient. Marta Vlatchkova: And maybe on the procurement savings and the phasing of Bayer Impact in 2026. Again, those are structural procurement savings, and they are really driven by the renegotiation of our main suppliers contracts, which happened at the end in Q4 of 2025. Therefore, in terms of saving, it is really throughout 2026. There is no biggest portion to fall in H1. It is more evenly spread because the new contract and new prices were signed at the end of 2025. Arnaud Palliez: Arnaud Palliez, CIC CIB. On Sustainability Products and Solutions, do you see any change in trend following the environmental backlash in the U.S. and softer regulations in Europe? Or are we still on the same kind of trend? Geraldine J. M. Picaud: No, that's a good question. But look at our performance in sustainability, we have 15% of growth, reported growth, organic growth, 15%. So there's still a very strong demand in all areas related to the energy transition, I would say, also to what I described as this consumer consciousness. And it's not only the X or the Y and the Z generation that people want to know where the product they use has been produced, how it is being produced. Does it contain heavy metals, PFAS, contaminants? They want to know it. And this trend is really fueling the growth on the sustainability impact now framework that we have inaugurated. So it's really no. And it's not only U.S., it's also Europe. And in Europe, the carbon emissions still matter and still matter a lot. So overall, no, I don't see any decline here on this megatrend. Virginia Montorsi: Maria Virginia Montorsi from Bank of America. Could I ask you, if we think about I&E for 2026, what are the key moving pieces for growth when I think about end markets? Because you obviously had a very strong Q3 and a little bit of a sequential slowdown in Q4 despite easier comps. So -- and obviously, it's a very good end market for you guys. So how should we think about the full year and what's really driving the strength? Geraldine J. M. Picaud: Yes. Thank you. Look, we have a very good performance that we see continuing and everything we call safety. You see inspection, testing, that is something that we feel is going to continue. Remember that we were impacted also a bit by shutdown in the U.S. also in Q4 that didn't help. But everything around construction is an area that we need to definitely focus more because construction material testing is effectively growing fast, notably in APAC, actually. So look, we see fundamental strong growth for I&E. Suhasini Varanasi: Suhasini from Goldman Sachs. Just a couple for me, please. Given the growth rates that you saw first half, second half in '25, when you think about the growth for 2026, underlying organic, do you expect growth to be weighted maybe a little bit to the first half or the second half? That's the first question. And do you anticipate doing any more portfolio review work that can be a drag on numbers in '26? The second is just more housekeeping, to be honest. When we think about including ATS in the numbers, do we expect it to be accretive to EBIT margins? What is the current FX drag on revenues, profits, interest tax? If you could just run through that. Geraldine J. M. Picaud: So there are several questions. So we are going to start with the FX question with Marta, and then I'll take on ATS, the portfolio. And about the growth, it's a bit too early to really give something. We really, as I said to early, I think I prefer to wait for the Q1 call to give more perspective on how the organic growth is going to unfold for us during 2026. Marta, you're taking the ForEx? Marta Vlatchkova: Yes. So ATS, they are operating exclusively in the United States. So their margin per se is not really impacted. Of course, if the U.S. dollar depreciates further, it is proportionate between sales and EBIT. In terms of is it accretive, we were showing 20 basis points here in 2025 from our bolt-ons. Now that we have reached the 16% EBIT margin level, I would say ATS is slightly accretive in our EBIT, but don't expect the same proportion. Obviously, we are now at a higher level compared to '25. Geraldine J. M. Picaud: It's accretive with the synergy. I want to insist on that. So let us put the synergies in place. But I think it's the ForEx for 2026, the impact on sales, I think that was more. Marta Vlatchkova: Overall -- yes. Now the overall impact of ForEx, you remember in terms of evolution in the baseline last year, Q1 actually, the Swiss franc was stable compared to other currencies until liberation day in early April 2025. So now in '26, when you compare, we are having huge ForEx in Q1. You should expect 8% ForEx and then easy comps in terms of ForEx from Q2, Q3, Q4. Again, this is if we take the current levels. Geraldine J. M. Picaud: Yes. So we prepared for another strong ForEx adverse impact as we are going to publish Q1, we're on a minus 8%, minus 9%, probably if rate stays as is for Q1. That's what it is. Again, you can make the translation and see the impact if we were publishing in another currency. You mentioned about portfolio, I would say that there's -- if you're thinking in terms of sales of potential activities, there's nothing we want to sell apart from little things here and there, but that's not worth really making an announcement about that. We've done some in 2025, derisk clean, and that's part of the things that we are going to continue to do. But overall, we are happy with our businesses. They have good margins. Neil Tyler: It's Neil Tyler from Redburn. Two questions, please. Coming back to margin. Divisionally, the 2 areas that grew the strongest of those were typically the kind of higher fixed costs, the testing-based businesses, CP and Health & Nutrition. Is that sort of right to draw a line between that cost structure and the margin progression? Or was there more efficiency to be gained within those businesses? And taking that sort of one step further into your comments about reinvesting, are you looking at that sort of reinvestment of margin on a division-by-division basis? Or if one division produces more gain, is there scope to reinvest it elsewhere? Second question on capital allocation and M&A. It's a pretty impressive and diverse list of bolt-ons, both sort of regionally and business line-wise. Can you talk about a little bit about the process of selecting those businesses? How many you have to sift through to kind of get to that point? And some of these are sort of relatively small and emerging and fast-growing businesses. And how do you get comfortable given you've said that the sort of megatrends and the backdrop are changing so quickly that you get comfortable that these businesses aren't those that are going to be sort of potentially of disintermediated or at risk as things continue to change. Geraldine J. M. Picaud: Right. It's a good question. Look, on the bolt-ons, we have a very strict process. But first and foremost, it is a business leader that source the deal. It's not coming out from any fancy consulting consultant presentation or whatever. It is really sourced by the business. The business has to know its market, has to liaise with competitions or with complementary services that is missing in its offering. And obviously, we look at it. There's a very big pipeline. We're very selective. We described during our capital markets event the criteria upon which we do acquisitions. We look at it from a ROIC standpoint, from a payback standpoint, and we always assign a business leader in charge. So there's no one that can come with, oh, I have this idea that would be great -- looks great, it's fancy, it's fashion, whatever, without having someone that is fully committed to execute the business the acquisition business plan. And that's really the important thing here. So it's payback, and there's a business ownership that is extremely strong. We obviously look and study the business. We see how resilient the growth is, how the customer base is. We see how it can fit in our portfolio as well, what kind of complementary services. And then we effectively scale what we can scale to get synergies on top on the cost side, right? This is what -- you've seen it's accretive to our margin. It's accretive to our growth. So it is very important that in an industry which is growing and which is so fragmented, you have an active role. Otherwise, you wake up one morning and then you stick with your own lab, but you haven't provided or evolved into what you offer to customers. And it takes time to get an accreditation. That's also one of the fundamental barriers to entry we're having in our business. And acquiring a lab is already the set of accreditation that you don't have just provides you an edge and allow you to speed up. And that's why bolt-ons are a key component of our strategy. So that was your question on the bolt-ons. And you asked about -- what was it about the margins, right? About reinvesting, how we are going to reinvest? Look, again, it has to be accretive to the growth. It has to be accretive to margins. So this is where we're going to reinvest. I think the important thing is that when people ask a lot about digital or AI, and there's a lot of fancy startups all over the place and great. But here, we often prefer to do it organically and to invest into people to develop this capability internally. So that will cost some basis points of margins because we're going to have the cost internally, but I prefer big time this and taking a bet in. So we take care. Michael Foeth: Michael Foeth, Vontobel. I have a question on Business Assurance. If you could give some more color on the trajectory of the consulting business. I think there's a big discrepancy between all the double-digit growth that you described in many parts of Business Assurance and the overall growth is only 4%. I'm trying to figure out at what point we can see a real reacceleration of the overall business there. Geraldine J. M. Picaud: Yes. It's clearly we've been impacted in consulting. It's a business that is suffering for the last 2 years. That's clear. Projects have been a lot delayed last year. We see and are hoping it to bounce back this year. But I will remain cautious. I hope I'll have better news to announce to you in the end of Q1 when we have our Q1 call. I always want to remain cautious. You know me. I will not start to overpromise anything and deliver, not with me. So we have to fix the business. You've seen that we changed the management of Business Assurance, and this is in process. But I think the environment is better for consulting this year than it was last year. So let's see. Last question. James Clark: James Rowland-Clark from Barclays. My first is, after all this M&A in the last year plus, has the competitive backdrop changed at all? Is there a greater attention on the bolt-on deals that you're after? And then secondly, you've done maybe 2/3 of the deals in North America and Europe, which are organically underperforming the rest of the group. So can you just talk about whether those regions should accelerate back up to near the group average over time as you drive growth? Or is it really a margin story and a return story on those deals? Geraldine J. M. Picaud: No, there's no margin or return story on North America and Europe. We needed to -- we're in a process to fix these regions. It's been tough in Europe economically and politically. I mean, it's fair to say that there's been a recession in Germany with the automotive industry. There has been challenges. And I said it's been challenging here in 2025. But we are in good -- let's say, good momentum to get things much better. And the fact that we are going to have better results in all verticals like Business Assurance, like environmental testing, like Food and Pharma is going to help Europe and North America. And ATS is going obviously also to help greatly in North America. So no, there's no fatality there at all, and it remains core sectors and core geographies for us to invest. And on the M&A, right, the M&A, the competitive, yes, well, we see some competitors entering the same areas and the same verticals that we like. So that's true that on some targets, we can feel the competition that we were not necessarily having when I started 2 years ago. That's fair to say. But we want to remain disciplined. And if we can't get synergies or anything, we won't go -- we won't change our rule and our financial discipline rule, which is very simple. It's about payback, as I said, and double-digit ROIC in 5 years. So that's clear. And therefore, that's where we are playing, and we are fine with that. So I think this is the end of our session. Thank you for being here with us today. It was great having this time with you and answering your questions. I hope that you enjoyed it and bear with us because it's just the beginning. Thank you. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines.
Katie Mackenzie: Good morning, everyone, and welcome to the Elixinol Q4 FY '25 Results and Outlook Webinar. On our call today, we have Gavin Evans, the Chair; Natalie Butler, Executive Director and CEO; and Adam Dimitropoulos, CFO. And my name is Katie Mackenzie, Investor Relations for Elixinol. The presentation today will run for about 20 minutes, and then we will open up for Q&A. [Operator Instructions]. So now I'd like to hand over to Gavin Evans. Gavin Evans: Thank you, Katie, and good morning, everyone. Thanks for joining us today to listen to this presentation about the solid progress that we're making at Elixinol. Let me start by providing some context to my role in the business. I was appointed Chair of Elixinol Wellness in December 2025 at a pivotal time for the company. Most recently, I've founded OpenWay Food Co., where we built a vertically integrated category-leading portfolio of better-for-you brands, brands such as Red Tractor, Table of Plenty and Keep it Cleaner. That experience building brands, strengthening supply chains and integrating businesses to deliver scale is highly relevant to EXL today. Over the last 2 decades, I've developed strong relationships across food supply chains, retail distribution and the broader investment community. My focus is on financial and operational discipline, targeting scalable, high-margin categories and aligning our cost base to those core revenue drivers. I also bring proven experience in M&A. From my perspective, my mandate is clear; to create a solid foundation for scalable growth. We're now operating from a stronger, more focused position than we were 6 months ago. In 2025, we rebuilt the leadership team and simplified how the company operates. We've removed a layer of middle management, tightened decision-making and created a much nimbler organization. This is an experienced team, but it's also an entrepreneurial one. We're used to operating with discipline, speed and accountability, and that matters because every dollar we invest needs to work hard and needs to be invested into the right places. Natalie Butler, our CEO and Executive Director, brings strong commercial and operational experience in consumer health. Adam Dimitropoulos, CFO, has strengthened our financial discipline and reporting transparency. And Nat and Adam have been the key drivers of the improved performance you're seeing in Q4 2025 and will guide the business through 2026. You'll be hearing from both of them later in the presentation. We're also well supported by Pauline Gately as an Independent Non-Executive Director, providing strong governance and another important perspective as we reset for the future. So to that future, EXL has a bold, ambitious vision; to build a portfolio of premium branded health food assets supported by Australian manufacturing and positioned for global growth. Premium health brands are where sustained consumer growth is occurring, strong loyalty, better margins and long-term value. Australian manufacturer gives us quality control, supply chain resilience and authenticity, particularly for export markets and global growth ensures we can scale beyond Australia. This vision is about a tight thematic, scale and building a platform asset, not just a collection of products or brands. Australia's broader wellness market is around $160 billion today and forecast to exceed $300 billion by 2033, growing at roughly 7%. Within wellness, functional foods represent a $10.5 billion opportunity, growing steadily, while dietary supplements are smaller but growing faster at around 8% CAGR. Importantly, that growth is significantly outpacing other general grocery categories. Australia also ranks top 10 globally for per capita wellness spend at roughly $7,400 per person per year, which shows that wellness is already embedded in our everyday behavior. Our brands compete across functional foods, everyday wellness and supplements, giving us exposure to segments that are growing faster than traditional grocery rather than relying on a single category. This is a large, expanding and structurally supported market. The opportunity is real, and it is substantial. Retailers and industry commentators refer to this as an invest or tailwind category. So that's the opportunity. Let's talk about who we are today and how we're positioning EXL to be the platform for that vision. Elixinol Wellness is a sustainable nutrition and wellness company operating in Australia and the U.S. We run a vertically integrated model, controlling production, manufacturing and distribution. Our portfolio spans nutrition, wellness and super food ingredients. Products are sold through grocery, wholesale and e-commerce channels. And in the U.S.A., Elixinol branded hemp and nutraceuticals have been well supported in that market for around 10 years. Together, this gives XL a scalable, diversified platform to leverage growth domestically and internationally. I view it as a great foundation for us to build our vision on. So then to drill into that, EXL is a diversified platform built for longevity and everyday wellness. The business is structured around 3 key streams: nutrition products, dietary supplement -- sorry, functional foods and beverages, wellness products, dietary supplements and nutraceuticals and super and food ingredients, where we are a B2B supplier and utilize these products in our own branded products as a point of difference. This brand and product diversification captures multiple growth opportunities while maintaining high-margin scalable profits. We'll hear later from Nat how this aligns with the wellness tailwinds and megatrends. Our brand portfolio supports continued organic growth and also opens up the opportunity for targeted new product launches. We operate 6 core brands with the majority of revenue coming from the top 3 on this slide, Hemp Foods Australia, the Healthy Chef and Australian Primary Hemp. Those brands make up 75% of our revenue. Mt Elephant is being reset for growth via a strong innovation pipeline. Sooulseeds is a useful and modern brand targeting healthy snacking on the go. And while our U.S.-based Elixinol CBD business continues to contribute to the group, we're navigating through a changing regulatory environment before deciding if we reestablish a growth profile or proceed towards an exit. This portfolio allows us to leverage strong brands while innovating, supporting our premium health platform vision. We will cover some of that innovation later in the presentation. As you can see here, EXL operates diverse channels, spanning B2B and B2C. Retail partnerships include Woolworths, Coles, Costco, Aldi and independents like IGA and Harris Farms. Our e-commerce channels such as Shopify and Amazon are growing, giving us direct consumer access. We're also reestablishing our strong position in the B2B hemp supply, leveraging manufacturing capabilities and strong industry relationships. This multichannel strategy derisks the business and drives growth. So I know many of you are familiar with the business structure, our brands and channels, but in the context of it being a platform for growth, both organic and via M&A, it's important to remind everyone what that platform now looks like. For those new investors, I'm sure this provides context for the vision I outlined earlier. So moving on to our Q4 financials for FY '25, which is really the financial platform or the financial foundation for building that vision. This Q4 highlight slide shows the reset we have taken is now starting to deliver results. Revenue for Q4 was $4.1 million, up just under 10% quarter-on-quarter. FY '25 revenue increased 3.6% year-on-year, but it's the quality of that revenue that I'm happy about. Gross margins improved due to higher-margin products and channels. The e-commerce sales of the Healthy Chef grew 42% year-on-year, showing the strength of our direct-to-consumer strategy. With a structural cost base reduction, the business was both profitable for the quarter and underlying or normalized operating cash flow positive, creating that foundation for growth. And whilst more work needs to be done, we're now firmly on the path to profitability that we've been talking about for the last 6 months. On that note, I'll hand over to Adam, who will talk through the improvements in the revenue mix and cost reduction performance. Adam Dimitropoulos: Thank you, Gavin. Let me take you through our Q4 and full year 2025 performance, which demonstrates a clear improvement in revenue quality, margin profile and the resilience of the business. Q4 is our seasonally strongest quarter, and we delivered revenue of $4.1 million, up 9.5% quarter-on-quarter, giving us a strong exit run rate into 2026. For the full 2025 year, revenue was $15.5 million, representing 3.6% growth year-on-year. While top line growth was modest, the more important story is the quality of that revenue, which improved materially over the year. We have made a deliberate shift towards higher-margin products and channels, and this is clearly reflected in our revenue mix. E-commerce increased from 21% of revenue in 2024 to 38% in 2025, while lower-margin bulk ingredients reduced from 24% to 14%. This repositioning is driving better gross margins and more predictable cash generation. A key contributor to this shift is the Healthy Chef, where e-commerce sales grew 42% in Q4 compared to the prior year. This growth not only improves margins, but also derisked the business by diversifying us away from a small number of larger wholesaler and retailer customers. At the same time, we have successfully streamlined our SKU range across retail brands, removing underperforming products, improving inventory efficiency and allowing us to focus resources on the highest return products. In summary, 2025 marked a turning point in our business. We exited the year with a much stronger revenue mix, higher margins and growing direct-to-consumer exposure, which puts us in a solid position to drive improved profitability and scalable growth. Now let me take you through the progress we've made this year and how we have reset the business for profitability, starting with revenue. As you can see on the top chart, revenue has remained resilient and consistent throughout 2025, ranging between roughly $3 million to $4 million per quarter. We saw solid momentum into Q2, some expected seasonality in Q3 and then a rebound in Q4. This stability is important because it demonstrates that our cost actions were not taken at the expense of revenue generation. Now turning to EBITDA. The bottom chart really tells the story of the year. In the first half, EBITDA was clearly negative as we were still carrying a higher historical cost base. In Q3, we accelerated our cost reduction initiatives across staffing, marketing and corporate overheads with some transitional cost increases to achieve that change. These disciplined actions flow fully through the P&L in Q4, where we reached positive EBITDA slightly better than breakeven. This marks a critical step change for the business. On a year-to-year basis, our operating cost base in Q4 '25 was reduced by approximately 30% compared to the same period in '24. Importantly, this is a structural reduction, not a temporary pause in spend. As a result, our ongoing expense rate is now significantly lower than historical levels. We also delivered positive underlying operating cash flow for the quarter, reinforcing that this improvement is real and sustainable. During the second half, we completed a two-tranche capital raise totaling $2.5 million, which further strengthened our balance sheet and provides flexibility as we move forward. Taken together, we now have a leaner cost structure, improving profitability and a stronger capital position. This creates a solid foundation for both organic growth and selective M&A opportunities as we look to scale the business in a disciplined way. I'll now hand over to Natalie, our CEO, for the key business drivers of 2026. Natalie Butler: Thanks, Adam. Over the past year, we've been very deliberate about resetting Elixinol for the next phase of profitable growth, making sure we're putting capital into the right places. At a high level, we know we're operating in a market that supports long-term growth with 70% to 80% of consumers rating wellness as a high priority. Longevity or well aging is shifting health spend from reactive to preventative, and that supports repeat purchase and a longer customer life cycle with Gen X and Millennials now the fastest-growing spenders on wellness. Food-led wellness categories or functional food, where many of Elixinol products play grow more consistently than supplements alone because they're part of that everyday shopping habit. Up to 70% of consumers say clean label and natural ingredients influence their purchase decisions. And finally, diversified portfolios across both grocery and e-commerce like we have at Elixinol are far more resilient to market fluctuations. Different categories move at different speeds, but together, they reduce that volatility and risk. And these dynamics are guiding exactly how we're going to allocate our capital moving forward. The focus for 2026 and beyond is about converting these trends into revenue growth. Cost controls remain constant and capital needs to be directed to parts of the portfolio with the strongest mix of both growth and return. In D2C e-commerce, investment is concentrated on where the returns are the highest, and the Healthy Chef is the main driver of growth and margin for us, while the Elixinol U.S. brand refresh, which is in the process of being rolled out, is focused on improving both conversion and retention and then long-term growth. In retail, everyday nutrition drives scale and repeat purchase. Our innovation focus is on products that really earn that shelf space and will grow the categories that they're in. Hemp remains a core platform for us. Elixinol is currently the largest hemp brand and ingredient supplier in Australia and contracted volumes for 2026 are up on 2025, which is really positive. And our vertically integrated model supports steady growth into the future without that need for extra capital. So as the market demand for hemp continues to grow, our strength across private label and branded hemp positions us for strong organic growth. Leading our innovation pipeline is the Healthy Chef Metabolic Burn launching this month. GLP-1 medication has fundamentally changed how consumers think about metabolic health and weight loss. In Australia, there is currently 400,000 to 500,000 people currently already using GLP-1 medications. But as interest -- but the interest around GLP-1 goes much further than this. And for every active user, there are 2 to 3 more consumers who are curious, but not currently on the treatment. So this creates a very large pre-GLP-1 audience, and this audience is our focus. Metabolic health is relevant to around 9 million Australians who are looking for credible everyday solutions. Metabolic Burn is built for this moment. It's not a pharmaceutical replacement. It's a natural TGA-regulated bridge that supports energy, glucose and metabolism using a clinically informed formula. This puts Elixinol in the right place in the GLP-1 cycle, early enough to capture that demand and credible enough to earn the trust. Alongside the GLP-1 shift, we're seeing a strong demand for lighter ways to consume protein. Consumers are moving away from heavy shakes and towards clean drinkable formats that support hydration and daily protein intake. Protein water is now one of the fastest-growing protein segments, growing at 8% in a protein market forecast to reach $1.1 billion by 2034. The Healthy Chef Protein waters launched in 2025 position us early in this trend with a premium functional offer aligned with where the category is headed. Finally, Mt Elephant, our healthy baking range, shows how we're applying innovation-led thinking at a brand level. As supermarkets reduce their ranges, we've reduced -- we have repositioned Mt Elephant to compete more effectively at shelf level, moving from a niche free from queue to a clean mainstream whole food proposition. Growth is coming from innovation that earns its place on the shelf. World-first sustainable formats and smart brand collaborations bring genuine news to traditional baking categories. This strategy is built in close partnership with Coles, giving us confidence at Mt Elephant's sustained growth in grocery. You can see on the screen, we have our new Mt Elephant peanut butter Whole Food cookie on the left, which is a collaboration with Pic's Peanut Butter. And on the right, our 2 new pancake mixes, which come in a mix and pour tub, and all 3 of these products are rolling out in Coles in May. Our sustainable pancake shakers are a world-first and address a long-standing sustainability issue for the category. About 95% of pancakes sold in grocery are sold currently in plastic shakers. And with only 19% of plastic in Australia being recycled, the real impact comes from reducing plastic in the first place. These products also provide key PR opportunities for both Mt Elephant and Elixinol and cement our corporate positioning as a sustainable nutrition company. I'm going to hand back to Gavin to wrap up. Thank you. Gavin Evans: Great. Thanks, Nat. Those opportunities are really exciting for us moving forward. So following Adam and Nat's updates, I can now share with you that the FY '26 outlook is anchored on 4 pillars. Operational momentum; continue to improve performance of this rightsized cost base and continue to drive stronger margins. Cost efficiency; maintain a structurally lower OpEx run rate, which then gives us flexibility to invest in growth. Build a growth foundation as a platform for sustainable organic growth, leveraging the category strengths that we already have. And then four and finally, strategic opportunities; pursue value-accretive M&A and focus on core revenue drivers. EXL is now operating from a stronger, more efficient cost base, well positioned to capture the growth opportunities and deliver long-term shareholder value. Please review the customary disclaimers. And thank you very much for your attention and ongoing support. And now I'd like to hand back to Katie to facilitate Q&A. Katie Mackenzie: Great. Thanks so much, Gavin and Nat and Adam for a really interesting presentation about the company and all the exciting things that you're doing and the outlook moving forward. [Operator Instructions] We might sort of kick off with a common investor question just about the supermarket channels in Australia and the opportunities and challenges that, that presents. In the presentation, you talked about your focus on higher-margin revenue and SKU rationalization, the partnership with Coles. Many investors are aware that some niche retailers can have a difficult relationship with some of those supermarkets. Are you able to just give a little bit more detail about what's happening on the ground? Perhaps Nat will start with you and then Gavin, if you could add a little bit as well. Natalie Butler: Yes. Thanks, Katie. Look, it's a fair question. And the short answer is that the supermarkets are tough right now, but they're not completely closed. This affects us at Elixinol more with some products than others. Our hemp ingredients are reasonably stable. But it's -- for the more niche brands like Mt Elephant, it has been a challenging year. But with that said, they are really open to true innovation, and it's just how they're defining that innovation and working with the buyers to give them products that they know that they need and that they know are going to provide, I guess, excitement to the category and something new to the category and growth to the category. So that's really what we're focused on. And I think one of the great things about being a small and nimble organization is that you can move so much faster to respond to trends. And if a buyer can give us feedback in one review, we can deliver on the next. And that's really what we're focused at delivering at the moment, playing to -- I guess, playing to our strength. Gavin Evans: Yes. Good answer, Nat. I think as well as that collaborative innovation, we have a couple of other key advantages, Katie, and to the investors listing that we have over our competitors, and we've talked about that diversification of channels. So the growing e-commerce business primarily through the Healthy Chef, at least in part, insulates us from much of the range rationalization that's been done quite aggressively by the 2 majors in particular. So that's been part of that strategy. I think that helps a lot. I think secondly, in that hemp space, we hold that strong position in the supply chain. So we're -- as Nat said, we're either the branded option on the shelf or in a number of situations, we're also the ultimate supplier of the hemp seed that is in the private label. So again, that diversification really gives us a natural hedge, which strengthens our position. Katie Mackenzie: Okay. Thank you, Nat, and Gavin, that makes sense. Gavin, we've got another one here for you. At the start of the presentation you were talking about the fact that you've got a mandate to create that solid foundation for scalable growth. So can you talk a little bit more about your vision for the company and what sort of assets you would be looking at to potentially scale the business in the future? Gavin Evans: Yes. Good question, Katie. I think that mandate for scalable growth starts with aligning the business to those wellness market opportunities that we've referred to earlier in the presentation. But just to be really clear, we have some urgency to optimize the business performance right now in the short term to align the market value of EXL more with our peers. I mean in FY '25, we reported revenue of circa $16 million. We're tracking towards profitability, as we can see in Q4. And we benchmarked our market cap against some of our listed peers in the food space, and they're in the range of 1 to 1.5x revenue. We're currently around 0.3. So that market re-rating is the first priority. And obviously, we will continue to deliver with the underlying business performance to build that confidence. But as we move towards that, we'll continue to look for the right asset to achieve the vision that we've just outlined, and that is to build a portfolio of premium branded health food assets. Now that portfolio has to deliver consistent growth, strengthen EXL's market position, and it has to create long-term shareholder value. Those assets have to be compelling as value accretive on acquisition. And given I've spent the last 5 years assessing businesses in this space, I'm confident those assets are available in the market. The other opportunity here is that there's been a lack of transactions in the private markets as many of the people listening would be aware, and that creates opportunities to buy these assets at the right time and at the right price and really use the platform that we've got to build something that's got scale that can be in a strong position as a listed player. Katie Mackenzie: That's great. Thanks, Gavin for that extra content and extra context. [Operator Instructions] Just a final one here. We've got lots of questions from investors about the loan note and the sale, potential sale of the U.S. business. You, Nat or Gavin, can you just give investors a little bit of an update on what's happening on that front? Gavin Evans: Yes. Why don't roll with that one, Nat. So the status of the loan notes remains unchanged. The Board doesn't think it's the best use of shareholder funds to hold an AGM to make any changes to the terms of those loan notes. But we do have our AGM coming up in May, and that presents an opportunity for us to look at our capital management. We're always seeking to optimize capital management and our balance sheet strength. So I also acknowledge the security link of those loan notes to the U.S. entity, which brings me to the update there that you requested. So late last year, the regulatory framework for CBD shifted in the U.S. exactly where that lands and the future implementation of how that plays out in the market is being heavily debated and lobbied in the U.S. political system at the moment. Indications are that within the next 2 to 3 months, there'll be more clarity on that. In the meantime, we continue to run the business to optimize its contribution. We're also staying connected with some prospective buyers on that should the market position become clearer. So we keep an open mind to what's happening in that space. And as I said, we continue to run that business with a long-term view. But this regulatory situation, hopefully, will become much clearer in the next 2 to 3 months. Katie Mackenzie: Okay. Great. Thank you for that update. So with that, if there's no further questions coming through from investors, but if people have listened to the presentation have got any further questions, we've got Gavin's address details there and my contact details as well. So please feel free to reach out to us after. So Gavin, I'll just hand it back over to you just to wrap it up, and thanks, everybody, for joining. Gavin Evans: No. Look, really just thank you. I appreciate people being engaged and the ongoing support. We are working very hard to improve the position of the business, and we think we've made some really good inroads in Q4, but there's still lots of hard work in front of us, and we're committed to stay focused, aren't we Nat and Adam. Natalie Butler: 100%. Gavin Evans: Thank you. Katie Mackenzie: Thanks so much. Bye. Natalie Butler: Thank you. Bye-bye.
Giorgio Iannella: Good morning, and good afternoon, everybody. This is Giorgio Iannella from the IR team. Thank you for joining EssilorLuxottica Interim Results Management Call. The Group Chairman and CEO, Francesco Milleri; the Deputy CEO, Paul du Saillant; and the CFO, Stefano Grassi, will walk you through the business and financial highlights of the first half of the year. After their presentations, there will be a 30-minute Q&A session [Operator Instructions]. With that, I hand it over to Francesco. Francesco Milleri: Welcome back, everyone, and thank you for joining us today. I'm pleased to reconnect with you and to share where we stand with the execution of our new strategy, which is clearly driving the group business momentum. This is in line with our plans, and I believe it will become more and more visible in the near future as the new projects, products and medical services will translate directly into numbers. 2025 marked a year of sharp acceleration for EssilorLuxottica as we manage our deep transformation from a traditional optical company into a leading med-tech and data-driven group. This broader scope now better defines and makes clear our core business, strategic focus and investment priorities. The new ambition of our group is to shape the future of health and human performance. This evolution represents the key engine behind our faster revenue growth and the driver of the positive progression of our profits. The strong increase of revenue in the fourth quarter reflects the solid performance of our overall business, further reinforced by our clear leadership in wearable and med-tech. We are confident that this trajectory will continue, confirming the strength of our vision and the excellence of our execution. Stefano will walk you through our financial performance later on. I would just like to highlight that we recorded revenue growth at constant currency above 18% in the fourth quarter and 11% in the full year. For the first time, we see a double digit in our history. With EUR 28.5 billion revenue in the full year, the adjusted operating profit reached EUR 4.5 billion after EUR 300 million headwind from U.S. tariffs and materially adverse exchange rates. Solid operations are clearly shown by a strong free cash flow of EUR 2.8 billion, EUR 400 million higher than last year. At this stage, the new category we have created in AI glasses is at the heart of this journey. In 2025, we sold more than 7 million units of AI glasses, posting exponential growth, driven by the strength of our iconic brands, Ray-Ban and Oakley across all geographies and channels. This success of our wearable brands has been made possible by our unique logistics and distribution footprint. with 18,000 stores in retail and 300,000 partners in wholesale, forming the most powerful go-to-market platform for a product that is first and foremost, a vision care device. This view is further reinforced by rapidly growing attachment rates of prescription lenses and the already high penetration of photochromic lenses, which together are delivering a strong increase in daily usage and confirming the relevance of this category for all consumers. Wearables are now becoming part of our normal life. As a testament to our capacity to roll out this new category and expand its scope, the recently launched Oakley Vanguard unlocks new use case across both sport and lifestyle. More is coming in terms of brands and futures with increasing levels of personalization, not only in daily and social life, but also in professional activities. Several projects are already underway with banks, consulting firms and health care institutions, opening up larger and sometimes unexpected market opportunities. AI glasses are not only the evolution of traditional eyewear. They are above all, a new digital platform that brings together vision correction, by sensors, audio, cameras and artificial intelligence into a single system. We are increasingly convinced that this category has the potential over time to replace the mobile phone as the primary personal computing interface in both personal and professional context. In 2025, our plan has been focused on growth and scale. We are convinced that leadership and consistent market share in this strategic area are essential for the future of our Med-Tech vision. This acceleration require significant upfront investments in both OpEx and CapEx across R&D, operations, marketing and communications. As expected, these initial investments are reflected in our P&L, but still the group reached record earnings results. As our Med-Tech and wearables segments reach scale, we expect profit to accelerate and the operating margin to regain momentum for both EssilorLuxottica and the whole optical and Med-Tech industry. The future direction of the company is now set around a clear and well-executed strategy based on emerging field of Oculomics. This enables us to expand our scope from vision correction into medical support and the early detection of metabolic, neurological and cardiovascular conditions. In line with this vision, our journey will continue to extend into advanced health technologies, predictive medicine, diagnostic instruments and clinical practices, including surgical applications. One of our most important achievements has been our ability to integrate in a truly holistic way, AI glasses as a consumer-facing evolution with a data-driven med-tech, health care and clinical business. You will see our M&A approach evolve with an increasing focus on start-ups in vertical medical AI, advanced diagnostics and support for clinical studies. At the same time, we will continue to improve and extend our logistics and distribution footprint through both internal and external growth across physical retail and e-commerce. The convergency of these 2 dimensions, digital and physical, together with our strong medical reputation is what we believe makes our strategy truly unique and almost impossible to replicate. Finally, in hearing aid glasses, we continue to invest in a vertical application of our technology in the audio space, bringing in new customer segments and incremental revenues. We have high expectation for the launch of new products in the second half of this year, combined with our strategy to expand audio feature across our wearable through a subscription-based approach. In conclusion, we have closed a remarkable year and are starting the new one with strong confidence and clear plans to be at the forefront of the convergence of multiple sector and different industries into glasses. That is why EssilorLuxottica is taking leadership in the whole med-tech space. Last word on our financial road map, why we confirm we are fully on track with our long-term outlook dating back to March 2022. Today, we are updating it, planning to deliver over the next 5 years, a solid and broadly aligned growth of revenues and operating profits. With that, I will now hand over to Paul. Thank you. Paul du Saillant: Thank you, Francesco, and hello, everyone. Happy to reconnect with you. As you have heard, in 2025, EssilorLuxottica took further decisive steps in its strategic journey and delivered solid financial results, driven by an ambitious vision, strong execution and a relentless focus on innovation. This performance is underpinned by our best-in-class manufacturing and logistics platform, our global and resilient supply chain and a unique omnichannel distribution model that enables us to scale innovation efficiently and consistently across markets. Today, I would like to take a step back and focus on what sits at the very core of our vision and strategy in the traditional business, which is the scientific ecosystem we are building around eye health. Let me start from lens innovation and myopia management in particular, a field that we have been investing in for almost half a century and where we further strengthened our leadership in 2025. Stellest has become a global reference in myopia management, supported by robust long-term clinical evidence and is now worn by millions of children worldwide. Importantly, Stellest remains the first and only spectacle lens to have received FDA market authorization in the United States. This is a decisive recognition of myopia management as a medical treatment. In 2025, we took a major step forward with the launch in China of Stellest 2.0, our most advanced myopia management lens to date. We have maximized the lens power and aspiricity of the micro lenses based on our fundamental research at a neurobiological level, leading to almost 2x lower actual length growth after 12 months in Stellas 2.0 versus the previous generation. This new generation is being rolled out in EMEA and will apply for authorization with the FDA. At the same time, we are moving earlier in the patient journey. With Stellest Plano solution, we are addressing children at risk of developing myopia based on clinical evidence showing that delaying onset can deliver long-term benefits comparable to years of slow progression. This marks a shift from management toward evidence-based prevention, a meaningful evolution. Our approach to myopia is deliberately multi-technology and multi-brand. Alongside Stellest, SightGlass Vision Dot technology commercialized under Nikon and Kodak in China continues to gain great traction, reinforcing our portfolio and offering eye care professionals a broader set of clinical validated solution across different price points. As a result, in 2025, total revenue generated by our myopia management portfolio grew by 22%. Beyond myopia, innovation across our lens portfolio remains strong. In presbyopia, brands such as Varilux, Nikon and Shamir continue to introduce designs that combine optical precision, personalization and comfort, leveraging AI-driven modeling. Transition, extending light management benefit across prescription, plano and smart eyewear is increasingly becoming a standard feature in connected glasses. In frames, 2025 was a year of strong brand momentum and creative activation across our portfolio. On the licensing side, we renewed our long-term partnership with Burberry through 2035, reaffirming a collaboration rooted in craftsmanship and innovation, and we launched the first-ever collaboration between MIU MIU and Puyi Optical, demonstrating our ability to blend exclusivity, design excellence and retail leadership, particularly in Asia. Across our proprietary brands, we further strengthened Ray-Ban's creative leadership by naming A$AP Rocky as its first ever creative director. We celebrated Oakley's 50th anniversary, and we are now seeing the brand gain exceptional global visibility through its presence at the Winter Olympic in Italy. At the core of all our initiatives is science. Last year, we formalized this commitment with the creation of our Scientific Advisory Committee, bringing together 5 world-class experts across physics, mathematics, ophthalmology, bioethics and neuroscience, including Nobel Price and Fields medal [indiscernible]. Their role is to challenge us, guide us and help us explore new frontiers from oculomics to AI and neuroscience, always with patient in mind in areas of human health where ethic matters as much as innovation. We are reinforcing our ecosystem through open collaboration. Our partnership with the Politecnico di Milano continues to advance research at the intersection of optics, bioengineering and artificial intelligence, while the joint smart eyewear lab is shaping the future of connected vision devices. Our membership in the collaborative community on ophthalmic innovation allows us to contribute to global standards and consensus building across myopia, AI and data-driven ophthalmology. Through our collaboration with Chips-IT, we are also investing in application-specific semiconductor designed to enable the next generation of smart and medical eyewear. Finally, at our [indiscernible] R&D lab in Paris, teams are working at the frontier between vision science and neuroscience, exploring how visual signals are processed and transmitted by the brain. This research is essential to deepen our understanding of perception and cognition and to unlock the next wave of optical and neuro adaptive solutions. Sustainability remains a fundamental pillar of our strategy, guided by a clear road map across climate, circularity, responsible operation and social impact. This year, our efforts were recognized by leading external benchmarks. We achieved an A rating for climate from CDP, placing EssilorLuxottica among [indiscernible] organizations. In parallel, our Standard & Poor's Global Corporate Sustainability Assessment score reached 66, securing the third position in our industry worldwide out of more than 250 assessed companies. To sum up, 2025 confirm that EssilorLuxottica growth is built on a unique combination of clinical science, technological depth and industrial scale. From med-tech to neuroscience, from eyewear to eye health, we are not only innovating with our industry, we are redefining its boundaries. At the same time, with our new long-term outlook, we are looking at the next 5 years with solid ambitions on our financial delivery. With that, I will now hand over to Stefano. Thank you. Stefano Grassi: Thank you, Paul, and welcome to our full year 2025 earnings results. We closed another record year for EssilorLuxottica with revenue that grew 11% at constant currency, almost 2x faster than the 6% that we delivered in 2024. North America, EMEA and Asia Pacific, they were all up double digit, while Latin America delivered a high single-digit year. In an outstanding quarter like 2025, Q4 was actually the strongest one for all the year. Our top line was up 18.4% at constant currency, 12.1% at current exchange results. These numbers are even more remarkable in consideration of the fact that in Q4, Supreme and Heidelberg became full comparable as they were both included in 2024 and 2025. So fully comp for our reporting. In Q4, our North American business was up 24%. EMEA delivered 16% sales growth, while Asia Pacific was up 12%. And the last, Latin America delivered 8% sales lift in the quarter. Last note on foreign exchange. For the third consecutive quarter, we had some headwinds, unfortunately, in our results with about 6 percentage points of difference between constant and current exchange results. As usual, the main driver for that is the U.S. dollar. They had a devaluation of approximately 8 percentage points year-over-year versus euro. At those currency level, you might still expect some currency headwinds during the course of 2026. But now as usual, let's take a closer look across the 4 different regions. In North America, we recorded a top line growth up 23.8% at constant currency. This result doubled the speed of growth that we had in North America during the course of the third quarter, where our revenue grew 12%. But what I think is probably even more evident is the different speed between the first half in North America, there was a 5% growth at constant currency and the second half, where we recorded an 18% growth at constant currency. In our Professional Solutions, our B2B business, our independent channels, our key accounts, our department stores were all positive. While when we look at our sales on our e-commerce partners, over there, we have a negative territory for the revenue in Q4. When we look at our product category, frames were up triple digit, thanks to an outstanding performance of our AI glasses category, but also optical frame delivered solid growth in the quarter, while our lens business in Q4 was flattish. When we look at our frame brands, Ray-Ban and Oakley were up triple digit. On the lens side of our business, we start seeing some good traction of Stellest, the first and only lens myopia solution FDA approval that is now available in the United States that is now getting orders in excess of 4,000 doors in North America. Last comment on price/mix, which I would say was strong in both lenses and frames. But now let's move to the direct-to-consumer. On the direct-to-consumer side in North America, our e-commerce business was just attached below double digit in the quarter, and our retail business delivered high single-digit comp sales for Q4. Sunglass Hut was up 9% and LensCrafters was up 7% in Q4. So I would say a very compelling story proposition for a direct-to-consumer business. A quick highlight on LensCrafters. We're reporting another great quarter. We posted in Q4 the 2 single days with the highest revenue in LensCrafters history, and that happened during the insurance days at the end of December. Our lens mix continues to improve during the quarter. We have a higher penetration of transition. We have a successful adaptive progressive lens powered by Shamir across the all different LensCrafters stores in North America. All the fundamental KPIs like price mix, eye examination, traffic and conversion that were all trending in the right direction. Moving to the Sun banner, Sunglass Hut now. Q4 was simply the best quarter in 2025 despite a tough comparison base as last year, Q4 comp sales were actually the best in 2024. So best result on top of best result last year. Our international and co- location performed, I would say, at a fairly even pace. AI glasses continue to represent a key driver of our growth with both Ray-Ban Meta and Oakley Meta that deliver an outstanding results. But before moving to EMEA, let me say that as we enter in 2026, our direct-to-consumer trend in North America is further accelerating. So we're just 1 month into the year, but obviously, we are up for a very promising start. Moving on to EMEA. EMEA delivered a 15.7% growth in Q4, the 19th consecutive quarter of growth in the EMEA region, the best quarter in 2025 for Professional Solutions, the best quarter in 2025 for direct-to-consumer with both segments that delivered a double-digit pace. In the region, Italy, Spain, U.K., Turkey, Eastern Europe and Middle East posted double-digit quarter at constant currency, while Scandinavia was up high single digit and France delivered a fourth quarter in a low single-digit territory. When we look at our 2 distribution channels in Professional Solutions, our frame business delivered an outstanding quarter, thanks to the AI glasses and the optical business with a growth that was very much driven by volume and also price mix. We're happy with our luxury portfolio in the EMEA region. We had a mid-single-digit pace. I would put on the spotlight, CHANEL, Prada, MIU MIU. Now when we look at the lens side of the business, the other product category, we had a good performance of transition and Varilux and a double-digit growth on Stellest with a growth that was very much driven by volume on the lens side of the business. Now let's switch channel and let's look at our direct-to-consumer. Comps were in the high single-digit territory for optical EMEA and double digit in the Sun part of our business in EMEA. Optical business, I would say that we are very much at the ending stage of the integration between the former GrandVision banners into the operating machine of EssilorLuxottica. And just to give you a flavor for that, approximately 85% penetration of the EssilorLuxottica product in our frame assortment and approximately 90% penetration of a lens assortment across the banners in the EMEA region. The subscription model is now available in about 19 countries and represents 22% of the optical revenue in the region, a couple of percentage points more than what we have in the fourth quarter of last year. Last but not least, there is another important asset, and that is represented by teleoptometry. And just to give you an idea how important is this asset and how successful was this exit in 2025, let me share with you that we hit over 200,000 eye examinations performed through the teleoptometry in 2025. That number is up 40% versus 2024 eye examinations. Now if we move to Sun, fourth quarter was actually the best quarter for Sun in 2025, with U.K., Turkey, Italy all at double-digit pace. The top door in the EMEA region for Sun, you remember, those are the 50 largest ones that we have deliver a double-digit quarter. So whether you are in Dubai or you are in Paris, in Madrid rather than in Istanbul, Sunglass Hut more and more is the destination location for Sun in the EMEA region. And that clearly makes everyone in the Sun team in EssilorLuxottica extremely proud for that. Now let's switch gears. Let's move to East in the Asia Pacific region. Top line up 11.6%. Another strong quarter in this region with India, Australia, Southeast Asia, all up on the double-digit pace. China and Japan were high single digit, while Korea delivered a mid-single-digit growth during the course of Q4. An important asset here is myopia. And the myopia category in China delivered another great quarter of double-digit growth with revenues that today in Greater China are about 27% of the total business. The demand continues to be strong. And I would say it's the demand that continues to be strong for all the different myopia solutions that range from Stellest up to the Kodak and Nikon that leverage the other technology, the DLT1. When we look at our other category, frame business delivered a strong quarter, I would say, across pretty much all the regions with sales that were driven by volume, but also with price mix. Ray-Ban, Oakley, luxury portfolio, they were all up double digit during Q4. Now when we look at our direct-to-consumer channel, the other channel, I would say that we are very pleased with our key banners in Mainland China. Those banners delivered a double-digit growth pretty consistently throughout 2025 in every single quarter. The other leading optical banner in the region, OPSM, posted a low single-digit quarter in comp sales with the key metrics on premium lenses on transition, on myopia solution that were all improving versus the fourth quarter last year. Now let's touch on the last region in the pipe, and that is obviously Latin America. In Latin America, we had a fourth quarter up 7.6%. That trend is an acceleration compared to the third quarter, where you remember, we delivered 5.2% top line growth. Both Professional Solutions and direct-to-consumer delivered high single-digit quarter. I would say we had pretty much a great quarter across the different country in the region. Brazil and Argentina were up double digit. Mexico, Colombia and the other Latin American country delivered a mid-single-digit quarter. In the Brazil, the largest country, we had a double-digit growth for our frame business and double digit in Oakley and in our luxury portfolio with price mix being very much the primary driver of our growth in the country. When we look at our lens business in Brazil, we had a low single-digit quarter, but all the key assets, Transition, Varilux, Eisen, they all delivered positive growth in Q4. Last touch on Oticas Carol as usual. The 1,400 stores delivered a double-digit quarter. And I would say that in Oticas Carol, AI glasses are start becoming more and more important and very much instrumental to our growth and success story for those banners. Let's touch now to the direct-to-consumer region. In the direct-to-consumer region, the Sun banner was just a touch below double digit. Ray-Ban stores, Sunglass Hut stores and Oakley stores were very much the primary driver of our comp sales growth in Q4. While when we look at our optical side of the business, the largest GrandVision footprint, the one that we had in Mexico posted a high single-digit comp sales. Now we are now concluding our journey across our 4 different regions. And now let's take a closer look to our profit and loss as usual. We will be looking at the full year profit and loss. And as usual, I will walk you through the key line items at constant currency, and I won't spend time on sales as we largely covered that before. So the first line item is the gross margin. Our gross margin is down 260 basis points in '25 versus 2024. And this is really the combination of 2 effects. On one side, you have the impact of tariffs. And here is the gap is largely in the second half versus the first half of the year as those tariffs impacted for 2 quarters in 2025, second half, while in the first half of the year, the impact was very much in the second quarter. The second part, important part, is the percentage dilution coming from the AI glasses that in the second half of the year due to the higher contribution of AI glasses to our growth rate had a much stronger impact on our margin. I would say that on a full year basis, just to give you a broader picture, approximately 1/3 of the impact is due to -- on the gross margin is due to tariffs, while 2/3 of the impact is attributable to AI glasses. Now let's take a look a little bit of our OpEx. Our OpEx as a percentage of revenues are 170 basis points down versus 2024 levels. Here, you have on one side, the investment that we continue to do to support our new strategic initiatives. We talk about during the different regions, the performance on AI glasses. Francesco and Paul explained our long-term strategy on med tech the development of the audiology business and those investments, the deployment of those initiatives across the different channels, across the different geography, clearly have an impact on our selling, marketing and also G&A. But at the same time, we are undertaking a deep exercise to relook at our organization, understand whether we have deployed all the people in the right spot, and we are working to realign our organization to our strategic priorities. So overall, you look at our operating profit as a percentage of revenue, that is down 70 basis points at constant FX and about 100 basis points at current exchange rate. Below the operating profit, our cost of debt as a result of a higher interest rate environment, it's higher versus last year. Clearly, that is the primary driver for that. While on the tax rate, we have a slightly more favorable pretty much as a result of a different country mix. That leads to a total net profit for EssilorLuxottica full year '25, down 50 basis points at constant FX and 70 basis points at current exchange rate. Now the last chapter of this journey before the Q&A session is clearly an important one, and that is represented by our cash flow. I will start saying one number that I believe tells you all, EUR 2.796 billion of free cash flow generation during the course of 2025. This represents a record high free cash flow generation. Those figures were achieved despite the material headwinds from tariffs and the material headwind from currencies. A last comment on our net debt-to-EBITDA ratio that is now at 1.7 at the end of 2025, clearly confirming our ability on one side to maintain a strong balance sheet and at the same time, to invest in all the strategic priorities for the group. But now as usual, let's leave the floor to the operator for the usual Q&A session. Operator: [Operator Instructions] Our first question comes from Oriana Cardani, Intesa Sanpaolo. Oriana Cardani: The first one is on the evolution of wearables sales by channel. Considering the full year results, can you provide us with the channel mix for wearable net revenues and tell us if you expect different future trends between the 2 channels? And my second question is on the margin outlook for wearables. How do you expect operating -- OpEx, operating cost to evolve in this year, next year for the wearables? And at what level of production volume do you expect economies of scale to help improve margins? Francesco Milleri: I take the first question is channel. Is professional solution wholesale, it will be the one that really will give us the best chance to grow everywhere. Also, if we believe that the direct-to-consumer, special the physical network that we have, the 18,000 stores that we directly manage it will be really the crucial factor that it can really activate in the wholesale, the growth of our sales of the AI glasses. AI glasses now is something more common. It is still something different from the normal glasses. So has to be tested, tried, explained sometimes. So it's a outdated fact that we have this very high professional network has helped a lot in the speed of really how we enter in the market. And then the Professional Solution follow also imitating the strategy that we have in our retail stores. So I believe that the mix will be much bigger on the wholesale because wholesale the number of doors are much bigger than our retail. But the sales -- the number of units for single door, it will be -- it will remain in the future, in the near future higher in our own retail where we can take care and we can better define the communication strategy that will help also the independent optician and also the consumer electronic to better understand how to sell eye glasses and wearable. Stefano Grassi: I'll take the second question you have for tonight. So margin outlook for the AI glasses. I think there's a couple of things that you need to take into consideration. On one side, we do expect consistently with what we have seen in the last couple of years, a price/mix going up as a result of product innovation. If you think about it, where we priced the original Ray-Ban stories at $2.99 and the evolution of pricing for Ray-Ban Metal now, it's obviously going exactly in that direction. And we believe that, that will happen again, driven by innovation as much as we have done with other parts of the business. Then there is a second part of the equation that is a cost. And I believe that the scale will have to get cost progressively lower throughout the time. Operator: Our next question comes from Chiara Battistini, JPMorgan. Chiara Battistini: The first question is on the wearables and the rollout of further capacity and production. So I was wondering and also, we've seen some comments from Meta in the last few weeks, if you could give us an update on how to think about the expansion of capacity and also CapEx for 2026 on the back of potentially expanding capacity? And the second question, you've mentioned myopia management up 22%. I was wondering if you could give us an update on the size of myopia management in 2025? And how to think about the priorities for myopia management in 2026, especially given the new push in the U.S. Stefano Grassi: Chiara, I'll take the answer to the first question with respect to capacity evolution. Let me put it in a broader perspective here. I think we will have the capacity that is needed internally or externally to manage the demand that we will face in the coming years. And I think we are planning according to that in close partnership with Meta. Then the second question is on myopia, Paul. Paul du Saillant: Yes, I will take the second one. Thank you, Chiara. To give you a little bit of a reference, so the global myopia activity for the group, as it was said, has grown 22% globally. As you know, mainly today, this activity is in China and Europe. For China, just to have in mind, I think Stefano gave a data point, we have close to 30% of the full China activity that is myopia management based. So it's quite significant. The priority for '26 is quite simple, and I did refer to it in my little talking point. First is to continue to deploy the full solution that we have at work with hospitals and the government in China, namely Stellest, Stellest 1, Stellest 2 and the DOT technology, which gives us a full platform to address the different price points and needs. Second is to continue to roll out in Europe and introduce Stellest 2.0, which is the latest technology platform in Europe. And of course, a huge focus of our American colleagues is following the FDA approval back in September that we obtained, we are now really in the full launching process of Stellest 1.0, the first platform as we prepare to file with FDA the Stellest 2.0 also. But right now, the focus is to establish with the doctors, with the optometrists, with the parents, this totally new solution in U.S., which is first ever available for the children. And we have already close to 4,000 doors that have been trained and equipped. And we, of course, are expanding the distribution to many more doors as we talk. So this is really the plan for us this year. It's a big priority for the teams. And it's a fantastic where also to connect to the med-tech strategy that was explained because this is taking us in the doctor and in the clinic in the high hospital space. Operator: Our next question comes from Anne-Laure Bismuth, HSBC. Anne-Laure Jamain: Congratulations on the very strong top line earnings. Just 2 questions. So first of all, I would like to come back on the production capacity because there were some headlines mentioning that you can -- there were some discussion to double the production capacity, so let's say, to reach EUR 20 million to EUR 30 million of production capacity in wearables this year. Is this -- is this assumption a number that we should take in consideration? Can you give us a bit more color on that? And the second question is still on the wearables. So the Meta Ray-Ban display. So the display is a big... Paul du Saillant: Okay. So I will -- I think we don't hear Anne, anymore. So I will take the first question on the capacity. I think you have to look at this question in a different angle. The company is well equipped with building and plans to follow the needs ramp-up as it comes. And you have to have in mind that we have a very modern plant in China, where we have actually a full new building that was realized in the last 18 months. We have also a very large campus. As you all know, we built in Thailand, where we have there, what I call advanced surface ready to be equipped. And as we need to follow the demand, we add production line, which we now have standardized. We know very well how to equip them. And also, we are connected when we need with a Vietnamese partner company to support. So we have an in-place capacity setup that can follow the demand. And I think this is the way to look at it more than anything. Operator: The next question comes from Hassan Al-Wakeel, Barclays. Hassan Al-Wakeel: I have a couple, please. Firstly, if I can follow up on wearables. Your P&L and business is changing in a meaningful way as wearables become a larger share of your top line. Can you talk about the longer-term benefits from scale and better unit economics on the EBIT margin, but also gross margin from product bundling. Do you see a wearables margin over the medium term in line with the group? I ask given your long-term targets broadly imply flat margins? And then secondly, can you please quantify the tariff and meta dilution headwind in the second half as you helpfully provided in H1 and the work that you've been doing to offset tariff, how do you see this in 2026? And what was the FX impact at the margin last year? Stefano Grassi: I'll take on your question. So beginning with the AI glasses. So the longer-term benefit in operating leverage and I would say, price/mix improvement is fully reflected in our long-term guidance, the new one that we just shared. Clearly, in that guidance, you have -- we are anchoring revenue growth with operating profit. And that's obviously creating that pace of earnings throughout the time. I would say that, again, when you look at the price mix, it's evident. You look at the collections that we have displayed today between Ray-Ban Meta, between Vanguard, Meta Ray-Ban Display, they all have price points that are higher -- significantly higher than the original product that we marketed a few years back because there is a higher technological content and because all those features, which, by the way, have been extremely appreciated by consumer are clearly creating a positive effect on our products. So remember, when you look at the ecosystem of our wearable AI glasses, you have to bear in mind there's always a couple of other add-ons, which obviously help top line, but also profitability. The first important part is the lenses. 20% of the AI glasses that we sell are equipped with prescription lenses. And that's obviously a margin lift that is quite material. The other important thing is represented by coatings with transition that typically 40% to 50% penetration in our AI glasses. So that's obviously something that helps. And that's pretty much the story for AI glasses. Again, you will see price/mix going up. You will have on a cost side scale that will help also on a cost management. And all of that is pretty much baked into our long-term guidance. Operator: Our next question comes from Hugo Solvet, BNP Paribas. Hugo Solvet: Congratulations on the print. I'd like to give you a break on smart glasses and focus on the base business. Could you maybe discuss the performance of the non-smart glasses portfolio and whether you continue to see that halo effect that you highlighted in Q3? And would you expect that to continue? And going back to smart glasses, but keen to get your thoughts on how do you see competition unfolding given the recent nervousness in anticipation of upcoming competitive launches? Francesco Milleri: Hugo, no eyeglasses sun halo effect. I believe that we have to start really thinking to glasses, sunglasses or eyeglasses, not as a really different category. It's really an expansion of category for different functionality. So we now start to consider AI glasses or wearable really part of our normal portfolio. Then, of course, the -- as any big innovation, especially the Ray-Ban display, they will drive traffic into the store. And honestly, the conversion is very high when the product is available and when it's not available is really we convert in a different kind of sunglasses of eyeglasses. So of course, the halo effect is quite important. But I believe that is really a part of the game. We don't consider something special. It's something that will continue in the future. This is the strategy of how we manage our portfolio. The same for competition, welcome competition on this new category because we are 2 years ahead of all others. We have the unique distribution platform, really almost impossible to be replicated in the short term, maybe also in the long term is not easy. And competition means more investment in the category. And since we lead the category, that means that for us is we expect an increasing share of the market. So both are good things, halo effect and competition are really welcome in our future. Thank you. Operator: The next question comes from Veronika Dubajova, Citi. Veronika Dubajova: Congratulations on a very impressive finish to the year and frankly, on a very impressive 2025. I will keep it to 2. I'm actually going to change it up a little bit and ask about Stellest and your ambitions in the U.S., Paul, I think based on the disclosure that you've given us, China is about a EUR 300 million or so revenue line for Stellest. How long do you think until we get to a similar number in the U.S.? And ultimately, how do you assess the potential in the U.S. market versus China? If you could talk about that, that would be super helpful. And then my second question is going back to wearables. And I was hoping maybe you can give us a little bit of a preview around what's in the pipeline for 2026. Obviously, I noted your comments around it sounds like Nuance Generation 2.0. But to the extent that you can maybe talk upon what what's planned on the sort of AI glasses front in terms of iterations in 2026, that would be helpful. Paul du Saillant: Yes. Thank you. So I will take your -- I'm sure I understand fully, and we also are trying to be reasonable in the ambition we can fix ourselves for the U.S. Let me give you just a few data points. In the U.S., you have 15 million children from the age of 5 to 17 that are corrected for their myopic vision. in China, this number, of course, is very much more than that. And in China, we have been able to see that myopia solution have been progressively deployed to 20% of those children that need -- that are corrected for myopia. So if you take that metric, which, of course, will take time, we have been in market really with those solutions for now 5, 6 years in China. But in the U.S., if you say that it could represent progressively 20% of the children that will embrace that technology, although Francesco will tell me every children have to be wearing Stellest. And he's right because it's actually the duty to make it available to any children. But this is the kind of order of magnitude that we see in the U.S. And the most important, it's that it's our duty and the duty of the parents of the -- all the stakeholders to make it available to equip the children in the U.S. with this solution because it's a good solution. It's super efficient. But that is what we are talking about. And be sure that there is a huge focus on that to reach millions of children with this solution in the U.S. Francesco Milleri: About the wearable pipeline once -- and just one thing on Stellest U.S. ambition. We start to understand that longevity is start when you are young. So that is why we are pushing so hard on Stellest. Stellest can change the progression of your myopia that it will prevent early stage of many others ocular pathology. So we believe that there is also a netic approach that we have -- we need to have because a kid with Stellest really have a chance to have a better life in the future. And this is the first time that is that problem we have to deal with. It's like in the pharma industry, when you need to make available some drugs to everybody because this will affect the future of your life, not just correct something, is slow down the pathology. That is really something that we are looking at, and we are reflecting how to really very well penetrated the market to give the information to doctors and to parents. For wearable pipeline and ones, of course, we believe that the portfolio has to grow very, very fast, as to touch different segments of our customers from luxury to more affordable eyeglasses and as to really have cover in a much better segmentation approach of female, male, kids, everyone that is -- can have interest in this new category. So it's not so easy like in analogic glasses to have a new product, but now the platform is very solid. We have more than one platform with different capability and features. And we are really focused on expanding our portfolio. The same for Nuance. We had a wonderful return on the first launch of Nuance. People have to really understand that is totally different approach, having Nuance towards in canal traditional hearing aids. At the first try, you don't see immediately the big benefit that amplification in canal gave to the patient. But in the long term, really, we had a strong return. People is telling us that their life change, the capability to have a clear understanding and conversation in-house with the TV or outside in the noisy place improve a lot. So the new launch that we expected for the second part of the year, it will really expand the portfolio with something that we will see big improvement in amplification and in the power supply, the battery and many other features, including the capability to take phone call from our hearing aids out of Canal. Operator: The next question comes from Thierry Cota, Bank of America. Thierry Cota: First, on the guidance, so you get for an aligned growth of sales and EBIT over the coming 5 years. I was wondering whether you think this is going to be aligned more or less every year or whether we should still have a margin drop at EBIT level in 2026. And secondly, in Q3 or on Q3, you gave the contribution of AI glasses to the growth of the quarter on an organic basis. Could you give us the same amount, the same number for Q4, please? Stefano Grassi: Thierry, let me answer your 2 questions here. First question on the guidance. I mean, we gave and shared a long-term guidance. And when we do that, we clearly don't guide on a single year. Clearly, there are certain things that are evident in 2026 as far as we see today. We have the annualization of tariffs. As you know, in 2025, we had from the second quarter until the end of '25, the impact of tariffs. We will annualize that effect in 2026. FX, apparently, it doesn't look like it's going to be our friend for 2026 with the U.S. dollar-euro exchange rate at this level. And obviously, the other thing that we know is that AI glasses will represent an important constituents of our growth profile this year. And we also know that the new initiative, the new assets that we recently deployed, Paul talked about the Stellest launch and deployment in the United States as the one and only solution to manage myopia as a lens. We know that the hearing aid will evolve throughout 2026. We know that the AR glasses family will expand in 2026. So all of those are constituents of this year. We have a checkpoint in the middle of the year where we'll see where we are in terms of trajectory. What I can tell you tonight is that already January started well. We are delivering a double-digit month in January. Clearly, is the lowest month in terms of contribution to the overall revenue. We have 11 months more to go, but it's a promising start for 2026. The second question you had, Thierry, was around the contribution of AR glasses. I can tell you, I mean, I think it's pretty evident that the contribution of AR glasses to our revenue profile, it was bigger during the second half of the year, particularly in the fourth quarter, even more than in the third quarter. I -- again, I think it's a natural evolution of our expansion of distribution network, as mentioned before. There's also probably a little bit of a seasonality linked to the holiday season. But again, it's nothing that shouldn't surprise as we keep rolling out a product that is highly desirable in the market and is very successful on both direct-to-consumer as well as Professional solution. Operator: The next question comes from Richard Felton, Goldman Sachs. Richard Felton: My first one is a follow-up on Veronika's question on Stellest in the U.S. I appreciate the comparison with China, but my understanding is that reimbursement is a little bit better in the U.S. So could you comment on current reimbursement coverage for Stellest and your expectations during 2026? And if that is reasonable to potentially drive higher penetration rates than you commented on in China? And my second question is on AI glasses. Are you able to provide any color on the acceleration in AI glasses in Q4 by product? So which products within the AI glasses portfolio were driving that acceleration in growth? Paul du Saillant: Reimbursement. So clearly, you're right, in the U.S., you have managed vision care programs and a very important, very positive news is that Stellest has already been put in the so-called formulary of VSP, which means that it is already very visible by all the eye care provider, the eye care professional as being a reimbursed product solution. So it's part of the installing this category, this product, this solution in the U.S. You are right, we are looking at every aspect that is going to make this, as Francesco and I said, a standard solution for children, for myopic children. Stefano Grassi: And I'll take the second question, Richard, with respect to eyeglasses. I have a hard time to honestly put on the spotlight a specific model for the fourth quarter because I think we had a successful rollout of the second generation of Ray-Ban Meta. We had an incredible, incredible curiosity and excitement around the launch of Vanguard and also the other product that we are selling during the end of the third quarter that is Houston. So -- and Meta Ray-Ban display, it's another product that attracted a lot of curiosity, a lot of interest. We have pretty much all the appointments booked in our stores to try on Meta Ray-Ban display booked throughout the end of the year. So all of them have been contributing to our successful story in the fourth quarter. Francesco Milleri: So thanks for following us also today. Really appreciate the patience that you show to our company and has been a really interesting question. I hope that next time, we will talk a little bit more about health care, predictive medicine and our investment in eye clinic and clinical study that is a part that will be really relevant for our future as eyeglasses are now. Thank you, and see you soon.
Helen Lofthouse: Good morning, and welcome to ASX's results briefing for the first half of the financial year ending 31st of December 2025. Thank you for taking part in this virtual presentation, and I hope you're well wherever you're joining us. My name is Helen Lofthouse, and I'm the Managing Director and CEO of ASX. I'm pleased to be presenting these results today, along with ASX's Chief Financial Officer, Andrew Tobin. I'd like to acknowledge the Gadigal people of the Eora Nation, who are the traditional custodians of the country where I'm speaking today. We recognize their continuing connection to the land and waters and pay our respects to elders past and present, and we extend that respect to any First Nations people joining us today. Before discussing the results, I wanted to address the CEO transition. So, on Tuesday, we announced that I'll be stepping down as Managing Director and CEO of ASX in May this year. It's been a privilege to serve ASX for 11 years, almost 4 of which as CEO at an organization that's at the heart of Australia's financial markets. It's been a challenging time for ASX with some tough decisions along the way. And I'm particularly proud of the achievements we've made on our transformation journey during my time as CEO. And it's been a rewarding but also demanding journey with enormous personal growth. And having reflected on what ASX needs for its next phase, together with the Board, I've agreed that this is the right time for a new person to bring fresh energy to the work ahead. And we've made great strides even as we face challenges, and I want to thank everyone at ASX for their dedication and support and our customers for their partnership. And as you'll have seen in the announcement, a comprehensive process is now underway to identify the next CEO. So moving now to today's presentation. It will cover areas, and then Andrew and I will take your questions. So I'll begin by talking about highlights from our first half results before Andrew provides a more detailed view. And the main focus of my presentation will be on the outcomes and commitments arising from the ASIC inquiry panels interim report and an update on our transformation strategy. And I'll then provide an update on progress on some of our customer-driven growth opportunities and conclude with some observations on market outlook and its implications for ASX. And we'll finish with Q&A. So let's begin with some highlights from our first half results. As you may have seen, we announced the headlines of our unaudited first half results on the 28th of January, alongside updated FY '26 total expense growth guidance. And today, I'm pleased to provide a more detailed view of our results. ASX delivered a solid financial performance in the half with particularly strong revenue growth. We reported operating revenue of $602.8 million, which is up 11.2% compared to the prior corresponding period or PCP. Underlying net profit after tax increased by 3.9% and was impacted by the growth in total expenses. Statutory profit was up by 8.3%, noting that significant items impacted the PCP. The Board has determined a fully franked interim dividend of $1.018 per share, reflecting a payout ratio of 75% of underlying NPAT, which as we flagged in our announcement in December, is at the bottom of our updated guidance range. Our EBITDA margin decreased by 180 basis points to 61.4%, primarily impacted by the growth in total expenses, including the cost of our response to the ASIC inquiry. Underlying return on equity was stable at 13.5%. Moving now to the ASIC inquiry. The ASIC Inquiry Panel released its interim report in December last year. The interim report represents a critical inflection point for ASX. It contains some serious interim findings, and we've taken the time to reflect deeply on the primacy of ASX's stewardship role as an operator of critical market infrastructure. And for us, stewardship means that we are trusted custodians who are accountable for delivering long-term sustainable outcomes for the Australian economy, supporting innovation and growth. Every day, we run critical market infrastructure that sits at the heart of Australia's financial markets and supports the stability of our financial system. Our markets help direct capital to where it's needed, driving Australia's economy and helping our customers and investors grow. And with this role comes significant responsibility to manage risk well, build resilient systems for the long term and continue innovating to prepare Australia's markets for the future. ASX has enjoyed a history of solid financial success and notable commercial and service innovation. And this has been an enduring strength for us, but it has not always served us well. At times, it's allowed a level of complacency and insularity to surface instead of benchmarking ourselves to the highest standards. And in more recent years, we've had too many instances where our customers and regulators have had their confidence tested. Our challenges have been many years in the making. And while there have been material changes over the past three years, we're taking immediate steps to make further changes, which will likely require a multiyear effort. We're committed to building an ASX that is sustainably different into the future. And the ASIC inquiry panel's interim report is tough reading, but it's fair. The inquiry process and the interim report have prompted us to carefully consider why some parts of our transformation strategy haven't progressed as quickly as we would have liked and what cultural factors have made it challenging to achieve. The panel's interim report states that it contains the substantive conclusions that will comprise the basis of their final report, which is to be released by the end of March this year. ASIC proposed a strategic package of actions for ASX to address the recommendations that the report contained. And we've committed to delivering these actions, and I'll talk about how we're doing this in a bit more detail shortly. Importantly, the inquiry panel also identifies the need for a new supervisory approach, which places greater emphasis on delivering outcomes that can benefit the whole market with open constructive engagement from all parties. Implementing our commitments to ASIC is a high priority for us. As we said at our announcement on the 28th of January, we'll deliver our commitments planned to ASIC by the end of this month, and we're already getting on with delivering the outcomes. First, we're creating a clear dedicated governance structure for our clearing and settlement functions. It will promote the independence of and responsible investment in each of the clearing and settlement facilities to support financial system stability. All ASX Limited directors have now stepped down from the clearing and settlement facility boards, which now comprise only independent nonexecutive directors. These boards will also be supported by dedicated resources as well as clearly defined shared services support from ASX Group. Our aim is to bring greater independence while maintaining the benefits for these entities and our customers of being part of the ASX Group. Our second commitment is to reset the Accelerate program. This is a vehicle delivering long-term enterprise-level change to enhance how ASX delivers on its stewardship of critical market infrastructure, embedding risk management excellence, resilience and sustainable business operations as standard practice. We are conducting a strategic reset of this program to align with our regulators to set appropriately aspirational work stream target states and with an additional governance and independence work stream to address key findings from the interim inquiry report. Work on this reset is underway, and we'll aim to agree our final plan with our regulators by the end of June this year. I'll talk in more detail about our approach shortly. Third, ASX will accumulate an additional $150 million above our current net tangible asset value by the 30th of June 2027. This capital charge is expected to be funded by lower dividend payments for at least the next three dividends at 75% of underlying NPAT, the bottom end of our revised dividend ratio -- payout ratio range. We also intend to operate a discounted dividend reinvestment plan for at least the next three dividends. And this work is being delivered as part of a strategy, investment and capital work stream as we refresh our strategy and ensure that we have the right investment plans in place to support it. It's important that our people demonstrate behaviors and decision-making that are aligned with our role as a steward of critical market infrastructure. ASX's leaders are expected to model these behaviors, which are now part of our performance and remuneration structures to ensure that these are deeply embedded and enduring in our organization. Our Board have an intense focus on this area of uplift, which we're delivering as part of the culture, capability and capacity work stream in the Accelerate program. And finally, we welcome the inquiry panel's recommendation for a revised regulatory approach that provides strong alignment to deliver outcomes that can benefit the entire market. And this involves uplifting our own regulatory engagement, too. The ASIC inquiry panel is expecting to publish a final report by the end of March, and we welcome further insights that it may provide. Now I'll focus on some important milestones that we've achieved in the past three years as part of our transformation. So, three years ago, we launched our strategy to transform ASX, and I'm proud of the progress that we've made in many areas during my time as CEO. And the inquiry panel's interim report underscores an even greater urgency to the transformation that we're pursuing. The investments we've already made in ASX through each of our strategic pillars have been important. So I want to focus on some key ones today. We've significantly reduced our technology risk and are building future-ready technology by delivering our modernization road map. And this includes the delivery of key ASX-wide capabilities such as our data, digital and observability platforms as well as cloud services. And these provide reusable capabilities for our critical services that are delivering scalability, resilience, security and best-in-class technology for ASX and our customers. We're partnering with our customers to evolve our offering and shape the future of financial markets. I won't list all of these new customer-driven initiatives as there are many, but some examples include the increase in trading opportunities from the creation of a post-auction trading session for our cash markets and the delinking of the bond role, driving greater liquidity in our rates futures market. We've also added environmental futures and debt market data products to our offering. And we've been undertaking some key reforms in our listings market as we look to play a leadership role in strengthening Australia's public markets. And we're enhancing our data and digital capability with a new platform that makes trusted data accessible, securely managed and integrated with analytics. Over time, we aim for all of our key data to be on this platform with AI to provide new insights for our customers to help them make decisions. And finally, as part of our commitment to invest in our people and ASX' culture, we now have a modern workplace experience here at our new head office in Sydney. As I said earlier, the ASIC inquiry panel's interim report is a critical inflection point for ASX. It comes at a time when markets and technology are changing fast. And as a Board and executive team, we are reflecting on our strategy and where changes may be needed to reflect the changing environment and our future aspirations. It's an opportunity to focus on the next horizon and on innovation for a future-ready exchange to power a stronger economy while also incorporating learnings and feedback from our stakeholders. Our strategy refresh will reflect our special position in the Australian economy and in supporting financial system stability. We run critical market infrastructure every day and the financial markets depend on us. We'll continue to focus on partnering with our customers and innovating to deliver the solutions that they need to prosper. And an important part of our strategy refresh is our role in shaping and stewarding the future of Australia's financial markets and how we deliver them to the world. Tokenization of assets, digital currencies, real-time trading and settlement and instant movement of collateral around the world are all important developments, which we're exploring. The Board and executive team are taking this important work forward together, and I know it will continue to evolve with the contributions of a new CEO in due course. ASX's technology underpins the daily operations of our markets and services. And we've taken a strategic approach to our long-term investment in technology, and this is delivering the enterprise capabilities we need now as well as supporting innovation and scale into the future. Our technology strategy is centered on core enterprise platforms, which provide our key ASX-wide services and are delivered as part of the major projects in our modernization road map. These projects are not just about replacing the technology that we have, they're building our future capability, flexibility and speed to market as markets evolve. We're leveraging leading global capability through our technology partnerships so that we can keep pace with emerging trends, innovation and best practice. We partner with a leading global cloud provider, delivering scalability, security and resilience for our new clearing and settlement services. We're also using cloud services for our new data platform, which, as I mentioned earlier, will enable new insights for our customers to help them make decisions. Our partnerships deliver the security, availability and recoverability that are important for critical market infrastructure. And we're also implementing an end-to-end observability platform to accelerate our detection of anomalies that could disrupt our services, improving our resilience and supporting our ability to operate through disruption. We're also partnering with specialist industry providers for business-specific applications. And this includes NASDAQ and TCS, who are delivering modern trading, clearing and settlement platforms with us. These best-in-class offerings benefit our customers with leading capability and ongoing globally driven product evolution for the future of Australia's financial markets. Our investments in technology mean that we're making product and process enhancements in some areas without some of the constraints of a legacy technology environment. As we look forward, these platform capabilities can provide the foundation for us to shape the future of financial markets. We'll consider global trends and explore innovation opportunities such as scaling our adoption of AI, end-to-end digitization for our customers and the digitization of financial markets for Australia. So let's focus on our technology modernization delivery road map, which we published at our AGM in October. We then -- since then, we've commenced our rollout of new network equipment to customer sites as part of our trading networks infrastructure replacement project. And when it's complete, it will deliver upgraded, resilient customer connectivity with current trading platforms, but also for upcoming cash market trading platform enhancements and for the new derivatives market trading platform. And for the derivatives market trading platform, our previous target window for go-live was late FY '27 or early FY '28. And as you can see on this road map, this has been updated to target late FY '28. Once it's in place, customers will benefit from a contemporary platform, which is aligned with global industry standards. It will deliver enhanced features and functionality, including new order entry and market data protocols and improved integration with our customers' pre-trade risk management systems. ASX will continue to invest in technology to support the evolving needs of financial markets now and into the future. For Release 1 of the CHESS project, ASX is targeting go-live in April 2026. This is a significant milestone for ASX and for Australian financial markets. The production parallel test is currently underway ahead of final preparations for all approved market operators for go-live. Release 1 will mean that we're delivering our clearing services on a contemporary platform, supporting resilience and security as well as growth in market volumes. And Release 1 is an important step in the delivery of ASX's technology strategy. It leverages the new cloud and data platforms, which provide improved resilience and secure access to high-quality data. Work on Release 2 continues in parallel with Release 1 with the first code release to the external industry test environment targeted for March this year. Our primary build is targeting to be completed by the end of 2027, and we've allowed a significant amount of time for industry testing and readiness preparation ahead of our targeted go-live in 2029. As we've previously announced, Clive Triance, our Group Executive of Securities and Payments, will be retiring. I'd like to sincerely thank him for his contribution to ASX. He'll be stepping down at the end of this month, and Andrew Jones, who's currently General Manager of Equities, has been appointed as Interim Group Executive. Andrew's instrumental role in the CHESS project ensures continuity as we move towards Release 1. The Accelerate program is the other key element of the great fundamentals pillar of our transformation strategy. The objective of this program is to enhance how ASX delivers on its stewardship of critical market infrastructure. It's embedding risk management excellence, resilience and sustainable business operation as standard practice. And we'll achieve this through a series of work streams, many of which we've talked about before. And since launching midway through last year, we've delivered key milestones, including uplifted core enterprise-level risk frameworks and controls, remediated key technology risks and launched a leadership program to develop our capability to drive our transformation. As I said earlier, we are undertaking a strategic reset of this program. We're carefully reviewing the target states for each work stream to make sure that they're appropriately aspirational. And this program is a high priority for us. We're aiming to agree the scope and target states of Accelerate with our regulators before the end of June. And I'll now hand over to Andrew to provide a detailed view of our financial results. Andrew Tobin: Thanks, Helen, and good morning, everyone. As announced on 28th January, we delivered strong operating revenue in the first half, demonstrating the quality of our portfolio of businesses. Operating revenue was $602.8 million, which was an increase of 11.2% compared to the prior corresponding period or PCP. Total expenses for the half were $264.3 million, which is up by 20%. Excluding the additional expenses relating to the ASIC inquiry, total expenses growth was 12.1% for the half. Net interest income was down by 6.7% to $40.2 million, impacted by lower earnings on ASX cash balances due to cuts in the RBA target cash rate. This was combined with higher interest expenses from the commencement of the lease at our new head office in Sydney. Underlying net profit after tax was up 3.9% compared to PCP as the strong revenue growth was partially offset by higher total expenses and lower net interest income. ASX's statutory net profit after tax was up by 8.3%, noting that significant items impacted the PCP. Our EBITDA margin was 61.4%, a decline of 180 basis points. And our underlying earnings per share of $1.357 is broadly consistent with the trend in underlying net profit after tax. Underlying ROE generated in the half was stable at 13.5% compared to the PCP. Now turning to the business unit revenue outcomes. Starting with Listings. Total listings revenue grew by 1.4% to $106.4 million compared to PCP. Annual listing fees make up just over half of total revenue for listings and are driven by market capitalization as at 31 May each year. Higher market capitalization in May 2025 supported revenue growth of 3.2% to $57.3 million in the period. We recognize the revenue derived from initial listings and secondary raisings over five years and three years, respectively. And so the revenue outcomes reported mainly reflect prior period activity. This is shown in the bar charts on the slide. This amortization profile was the primary driver of lower initial listings revenue recognized in the half of $9.1 million, down 3.2%. Secondary raisings revenue was $34.3 million, down 1.7% compared to PCP. Investment products and other listing fees were up 11.8% due to a higher number of ETF listings and growth in funds under management. Total net new capital quoted for the half was $27.3 billion compared to a net decline of $9.2 billion in 1H '25 due to stronger activity across our listing markets, particularly secondary raisings and dual listings. Moving now to the Markets business. This business generated revenue of $192.7 million, up 14.4% compared to PCP. Futures and OTC revenue of $142.9 million was up 13.1%, supported by a 10.5% increase in total futures and options on futures volumes as global interest rate market conditions in the period drove strong activity across the curve. Strong growth was observed across all major products, including 90-day bank bill futures and 3- and 10-year treasury bond futures with traded volumes up 14%, 13% and 10%, respectively. Commodities revenue was up primarily driven by higher trading activity in electricity derivatives. Cash market trading revenue was $41.6 million, up 24.6% on PCP, driven by a 22.7% increase in the total ASX on-market value traded. This was also supported by options traded value, which was up by 19.2%. ASX's share of on-market cash market trading averaged 88% for the period, which was consistent with the PCP. Equity options revenue was $8.2 million, down 4.7%, reflecting lower trading activity in single stock options, which was partially offset by an increase in index stock options. Now looking at the Technology and Data business. Today, we have published several new drivers that give a clearer view of the key revenue drivers for this business, which I will now outline. Technology and Data had another strong period with total revenue of $142.9 million, increasing by 7.5% compared to 1H '25. Information Services generated revenue of $89.3 million, up 8.6%, supported by strong demand for data across equities and derivatives markets. This drove real-time display and nondisplay data with the latter reflecting growth -- the growth trend in machine readable data that we have seen in recent years. Technical Services revenue of $53.6 million was up 5.7%. Growth was primarily driven by an increase in connectivity services, which provide access for participants to our markets. The number of ALC cabinets declined in the period, primarily due to customer consolidation and a shift in mix towards higher-powered cabinets, which attract a higher average fee for ASX. And finally, moving on to our fourth business segment, Securities and Payments. This business generated revenue of $160.8 million, up 18.5%. Issuer Services and equity post-trade services are subject to the new building block pricing model, which was implemented from 1 July 2025. Under this model, ASX's revenue requirement is derived by applying a regulated return to the efficient cost of providing these services. The revenue figures announced today are net of any over or under return experienced in the period, and we have accrued an over-recovery rebate of $7 million in the half. We provide a more detailed breakdown of this revenue calculation in the appendix of the investor presentation. Issuer Services revenue was $34.8 million, up 15.6%, driven by primary market facilitation fees and a higher number of CHESS statements issued, reflecting higher activity in cash markets. Equity post-trade services revenue also benefited from higher activity in cash markets, increasing by 22.2% to $81.5 million. Austraclear generated revenue of $44.5 million, up 14.4% compared to last year. It benefited from strong debt market activity during the period, leading to a 13.2% increase in transaction volume and 8.9% growth in the balance of issuances to $3.2 trillion at 31 December. Austraclear revenue also includes the net operating contribution from Sympli, ASX's property settlement joint venture. ASX's share of Sympli's operating loss was $4.4 million compared to a loss of $5.3 million in the PCP following a further restructure of their cost base. There remains ongoing uncertainty around the timing of interoperability between e-conveyancing platforms, and we continue to review the strategic value of this investment. Turning now to expenses. Total expenses for the half were $264.3 million, up 20% on the PCP. Operating expenses relating to our response to the ASIC inquiry was $17.3 million in the period. And excluding these additional costs, total expense growth was 12.1% or 7.8%, excluding depreciation and amortization. Employee expenses were up by 3.8%. Average permanent and contractor headcount increased from 1,265 in the PCP to 1,354 at the end of this period. The growth in project-related headcount primarily relates to our technology modernization program and OpEx headcount growth primarily relates to the investment in the Accelerate program. Technology expenses were higher, primarily due to higher licensing fees and costs related to the technology projects. Growth in administration expenses was driven by investments in the Accelerate program. And we reported depreciation and amortization of $31.9 million, up 54.1% as more elements of our new technology systems started to go live. This reflects our expectation of D&A increasing by approximately $20 million each financial year for the medium term. Turning now to total expenses growth. On 28th January, we announced an increase to our FY '26 total expense growth guidance range from between 14% and 19% compared to the PCP to be between 20% and 23%. Excluding the costs related to our response to the ASIC inquiry, we are guiding for total expense growth of between 13% and 15%. There are three key drivers of the higher range. We are increasing investment in the capacity and capability of resources to uplift risk management and support our major technology platforms. We have progressed the development of our commitments plan to respond to ASIC as part of the inquiry interim report. And finally, we have updated forecasts associated with trading volumes, primarily postage and timing of various legal actions. We also announced that we expect costs related to our response to the ASIC inquiry to be at the upper end of the previously provided $25 million to $35 million range, which now includes the expected commitments plan costs. We intend to provide FY '27 total expense growth guidance by the end of the financial year. Now moving to capital expenditure. CapEx for the first half was $83.1 million, and we are guiding for FY '26 CapEx to be between $170 million and $180 million and $160 million and $180 million in FY '27. This reflects the multiyear delivery profiles of our major projects, but noting the inherent delivery risks in the technology program may impact this guidance. We also expect an average depreciation and amortization schedule of 5 to 10 years for these major projects once they go live, noting that the CHESS project is expected to be amortized over 10 years. Moving now to net interest income. Net interest income consists of net interest earned on ASX's cash balances and net interest earned from the collateral balances lodged by participants to meet margin requirements. Total net interest income for the half was $40.2 million, representing a decline of 6.7% compared to the PCP. Interest income on ASX group cash of $26.8 million was down 16.8%, impacted by a lower RBA target cash rate in the period. Financing interest expense was 10.7% lower, largely driven by lower financing costs related to the corporate bond. Lease interest expenses primarily relate to the lease for our new headquarters in Sydney, which commenced on 1 October last year and also equipment leases. Net interest earned on the collateral balances was $26.1 million this half, up 16.5% compared to the PCP. This reflects an increase in the average collateral balance to $12.3 billion this half due to growth in activity across our markets. This was combined with a 3 basis point increase in the average investment spread on these balances to 18 basis points, driven by higher returns on government securities and overnight reverse repos. And we expect this spread to stay around the current level for the remainder of the financial year. The average collateral balances subject to risk management haircuts increased from $7.7 billion to $8.5 billion this period as overall collateral balances increased. As at 31 January, average collateral balances of $10.3 billion and balances subject to risk management haircuts of $6.8 billion were below the first half average, primarily due to the netting impact in index futures combined with a reduction in open interest. ASX's balance sheet continues to be strong and positioned conservatively with an S&P long-term rating of AA-. From a shareholder return perspective, underlying ROE for the half was 13.5%, which was stable compared to the PCP. An increase in reported underlying profit was offset by an increase in total equity over this period. As Helen mentioned earlier, we will accumulate $150 million above our current net tangible assets in line with our commitments to deliver ASIC's strategic package of actions. As part of this capital accumulation, the Board has declared an interim dividend of $1.018 per share for the half, which as previously indicated, is at the bottom end of our dividend payout ratio range of between 75% and 85% of underlying NPAT. In addition, we are also introducing a 2.5% discount to our existing dividend reinvestment plan. Depending on the participation rates in the DRP, we also have the flexibility to partially underwrite the DRP to achieve our capital targets over time. Our balance sheet and capital management options provide the flexibility to support ASX's future funding requirements. We currently hold available cash and short-term investments in excess of $200 million above the financial resource requirements for our licensed entities. This includes default and nondefault requirements to support our clearing and settlement licenses as well as financial resources to support the group's 5 other licenses, including its two financial markets licenses. We increased our default fund contribution by $50 million during the period to support the cash equities and exchange-traded options clearing business. Other financial resource requirements, which are calculated primarily based on revenue and expenses for the licensed entities, also increased by a similar amount. As mentioned previously, we will be accumulating an additional $150 million above the 31 December 2025 NTA position by June 2027. So, to summarize our results, the strong operating revenue we reported in the half reflects the strength of ASX's diversified businesses. Our medium-term underlying ROE target range of between 12.5% and 14% reflects our focus on our ongoing investment in the organization as well as delivering the right products and services for our customers. And with that, I will hand back to Helen. Thank you. Helen Lofthouse: Thanks, Andrew. So I'll now provide an update on our customer-driven growth opportunities before finishing up with outlook and guidance. Growing and improving our offering by listening to and partnering with our customers remains a priority by improving market quality and pursuing new initiatives. And today, I'll provide an update on the progress of some of our near-term opportunities. Market quality is about ensuring that our markets have the right settings to create transparency and liquidity and to drive capital allocation to the right opportunities. And as I mentioned earlier, we recently announced the appointment of seven members to the newly constituted advisory group on corporate governance, which replaces the ASX Corporate Governance Council. Chaired by Dr. Philip Lowe, this advisory group has been appointed to act in the interest of the market as a whole with members bringing deep expertise in listed entity governance, investment, superannuation, markets and stakeholder engagement. We also have an ongoing review into potential changes to the listing rules, which relate to shareholder approval requirements for dilutive acquisitions and changes in admission status for dual listed entities. We've received 45 submissions, and we look forward to providing an update later this half. These activities are examples of how we make sure that our market keeps evolving to remain attractive to companies and investors in Australia and around the world. And new initiatives are about adding new products and services in partnership with our customers to give them what they need to prosper as the global economy evolves. In the first half, we launched options over gold ETFs, which extends our ETF options offering into the commodities asset class for the first time. And we also added morning and peak electricity contracts to our environmental futures product suite as our customers' risk management needs evolve. And we've had our first customers use our ASX colo on-demand service, which we launched in late June as part of our -- an expansion of our technical services offering in our technology and data business. And this is a fully managed Infrastructure-as-a-Service solution within the Australian liquidity data center. It enables rapid client onboarding and scalability, allowing access to ASX's trading and clearing and settlement services without the need for on-premises equipment. So, looking now to outlook and starting with our listings business. There was solid momentum in listings activity in the first half. And during that period, there were 62 new listings, including the IPO of BMC Minerals as well as several dual listings, including Channel Infrastructure and Ryman Healthcare. And we're seeing a higher level of inquiries from entities considering a listing compared to this time last year. And as I just mentioned, market quality is a key focus for us and net new capital quoted is an important metric to measure the quality of our listings market because it takes into account delistings, new listings and secondary capital raisings. Net new capital quoted was $28.7 billion in the first seven months of the financial year, which was driven by this new listings activity as well as secondary capital raisings. And we also saw significant growth in the number of international listings with 13 in the first half, which demonstrates our strong global value proposition. Strong cash market activity continued into the second half with total value for January up by 47% compared to the same month last year. And we've seen volume growth continue to be driven by volatility caused by geopolitical events as well as expectations around local and global central bank monetary policy. Strong passive manager flows are also driving growth in options activity, particularly during index rebalancing events. Total futures and options on futures volumes were also strong in January, increasing by 31% compared to the prior period. The current rate futures environment remains supportive with activity across the curve. And at the short end, activity has been driven by changing market expectations around RBA monetary policy settings. And at the longer end of the curve, volumes have been driven by domestic and foreign issuance of Australian debt and global economic dynamics and their impact on Central Bank rates and currencies. Moving now to guidance. So as announced on the 28th of January, total expense growth for FY '26 is expected to be between 20% and 23%. And this includes the operating expenses associated with our response to the ASIC inquiry and development of our commitments plan and is expected to be at the upper end of our $25 million to $35 million range. Excluding these additional costs, we expect total expense growth of between 13% and 15%. FY '26 capital expenditure is expected to be between $170 million and $180 million and for FY '27, between $160 million and $180 million. As you know, the majority of our CapEx spend relates to the major technology projects as part of our modernization plan. Future investment by ASX, which will be considered as part of our strategy refresh, will reflect aspirations for innovation, findings from the inquiry panel and change load on ASX and our customers. Given the CEO transition, we'll no longer be holding our investor forum in June. Instead, we intend to provide our FY '27 total expense growth guidance together with CapEx guidance for FY '28 by the end of the financial year. And finally, underlying ROE remains a key metric as we continue to focus on growth opportunities while increasing our investment in the organization, and we're targeting between 12.5% and 14% in the medium term. Thank you, and I'll now invite questions. Operator: [Operator Instructions] Your first question comes from Julian Braganza with Goldman Sachs. Julian Braganza: Just a couple of questions from me. Just firstly, on the spread just on the participant balances, that continues to improve 18 basis points. Can you just help us understand better that trend has been consistently improving over the last few halves. Just want to get a sense whether there's a bit of conservatism here or just in terms of the outlook, how should we be expecting that to track? Helen Lofthouse: I'm sorry, Julian. I didn't quite -- did you catch that Andrew? Andrew Tobin: The spread movement. Helen Lofthouse: Okay. Andrew Tobin: So, Julian, if I understand the question, it was the 18 basis points on the spread that we reported. We are expecting to see that extend into the second half of this financial year. But beyond that, at this point in time, we haven't provided any guidance. To your point, though, it has been expanding. We have seen changing in dynamics with the reduction in cash in the overall system. That is providing further opportunities to increase that spread slightly. But we're really focused at this point in time on the second half, which is to continue with that 18 basis point spread into that second period. Julian Braganza: And has that spread been improving over the course of the half? Is that how we should be thinking about it? Andrew Tobin: Julian, I think the prior period comparison, it went up by about 3 basis points. So it can move around a little bit in any given month, but we're talking 1 or 2 basis points here in the scheme of things, but 18 basis points for the half, and that's expected to continue in the second half. Julian Braganza: Okay. That's clear. And then maybe just on the market futures average fee per contract, that improved to about $1.40. Can I just understand the thematics that's driving that improvement and also just your expectations around that going forward? Andrew Tobin: Yes, happy to. So we've seen a significant increase in volume over the period and also a change in mix. Commodities is part of the answer here that we've seen an increase in the commodities futures contracts over that period of time. And we've also seen the rebate process or outcome change over that period. So it's a combination of mix, higher commodities volumes coming through and sort of a lower rebate rate per contract over the period that's led to that $1.40. We haven't given guidance going forward, but you can see sort of that moves around depending on the mix of products there and that rebate mix. Julian Braganza: Okay. Got it. That's clear. And then maybe then just touching on the settlement and clearing business here. I just want to understand just in the appendices, the expense allocation to that division. It feels like there's been an increase in expenses based on the management accounts that were published for FY '25 and what you're giving us here for FY '26 seems like it's about $20 million, $25 million. It's about probably half the expense increase for the operating costs for the ASX Group ex the ASIC inquiry costs, et cetera. I just want to understand just the expense allocation between the two and how you're comfortable that, that increase is the right increase that should be allocated to the settlement and clearing business for pricing purposes. Andrew Tobin: So, Julian, I think you're talking -- so it's a bit muffled and difficult to hear you. But I think the question was going to the clearing and settlement allocation of costs. Is that correct? Julian Braganza: That's right. And then just also understanding that it be clear that the increase in expenses into FY '26 is in the order of about $22 million in terms of what's being allocated to the settlement and clearing business for pricing purposes. Andrew Tobin: So to determine the expense base allocated to clearing settlement and Issuer Services, we go through an activity-based allocation process. And so depending on where those resources are allocated, that will determine the expense outcomes allocated to clearing settlement and Issuer Services. On an annual basis, we actually published the budget number for the year ahead. And so following the end of this financial year, once we've concluded our budgets, we will be publishing the budget allocated to the clearing settlement and Issuer Services. So you'll be able to pick it up at that point in time. Julian Braganza: Okay. But just to that number at the bottom in the appendices is $147 million that's the budgeted number for? Andrew Tobin: That's correct. That's a budgeted number for FY '25 -- FY '26, I'm sorry. Julian Braganza: Yes. So just to be clear, so that's a $20 million, $25 million increase from last year based on the actual expenses for last year. So I just want to be clear because it's about 50% of the increase in ASX group cost that's being allocated here if I compare like-for-like. I just want to make sure that, that's consistent with how you're thinking about the cost allocation between the group versus settlement and clearing at this stage in the investment cycle. Andrew Tobin: That's correct. It's based on, as I mentioned, that activity-based allocation of costs to those particular activities. Julian Braganza: Okay. Got it. And then maybe just a last question. In terms of the ROE, you've given us a fair bit of numbers there in terms of the capital of the business and expenses, et cetera. But in terms of the ROE that you're seeing within settlement and clearing at the moment for the first half based on activity levels, where would that be? Andrew Tobin: Julian, you -- again, sorry, it's a bit muffled, but I think you're asking about the group ROE target. Julian Braganza: Yes. Apologies. I was asking about just the clearing at the moment for first half '26 on ROE. You've given us the fair numbers in terms of the capital in the business, the D&A, et cetera. So I just want to be clear given the in the first half, where the ROE for the first half '26. Andrew Tobin: So let me try and capture it. I think we've clearly stated our ROE targets at a group level, the 12.5% to 14%. But I think your question was also going to the clearing and settlement activities. And really, the way to think about the return in that business, it's a targeted return that determines the revenue allocation, if you like. So if you look at the slide in the back of the investor pack, the BBM slide, it talks about a targeted rate of return of 11.44%. That's the regulated cap, if you like. cap and floor for that business activity. So I think that answers your question, hopefully, Julian. Julian Braganza: Sorry, Andrew, I was asking what would have been the ROE for the first half of '26 for settlement and clearing? Andrew Tobin: Well, it's targeted to that return. So we -- 11.44% is the regulated cap. We mentioned today that we've included a rebate of $7 million in the clearing settlement issuer services revenue, and that really aligns that outcome with that 11.44% return. Operator: The next question comes from Ed Henning with CLSA. Ed Henning: A couple from me. Just the first one, just a clarification what you were just running through then on just a regulated return. Have you over earned $7 million in the period, so that is accrued. So therefore, if you underearn on the return, whether in the second half, you can then book that revenue? And the second part to that is can this be continued to accrue? Or is it -- can it be over multi years? Or is it can only be accrued for a year? Andrew Tobin: Yes, that's a great question, Ed. So we've published our pricing policy that goes into a lot of detail around this. Effectively, it is an accrual based on our estimation of what will be paid out as a rebate to our customers, but we need to let the full year complete. And so it will be determined based on the 30 June 2026 position. And in the pricing policy, there are certain sort of, I suppose, tolerances around an under or over accrual. So, for example, if there's an over-earning of a number beyond 5% is paid as a cash rebate to customers immediately. If it's between 0% and 5%, it's really retained by the organization to offset potential ups and downs or variances into the future periods as well. I mean if I just draw your attention to the pricing policy, and it sets out the tolerances around how the mechanisms work. Ed Henning: Okay. So this 7%, I imagine is within the 0% to 5%. So you -- just to clarify, you have booked this in the period. Okay. And -- but there could be a swing factor where if you overearn in the next period, you may not be able to book as much? Andrew Tobin: That's correct. Think about it as the regulated rate of return, the 11.44% that we've got in the example really sets that outcome, and we sort of monitor that on a regular basis. But the true measurement is 30 June each year. At 31 December, we have booked our best estimate of that $7 million accrual. Ed Henning: But as I said, that accrual has gone through the P&L or that is sitting there outside that hasn't been booked through the P&L? Helen Lofthouse: It could it go up or down. Andrew Tobin: Could it go up or down. It could go up or down. It's gone through the P&L, Ed. So it's a net rebate against the revenue we've recognized in the period. Ed Henning: Okay. No worries. Second question for you, Helen. In the speech today, you talked a number of times about aspirational targets and work streams. Is this a potential issue for ASIC? Because I'm surely they want realistic work streams and targets, not aspirations. Are your aspirations realistic? They're actually hard targets as opposed to aspirations? Helen Lofthouse: Well, look, I think as we reset the Accelerate program, those are exactly the questions we'll be focusing in on. I think that there's a balance to be had here, right, because the work streams absolutely need to be practical and deliverable and realistic. But they also need to really be couched in a deep understanding of our role as a steward of critical market infrastructure. And so when we talk about them being aspirational, we're really talking about being aligned with that and what are our aspirations for both resilience, for example, for Australia's financial markets, but also how do we make sure we're future-ready and supporting innovation across the markets. So we will be going through exactly those types of questions with ASIC to try and make sure we're aligned. But just to be clear, our target state definitions will be clear and measurable. But as we consider what those target states are, one of the questions we'll be asking ourselves is do they have the right level of aspiration in them given the important role that we play in Australia's markets. Ed Henning: Okay. And just to clarify, you will not expect any material changes from the interim report to the final? Helen Lofthouse: Well, look, I clearly don't know what's in the final report. I guess the things I would draw your attention to is the fact that in the interim report, they clearly state that the substantive findings from the inquiry panel are there in the interim report. I'm sure there'll be a lot more detail in the final report. But based on their prior comments, our expectation is that the substantive findings have already been identified. Operator: Your next question comes from Kieren Chidgey with UBS. Kieren Chidgey: I just have two questions. First one on costs. Following on, I guess, from that comment there, Helen, if ASX interim report is a substantive view of changes required, how should we think about, I guess, the information you've already put out to market in terms of the second half OpEx outlook. Obviously, it's stepping up 12% to 13% relative to first half. I think there was talk of various factors in there such as legal costs and volumes, but a key driver presumably is some of that response and bringing on additional people to enact that change. So just wondering sort of how much of what you think is required to be done is going to be there in second half, given it will obviously take time to sort of get all those people and processes in place. Is that a reasonable guide of the cost base as we look into '27, second half? Or is sort of that run rate in terms of the ASIC response going to step up further in '27? Helen Lofthouse: Look, it's a really understandable question, Kieren. But obviously, to really give a good sense of what FY '27 is going to look like, we need to make sure we've done the planning to substantiate that. Obviously, when we considered the updated guidance for FY '26, clearly we considered the factors that we laid out and made sure that with some flexibility as well because, of course, we haven't done our final submission of the commitments plan with ASIC, and we're still liaising with them to make sure that our plan is in line with expectations. So we've made sure that there's some flexibility there for adjustments that we might need to make during the half. But the planning and the detailed guidance for FY '27, I'm afraid, will come by the end of June. Kieren Chidgey: Yes. So yes, I don't want to sort of try and draw you too much on the '27 number, but maybe just to understand what you've allowed for in second half '26. So maybe you can just explain, I guess, are a lot of the cost responses that are coming through in second half in relation to the ASIC inquiry, the people, if there are additional heads, given you only announced that change sort of last month, like I presume the exit run rate at the end of the second half in terms of headcount, is that going to be particularly different to sort of where we sit today? Andrew Tobin: Yes. Happy to provide a comment here, Kieren, as well. I suppose there's an exercise to reset the Accelerate program, and that's part of what we need to do. And as Helen mentioned, that will also be informed by the final report once we receive that. That's due to be delivered to ASIC by the end of June. And really, then I think about the sort of the ongoing cost base to be part of the Accelerate delivery program. And a large part of that program is built into our cost base I think about the nonrecurring costs in this particular year will be the ASIC inquiry costs in total. And so that guidance of $30 million to $35 million that we provided to the marketplace, I do think about that as a one-off or nonrecurring cost. Kieren Chidgey: Yes. Okay. Second question sort of on a different subject on Sympli, we've seen AI release a couple of reports on interoperability and sort of cost benefit analysis across the system that showed, I guess, only a couple of scenarios that would drive a net positive economic contribution to the country over the next 20 or so years. Like has that altered your view or your commitment to that business? Andrew Tobin: Kieren, happy to take that one as well. As I called out in the speech this morning, we are considering that position and considering the sort of the strategic investment that we've made in Sympli, fully aware of the sort of ARNECC reports. But ARNECC are yet to sort of, I suppose, announce a date for interoperability, and that's the key uncertainty at this point in time. Operator: Your next question comes from Siddharth Parameswaran with JPMorgan. Siddharth Parameswaran: A couple of questions, if I can. Firstly, Helen and Andrew, I was hoping you could just provide some color on the very strong growth we've been getting on the revenue side in cash markets and also futures and just the sustainability into the future. So where -- maybe if you could just break down retail versus in-store versus offshore. What are you seeing? Maybe just whatever color you can give about the strong growth we've seen and your expectations on sustainability in the short and medium term? Helen Lofthouse: Maybe the comment I'd make there, Sid, is obviously, volumes for us are driven by a couple of different things. So one of them, of course, is the work we do with our customers to ensure we have market quality to add new products, new services, new trading opportunities, make sure we've got the market settings right. But of course, also a big part of it is global markets and volatility and what's happening more broadly. And so as you'd expect, the drivers of growth that we're seeing are both of those things. I think we've made a series of really important investments in capacity, in functionality for our customers, in the structural settings for our markets that are all supporting part of the volume increase that we're seeing. But part of what we're seeing is also a globally observed broad increase in market activity in both rates and the cash equity markets. So there are both kind of global macroeconomic and volatility factors there as well as the work that we've been doing to invest in and continue to grow and improve our markets to support that and make sure that we're benefiting from that increase of activity when it comes. And so if you look at long-term trends, and I'd encourage you to do that. We do have some good information, I think, on the -- on multiyear trends, then you can see that we are -- there are always ups and downs, and that's the sort of global market factors. But what we're seeing is broadly consistent with a long-term growth trend, notwithstanding that because of the ups and downs in different periods, you sort of have to draw a bit of a line of best fit there. But I think that this kind of level of volume growth is something that we've seen consistently over the years, but with some fluctuation up and down sort of in individual years given whatever market factors are at the time. Does that answer your question, Sid? Siddharth Parameswaran: Not fully. I was just hoping you could give some color around just the composition, retail versus offshore and just also domestic -- just on the futures side, just -- I understand the long-term growth drivers and you think it's consistent, but just where we are today. Helen Lofthouse: Yes. I think I can add a couple of things. Siddharth Parameswaran: It's much higher than the long-term growth. The recent has been extraordinary. So just what's driving it and how sustainable is this as a base? Helen Lofthouse: So maybe we might follow up separately and update you on the retail percentage because I don't think I have it handy. But what I would observe is that we have seen good diversification of participation in both markets. So seeing a range of different users very active in both the cash equity market and in our futures market. I think that our futures market has become an attractive market to trade on a global basis. And we're certainly seeing the diversified participation being no evidence of that. Siddharth Parameswaran: Yes. Okay. Just a second question, just on the strategy refresh, which I think you alluded to in your presentation. Just wanted to understand what is within the remit of what the Board is considering as worthy of a refresh. The financial targets, I presume, are not going to be changed. I mean you've obviously reaffirmed today, but I'm just wondering when you do a strategy refresh, you could look at all sorts of things. You're still privy to what is on the -- what is being considered? Just keen to understand exactly what is being considered in that strategy refresh and whether all the financial targets are likely to stay and not be addressed. Helen Lofthouse: Look, I think some of the really -- we've absolutely intended anyway to do a significant refresh at this point because halfway through our -- what we originally set out as a five-year strategy, what that means is that our current horizon for what we've currently laid out really only goes for the next couple of years. And I think it's very important for any organization that we have a longer perspective than that. But I think the factors that I would add from an ASX perspective are, firstly, that Markets and technology around market infrastructure are changing fast. We are seeing -- just as one example of that, all around the world, we're seeing significant changes in how regulators and organizations around the world are dealing with things like tokenization and digital currency. We've seen things like the GENIUS Act in the U.S. in the U.K., the Bank of England sort of Sandbox for digital currency. Now these are significant changes on a global basis and are really important for us to consider for ASX and think about what does that mean in terms of the services that we need to be offering, making sure that our strategy is supporting innovation and new services for Australia and that our technology strategy is taking account of those things as well. So, in a fast-moving environment, there's really a desire to make sure that our lens is looking not just at the transformation that's underway at the moment that's really foundational, but also what does that mean for the future? How do we make sure we're delivering future-ready market infrastructure. And of course, added to that, we have lots of stakeholder feedback, including the ASIC inquiry panels report. And I think there's important feedback from that in both how we make sure that we're really articulating our critical role in shaping and stewarding Australia's financial markets and making sure that we're very clear about how that feeds into our strategy and the investments that we're making. Siddharth Parameswaran: Okay. Yes. So the financial targets are not part of the consideration. It's all about the future in terms of where the financial markets are heading. Helen Lofthouse: Well, as we develop the strategy, we've obviously given some financial targets and guidance. The FY '27 expense guidance and the FY '28 CapEx guidance that we're intending to give will, of course, be informed by some of the strategic refresh that we're going through. Siddharth Parameswaran: Yes. But the ROE targets, et cetera, medium term? Andrew Tobin: It's medium term, and I just had a comment, that's the appropriate target at this point in time. Operator: Your next question comes from Freya Kong with Bank of America. Freya Kong: Just on the new pricing policy for clearing and settlements, so that was implemented 1st July 2025. Is there any need to review this? Or is it consistent with the criticisms and recommendations of the interim report that we got? Helen Lofthouse: Do you want to take this? Andrew Tobin: Sure. Thanks, Freya. So the new pricing policy went through an extensive consultation process with the industry prior to its implementation, and it's not part that we can see in terms of the recommendations out of the interim inquiry report at this point in time. Freya Kong: Okay. And then I guess, given the big uplift in resourcing you expect in clearing and settlements, has this already started to be reflected in pricing? Probably that follow. Andrew Tobin: Yes, Freya, it probably goes back to a prior question that effectively, the pricing policy really regulates the absolute return for those business activities, clearing settlement Issuer services. That goes into sort of considering the capital base. So that would include the CapEx in relation to the CHESS Release 1 and Release 2, for example. It would include costs that are allocated to those activities, and that really determines a revenue target, but that aligns to that overall return target for those business activities. And so all of those go into determining what the appropriate return is. Freya Kong: Okay. But I guess my question is because you've increased the resourcing to the clearing and settlement facilities based on ASIC recommendations, this should naturally automatically flow into the pricing just to inform the return. Is that fair? Helen Lofthouse: To the extent that it impacts the specific licenses that are part of the pricing policy, and that's the ASX Clear and ASX settlement licenses. Those are the two entities that provide the cash market clearing, settlement and issuer services. then yes, that would be true. The greater independence of clearing and settlement does capture other license facilities as well. Freya Kong: Okay. Okay. Great. And then just a question on the interim report and what's really changed. But I guess the report was quite critical of ASX, but also critical of the uncoordinated approach of regulators, which has contributed to what you called a defensive culture at ASX. Since the report, do you sense there's been any change in the working relationship that you've got with the regulator? Helen Lofthouse: Well, I think that certainly from our interactions so far, we can see that our regulators have taken that feedback very seriously and are very committed to having a very outcomes-focused approach. And it's also important to note that part of that is ASX improving our own regulatory engagement, too and making sure that we are really clear on what it is that our regulators need in order to fulfill their important function and trying to make sure that we deliver the right information at the right time as well. So I think there's a genuine commitment on all sides for that to be an important factor. Operator: There are no further questions at this time. I'll now hand back to Ms. Helen Lofthouse for closing remarks. Helen Lofthouse: So, thank you. This concludes our first half results presentation. And thank you much -- thank you very much, everyone, for -- on what I know is a busy day for joining us today. So, goodbye. Andrew Tobin: Thank you.
Helen Lofthouse: Good morning, and welcome to ASX's results briefing for the first half of the financial year ending 31st of December 2025. Thank you for taking part in this virtual presentation, and I hope you're well wherever you're joining us. My name is Helen Lofthouse, and I'm the Managing Director and CEO of ASX. I'm pleased to be presenting these results today, along with ASX's Chief Financial Officer, Andrew Tobin. I'd like to acknowledge the Gadigal people of the Eora Nation, who are the traditional custodians of the country where I'm speaking today. We recognize their continuing connection to the land and waters and pay our respects to elders past and present, and we extend that respect to any First Nations people joining us today. Before discussing the results, I wanted to address the CEO transition. So, on Tuesday, we announced that I'll be stepping down as Managing Director and CEO of ASX in May this year. It's been a privilege to serve ASX for 11 years, almost 4 of which as CEO at an organization that's at the heart of Australia's financial markets. It's been a challenging time for ASX with some tough decisions along the way. And I'm particularly proud of the achievements we've made on our transformation journey during my time as CEO. And it's been a rewarding but also demanding journey with enormous personal growth. And having reflected on what ASX needs for its next phase, together with the Board, I've agreed that this is the right time for a new person to bring fresh energy to the work ahead. And we've made great strides even as we face challenges, and I want to thank everyone at ASX for their dedication and support and our customers for their partnership. And as you'll have seen in the announcement, a comprehensive process is now underway to identify the next CEO. So moving now to today's presentation. It will cover areas, and then Andrew and I will take your questions. So I'll begin by talking about highlights from our first half results before Andrew provides a more detailed view. And the main focus of my presentation will be on the outcomes and commitments arising from the ASIC inquiry panels interim report and an update on our transformation strategy. And I'll then provide an update on progress on some of our customer-driven growth opportunities and conclude with some observations on market outlook and its implications for ASX. And we'll finish with Q&A. So let's begin with some highlights from our first half results. As you may have seen, we announced the headlines of our unaudited first half results on the 28th of January, alongside updated FY '26 total expense growth guidance. And today, I'm pleased to provide a more detailed view of our results. ASX delivered a solid financial performance in the half with particularly strong revenue growth. We reported operating revenue of $602.8 million, which is up 11.2% compared to the prior corresponding period or PCP. Underlying net profit after tax increased by 3.9% and was impacted by the growth in total expenses. Statutory profit was up by 8.3%, noting that significant items impacted the PCP. The Board has determined a fully franked interim dividend of $1.018 per share, reflecting a payout ratio of 75% of underlying NPAT, which as we flagged in our announcement in December, is at the bottom of our updated guidance range. Our EBITDA margin decreased by 180 basis points to 61.4%, primarily impacted by the growth in total expenses, including the cost of our response to the ASIC inquiry. Underlying return on equity was stable at 13.5%. Moving now to the ASIC inquiry. The ASIC Inquiry Panel released its interim report in December last year. The interim report represents a critical inflection point for ASX. It contains some serious interim findings, and we've taken the time to reflect deeply on the primacy of ASX's stewardship role as an operator of critical market infrastructure. And for us, stewardship means that we are trusted custodians who are accountable for delivering long-term sustainable outcomes for the Australian economy, supporting innovation and growth. Every day, we run critical market infrastructure that sits at the heart of Australia's financial markets and supports the stability of our financial system. Our markets help direct capital to where it's needed, driving Australia's economy and helping our customers and investors grow. And with this role comes significant responsibility to manage risk well, build resilient systems for the long term and continue innovating to prepare Australia's markets for the future. ASX has enjoyed a history of solid financial success and notable commercial and service innovation. And this has been an enduring strength for us, but it has not always served us well. At times, it's allowed a level of complacency and insularity to surface instead of benchmarking ourselves to the highest standards. And in more recent years, we've had too many instances where our customers and regulators have had their confidence tested. Our challenges have been many years in the making. And while there have been material changes over the past three years, we're taking immediate steps to make further changes, which will likely require a multiyear effort. We're committed to building an ASX that is sustainably different into the future. And the ASIC inquiry panel's interim report is tough reading, but it's fair. The inquiry process and the interim report have prompted us to carefully consider why some parts of our transformation strategy haven't progressed as quickly as we would have liked and what cultural factors have made it challenging to achieve. The panel's interim report states that it contains the substantive conclusions that will comprise the basis of their final report, which is to be released by the end of March this year. ASIC proposed a strategic package of actions for ASX to address the recommendations that the report contained. And we've committed to delivering these actions, and I'll talk about how we're doing this in a bit more detail shortly. Importantly, the inquiry panel also identifies the need for a new supervisory approach, which places greater emphasis on delivering outcomes that can benefit the whole market with open constructive engagement from all parties. Implementing our commitments to ASIC is a high priority for us. As we said at our announcement on the 28th of January, we'll deliver our commitments planned to ASIC by the end of this month, and we're already getting on with delivering the outcomes. First, we're creating a clear dedicated governance structure for our clearing and settlement functions. It will promote the independence of and responsible investment in each of the clearing and settlement facilities to support financial system stability. All ASX Limited directors have now stepped down from the clearing and settlement facility boards, which now comprise only independent nonexecutive directors. These boards will also be supported by dedicated resources as well as clearly defined shared services support from ASX Group. Our aim is to bring greater independence while maintaining the benefits for these entities and our customers of being part of the ASX Group. Our second commitment is to reset the Accelerate program. This is a vehicle delivering long-term enterprise-level change to enhance how ASX delivers on its stewardship of critical market infrastructure, embedding risk management excellence, resilience and sustainable business operations as standard practice. We are conducting a strategic reset of this program to align with our regulators to set appropriately aspirational work stream target states and with an additional governance and independence work stream to address key findings from the interim inquiry report. Work on this reset is underway, and we'll aim to agree our final plan with our regulators by the end of June this year. I'll talk in more detail about our approach shortly. Third, ASX will accumulate an additional $150 million above our current net tangible asset value by the 30th of June 2027. This capital charge is expected to be funded by lower dividend payments for at least the next three dividends at 75% of underlying NPAT, the bottom end of our revised dividend ratio -- payout ratio range. We also intend to operate a discounted dividend reinvestment plan for at least the next three dividends. And this work is being delivered as part of a strategy, investment and capital work stream as we refresh our strategy and ensure that we have the right investment plans in place to support it. It's important that our people demonstrate behaviors and decision-making that are aligned with our role as a steward of critical market infrastructure. ASX's leaders are expected to model these behaviors, which are now part of our performance and remuneration structures to ensure that these are deeply embedded and enduring in our organization. Our Board have an intense focus on this area of uplift, which we're delivering as part of the culture, capability and capacity work stream in the Accelerate program. And finally, we welcome the inquiry panel's recommendation for a revised regulatory approach that provides strong alignment to deliver outcomes that can benefit the entire market. And this involves uplifting our own regulatory engagement, too. The ASIC inquiry panel is expecting to publish a final report by the end of March, and we welcome further insights that it may provide. Now I'll focus on some important milestones that we've achieved in the past three years as part of our transformation. So, three years ago, we launched our strategy to transform ASX, and I'm proud of the progress that we've made in many areas during my time as CEO. And the inquiry panel's interim report underscores an even greater urgency to the transformation that we're pursuing. The investments we've already made in ASX through each of our strategic pillars have been important. So I want to focus on some key ones today. We've significantly reduced our technology risk and are building future-ready technology by delivering our modernization road map. And this includes the delivery of key ASX-wide capabilities such as our data, digital and observability platforms as well as cloud services. And these provide reusable capabilities for our critical services that are delivering scalability, resilience, security and best-in-class technology for ASX and our customers. We're partnering with our customers to evolve our offering and shape the future of financial markets. I won't list all of these new customer-driven initiatives as there are many, but some examples include the increase in trading opportunities from the creation of a post-auction trading session for our cash markets and the delinking of the bond role, driving greater liquidity in our rates futures market. We've also added environmental futures and debt market data products to our offering. And we've been undertaking some key reforms in our listings market as we look to play a leadership role in strengthening Australia's public markets. And we're enhancing our data and digital capability with a new platform that makes trusted data accessible, securely managed and integrated with analytics. Over time, we aim for all of our key data to be on this platform with AI to provide new insights for our customers to help them make decisions. And finally, as part of our commitment to invest in our people and ASX' culture, we now have a modern workplace experience here at our new head office in Sydney. As I said earlier, the ASIC inquiry panel's interim report is a critical inflection point for ASX. It comes at a time when markets and technology are changing fast. And as a Board and executive team, we are reflecting on our strategy and where changes may be needed to reflect the changing environment and our future aspirations. It's an opportunity to focus on the next horizon and on innovation for a future-ready exchange to power a stronger economy while also incorporating learnings and feedback from our stakeholders. Our strategy refresh will reflect our special position in the Australian economy and in supporting financial system stability. We run critical market infrastructure every day and the financial markets depend on us. We'll continue to focus on partnering with our customers and innovating to deliver the solutions that they need to prosper. And an important part of our strategy refresh is our role in shaping and stewarding the future of Australia's financial markets and how we deliver them to the world. Tokenization of assets, digital currencies, real-time trading and settlement and instant movement of collateral around the world are all important developments, which we're exploring. The Board and executive team are taking this important work forward together, and I know it will continue to evolve with the contributions of a new CEO in due course. ASX's technology underpins the daily operations of our markets and services. And we've taken a strategic approach to our long-term investment in technology, and this is delivering the enterprise capabilities we need now as well as supporting innovation and scale into the future. Our technology strategy is centered on core enterprise platforms, which provide our key ASX-wide services and are delivered as part of the major projects in our modernization road map. These projects are not just about replacing the technology that we have, they're building our future capability, flexibility and speed to market as markets evolve. We're leveraging leading global capability through our technology partnerships so that we can keep pace with emerging trends, innovation and best practice. We partner with a leading global cloud provider, delivering scalability, security and resilience for our new clearing and settlement services. We're also using cloud services for our new data platform, which, as I mentioned earlier, will enable new insights for our customers to help them make decisions. Our partnerships deliver the security, availability and recoverability that are important for critical market infrastructure. And we're also implementing an end-to-end observability platform to accelerate our detection of anomalies that could disrupt our services, improving our resilience and supporting our ability to operate through disruption. We're also partnering with specialist industry providers for business-specific applications. And this includes NASDAQ and TCS, who are delivering modern trading, clearing and settlement platforms with us. These best-in-class offerings benefit our customers with leading capability and ongoing globally driven product evolution for the future of Australia's financial markets. Our investments in technology mean that we're making product and process enhancements in some areas without some of the constraints of a legacy technology environment. As we look forward, these platform capabilities can provide the foundation for us to shape the future of financial markets. We'll consider global trends and explore innovation opportunities such as scaling our adoption of AI, end-to-end digitization for our customers and the digitization of financial markets for Australia. So let's focus on our technology modernization delivery road map, which we published at our AGM in October. We then -- since then, we've commenced our rollout of new network equipment to customer sites as part of our trading networks infrastructure replacement project. And when it's complete, it will deliver upgraded, resilient customer connectivity with current trading platforms, but also for upcoming cash market trading platform enhancements and for the new derivatives market trading platform. And for the derivatives market trading platform, our previous target window for go-live was late FY '27 or early FY '28. And as you can see on this road map, this has been updated to target late FY '28. Once it's in place, customers will benefit from a contemporary platform, which is aligned with global industry standards. It will deliver enhanced features and functionality, including new order entry and market data protocols and improved integration with our customers' pre-trade risk management systems. ASX will continue to invest in technology to support the evolving needs of financial markets now and into the future. For Release 1 of the CHESS project, ASX is targeting go-live in April 2026. This is a significant milestone for ASX and for Australian financial markets. The production parallel test is currently underway ahead of final preparations for all approved market operators for go-live. Release 1 will mean that we're delivering our clearing services on a contemporary platform, supporting resilience and security as well as growth in market volumes. And Release 1 is an important step in the delivery of ASX's technology strategy. It leverages the new cloud and data platforms, which provide improved resilience and secure access to high-quality data. Work on Release 2 continues in parallel with Release 1 with the first code release to the external industry test environment targeted for March this year. Our primary build is targeting to be completed by the end of 2027, and we've allowed a significant amount of time for industry testing and readiness preparation ahead of our targeted go-live in 2029. As we've previously announced, Clive Triance, our Group Executive of Securities and Payments, will be retiring. I'd like to sincerely thank him for his contribution to ASX. He'll be stepping down at the end of this month, and Andrew Jones, who's currently General Manager of Equities, has been appointed as Interim Group Executive. Andrew's instrumental role in the CHESS project ensures continuity as we move towards Release 1. The Accelerate program is the other key element of the great fundamentals pillar of our transformation strategy. The objective of this program is to enhance how ASX delivers on its stewardship of critical market infrastructure. It's embedding risk management excellence, resilience and sustainable business operation as standard practice. And we'll achieve this through a series of work streams, many of which we've talked about before. And since launching midway through last year, we've delivered key milestones, including uplifted core enterprise-level risk frameworks and controls, remediated key technology risks and launched a leadership program to develop our capability to drive our transformation. As I said earlier, we are undertaking a strategic reset of this program. We're carefully reviewing the target states for each work stream to make sure that they're appropriately aspirational. And this program is a high priority for us. We're aiming to agree the scope and target states of Accelerate with our regulators before the end of June. And I'll now hand over to Andrew to provide a detailed view of our financial results. Andrew Tobin: Thanks, Helen, and good morning, everyone. As announced on 28th January, we delivered strong operating revenue in the first half, demonstrating the quality of our portfolio of businesses. Operating revenue was $602.8 million, which was an increase of 11.2% compared to the prior corresponding period or PCP. Total expenses for the half were $264.3 million, which is up by 20%. Excluding the additional expenses relating to the ASIC inquiry, total expenses growth was 12.1% for the half. Net interest income was down by 6.7% to $40.2 million, impacted by lower earnings on ASX cash balances due to cuts in the RBA target cash rate. This was combined with higher interest expenses from the commencement of the lease at our new head office in Sydney. Underlying net profit after tax was up 3.9% compared to PCP as the strong revenue growth was partially offset by higher total expenses and lower net interest income. ASX's statutory net profit after tax was up by 8.3%, noting that significant items impacted the PCP. Our EBITDA margin was 61.4%, a decline of 180 basis points. And our underlying earnings per share of $1.357 is broadly consistent with the trend in underlying net profit after tax. Underlying ROE generated in the half was stable at 13.5% compared to the PCP. Now turning to the business unit revenue outcomes. Starting with Listings. Total listings revenue grew by 1.4% to $106.4 million compared to PCP. Annual listing fees make up just over half of total revenue for listings and are driven by market capitalization as at 31 May each year. Higher market capitalization in May 2025 supported revenue growth of 3.2% to $57.3 million in the period. We recognize the revenue derived from initial listings and secondary raisings over five years and three years, respectively. And so the revenue outcomes reported mainly reflect prior period activity. This is shown in the bar charts on the slide. This amortization profile was the primary driver of lower initial listings revenue recognized in the half of $9.1 million, down 3.2%. Secondary raisings revenue was $34.3 million, down 1.7% compared to PCP. Investment products and other listing fees were up 11.8% due to a higher number of ETF listings and growth in funds under management. Total net new capital quoted for the half was $27.3 billion compared to a net decline of $9.2 billion in 1H '25 due to stronger activity across our listing markets, particularly secondary raisings and dual listings. Moving now to the Markets business. This business generated revenue of $192.7 million, up 14.4% compared to PCP. Futures and OTC revenue of $142.9 million was up 13.1%, supported by a 10.5% increase in total futures and options on futures volumes as global interest rate market conditions in the period drove strong activity across the curve. Strong growth was observed across all major products, including 90-day bank bill futures and 3- and 10-year treasury bond futures with traded volumes up 14%, 13% and 10%, respectively. Commodities revenue was up primarily driven by higher trading activity in electricity derivatives. Cash market trading revenue was $41.6 million, up 24.6% on PCP, driven by a 22.7% increase in the total ASX on-market value traded. This was also supported by options traded value, which was up by 19.2%. ASX's share of on-market cash market trading averaged 88% for the period, which was consistent with the PCP. Equity options revenue was $8.2 million, down 4.7%, reflecting lower trading activity in single stock options, which was partially offset by an increase in index stock options. Now looking at the Technology and Data business. Today, we have published several new drivers that give a clearer view of the key revenue drivers for this business, which I will now outline. Technology and Data had another strong period with total revenue of $142.9 million, increasing by 7.5% compared to 1H '25. Information Services generated revenue of $89.3 million, up 8.6%, supported by strong demand for data across equities and derivatives markets. This drove real-time display and nondisplay data with the latter reflecting growth -- the growth trend in machine readable data that we have seen in recent years. Technical Services revenue of $53.6 million was up 5.7%. Growth was primarily driven by an increase in connectivity services, which provide access for participants to our markets. The number of ALC cabinets declined in the period, primarily due to customer consolidation and a shift in mix towards higher-powered cabinets, which attract a higher average fee for ASX. And finally, moving on to our fourth business segment, Securities and Payments. This business generated revenue of $160.8 million, up 18.5%. Issuer Services and equity post-trade services are subject to the new building block pricing model, which was implemented from 1 July 2025. Under this model, ASX's revenue requirement is derived by applying a regulated return to the efficient cost of providing these services. The revenue figures announced today are net of any over or under return experienced in the period, and we have accrued an over-recovery rebate of $7 million in the half. We provide a more detailed breakdown of this revenue calculation in the appendix of the investor presentation. Issuer Services revenue was $34.8 million, up 15.6%, driven by primary market facilitation fees and a higher number of CHESS statements issued, reflecting higher activity in cash markets. Equity post-trade services revenue also benefited from higher activity in cash markets, increasing by 22.2% to $81.5 million. Austraclear generated revenue of $44.5 million, up 14.4% compared to last year. It benefited from strong debt market activity during the period, leading to a 13.2% increase in transaction volume and 8.9% growth in the balance of issuances to $3.2 trillion at 31 December. Austraclear revenue also includes the net operating contribution from Sympli, ASX's property settlement joint venture. ASX's share of Sympli's operating loss was $4.4 million compared to a loss of $5.3 million in the PCP following a further restructure of their cost base. There remains ongoing uncertainty around the timing of interoperability between e-conveyancing platforms, and we continue to review the strategic value of this investment. Turning now to expenses. Total expenses for the half were $264.3 million, up 20% on the PCP. Operating expenses relating to our response to the ASIC inquiry was $17.3 million in the period. And excluding these additional costs, total expense growth was 12.1% or 7.8%, excluding depreciation and amortization. Employee expenses were up by 3.8%. Average permanent and contractor headcount increased from 1,265 in the PCP to 1,354 at the end of this period. The growth in project-related headcount primarily relates to our technology modernization program and OpEx headcount growth primarily relates to the investment in the Accelerate program. Technology expenses were higher, primarily due to higher licensing fees and costs related to the technology projects. Growth in administration expenses was driven by investments in the Accelerate program. And we reported depreciation and amortization of $31.9 million, up 54.1% as more elements of our new technology systems started to go live. This reflects our expectation of D&A increasing by approximately $20 million each financial year for the medium term. Turning now to total expenses growth. On 28th January, we announced an increase to our FY '26 total expense growth guidance range from between 14% and 19% compared to the PCP to be between 20% and 23%. Excluding the costs related to our response to the ASIC inquiry, we are guiding for total expense growth of between 13% and 15%. There are three key drivers of the higher range. We are increasing investment in the capacity and capability of resources to uplift risk management and support our major technology platforms. We have progressed the development of our commitments plan to respond to ASIC as part of the inquiry interim report. And finally, we have updated forecasts associated with trading volumes, primarily postage and timing of various legal actions. We also announced that we expect costs related to our response to the ASIC inquiry to be at the upper end of the previously provided $25 million to $35 million range, which now includes the expected commitments plan costs. We intend to provide FY '27 total expense growth guidance by the end of the financial year. Now moving to capital expenditure. CapEx for the first half was $83.1 million, and we are guiding for FY '26 CapEx to be between $170 million and $180 million and $160 million and $180 million in FY '27. This reflects the multiyear delivery profiles of our major projects, but noting the inherent delivery risks in the technology program may impact this guidance. We also expect an average depreciation and amortization schedule of 5 to 10 years for these major projects once they go live, noting that the CHESS project is expected to be amortized over 10 years. Moving now to net interest income. Net interest income consists of net interest earned on ASX's cash balances and net interest earned from the collateral balances lodged by participants to meet margin requirements. Total net interest income for the half was $40.2 million, representing a decline of 6.7% compared to the PCP. Interest income on ASX group cash of $26.8 million was down 16.8%, impacted by a lower RBA target cash rate in the period. Financing interest expense was 10.7% lower, largely driven by lower financing costs related to the corporate bond. Lease interest expenses primarily relate to the lease for our new headquarters in Sydney, which commenced on 1 October last year and also equipment leases. Net interest earned on the collateral balances was $26.1 million this half, up 16.5% compared to the PCP. This reflects an increase in the average collateral balance to $12.3 billion this half due to growth in activity across our markets. This was combined with a 3 basis point increase in the average investment spread on these balances to 18 basis points, driven by higher returns on government securities and overnight reverse repos. And we expect this spread to stay around the current level for the remainder of the financial year. The average collateral balances subject to risk management haircuts increased from $7.7 billion to $8.5 billion this period as overall collateral balances increased. As at 31 January, average collateral balances of $10.3 billion and balances subject to risk management haircuts of $6.8 billion were below the first half average, primarily due to the netting impact in index futures combined with a reduction in open interest. ASX's balance sheet continues to be strong and positioned conservatively with an S&P long-term rating of AA-. From a shareholder return perspective, underlying ROE for the half was 13.5%, which was stable compared to the PCP. An increase in reported underlying profit was offset by an increase in total equity over this period. As Helen mentioned earlier, we will accumulate $150 million above our current net tangible assets in line with our commitments to deliver ASIC's strategic package of actions. As part of this capital accumulation, the Board has declared an interim dividend of $1.018 per share for the half, which as previously indicated, is at the bottom end of our dividend payout ratio range of between 75% and 85% of underlying NPAT. In addition, we are also introducing a 2.5% discount to our existing dividend reinvestment plan. Depending on the participation rates in the DRP, we also have the flexibility to partially underwrite the DRP to achieve our capital targets over time. Our balance sheet and capital management options provide the flexibility to support ASX's future funding requirements. We currently hold available cash and short-term investments in excess of $200 million above the financial resource requirements for our licensed entities. This includes default and nondefault requirements to support our clearing and settlement licenses as well as financial resources to support the group's 5 other licenses, including its two financial markets licenses. We increased our default fund contribution by $50 million during the period to support the cash equities and exchange-traded options clearing business. Other financial resource requirements, which are calculated primarily based on revenue and expenses for the licensed entities, also increased by a similar amount. As mentioned previously, we will be accumulating an additional $150 million above the 31 December 2025 NTA position by June 2027. So, to summarize our results, the strong operating revenue we reported in the half reflects the strength of ASX's diversified businesses. Our medium-term underlying ROE target range of between 12.5% and 14% reflects our focus on our ongoing investment in the organization as well as delivering the right products and services for our customers. And with that, I will hand back to Helen. Thank you. Helen Lofthouse: Thanks, Andrew. So I'll now provide an update on our customer-driven growth opportunities before finishing up with outlook and guidance. Growing and improving our offering by listening to and partnering with our customers remains a priority by improving market quality and pursuing new initiatives. And today, I'll provide an update on the progress of some of our near-term opportunities. Market quality is about ensuring that our markets have the right settings to create transparency and liquidity and to drive capital allocation to the right opportunities. And as I mentioned earlier, we recently announced the appointment of seven members to the newly constituted advisory group on corporate governance, which replaces the ASX Corporate Governance Council. Chaired by Dr. Philip Lowe, this advisory group has been appointed to act in the interest of the market as a whole with members bringing deep expertise in listed entity governance, investment, superannuation, markets and stakeholder engagement. We also have an ongoing review into potential changes to the listing rules, which relate to shareholder approval requirements for dilutive acquisitions and changes in admission status for dual listed entities. We've received 45 submissions, and we look forward to providing an update later this half. These activities are examples of how we make sure that our market keeps evolving to remain attractive to companies and investors in Australia and around the world. And new initiatives are about adding new products and services in partnership with our customers to give them what they need to prosper as the global economy evolves. In the first half, we launched options over gold ETFs, which extends our ETF options offering into the commodities asset class for the first time. And we also added morning and peak electricity contracts to our environmental futures product suite as our customers' risk management needs evolve. And we've had our first customers use our ASX colo on-demand service, which we launched in late June as part of our -- an expansion of our technical services offering in our technology and data business. And this is a fully managed Infrastructure-as-a-Service solution within the Australian liquidity data center. It enables rapid client onboarding and scalability, allowing access to ASX's trading and clearing and settlement services without the need for on-premises equipment. So, looking now to outlook and starting with our listings business. There was solid momentum in listings activity in the first half. And during that period, there were 62 new listings, including the IPO of BMC Minerals as well as several dual listings, including Channel Infrastructure and Ryman Healthcare. And we're seeing a higher level of inquiries from entities considering a listing compared to this time last year. And as I just mentioned, market quality is a key focus for us and net new capital quoted is an important metric to measure the quality of our listings market because it takes into account delistings, new listings and secondary capital raisings. Net new capital quoted was $28.7 billion in the first seven months of the financial year, which was driven by this new listings activity as well as secondary capital raisings. And we also saw significant growth in the number of international listings with 13 in the first half, which demonstrates our strong global value proposition. Strong cash market activity continued into the second half with total value for January up by 47% compared to the same month last year. And we've seen volume growth continue to be driven by volatility caused by geopolitical events as well as expectations around local and global central bank monetary policy. Strong passive manager flows are also driving growth in options activity, particularly during index rebalancing events. Total futures and options on futures volumes were also strong in January, increasing by 31% compared to the prior period. The current rate futures environment remains supportive with activity across the curve. And at the short end, activity has been driven by changing market expectations around RBA monetary policy settings. And at the longer end of the curve, volumes have been driven by domestic and foreign issuance of Australian debt and global economic dynamics and their impact on Central Bank rates and currencies. Moving now to guidance. So as announced on the 28th of January, total expense growth for FY '26 is expected to be between 20% and 23%. And this includes the operating expenses associated with our response to the ASIC inquiry and development of our commitments plan and is expected to be at the upper end of our $25 million to $35 million range. Excluding these additional costs, we expect total expense growth of between 13% and 15%. FY '26 capital expenditure is expected to be between $170 million and $180 million and for FY '27, between $160 million and $180 million. As you know, the majority of our CapEx spend relates to the major technology projects as part of our modernization plan. Future investment by ASX, which will be considered as part of our strategy refresh, will reflect aspirations for innovation, findings from the inquiry panel and change load on ASX and our customers. Given the CEO transition, we'll no longer be holding our investor forum in June. Instead, we intend to provide our FY '27 total expense growth guidance together with CapEx guidance for FY '28 by the end of the financial year. And finally, underlying ROE remains a key metric as we continue to focus on growth opportunities while increasing our investment in the organization, and we're targeting between 12.5% and 14% in the medium term. Thank you, and I'll now invite questions. Operator: [Operator Instructions] Your first question comes from Julian Braganza with Goldman Sachs. Julian Braganza: Just a couple of questions from me. Just firstly, on the spread just on the participant balances, that continues to improve 18 basis points. Can you just help us understand better that trend has been consistently improving over the last few halves. Just want to get a sense whether there's a bit of conservatism here or just in terms of the outlook, how should we be expecting that to track? Helen Lofthouse: I'm sorry, Julian. I didn't quite -- did you catch that Andrew? Andrew Tobin: The spread movement. Helen Lofthouse: Okay. Andrew Tobin: So, Julian, if I understand the question, it was the 18 basis points on the spread that we reported. We are expecting to see that extend into the second half of this financial year. But beyond that, at this point in time, we haven't provided any guidance. To your point, though, it has been expanding. We have seen changing in dynamics with the reduction in cash in the overall system. That is providing further opportunities to increase that spread slightly. But we're really focused at this point in time on the second half, which is to continue with that 18 basis point spread into that second period. Julian Braganza: And has that spread been improving over the course of the half? Is that how we should be thinking about it? Andrew Tobin: Julian, I think the prior period comparison, it went up by about 3 basis points. So it can move around a little bit in any given month, but we're talking 1 or 2 basis points here in the scheme of things, but 18 basis points for the half, and that's expected to continue in the second half. Julian Braganza: Okay. That's clear. And then maybe just on the market futures average fee per contract, that improved to about $1.40. Can I just understand the thematics that's driving that improvement and also just your expectations around that going forward? Andrew Tobin: Yes, happy to. So we've seen a significant increase in volume over the period and also a change in mix. Commodities is part of the answer here that we've seen an increase in the commodities futures contracts over that period of time. And we've also seen the rebate process or outcome change over that period. So it's a combination of mix, higher commodities volumes coming through and sort of a lower rebate rate per contract over the period that's led to that $1.40. We haven't given guidance going forward, but you can see sort of that moves around depending on the mix of products there and that rebate mix. Julian Braganza: Okay. Got it. That's clear. And then maybe then just touching on the settlement and clearing business here. I just want to understand just in the appendices, the expense allocation to that division. It feels like there's been an increase in expenses based on the management accounts that were published for FY '25 and what you're giving us here for FY '26 seems like it's about $20 million, $25 million. It's about probably half the expense increase for the operating costs for the ASX Group ex the ASIC inquiry costs, et cetera. I just want to understand just the expense allocation between the two and how you're comfortable that, that increase is the right increase that should be allocated to the settlement and clearing business for pricing purposes. Andrew Tobin: So, Julian, I think you're talking -- so it's a bit muffled and difficult to hear you. But I think the question was going to the clearing and settlement allocation of costs. Is that correct? Julian Braganza: That's right. And then just also understanding that it be clear that the increase in expenses into FY '26 is in the order of about $22 million in terms of what's being allocated to the settlement and clearing business for pricing purposes. Andrew Tobin: So to determine the expense base allocated to clearing settlement and Issuer Services, we go through an activity-based allocation process. And so depending on where those resources are allocated, that will determine the expense outcomes allocated to clearing settlement and Issuer Services. On an annual basis, we actually published the budget number for the year ahead. And so following the end of this financial year, once we've concluded our budgets, we will be publishing the budget allocated to the clearing settlement and Issuer Services. So you'll be able to pick it up at that point in time. Julian Braganza: Okay. But just to that number at the bottom in the appendices is $147 million that's the budgeted number for? Andrew Tobin: That's correct. That's a budgeted number for FY '25 -- FY '26, I'm sorry. Julian Braganza: Yes. So just to be clear, so that's a $20 million, $25 million increase from last year based on the actual expenses for last year. So I just want to be clear because it's about 50% of the increase in ASX group cost that's being allocated here if I compare like-for-like. I just want to make sure that, that's consistent with how you're thinking about the cost allocation between the group versus settlement and clearing at this stage in the investment cycle. Andrew Tobin: That's correct. It's based on, as I mentioned, that activity-based allocation of costs to those particular activities. Julian Braganza: Okay. Got it. And then maybe just a last question. In terms of the ROE, you've given us a fair bit of numbers there in terms of the capital of the business and expenses, et cetera. But in terms of the ROE that you're seeing within settlement and clearing at the moment for the first half based on activity levels, where would that be? Andrew Tobin: Julian, you -- again, sorry, it's a bit muffled, but I think you're asking about the group ROE target. Julian Braganza: Yes. Apologies. I was asking about just the clearing at the moment for first half '26 on ROE. You've given us the fair numbers in terms of the capital in the business, the D&A, et cetera. So I just want to be clear given the in the first half, where the ROE for the first half '26. Andrew Tobin: So let me try and capture it. I think we've clearly stated our ROE targets at a group level, the 12.5% to 14%. But I think your question was also going to the clearing and settlement activities. And really, the way to think about the return in that business, it's a targeted return that determines the revenue allocation, if you like. So if you look at the slide in the back of the investor pack, the BBM slide, it talks about a targeted rate of return of 11.44%. That's the regulated cap, if you like. cap and floor for that business activity. So I think that answers your question, hopefully, Julian. Julian Braganza: Sorry, Andrew, I was asking what would have been the ROE for the first half of '26 for settlement and clearing? Andrew Tobin: Well, it's targeted to that return. So we -- 11.44% is the regulated cap. We mentioned today that we've included a rebate of $7 million in the clearing settlement issuer services revenue, and that really aligns that outcome with that 11.44% return. Operator: The next question comes from Ed Henning with CLSA. Ed Henning: A couple from me. Just the first one, just a clarification what you were just running through then on just a regulated return. Have you over earned $7 million in the period, so that is accrued. So therefore, if you underearn on the return, whether in the second half, you can then book that revenue? And the second part to that is can this be continued to accrue? Or is it -- can it be over multi years? Or is it can only be accrued for a year? Andrew Tobin: Yes, that's a great question, Ed. So we've published our pricing policy that goes into a lot of detail around this. Effectively, it is an accrual based on our estimation of what will be paid out as a rebate to our customers, but we need to let the full year complete. And so it will be determined based on the 30 June 2026 position. And in the pricing policy, there are certain sort of, I suppose, tolerances around an under or over accrual. So, for example, if there's an over-earning of a number beyond 5% is paid as a cash rebate to customers immediately. If it's between 0% and 5%, it's really retained by the organization to offset potential ups and downs or variances into the future periods as well. I mean if I just draw your attention to the pricing policy, and it sets out the tolerances around how the mechanisms work. Ed Henning: Okay. So this 7%, I imagine is within the 0% to 5%. So you -- just to clarify, you have booked this in the period. Okay. And -- but there could be a swing factor where if you overearn in the next period, you may not be able to book as much? Andrew Tobin: That's correct. Think about it as the regulated rate of return, the 11.44% that we've got in the example really sets that outcome, and we sort of monitor that on a regular basis. But the true measurement is 30 June each year. At 31 December, we have booked our best estimate of that $7 million accrual. Ed Henning: But as I said, that accrual has gone through the P&L or that is sitting there outside that hasn't been booked through the P&L? Helen Lofthouse: It could it go up or down. Andrew Tobin: Could it go up or down. It could go up or down. It's gone through the P&L, Ed. So it's a net rebate against the revenue we've recognized in the period. Ed Henning: Okay. No worries. Second question for you, Helen. In the speech today, you talked a number of times about aspirational targets and work streams. Is this a potential issue for ASIC? Because I'm surely they want realistic work streams and targets, not aspirations. Are your aspirations realistic? They're actually hard targets as opposed to aspirations? Helen Lofthouse: Well, look, I think as we reset the Accelerate program, those are exactly the questions we'll be focusing in on. I think that there's a balance to be had here, right, because the work streams absolutely need to be practical and deliverable and realistic. But they also need to really be couched in a deep understanding of our role as a steward of critical market infrastructure. And so when we talk about them being aspirational, we're really talking about being aligned with that and what are our aspirations for both resilience, for example, for Australia's financial markets, but also how do we make sure we're future-ready and supporting innovation across the markets. So we will be going through exactly those types of questions with ASIC to try and make sure we're aligned. But just to be clear, our target state definitions will be clear and measurable. But as we consider what those target states are, one of the questions we'll be asking ourselves is do they have the right level of aspiration in them given the important role that we play in Australia's markets. Ed Henning: Okay. And just to clarify, you will not expect any material changes from the interim report to the final? Helen Lofthouse: Well, look, I clearly don't know what's in the final report. I guess the things I would draw your attention to is the fact that in the interim report, they clearly state that the substantive findings from the inquiry panel are there in the interim report. I'm sure there'll be a lot more detail in the final report. But based on their prior comments, our expectation is that the substantive findings have already been identified. Operator: Your next question comes from Kieren Chidgey with UBS. Kieren Chidgey: I just have two questions. First one on costs. Following on, I guess, from that comment there, Helen, if ASX interim report is a substantive view of changes required, how should we think about, I guess, the information you've already put out to market in terms of the second half OpEx outlook. Obviously, it's stepping up 12% to 13% relative to first half. I think there was talk of various factors in there such as legal costs and volumes, but a key driver presumably is some of that response and bringing on additional people to enact that change. So just wondering sort of how much of what you think is required to be done is going to be there in second half, given it will obviously take time to sort of get all those people and processes in place. Is that a reasonable guide of the cost base as we look into '27, second half? Or is sort of that run rate in terms of the ASIC response going to step up further in '27? Helen Lofthouse: Look, it's a really understandable question, Kieren. But obviously, to really give a good sense of what FY '27 is going to look like, we need to make sure we've done the planning to substantiate that. Obviously, when we considered the updated guidance for FY '26, clearly we considered the factors that we laid out and made sure that with some flexibility as well because, of course, we haven't done our final submission of the commitments plan with ASIC, and we're still liaising with them to make sure that our plan is in line with expectations. So we've made sure that there's some flexibility there for adjustments that we might need to make during the half. But the planning and the detailed guidance for FY '27, I'm afraid, will come by the end of June. Kieren Chidgey: Yes. So yes, I don't want to sort of try and draw you too much on the '27 number, but maybe just to understand what you've allowed for in second half '26. So maybe you can just explain, I guess, are a lot of the cost responses that are coming through in second half in relation to the ASIC inquiry, the people, if there are additional heads, given you only announced that change sort of last month, like I presume the exit run rate at the end of the second half in terms of headcount, is that going to be particularly different to sort of where we sit today? Andrew Tobin: Yes. Happy to provide a comment here, Kieren, as well. I suppose there's an exercise to reset the Accelerate program, and that's part of what we need to do. And as Helen mentioned, that will also be informed by the final report once we receive that. That's due to be delivered to ASIC by the end of June. And really, then I think about the sort of the ongoing cost base to be part of the Accelerate delivery program. And a large part of that program is built into our cost base I think about the nonrecurring costs in this particular year will be the ASIC inquiry costs in total. And so that guidance of $30 million to $35 million that we provided to the marketplace, I do think about that as a one-off or nonrecurring cost. Kieren Chidgey: Yes. Okay. Second question sort of on a different subject on Sympli, we've seen AI release a couple of reports on interoperability and sort of cost benefit analysis across the system that showed, I guess, only a couple of scenarios that would drive a net positive economic contribution to the country over the next 20 or so years. Like has that altered your view or your commitment to that business? Andrew Tobin: Kieren, happy to take that one as well. As I called out in the speech this morning, we are considering that position and considering the sort of the strategic investment that we've made in Sympli, fully aware of the sort of ARNECC reports. But ARNECC are yet to sort of, I suppose, announce a date for interoperability, and that's the key uncertainty at this point in time. Operator: Your next question comes from Siddharth Parameswaran with JPMorgan. Siddharth Parameswaran: A couple of questions, if I can. Firstly, Helen and Andrew, I was hoping you could just provide some color on the very strong growth we've been getting on the revenue side in cash markets and also futures and just the sustainability into the future. So where -- maybe if you could just break down retail versus in-store versus offshore. What are you seeing? Maybe just whatever color you can give about the strong growth we've seen and your expectations on sustainability in the short and medium term? Helen Lofthouse: Maybe the comment I'd make there, Sid, is obviously, volumes for us are driven by a couple of different things. So one of them, of course, is the work we do with our customers to ensure we have market quality to add new products, new services, new trading opportunities, make sure we've got the market settings right. But of course, also a big part of it is global markets and volatility and what's happening more broadly. And so as you'd expect, the drivers of growth that we're seeing are both of those things. I think we've made a series of really important investments in capacity, in functionality for our customers, in the structural settings for our markets that are all supporting part of the volume increase that we're seeing. But part of what we're seeing is also a globally observed broad increase in market activity in both rates and the cash equity markets. So there are both kind of global macroeconomic and volatility factors there as well as the work that we've been doing to invest in and continue to grow and improve our markets to support that and make sure that we're benefiting from that increase of activity when it comes. And so if you look at long-term trends, and I'd encourage you to do that. We do have some good information, I think, on the -- on multiyear trends, then you can see that we are -- there are always ups and downs, and that's the sort of global market factors. But what we're seeing is broadly consistent with a long-term growth trend, notwithstanding that because of the ups and downs in different periods, you sort of have to draw a bit of a line of best fit there. But I think that this kind of level of volume growth is something that we've seen consistently over the years, but with some fluctuation up and down sort of in individual years given whatever market factors are at the time. Does that answer your question, Sid? Siddharth Parameswaran: Not fully. I was just hoping you could give some color around just the composition, retail versus offshore and just also domestic -- just on the futures side, just -- I understand the long-term growth drivers and you think it's consistent, but just where we are today. Helen Lofthouse: Yes. I think I can add a couple of things. Siddharth Parameswaran: It's much higher than the long-term growth. The recent has been extraordinary. So just what's driving it and how sustainable is this as a base? Helen Lofthouse: So maybe we might follow up separately and update you on the retail percentage because I don't think I have it handy. But what I would observe is that we have seen good diversification of participation in both markets. So seeing a range of different users very active in both the cash equity market and in our futures market. I think that our futures market has become an attractive market to trade on a global basis. And we're certainly seeing the diversified participation being no evidence of that. Siddharth Parameswaran: Yes. Okay. Just a second question, just on the strategy refresh, which I think you alluded to in your presentation. Just wanted to understand what is within the remit of what the Board is considering as worthy of a refresh. The financial targets, I presume, are not going to be changed. I mean you've obviously reaffirmed today, but I'm just wondering when you do a strategy refresh, you could look at all sorts of things. You're still privy to what is on the -- what is being considered? Just keen to understand exactly what is being considered in that strategy refresh and whether all the financial targets are likely to stay and not be addressed. Helen Lofthouse: Look, I think some of the really -- we've absolutely intended anyway to do a significant refresh at this point because halfway through our -- what we originally set out as a five-year strategy, what that means is that our current horizon for what we've currently laid out really only goes for the next couple of years. And I think it's very important for any organization that we have a longer perspective than that. But I think the factors that I would add from an ASX perspective are, firstly, that Markets and technology around market infrastructure are changing fast. We are seeing -- just as one example of that, all around the world, we're seeing significant changes in how regulators and organizations around the world are dealing with things like tokenization and digital currency. We've seen things like the GENIUS Act in the U.S. in the U.K., the Bank of England sort of Sandbox for digital currency. Now these are significant changes on a global basis and are really important for us to consider for ASX and think about what does that mean in terms of the services that we need to be offering, making sure that our strategy is supporting innovation and new services for Australia and that our technology strategy is taking account of those things as well. So, in a fast-moving environment, there's really a desire to make sure that our lens is looking not just at the transformation that's underway at the moment that's really foundational, but also what does that mean for the future? How do we make sure we're delivering future-ready market infrastructure. And of course, added to that, we have lots of stakeholder feedback, including the ASIC inquiry panels report. And I think there's important feedback from that in both how we make sure that we're really articulating our critical role in shaping and stewarding Australia's financial markets and making sure that we're very clear about how that feeds into our strategy and the investments that we're making. Siddharth Parameswaran: Okay. Yes. So the financial targets are not part of the consideration. It's all about the future in terms of where the financial markets are heading. Helen Lofthouse: Well, as we develop the strategy, we've obviously given some financial targets and guidance. The FY '27 expense guidance and the FY '28 CapEx guidance that we're intending to give will, of course, be informed by some of the strategic refresh that we're going through. Siddharth Parameswaran: Yes. But the ROE targets, et cetera, medium term? Andrew Tobin: It's medium term, and I just had a comment, that's the appropriate target at this point in time. Operator: Your next question comes from Freya Kong with Bank of America. Freya Kong: Just on the new pricing policy for clearing and settlements, so that was implemented 1st July 2025. Is there any need to review this? Or is it consistent with the criticisms and recommendations of the interim report that we got? Helen Lofthouse: Do you want to take this? Andrew Tobin: Sure. Thanks, Freya. So the new pricing policy went through an extensive consultation process with the industry prior to its implementation, and it's not part that we can see in terms of the recommendations out of the interim inquiry report at this point in time. Freya Kong: Okay. And then I guess, given the big uplift in resourcing you expect in clearing and settlements, has this already started to be reflected in pricing? Probably that follow. Andrew Tobin: Yes, Freya, it probably goes back to a prior question that effectively, the pricing policy really regulates the absolute return for those business activities, clearing settlement Issuer services. That goes into sort of considering the capital base. So that would include the CapEx in relation to the CHESS Release 1 and Release 2, for example. It would include costs that are allocated to those activities, and that really determines a revenue target, but that aligns to that overall return target for those business activities. And so all of those go into determining what the appropriate return is. Freya Kong: Okay. But I guess my question is because you've increased the resourcing to the clearing and settlement facilities based on ASIC recommendations, this should naturally automatically flow into the pricing just to inform the return. Is that fair? Helen Lofthouse: To the extent that it impacts the specific licenses that are part of the pricing policy, and that's the ASX Clear and ASX settlement licenses. Those are the two entities that provide the cash market clearing, settlement and issuer services. then yes, that would be true. The greater independence of clearing and settlement does capture other license facilities as well. Freya Kong: Okay. Okay. Great. And then just a question on the interim report and what's really changed. But I guess the report was quite critical of ASX, but also critical of the uncoordinated approach of regulators, which has contributed to what you called a defensive culture at ASX. Since the report, do you sense there's been any change in the working relationship that you've got with the regulator? Helen Lofthouse: Well, I think that certainly from our interactions so far, we can see that our regulators have taken that feedback very seriously and are very committed to having a very outcomes-focused approach. And it's also important to note that part of that is ASX improving our own regulatory engagement, too and making sure that we are really clear on what it is that our regulators need in order to fulfill their important function and trying to make sure that we deliver the right information at the right time as well. So I think there's a genuine commitment on all sides for that to be an important factor. Operator: There are no further questions at this time. I'll now hand back to Ms. Helen Lofthouse for closing remarks. Helen Lofthouse: So, thank you. This concludes our first half results presentation. And thank you much -- thank you very much, everyone, for -- on what I know is a busy day for joining us today. So, goodbye. Andrew Tobin: Thank you.
Operator: Hello, everyone, and welcome to Yara's Fourth Quarter Results Call. Please note that this call is being recorded. I will now hand over the call to Maria Gabrielsen, Head of Investor Relations in Yara. Please go ahead. Maria Gabrielsen: Thank you, operator, and welcome to everyone for joining us for this conference call for our fourth quarter results. And I'm here together with the representatives in Yara's management, our CFO, Magnus Krogh Ankarstrand; Head of Market Intelligence, on Dag Tore Mo, well is the representative from Yara. We're not planning to give a presentation or further opening remarks as we hope you all just watched our webcast, and we will therefore go straight into questions. And I will ask operator, if you may please open the first line. Operator: Our first question comes from the line of Joel Jackson of BMO Capital Markets. Joel Jackson: I'll ask a couple of questions, maybe one by one. Can you talk a little bit about the difference in Q4 between Europe and the Americas. You had a lot of buying in Q4 in Europe. Was that ahead of CBAM, and the Americas was flat. Was that weather? Can you talk about that, please? Dag Mo: Yes. Yes, in Europe, we had a strong Q4, both when it comes to our own sales, but also the market in general, both up because we think a large part of that was due to positioning ahead of CBAM already from November, in particular, there was quite strong interest in buying, importing as well as from domestic producers to avoid the CBAM charge from January 1, and it's actually led to a price increase across the products already in Q4 because of that partly then reflecting the CBAM charge already in Q4. In the U.S., I think it's more -- there has been [indiscernible]. The norms of the recent seasons has been quite a lot of late buying in North America and the U.S. with a lot of imports focused in, let's say, the February through April period. And this season looks to be similar. It's just slightly ahead. But I would say that's not more than just more or less random variation. I have not seen anything kind of specific or any structure when it comes to that. There's a lot of buying from the U.S. that remains. Joel Jackson: Okay. And then I'm trying to reconcile your comments around Q1. So you talk about how -- because there is some pre-bond in Q4 in Europe, your Q1 is ahead of [ a season ]. You kind of talk about, yes, but there's lots of products still to buy in Europe. So in one hand, you're kind of saying like, oh, people have bought ahead, but oh, they haven't bought enough. I'm just trying to understand your comments. And then can you -- as part of that, with some of the uncertainties around CBAM, whether there might be some offsets or not, can you try to sort of talk about that and how it's affecting the market and your strategy? Dag Mo: I can start with some comments, and then Magnus can add if he wish. First of all, given that we -- as our estimate, that deliveries are 7% ahead as of end December compared to last year, even if not, you would think that the first application for the farmers are generally already purchased. And now we still have winter. So until there is a kind of a movement in the field there is no real need for farmers to replenish their inventories or further buying in order to -- for the subsequent applications. So -- and also, as you hint that there is now a CBAM in force. There's some political uncertainties that has kind of surfaced through January around this. So it's logical then that as we start the new year that we have a relative slowdown -- a little bit of a slowdown in the market after Christmas. But 7% ahead, almost half of the seasonal demand has yet to be bought. And we think that imports is slowing now in Q1. So that's where we are kind of coming from that, yes, it's a little bit slow start. No, we are kind of depending a little bit on spring arriving. And then it could be a very -- quite a busy period actually, and it depends a little bit on how much will be imported. Just for your reference, urea is the main product on the nitrogen side that is imported, less for nitrates. And Q1 last year, EU imported 2.2 million tonnes of urea. That's quite a lot. So even if imports is down, there is quite a lot needed. So that's kind of -- I can understand that you are a little bit puzzled by the formulations maybe. But -- so yes, the market is a little bit ahead by the end of December, but it's a lot that remains and we'll see how that plays out in a market where imports is now more expensive. Magnus Ankarstrand: Yes. No. I think that's the key point. And obviously, with the prospect of CBAM in Q4, there was a bit of a rush on the import side, which is also reflected on the pricing or in prices. But I think it's also key to remember that CBAM is still enforced. I mean every ton that goes into Europe now faces CBAM. And of course, by the time any changes to that would be in place. Of course, that project will have been sold and probably applied a long time ago. So I mean we don't really see that. From a market perspective, this spring that any CBAM changes would impact anything on prices as such. And then also we believe it's highly questionable that there will be any changes to the CBAM at all. Joel Jackson: Okay. Just to fit one more in. Would you expect '26 -- for ammonia production, would you expect '26 to play out largely like 2025 and 2024, where you're producing 1.7 million, 1.8 million tonnes a quarter, except for Q3, where you produce significantly more. Should it be similar kind of ranges across the quarters this year? Magnus Ankarstrand: I think when -- if you're referring to Yara's ammonia production, I mean, we... Joel Jackson: Yara. Just Yara, 1.7%, 1.8% a quarter except for Q3, where you produce more. Magnus Ankarstrand: Well, I mean, we run our facilities 24/7 all year around, if there's a positive cash margin. So -- and then, of course, there are some turnarounds that impact the schedule. And of course, from now and then, there's a plan to stop as well. But in general, our uptime is very, very strong. So I think our plan is to produce sort of the practical production rate that we have. Right now, there is strong -- right now, there is good cash margin in all our production facilities. Joel Jackson: So do you have any special turnarounds or any additions this year in '26, that would be significantly different than '25, excluding unplanned adages? Magnus Ankarstrand: No. No. I mean I think we distribute our turnarounds fairly evenly. So there's nothing special compared to other years. Operator: Next question comes from the line of Christian Faitz of Kepler Cheuvreux. Christian Faitz: Two questions, please. First, your scheduled maintenance CapEx for '26, some USD 200 million higher versus '25. I'm aware of the phasing that you mentioned in the webcast, but can you elucidate this a bit, for example, which plants are mainly concerned? And the second question would be, can I ask whether the sequential property plant equipment increase over the past few quarters is largely U.S. dollar driven? Magnus Ankarstrand: Yes. No, I think on the first question, our maintenance schedule is basically driven by the turnaround. So we do have a few turnarounds this year, which have a bigger scope. I think in referring to the previous question in terms of sort of how much we will produce this year or not produce because of turnarounds, that's pretty stable, but some turnaround are more expensive than others because scope change from turnaround to turnaround. So that's why the maintenance for 2026 is somewhat higher than the sort of the -- or in the upper part of the range that we've given from sort of USD 700 million to USD 850 million per year. And then that includes -- a small portion of that includes a little bit of phasing from 2025 as well, but that's not much. And could you repeat your question on PP&E, please? Christian Faitz: Your plant, property and equipment in your balance sheet seems to be going up sequentially over the past 3 quarters or so. Is that largely U.S. dollar driven? Maria Gabrielsen: Yes. Most of the increase is -- most of our assets are booked in euros across Europe. So that will likely reflect the currency rate. Operator: Your next question comes from the line of Lisa De Neve of Morgan Stanley. Lisa Hortense De Neve: I want to follow up on the first question around spring demand. If you can give us an idea of what you think current channel inventories are across the Americas and Europe? Some idea on that would be great. That's my first question. And my second question would be around CBAM. I mean to which extent have you been involved with European policymakers around what your view is on the importance of CBAM and what sort of variables are being discussed to make the -- potentially move ahead with banning CBAM for fertilizers or maintaining that structure? Dag Mo: On your first question, when it comes to North America, I mean players supplying nitrogen to the U.S. or North American markets are normally coming down with their feet on the ground, playing this out quite well. And I can say that already now, U.S. Gulf pricing for urea is up at $500, which is kind of sufficient to attract quite a lot of tonnage. So it seems -- to us, it seems like it is fairly normal. It's one of the reasons why the market globally is so tight, I mean it's $500 basically, is part of that reason is outstanding U.S. demand. And there is also activity into Europe from North Africa, in particular. You've probably seen last week, there was quite a substantial volume that was bought. So there is also that's going on in anticipation of the spring that will come. So I would say it's fairly normal, both in North America and Europe in that sense. And now you have Indian addition that is trying to fight for March availability by announcing a 1.5 million tonne tender as we probably saw. So it's fairly busy in the very short term. Magnus Ankarstrand: And on CBAM, I think what's important, first and foremost, is to kind of be accurate on what's actually happening, right? So right now, CBAM as per EU legislation is in force. Then there is a proposal, Paragraph 27a, which is passed was open for temporary suspension or give the commission a temporary suspension opportunity. If there are unforeseen impact on the single market or something like that. For that to even be a possibility, that paragraph has to be passed by the European Parliament, which is obviously not a given -- this is not something that either the member states or the commission can decide on their own. So obviously, and referring to your questions, we are, of course, in close contact with at the political level, in several member states with the EU Commission and also the EU Parliament to voice our view on that. And I think our CEO has been very clear on that, of course, there's absolutely nothing with CBAM that is unforeseen. I think it should be evident that prices will go up equivalent to the import tax you put on ag. So it's very difficult from our perspective to see any logic in implementing such a paragraph. But of course, politics is politics. And this will then -- we will see what the mood in Europe and how receptive the MEP will be for that. But as a reference, in the same -- same event where this was introduced, the commission also and the member state agreed on Mercosur, which was later rejected by the MEP. So, there is certainly no guarantee that the proposal from the EU Commission is approved by the European Parliament. Operator: Your next question comes from the line of John Campbell of Bank of America. John Campbell: Maybe sticking with CBAM. So do you have a sense within Yara of the potential time line for when the EU could pass or not pass this modification to the suspension tool, et cetera, number one. Number two, on your Air Products projects, sort of what confidence do you have at this stage that it can be delivered within the NOK 8 billion to NOK 9 billion budget. I think it's probably fair to say the projects have seen numerous costs increases. Air Products, I think, are quite clear on their calls that there's a lot of construction market labor bids from data centers. I think Air Products has tried to basically split up the construction to several different tenders, et cetera. Maybe you could tell us how that's going? But I can tell you, at least from the Air Product call, they said 90% of the missing puzzle piece to reach FID relates to the cost. So is there any reassurance you can offer that NOK 8 billion to NOK 9 billion figure will be achieved? Magnus Ankarstrand: Yes. I think on your CBAM question, I mean it's difficult for us to sort of give us sort of a fair estimate on how much time EU need to pass this through parliament. So that's, of course, something that we are watching closely. However, we do note that there is significant resistance both in the European parliament, but also from several member states as well as the industry as well as commissioners against this proposal of opening for a possibility of suspension. So at least, I think it's fair to say that it's going to be a fight -- pretty good fight. I think -- and whether that sort of comes in time or how that sort of matches up with our time line for the Air Products project is, of course, equally difficult to say. But of course, next month, we'll hopefully, provide some direct entities in terms of what the political mood is and where this is going. On the cost increases, we don't have any sort of further update to what we and Air Products have stated earlier in terms of the range that we are looking at. I think, of course, as you say, from the original outset of that project from a product side, CapEx has gone up, but it's also important to remember that the technical maturity of the work detailed engineering, et cetera, has developed a lot as well, right? So I think sort of costs that -- comparing cost estimates, is not like comparing apples and apples necessarily, right? It's a big difference between cost estimate after detailed engineering and the cost estimate that you do on your first FID as an example. So they are working diligently to get these estimates in place. We are supporting that as well with our expertise. And as you said, there is competition for this, but there are also not many ammonia plants being actually being built in the U.S. So we will see how that works out over the next month. And of course, a very important element in the decision making as Air Products have pointed out. And of course, that will case for us as well. Operator: The question comes from the line of David Symonds of BNP Paribas. David Symonds: So 2 questions for me, please. Firstly, you mentioned strong demand fundamentals, but you're showing optimal nitrogen application on Slide 29 for a wheat farmer. As being 4% lower versus this time last year. And I think if you scale that up to the whole nitrogen market, the equipment of losing maybe 5 million tonnes of urea demand in 2026 ex-China. Now I know you're not just selling to wheat farmers, but soy and corn, economics are very weak as well. So could you comment on expectations for supply and demand balances in 2026 based on current farmer economics as opposed to long-term averages that you show on the slide? That's question one. And then question two, the NPK margins have come down, and you mentioned that's normal in a type and nitrogen market. But I noticed that compound NPK inventories also look like they've built in the 3Q and 4Q. So are you seeing farmers down trading to straight nutrients? Or what's behind that larger than usual inventory build in compound NPKs? Dag Mo: Yes. As you mentioned, the example we showed there is, kind of, course, a little bit of a theoretic issue where we have a yield curve that we have, kind of, based ourselves on from a research center in Germany. And it, as you say, if a farmer already is at optimal application rate, it does show what hold that optimal application rate is changing with the price ratio between wheat and fertilizer. And the fertilizer is clearly expensive. I mean, affordability issues is high on the agenda, both on nitrogen, even more on phosphate. So it's a limiting factor. I think that if not for relatively modest or low grain prices, we will have even higher prices for N and P than what we have today. And if you look at, as you said, demand, has this led to lower global demand, this pressure on affordability, it hasn't. And that's, of course, maybe it can be more or less surprised by that. If you look at 2025, with that increase in Chinese exports of 5 million tonnes, even if you then take away some production outside China due to India producing less, due to Iran and Egypt producing less, due to the conflict and also gas diverted to other purposes, I think you'll find that fairly healthy supply growth for nitrogen in 2025 and into '26 and even despite that we are having $500 urea prices now. So -- and I think that has taken some players by surprise. If you look at -- if you look, let's say, a year ago at forecast for 2025 and 2026 pricing from most players, consultants, et cetera, they will be considerably lower than what we have been realizing. So yes, we have a very strong and tight supply demand balance despite relatively poor affordability. Magnus Ankarstrand: On the NPK side, I think what's important to remember is that most of our NPKs goes into what we call premium products, where, of course, the value of those products on yield quality and several other aspects, is kind of what determines price and the willingness to pay, which is, of course, on the absolute price that the farmers pay. When we talk about premiums, we refer to that price less sort of commodity value of the 3 nutrients in the product. So in that scenario, even though sort of NPK prices go up when NP&K go up as well, when they go up as much as they do now, it's natural to sort of see some contraction in the premium in the way we measure it. And I think if you look at across nitros and NPK, premiums that actually hold up very well, I would say, considering the high commodity price environment that we have. But we have, as we reported, seen some tightening on the premium side, particularly in Asia, whereas sort of margins, which is Yara margin, are not down in the same way. When it comes to inventories, actually, our sales in Q4 and the year in total are slightly up. But our production levels are also significantly up due to improvements in productivity in our production system. So that has led to I would say, a fairly slight inventory buildup, which we believe that -- which we are working hard to, of course, sell the additional tonnages that we get out of our plants now in the spring. Operator: Your next question comes from the line of Bengt Jonassen of ABG Sundal Collier. Bengt Jonassen: I have 2, if I may, both related to Q4. If you take your EBITDA bridge year-over-year, prices had a tailwind of [ 140 ], looking at your nitrate price realization is [ 358 ] versus your own pre-quarter material list prices at [ 370 ]. Could you talk a little bit about the price realization and if it's timing or discounting. Maria Gabrielsen: So the prices for fourth quarter realized slightly lower than publication prices, but it actually was last year as well. So we typically -- that's why we typically recommend using the delta for publication prices or delta realized prices, I think you will end up with roughly the same impact in the EBITDA bridge. But then the other part is also that if you look at the publication prices for CAN, it's not a fully liquid reference in the sense that publications aren't able to capture the exact price that every trade goes. And I'm sure that could expand on that. And also they aren't volume weighted. So it means that you will always have these deviations a bit between publication prices and realized prices, which are also linked to how they make their estimates and not only commercial performance. So the biggest impact in the price margin compared to the outside in if you use pure publication prices is really related to the NPK premiums that were pressured, especially in Asia, China and Thailand, and that we estimate to be roughly $20 million, $30 million impact this quarter compared to same quarter last year. Magnus Ankarstrand: And then I think it's fair to say that the impact the risk in Europe is mostly due to timing in the quarter. Bengt Jonassen: Yes. Okay. But let me ask the question the other way around that. If you take your official publication prices, your list prices to your clients, it's much higher than your price realization implies. And then back to the question, why our realized price is so much lower than the prices that you're actually announces to your client? There seems to be some kind of either increased competition or discounting or timing independent of the EBITDA bridge year-over-year. Magnus Ankarstrand: The biggest factor in that regard is timing, right? That's -- and in a way, that's difficult to predict from year-to-year for us as well as for you guys, of course, as well. I mean there are -- it depends on a lot of different factors when the markets move, right, when buyers step in to buy, when imports come in and so on. So there are a lot of factors there that impact what -- how we have -- I mean, how our sales team have to determine what's the optimal volume to sell at each point in time. We can have an idea of where we think prices are going or will go. But if the market moves, you have to move with it to some extent in order to stay a part of the market. So I think of the factors you mentioned, I would say sort of timing is the key one. Maria Gabrielsen: Also you're right, when we announce prices, which we do from time to time, but it depends a bit on how often we do it publicly through official announcements and how much do we announce at a certain point in time and ongoing negotiation. So -- and that's really typically based on Germany and France, right? And then there can be other deviations from that in the other markets, which can then lead us to deviate from those which prices you're correct [indiscernible]. Bengt Jonassen: And on that topic, how should we view current publication prices? Are they a reflection of the actual market or is the softness that you are communicating, maybe delaying some purchases on the price realization for the current quarter? Magnus Ankarstrand: Yes. No, list prices, we have a reflection of the current market. Dag Mo: Here CAN around EUR 350 that we think is pretty close to where it's actually. Operator: Your next question comes from the line of Angelina Glazova of JPMorgan. Angelina Glazova: I will also have 2. And my first question is on free cash flow dynamics. We have noticed that in the past couple of quarters, there was a sizable working capital buildup. And I'm wondering how you the working capital to develop into 2026? And we, of course, know that the working capital trend is impacted by seasonality, can be path on a quarterly basis. But I'm just wondering, in general, if you could give us some color on next year? And also because you now have a free cash flow target. So just wondering how you think of working capital as a variable in achieving that target? And my second question would just be a follow-up on CBAM. Apologies again on this topic, but I just wanted to make sure I understand correctly what you have said earlier in the call. I believe you have mentioned that [ you doubt ] there will be any meaningful changes to CBAM in principle. So I just wanted to understand, is this something that you're seeing based on the discussions that maybe you have had with regulators so far? Or what is this view based on? Magnus Ankarstrand: Yes. Thank you for your questions. I think on the first one on working capital. So I mean, first half is the -- as you know, the season in the Western Northern Hemisphere, right, and that forget that's the biggest part of the global application as well. So that's where we have higher deliveries. And so that -- in that you see typically see a buildup of inventories somewhat and working capital before season. And then we release indices. So that's kind of the, I would say, the price neutral view. But then, of course, when prices go up or down, that impacts working capital as well. And when prices go up like they have done through Q4, which is, of course, very good for Yara. But that, of course, also means that the value of receivables and so on is higher, also then working capital goes up. But there's nothing uncommon on credit days or inventory days or anything like that, that will constitute a change. So this is kind of purely seasonality as such. And then of course, there are, from time to time, some sort of changes on when prepayments happen and so on. So I think as well as season starts and also let's see if prices stabilize at this level, it's fair to think that everything else equal, is the release of working capital. If prices go up, it will -- there will be a buildup, it also will, of course, be released from sales done in Q4 but nothing uncommon compared to the previous years. And that, of course, also plays a little bit into -- when you talk about improvement or how to sort of think about working capital from a value perspective, then you, of course, think about sort of the average for the year or average towards the season, which is kind of what matters. That being said, of course, working capital improvement in itself is an important topic, but that's not something we sort of improve by moving things around between the quarters. That's more a question of working on the different aspects of working capital such as reducing credit days, optimizing product flows based on inventory days, obviously, products we sell close to our plants, generally typically tend to have lower working capital and so on. So that's really something that we work on as well. And which, of course, we have to measure against the premiums we achieved for some of these products in markets far away from the plant. On CBAM, just to be precise because I think I've seen a lot of different comments on this. And I think you sometimes read it as if either CBAM has been suspended, which is absolutely not the case. Or as if it's something that the EU commission or a member state could just decide on their own tomorrow. So what I said was that the commission has proposed a new paragraph, which does not take us today or it's not in part of the legislation today. That allows them to suspend CBAM not only for fertilizer, for any product, temporarily if there are unforeseen negative impact on the single market. Now for them to even have that possibility, that paragraph needs to be included in the legislation and that will require sort of the full legislative process, including an approval by the European Parliament. And then when it comes to sort of what the likelihood of that happening, that's, of course, anybody's guess. But if you read the media, there have been both several members of the European Parliament who've spoken out against these changes. There have been people from the commission stating that CBAM is the cornerstone of the European decarbonization policy and so on. So I mean there's clearly in all -- in all camps, strong resistance of even contemplating this, even though the proposal is there. But of course, as we then in politics, it's very difficult to sort of predict what that outcome could be. But I think what's important also to emphasize is that even if that was implemented, then unforeseen consequence, it's very hard to see how a price increase equivalent to a tariff could be unforeseen. That's -- so I mean, at least judging by the letter of the law, even if it was implemented, that shouldn't really open the opportunity for any suspension of CBAM on product fertilizer due to the grounds of being unforeseen. But of course, that's my personal interpretation not necessarily the interpretation of the European Commission. Operator: Your next question comes from the line of Tristan Lamotte of Deutsche Bank. Tristan Lamotte: Kind of CBAM adjacent, but I'm just wondering on proposed changes to ETFs and the phaseouts of free emissions. Can you just remind us of your position there? And I think you mentioned in the past that you have credits that you could start at some point. So could you also talk about your exposure to the need to buy credits over time? And then second question is, just given whether net debt is now sitting, which I think is below your range, what's your view on kind of capital allocation and buybacks? Magnus Ankarstrand: Yes. When it comes to ETFs, we have -- we take before around 6 million credits in our bank, so to speak. And then I mean we -- the way it works, of course, is that you -- we get a certain fee allowance per year that matches so far -- has matched or exceeded our need to buy ETF [ quotas ] and then now free allowances will be gradually phased out at least according to the current plan. And I think -- I mean you can think about the credits that we hold in different ways, but just sort of a measuring it physically, that kind of takes us to 2029 or something like that -- through 2029, kind of where we could cover our need for actually buying credits with what we have in the bank. And of course, I mean, given that your question was adjacent to CBAM, obviously, we would -- we almost assume that in the event that the EU Commission would take away or suspend CBAM temporarily. I would also almost they were granted that they would suspend or extend free allowances for the same period. Of course, it's not -- it would be treating domestic industry very, very unfavorably compared to imports. And did you repeat your second question, please? Maria Gabrielsen: Can I just add a comment to the -- so if we have then a slower phase out, Tristan, right? So basically, it means that the deficit we expect in 2029 and 2030, that won't increase as much as we would have otherwise done until 2034, right? But whether we use those closes in the bank or whether we sell them, that's a pure financial decision ultimately depending on where prices are and where we think they're going because they have a cost regardless of when we materialize the cash effect related to them. Tristan Lamotte: And yes, the second question was just around your net debt-to-EBITDA level, which I think is below the range and your thoughts around kind of buybacks or what you would do with extra headroom. Magnus Ankarstrand: Yes. No, I think we outlined our capital allocation policy in our CMD month ago. And our main priority on the investment side or on the growth investment side is clearly U.S. projects and reducing our energy costs or investments into ammonia. I think that beyond that capital discipline will be very strict. Of course, if we have smaller value very value-accretive opportunities, that's of course, something that we'll always consider. And then we sort of stick to our dividend policy of 50% cash dividend of net income. Of course, as we also said earlier today, if there is headroom or availability for it, we will always also consider additional buybacks depending on what we believe is the most accretive for the shareholder. Operator: Your next question comes from the line of Magnus Rasmussen of SEB. Magnus Rasmussen: I have 2, if I may. Firstly, when you announced the Air Products project, you said that you could do that within your $1.2 billion CapEx frame. I assume that implies you have to be quite a bit below that level towards 2030, still guide for $1.2 billion '26. So I'm just wondering sort of what's your thinking here? And how should we think about that beyond 2026? And the other question I had was whether you could talk about -- a bit about the factors impacting your earnings, which are not captured in your sensitivities such as NPK premiums, phosphate margins, et cetera? Where are we now relative to '25? And how does '25 compare to sort of historical averages? Magnus Ankarstrand: I'm not sure I capture your full first question. But I think what we've said is that the Air Products project is within our capital allocation policy. We've also indicated that we see sort of CapEx spend in real terms around $1.2 billion next year -- sorry, in the coming years. And then, of course, if you sort of deduct the maintenance level that we've indicated as well, that there should be within that also sufficient space for the project portfolio that we are looking at towards 2030. And then -- yes, and then of course, as in the previous question, that also opens up for the dividend policy that we have and, of course, evaluating buybacks versus very accretive opportunities that might arise in addition. But I think, again, U.S. projects will be a priority, and of course, also CapEx discipline is critical. In terms of variables beyond the one that we've given the sensitivity, I'll give the word to Maria. Maria Gabrielsen: Yes. Just to mention, I think the largest one, we have the phosphate upgrading margin which we used to have a sensitivity on but don't have currently, but it has had an impact in 2025 compared to 2024,,in general on the positive side, even though prices have been following for the later half. In the case premiums, for example, it tends to be fairly stable, but we do see some variations like we did in this quarter. So that will also impact us even though not covered in the bridge as such. And then you could also -- because we have gas exposure mainly to TTF and Henry Hub, but we have some class exposed to other gas costs, which tends to be more stable. But in the degree they vary, they wouldn't typically reflected in our sensitivities. And fixed costs, for example, which obviously has been the impact for the year that to be the main drivers where most of them have contributed positively for '25 as such. Dag Mo: I don't know if it's helpful, but you have this -- the phosphate upgrading depends on sulfur as a raw material for most production processes. And sulfur has been so volatile. So far, let's say, for a phosphoric acid base, which is a normal route phosphate upgrader. There has been a very strong cost increase on the sulfur part, which we don't have with our nitrate phosphate process, that is the NPK plant in Norway. So that may also make it a little bit more complicated for you to make that assessment because phosphate upgrading margins are a little bit different depending on which processing route you are using. Maria Gabrielsen: We could also -- since we are talking a lot about CBAM today, for 2026, that will also have an impact. So CBAM costs doesn't impact our EBITDA as long as we're utilizing credits that we have. But the price effect will be there, of course, then dependent on whether it's in Europe or outside Europe, that will have different effects. So as we mentioned in CMD, we will pre-quarter package, we will update sensitivities to reflect that in due course before 1Q '26. Operator: Our final question comes from the line of John Campbell of Bank of America. John Campbell: I just had 1 or 2 follow-ups, if I could. Could you maybe give us a sense on your view in terms of the potential resumption of Chinese urea exports in '26? How many million tons basically, you're expecting? Number one. And number two, coming back, I guess, to Air Products, have you -- presumably you've done some sort of levelized cost analysis in terms of delivering that ammonia resuming the project can be built for [ $8 billion or $9 billion ] or whatever it is. And I thought maybe one way to think about it is how that compares to something like the gray cash cost have delivered U.S. ammonia and maybe what carbon price would be required or sustained to actually kind of make the blue ammonia projects look cost competitive with just importing gray ammonia and just paying for the CBAM? Have you kind of got a view on that? I think I came out to $160. Of course that's just a ballpark figure, but do you have a sense maybe on the longer-term carbon price? Dag Mo: On your first question, I think we don't have a very specific opinion exactly how much that will be exported. We have just said that it's certainly a very important factor in the global balance how much that volume will be, but we are also referring to some external opinions around this in the press, where last year, it was, let's say, it was in second half April, that this was addressed initially by the Chinese Government and NDRC, I think it will be logical for something similar that when it gets to second half April, maybe there will be -- that will be on the agenda of the Chinese government. We observed that some of the consultants are working on that kind of baseline around 6 million tonnes, maybe a little bit higher than 2025. But of course, nobody knows all that is going to play out. Magnus Ankarstrand: And I think -- I mean, obviously, that's very difficult to predict exactly what you're going to do, right? But I think more important than the actual number of tons as such is what would it potentially do to the global market and global pricing, right? And then there, I think it's just important to keep in mind that at least so far, it seems that the main policy from the Chinese government has been to keep urea prices low. And obviously, the more you export, the more you impacted the global pricing and if you export to the extent that you impact global pricing. And of course, it's very likely to assume that it will impact domestic prices as well. And as we've talked about in our Capital Markets Day and as we see there's nothing that would point to sort of a softening to try demand balance outside China, meaning that sort of any opening to exports will sort of face quite high price environment globally. And I think it's sort of safe to assume that they will sort of exports to the extent that it doesn't impact domestic prices very much. And of course, I think it's also logical to assume then that at least from funding perspective, that shouldn't impact global prices too much either. But of course, things are difficult to predict. And on the Air Products question or the U.S. project question, yes, I mean, we have, of course, our internal views on sort of what different levels of CBAM with due to more in the pricing into Europe and so on and how that impacts the project. But that's not something that we can share publicly. But I think as we have said before, it is -- I mean, it is an ammonia -- it is a regular ammonia plant with very high scale and certain advantages that we talked about in our Capital Markets Day and sort of there's a great sort of price comparison to that. And then there's added premium, obviously, from CBAM as well. And I think as we've said also that -- just when we see from a total project perspective, sort of the CO2 capture park in itself is more than covered by the 45Q tax credit. From that perspective, this is something that even without a CBAM premium, should be profitable. But obviously, the CBAM adds that up to the profitability of building a decarbonized plant. Operator: [Operator Instructions] Your next question comes from the line of Julian Galliard of PGGM Investments. Unknown Analyst: I have 2 questions. So first, on your capital allocation framework, you highlighted maintenance and growth CapEx, but there was no explicit mention of sustainability or the transition CapEx. Could you explain how decarbonization investments are reflected and prioritized within the framework? Magnus Ankarstrand: Well, I think -- as we've said, the U.S. projects would be the lion's share of that growth CapEx, right? And sort of even though they represent lower gas costs, more scale over fixed cost per tonne, they also are key to the carbonization. So I think from that perspective, you can sort of say -- I mean, the benefit that we have, right, is that a project like that and our position in the ammonia market means that we can do the decarbonization profitably and have -- because we have the other benefits as well, right? So I think that part is fairly sort of, I would say, covering that. And I think when it comes to the maintenance CapEx, part of that go into improvements in our plant that are also related ESG related, such as energy efficiency, which also has a good momentary impact by using less energy and lowering costs. But I think in general, Yara does not do ESG investments unless they are profitable. So there's no separate budgets for that. Unknown Analyst: Okay. Okay. Okay, that's clear. It would be helpful, though, if you would include a figure that would show that officially because now it's just maintenance and growth. Also to my second question. It stated that Yara's capital allocation policy is based on maximizing shareholder value. while maintaining a mid-investment grade profile. I'm wondering how do you operationally ensure that capital allocation decisions are still consistent with either a 1.5 degrees line pathway or a well below 2 degrees of pathway? Magnus Ankarstrand: Yes. No, I think we have set targets for 2025, which we achieved in 2030 that we're working hard to achieve. And these are based on exactly that. And then we -- in our CapEx allocation, we I mean -- or to be different to achieve those targets, like we have done for 2025, we have a portfolio of different projects and of course, the U.S. ammonia investments being by far the biggest one, but also other projects like electrification project, we have our CCS project in Sluiskil that we complete this year and so on. So we look at our portfolio in totality and then we look at whether our CapEx or sort of the capital investment that we do provide a sufficient return or a strong return to our shareholders as well as how it sort of meets targets such as the ones we've set, right on the ESG side. But I think what's important to remember is that in order for that to be possible, there needs to be a firm sort of economic value drivers, right? So of course, our investment in [indiscernible] CCS, which contributes significantly to our targets, would not have been possible unless there was a carbon pricing in Europe, right? And I have to say, if the type of uncertainties, even though we believe firmly that CBAM will remain in place, would I think it's safe to say that is this kind of uncertainty would have come exactly when we were to do our investment decision on that project. It's just a guarantee that we would have actually approved that. So I think that's important to keep in mind as well. However, we do believe that, that project will make us very competitive in the European context. And that's kind of the basis for all the projects. They need to be -- they need -- so basically, what I'm saying is that the regulatory side needs to be in place so that these projects are profitable. Some of them are profitable, no matter what because saving electricity is typically possible. But some others will not be a profit on that -- yes, the regulatory side is in place. Operator: Our next question comes from the line of Mazahir Mammadli of Rothchild. Mazahir Mammadli: So my question is on CBAM. Basically, I wanted to ask. So we saw the benchmark values published by the EU on CO2 intensity of mitogen production in various countries. When you compare those benchmarks to the CO2 intensity of your own production. Do you see an advantage? If so, how big is it? Maria Gabrielsen: Yes. So for urea, we will have a variation between our plants naturally, some will be very efficient and some will be less efficient. But in general, Yara's plant will be more efficient than the [indiscernible] average European, but more so the global averages and the benchmark for imports. Yes is the short answer. Magnus Ankarstrand: Absolutely. And I would say, particularly in our nitrate production with the investments that we've done there over a long period of time, we are significantly more advantaged on the carbon footprint side. So that's, of course, a huge advantage on nitrates in Europe, particularly when you compare to imports of urea. And I think since this was the last question on the CBAM, many questions on CBAM, which, of course, is a very hot topic these days. I think you also sort of in its place to add that we are very concerned about sort of the impact on the farmer, obviously, not only from increased cost of fertilizer, but also on a lot of the other regulation that's put on the particular European farmers. But I think, it is a very easy way to solve that problem for the EU, particularly when it comes to CBAM, and that would simply be to give that the CBAM revenue as a subsidy back to the farmer who buy the fertilizer. I can see no better use of that money than that sort of the train of thought that you would sort of suspend CBAM. So that 30 imports from outside Europe can outcompete European industry is clearly not the best route of achieving that. So I think there is a very easy way for the EU to help farmers and not negatively impact European industries as well. Operator: We have reached the end of our Q&A session. I'd now like to hand the call back to Maria for final remarks. Maria Gabrielsen: Thank you for everyone for joining. No further comments from our side. But our Investor Relations is available for further questions, please feel free to have follow-up. Thank you and goodbye. Operator: Thank you for attending today's call. You may now disconnect. Goodbye.
Operator: Good evening. This is the conference operator. Welcome, and thank you for joining the Rexel Fourth Quarter Sales and Full Year 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Guillaume Texier, CEO of Rexel. Please go ahead, sir. Guillaume Jean Texier: Good evening, everyone, and thank you for joining us today for our full year 2025 results presentation. I'm with Laurent Delabarre, our Group CFO, who will take you through the financials and the detailed numbers in a few minutes. And before that, let me briefly set the scene and share the key messages. 2025 was another year of market outperformance and margin resilience, and this is a particularly remarkable outcome as it was delivered in a mixed environment. It also clearly demonstrates the transformation of Rexel's model that is underway and gathering pace. Beyond the results, an additional element of satisfaction is that behind the scenes, we continue to take initiatives to strengthen the group for the next phase. Building momentum in high-growth verticals such as data centers, actively managing the portfolio and accelerating our transformation through digital, AI and productivity initiatives, which supports our confidence in our midterm ambition. With that, let's get started. And let me begin with a quick overview of the key highlights of the year. First of all, as I mentioned, our sales and margin performance offers an important proof point that Rexel's transformed business model is working, not only in favorable macro conditions, but also in a more mixed environment. Second, we adapted quickly to a very different environment in Europe and North America. As conditions evolved through the year, we stayed close to our customers, and we accelerated execution progressively, adjusting priorities and protecting performance. And third, as I said, we stepped up self-help actions through our Axelerate28 strategic plan. These initiatives are very operational and concrete, strengthening discipline, improving efficiency and ensuring we continue to build the foundations for future performance. So overall, resilient results today, rapid adaptation throughout the year and action plans that support the next steps of our journey to reach our midterm ambition. With that, let's move on and take a look at the year in more detail. And turning to our full year achievements on Slide 4. We met or exceeded the guidance we set for the year on all KPIs. First, on top line. We achieved plus 2.5% same-day sales growth, above the initial guidance that we had raised in October. Second, profitability remains very solid. We delivered a current adjusted EBITA margin of 6%, fully in line with our guidance, again, illustrating the resilience of our margins in a challenging environment. And third, cash generation was strong. Our free cash flow conversion before interest and tax reached 76%, well above our guidance of above 65% when excluding the impact of the EUR 124 million French anti-trust fine. So overall, we delivered growth, we maintained margin and generated strong cash, providing a solid base as we move into the next year and execute our priorities. Let me then take a step back on the backdrop. It was not a particularly easy environment. Europe stayed weak, notably in residential, North America was impacted by uncertainty and a delayed recovery in industrial automation. And Asia Pacific remained subdued. The clear area of strength was AI-driven data center investment and favorable pricing in the U.S., supported by trade tariffs. In that context, Rexel did what we set out to do. We outperformed and gained share across our key markets. We are seeing a real payoff from the work we've been doing over the last several years on sales force excellence, higher digital penetration and the ramp-up of advanced services. We also leaned into data centers and broadband infrastructure, particularly in the U.S. with dedicated teams and branches, and we further strengthened our position in the telecom space with Talley acquisition. In addition, we stayed agile on the portfolio with 5 acquisitions and 2 disposals. Overall, top markets but strong execution, and we've continued to build momentum in the right growth areas. From a geographical standpoint, the year really comes down to how we manage the 2 main engines of the group, North America and Europe. In North America, the focus was on managing profitable growth. We captured the trends in higher growth segments. And at the same time, we managed the tariff situation in a disciplined way. And importantly, we kept tight control of the cost base, delivering growth while operating with a broadly similar FTE level. In Europe, the environment was more muted with negative volumes and flat pricing. So we moved fast on costs. We rapidly implemented adaptation plans, leading to a workforce reduction of around 4%, about 600 FTEs in 2025, while keeping a strong focus on margins. Taken together, this is what drove improved margin resilience versus previous cycle downturns. Let me now focus on data centers in North America on Slide 7. What began 3 years ago as a targeted initiative is now achieving scale to become one of our most attractive growth platforms. In the U.S., we are reinforcing our position. We continue to significantly outperform the market with very strong momentum in Q4 and across the year, and data center already represents a meaningful share of our sales. To support that growth, we expanded our footprint and capabilities close to project sites, adding, for example, around 200,000 square feet of storage capacity in key locations like Atlanta, Mesa and Reno, with further potential to scale. Our model is simple, local branches and resources backed by national coordination. That allows us to be close to customers on execution while still bringing the breadth of Rexel expertise, availability and consistency across multiple sites. We also broadened our offering into new product categories that matter for data centers built, and we are continuing to add dedicated resources and expertise to capture the next wave of projects. In Canada, also, we are off to a promising start. Here, the activity for us is concentrated in the Western region. We are active in the gray room offering from UPS to panels and datacom accessories. And we have a strong backlog that supports continued momentum for 2026. So the key takeaways here is that our scale, logistics capabilities and technical expertise give us a clear advantage in this segment. We are well positioned with strong momentum ahead of us. I'm now on Slide 8. Portfolio management remains a key lever of our strategy. 2025 was another year of active portfolio management with 4 acquisitions completed and 2 disposals, further sharpening the group's footprint and profitability profile. We've strengthened our footprint through the additions of Warshauer and Schwing in the U.S. In Canada and Italy, we've expanded into adjacent higher-margin businesses with Jacmar [Technical Difficulty] while completing around EUR 2 billion net of disposals. And in total, we've closed 21 acquisitions over that period, including 4 in 2025. And what I would like to stress is the quality and the direction of this M&A. Around 60% is in our core electrical distribution business, around 40% in adjacencies where we see attractive structural growth and higher value-added opportunities. We have been particularly focused on North America with 14 acquisitions, representing more than 70% of acquired sales, including about EUR 0.5 billion in adjacencies. And this is clear value creation. On average, we see value creation from year 2, earlier than initially targeted. And our combined 2025 performance imply roughly 7x EV to EBITDA multiple after synergies below Rexel valuation multiple. And we also move forward on the other side of the portfolio with 2 targeted divestments completed in 2025, and these actions reinforce the robustness of our balance sheet and provide flexibility to continue investing in growth. Moving to Slide 9. Digital is a very tangible differentiator for Rexel and it continues to gain traction. Today, we are a B2B leader in digital with more than 1/3 of our sales going through digital channels, and this is not slowing down. Digital penetration has been progressing by between 200 and 300 basis points per year over the last 15 years. What's driving it is a mix of constant improvement in the customer experience with more tailor-made features, including AI-powered capabilities, plus continuous data enrichment and also, frankly, a generational shift in how customers want to buy and interact. The benefits of these long-term efforts are very concrete. And I believe this is one also of the explanation of our good set of results recently. Digital increased its customer stickiness and share of wallet. It widens the service gap versus smaller competitors who have increasing difficulties following the pace of the race to more data and more features. And finally, it also improves the efficiency and productivity of our teams, which is critical to our business model. All in all, it's a key engine of differentiation and performance for Rexel. Beyond the short-term environment, we are accelerating a set of deeper transformation to pave the way for future performance as shown on Slide 10. First, we are boosting sales force productivity through organizational changes and increasing adoption of AI-based tools to help our teams spend more time selling and improve the quality of execution. Second, we're optimizing the supply chain through more automation, stronger internal synergies and AI, improving service levels while taking structural costs out. Third, we are resetting parts of the cost base in lower profitability countries. This is about staying disciplined, adapting the model to the reality of the market and protecting margins. Fourth, we are leveraging our full offering, expanding in adjacent product categories and services where we can create more value for customers and capture more of their spend. And finally, we continue to roll out smart pricing programs that leverage data to improve consistency and value capture. Those OpEx are not only to Rexel obviously as we constantly strive to improve, but 2025 was a year of clear acceleration. First of all, because the business environment pushed us to move faster and sometimes think out of the box. And secondly, because we launched our new strategic plan, Axelerate28. And most of those plans we are talking about are multiyear efforts, which means that you will see them progressively delivering benefits to our P&L. Focusing on next slide on AI. AI is another area where we are moving fast. And it's not just -- I'm on Slide 11, and it's not just running pilots, but now scaling real use cases into day-to-day operations. On the left of the slide, you see the main areas where we had identified clear AI opportunities, tools to speed up RFQs, smart automation for order entry, automatic data enrichment and internal category expert capability, customer-facing chatbots. And on the right, you see where we are today, not in terms of shiny proof-of-concept demos but in terms of reduction by the teams and real-life industrial live tools. In the U.S., more than 50% of the quoting teams, for example, are already using the new quotation tools. In France, around 25% of e-mails quotes are handled through AI tools. And on order entry, we now have over 65% of U.S. teams and more than 70% of French teams using AI-powered tools. We are also rolling out internal expert capabilities by categories, deploying customer-facing chatbots across additional countries. So the message here is simple. AI is already improving speed, quality and productivity, and we are scaling it pragmatically use case by use case. And Slide 12 is about productivity, a major KPI for us. The message here is that over the last 5 years, we have lifted the baseline of what we are able to deliver in terms of productivity every year. What differentiates this cycle from previous downturns is the speed and depth of our cost adaptation. Through workforce adjustments, productivity initiatives, tighter cost control, we protected margins despite lower volumes, reinforcing the resilience of our operating model. Historically, between 2016 and 2021, our productivity ratio averaged around 0.9%. Over the last few years, it has stepped up and in 2025, it reached 2.8%. This improvement is not coming from one single level. It's a combination of structural initiatives that I just presented, including the ramp-up of digital and the early impact of AI tools, together with rapid cost adaptations in more challenging markets. So 2025 was another demonstration of Rexel's resilience at the bottom of the cycle. The key takeaway is that we are not just managing through the cycle, we are structurally improving how efficiently the group operates, which supports margin readiness and future performance. With that, let me now hand over to Laurent, who will take you through the detailed 2025 numbers, and I will come back for the guidance. Laurent Delabarre: Thank you, Guillaume, and good morning to all of you. Evening. Good evening, sorry. On Slide 14, you can see how momentum improved throughout the year '24 and '25. With the quarterly same-day sales growth trend at group level and the regional breakdown, we moved from minus 4.6% in Q1 '24 to a progressively better trend quarter after quarter, and we closed 2025 with plus 3.8% in Q4. That's a very clear reflection of better momentum, disciplined execution in the field and better pricing management. First, selling prices contributed positively in Q4 '25 by 1.7%, improving compared to Q3 '25. And more specifically, non-cable pricing were unshaded in Q4 '25 at 0.9%, with improving trends in North America, mainly offset by China. Selling price on cable improved to plus 0.8%, notably thanks to Europe. And briefly on geography that I will highlight in the next 2 slides. North America remains the main growth engine. Growth accelerated through the year and ended it at plus 7.9% in Q4 '25. And Europe remained difficult, but the trend improved sequentially, and we are back to flat sales evolution in Q4 '25. And more specifically for Asia Pacific accounting for 6% of group revenue. China was up 3.1%, supported by industrial automation project in a better environment while selling price were just back to flat in Q4 '25. In Australia, sales growth accelerated in the quarter, notably boosted by solar activity, further supported by subsidies on batteries. Lastly, India, which is small, but sales increased by plus 16.9%, driven by strong growth in our industrial automation activity. I'll now go into more detail in the next 2 slides on Europe and North America. So moving to Slide 15. Europe remained impacted by muted construction environment and delayed electrification trends. Despite this, Rexel gained market share in its most important countries and delivered a resilient performance. Same-day sales in Europe were flat in Q4, improving from minus 0.5% in Q3. Volumes were broadly stable despite the political and macro uncertainties. And we also saw a sequential improvement in pricing in Q4 versus Q3, mainly driven by cable. And to put the underlying trend in perspective, our growth excluding solar, which represents about 4% of our sales in Europe, was up plus 0.5%. By end market, residential was flat, excluding solar, with first sign of recovery in a few countries, notably Sweden and the Netherlands. Non-residential was broadly flat and we saw a slight improvement in industry. Let me highlight the main country dynamics in the quarter. France was up plus 3% despite a challenging environment with broad-based market share gains and strong HVAC contribution. Benelux was up plus 2.6%, driven by electrical distribution activity in the Netherlands, and the acceleration of solar growth in Belgium. DACH was a key offset, deteriorating sequentially on business selectivity in a difficult macro environment. Also, we continue to take market share in Austria. Sweden was flat with a sequential improvement driven by industrial segment and supported by a smaller drag from solar in Q4 compared to Q3. And finally, U.K./Ireland was down minus 6.7%. Ireland remained positive with a favorable industrial market. But the U.K. market stayed tough with London showing the first sign of our recent investment. So overall, still a soft market, but improving trends from Q4 and continued market share gains in several countries. In this context, productivity initiatives helped mitigate the impact of lower activity. And this positioned well to benefit from any market recovery, particularly as leading indicators in some countries begin to stabilize. On Slide 16, we turn to North America, which remains the growth engine in Q4, driven by both volume and pricing where we saw improvement in non-cable, mainly driven by piping and conduit families. First, same-day sales were up strongly in the quarter with Canada driving the acceleration versus Q3 '25, specifically in data center project as presented by Guillaume. We also benefited from strong continued market share gains and positive contribution in datacom. And second, the U.S. continues to be driven by high-growth verticals, particularly data center and broadband infrastructure, which represents more than 55% of the growth in the quarter. We also saw strong activity in solar and EV charging. By end markets, all 3 markets were positive, with non-residential clearly driving the acceleration and the industrial automation up 8%. Lastly, the backlog remains solid, representing 2.7 months of activity at the end of December. Moving now to the full year picture. I'll start on Slide 17 with the bridge of our full year sales, showing how growth was built between scope organic, FX and calendar. We delivered full year '25 sales of EUR 19.4 billion, up 0.7% on a reported basis. Organic performance was the main driver. As we saw, same-day sales growth was plus 2.5% for the year, with volume contributing plus 1.2% and pricing adding plus 0.6% in non-cable and plus 0.7% in cable. So a solid volume contribution plus disciplined pricing across both cable and non-cable. M&A also contributed meaningfully. Acquisition added plus 1.8% more than offsetting the minus 0.9% impact from disposals. These positives were partly offset by external factors. First, the FX was a headwind of minus 2.2%, mainly from weakening of the U.S. and Canadian dollar as well as a calendar impact of minus 0.5%. That was the sales bridge for the year and we'll now move to profitability and margin performance. In this Slide 18, we bridge our adjusted EBITA margin year-on-year and the key message is simple. Record productivity more than compensates what we call the delta inflation headwind. Adjusted EBITA margin increased from 5.9% in full year '24 to 6% in full year '25. First, portfolio and FX were positive, contributing 11 basis points, while the calendar effect was a drag of minus 5 basis points. Second, you see the operating leverage, slightly negative because due -- mainly due to the new European environment and the underabsorption of fixed costs, notably in underperforming countries, mitigated by positive operating leverage in North America. Third, the main headwinds in the year was what we call the delta inflation, which represent the gap between selling price increase and OpEx inflation, 19 basis point headwind, in line with our expectations. Cost inflation was around plus 2.2% in full year '25, while selling price increase were up 1.3%. And these headwinds was more than offset by the 2 following actions: first, the gross margin improvement adding 9 basis points, supported by pricing initiatives; and second, our action plan delivered a further 33 basis points, in line with the expectation and already illustrated by Guillaume in the slide dedicated to productivity. Let me remind you that FTEs was down 2.3%, while volume contribution to sales were up 0.7% in actual days. But operating discipline is what allow us to protect and slightly expand despite inflationary pressure. Lastly, and we are further investing in the business notably through digital and footprint investment that impact our EBITA margin by 11 basis points. On Slide 19, we look at the bottom-line part of our P&L., with a zoom on other income and expense, financial expense, tax rate and recurring net income. Other income and expense stood at EUR 56 million, notably including minus EUR 41.1 million in restructuring, mainly in Europe, more than last year in order to accelerate adaptation to a tougher environment, notably in U.K. and Germany. EUR 36 million of capital gains on disposal. Minus EUR 29.7 million in asset impairment in the U.K. Minus EUR 20 million in others, including integration costs and pension settlement in Canada. Financial expense stood at EUR 214 million, slightly above last year with a rise in gross debt, offsetting the lower cost of debt now at 4% versus 4.4% last year. It includes EUR 72 million of interest on lease liabilities and pure financial cost of EUR 142 million. And for '26, we anticipate financial expense of circa EUR 250 million, including less than EUR 70 million of interest on lease liabilities and around EUR 145 million plus of pure financial expense, excluding one-off. And assuming current interest rate continues, condition remain unchanged. Our income tax rate stood at 30.2% due to the impact of the exceptional tax in France. And going forward, we anticipate the tax rate to be at circa 30% in '26, take into consideration the additional tax in France that will apply for the second year. And for '27 onwards, we anticipate then the tax rate to go back to circa 27% in the absence of exceptional tax renewal in France. And as a result, net income increased by 73% and recurring net income stood at EUR 308 million, up 2.4%. Moving to slide 20. We generated robust cash flow before interest and tax, reaching a high level of EUR 938 million, implying a free cash flow conversion rate of 76%, well above last 4 years' above average, that stood at 69%. This is excluding the EUR 124 million fine imposed by French tax authorities and paid in April '25. The trade working capital as a percentage of the last 12 months of sales increased to 15% versus 14.6% last year, mainly related to the sales growth acceleration in H2 and mainly Q4. In a number of days, embedding the last 3 months of sales, both inventory and receivables improved and were partially offset by lower payables. Indeed, the DOI and DSO decreased by respectively, 1.5 and 1 days and DPO was down 2 days. Non-trade working capital was an inflow of EUR 24 million on an outflow of EUR 100 million, including the payment of the EUR 124 million fine. CapEx remained disciplined at EUR 136 million, with growth CapEx representing 0.7% of sales, stable versus last year. So overall, we converted earnings into cash at a very strong rate, supported by tight working capital and disciplined investment levels. On Slide 21, I want to come back to free cash flow conversion profile over the last 5 years, a key proof point of the quality of our execution. As you can see, we delivered a record level again, above 70% for the third consecutive year. [ 7.6% ] conversion rate is at the top end of what we have delivered in recent years and clearly above our full year guidance of above 65% in our midterm ambition. And this performance is a result of two very disciplined execution. First, a well-balanced investment approach with roughly 55% of our CapEx in digital and about 45% in network and supply chain modernization. Second, active working capital management as we have seen, especially the quality and structure of inventory and receivables. So overall, this strong cash generation built on repeatable levels support our financial flexibility going forward. As shown on Slide 24, our capital allocation focus on both acquisition and return to shareholders. Overall, net debt slightly increased by EUR 147 million, mainly resulting from 2 factors. First, the EUR 227 million impact from net financial investments, mainly the acquisition of Warshauer, Schwing, Jacmar and TECNO BI mentioned earlier by Guillaume. Second, the dividend payment related to the 2024 performance for EUR 355 million, corresponding to EUR 1.20 per share. Lastly, we also bought back shares for EUR 100 million, in line with our midterm objectives. And since mid-2022, we bought back EUR 400 million and reduced the number of outstanding shares to 296 million. All this leads to net debt close to EUR 2.6 billion, including earnout for circa EUR 30 million, and the indebtedness ratio stands at 2x, representing a strong achievement. In short, we continue to invest in value-creating growth while maintaining a healthy balance sheet and a consistent return to shareholders. Let's turn now on Slide 23 to the breakdown of our main debt maturity and liquidity. 2024 was a very active year in terms of refinancing. In addition to all operations presented in H1, the second half was also intense, and we further extended our debt maturity profile. As a reminder, we have first issued a new EUR 100 million Schuldschein in July with a '29 maturity. Second issued EUR 400 million senior notes with 4% coupons maturing in 2030 but extended 2 securitization programs for more than EUR 800 million from '25 to '28. And finally, we increased our senior credit agreement by EUR 200 million to EUR 900 million and extended it to 2031. Overall, we have a well-balanced funding structure, extending maturities and comfortable liquidity, and we can stay focused on executing the strategy. As always, we are evaluating market opportunities in the volatile debt market environment. Moving to the next slide, we summarize our shareholder returns through the dividend. For the year, the Board will propose a dividend of EUR 1.20 per share, maintaining our strong track record. This implied payout ratio of 52%, which is at the high end of our guidance and reflect our confidence in the resilience of the business model and in our cash generation. Subject to the general assembly approval in April 22, 2026, the dividend will be payable in cash on May 13. So overall, we remain fully committed to a disciplined capital allocation policy, combining value creation growth investments and an attractive return to shareholders. Let me hand back to Guillaume before we move on to your questions. Guillaume Jean Texier: Thank you, Laurent. And let me now turn to our outlook for 2026, and let me go to Slide 26. It's a busy slide, but it illustrates also well the way we see the short-term future. Many moving parts, a good level of uncertainty, but probably overall, more encouraging trends than the opposite. Starting with North America, prospects are clearer and we continue to expect further growth. Of course, there are still macro uncertainties, including around tariffs, and we see less traction in some electrification solutions. But structurally, the key growth engines remain in place. We expect continued progression in data centers, and we are also seeing more positive signals in industrial automation, supported by reshoring and the One Beautiful Bill. In Europe, the environment is still challenging. Construction remains near the trough and confidence is not yet back. That said, we see more and more encouraging early indicators, and we do expect improving trends, especially in the back part of the year. The comparison base becomes easier for electrification. The lower interest rate environment is starting to improve. And as I said, we see leading indicators in residential improving. And in Germany, finally, the infrastructure plan could begin to materialize later in the year. On pricing and inflation, we still expect OpEx inflation to remain slightly higher than selling price increases. At the same time, we should benefit from the carryover of 2025 pricing in the U.S. We may also see additional price increases reflecting the recent rise in copper and silver, but it is a little bit too early to tell with certainty. And finally, self-help remains a very important part of the equation. We will benefit from the carryover of actions already launched, and we have also new initiatives to implement in 2026. So overall, North America should remain solid and supportive. Europe should gradually improve. And in all cases, we stay focused on execution and self-help to deliver in an uncertain environment, which brings us to our full year 2026 guidance on Slide 27. On the top line, we expect same-day sales growth of 3% to 5%. On profitability, we guide for a current adjusted EBITA margin of around 6.2%. At this stage, we still expect a slightly negative inflation gap with cost inflation running ahead of selling price increases although improving compared to 2025. And that will be offset by a clear set of cost and productivity initiatives, including the continued rollout of digital and AI tools. In addition, copper price rose sharply recently. Of course, as a distributor, we will pass the price increases from suppliers. We don't know yet how much price increase will be passed by those suppliers. And we believe that the situation may vary by country, by suppliers, leading to progressive price increases. We prefer to be cautious that it is very early in the year, which means that we took the equivalent in terms of copper of $11,000 per tonne price of copper to design this guidance. And we will adjust during the year depending on the evolution of the situation. And finally, on cash, we are guiding for free cash flow conversion now above 65%, reflecting our disciplined CapEx policy and continued focus on working capital. So overall, our 2026 guidance reflects continued growth, resilient margins through self-help and strong cash generation in a global environment that remains marked by a little bit of uncertainty. Turning to Slide 28. Before we conclude, I think it's worth taking a step back to consider how Rexel's ongoing transformation has taken roots over time and is still ramping up. Building on foundations laid in 2010 to 2019, particularly when it comes to digital penetration, we have been broadening and accelerating our transformation since 2020 to more dimensions of our operating model. We have raised the bar on operational excellence with more standardization, automation, discipline and execution. We have also made portfolio management much more active using bolt-on M&A and selective disposals to improve the quality of the group. In parallel, we have scaled advanced services and focus more on the market where we see structural acceleration, electrification, energy efficiency and of course, data centers and datacom. And now we're entering a new phase where AI-boosted tools are becoming a real game changer in customer experience and productivity level, not a concept. What matters is that these levels reinforce each other, stronger digital, better operations, a sharper portfolio, more value-added services and higher productivity. So when we talk about Axelerate2028 and our medium-term ambitions, it's the continuation and acceleration of the transformation that has been underway for years. The Axelerate2028 plan is now fully underway. And as I said at the beginning of the presentation, 2025 was a very busy year in a number of new initiatives launched. This gives us great confidence in our ability to deliver on our midterm ambitions, even in a less supportive market environment. And I'm now on Slide 29. Since 2024, when we issued our midterm guidance at our Capital Markets Day, what has first changed is the market backdrop. The macro cycle recovery has been delayed. We faced a delta inflation headwind in 2024 and 2025 and electrification market in Europe has been a little bit more muted than expected. But on the other hand, several factors have moved in the right direction with some of them, many of them being in our control. So first, we are leaning even more into high-growth verticals, especially data centers. Second, the adoption of GenAI is accelerating faster than we initially anticipated, and this will prove clearly beneficial to our business model. Third, we have reinforced our focus on cost initiatives and productivity across the group. And finally, pricing is more supportive in '25 and '26 with higher selling price increases coming from U.S. tariffs, pricing programs and potential impact from copper. So when you put all of that together, there are pluses and minuses, but the combination of that allows us to confirm our medium-term objectives, sales growth of 5% to 8%, including 2% to 3% from acquisitions, an adjusted EBITA margin above 7% and cash conversion of 65%. In other words, the market is certainly not giving us a free ride, but the strategy and the self-help levers are stronger and this is why we are confident in our midterm ambition. And in a way, the fact that we now rely more and more on our own efforts on what is in our hands than on the market is an element of security that is good news for the future. So let me close this presentation with 4 key messages before we open the call for Q&A. First, 2025 was another clear demonstration of Rexel's resilience through the bottom of the cycle, proof that our transformed model is working. Second, the momentum we saw in Q4 in both Europe and North America, that we continue to see in January, has carried into early 2026, which gives us a very good starting point. Third, with the launch of Axelerate2028, we are accelerating transformational change across the group from productivity and cost efficiency to digital and AI adoption to unlock our next phase of performance. And despite slightly less market support, we are keeping a high level of ambition, and we remain fully committed to reaching our midterm guidance. Finally, I'd like to finish by saying, our teams have once again shown remarkable commitment and agility in 2025. And with that, I would like to thank our employees, customers and partners for their continued trust. Thank you for your time and attention. And now Laurent and I are happy to take your questions. Operator: [Operator Instructions] First question is from Daniela Costa, Goldman Sachs. Daniela Costa: I have 2 questions, if possible. I'll ask them one at a time. But the first one is regarding the free cash flow. As you mentioned on the presentation, you've beaten your targets on free cash flow for a few years there. But you're once again guiding for around 65% on the conversion. Can you talk why you don't upgrade that target? And what would drive you back down to a weaker cash conversion than what you have had, for example, this year, excluding the charge? That's number one. And then I'll ask the other one. Guillaume Jean Texier: Okay. Thank you very much, Daniela. And thank you, first of all, to recognize the important effort that we make to optimize free cash flow and to deliver good performance. Now we have upgraded in reality, the free cash flow guidance. You have probably noticed that, but we went to around 65% and then to above 65%, which is the guidance that we are giving. So it's progressing. Now on this one, we prefer to be cautious because, as you know, the free cash flow delivery depends very much on the shape of the last part of the year. In a year of acceleration, which we experienced in Q4 2025, that's always a little bit favorable to free cash flow. And to the opposite, and we have seen that during COVID, for example, in a year of a deceleration, the free cash flow in terms of transformation is always a little bit more challenged because of working capital at the end of the year. So there are many things in the free cash flow delivery that we master, inventory and number of days throughout the years in average is something that we control well. CapEx is something we control very well. But when it comes to payables and receivables, because of this uncertainty, we prefer to be cautious. But you're right, over the last 3 years, we have systematically delivered more than 70%. And in the last 2 years, more than 75%. I mean I don't know, Laurent, if you want to add anything to that. Laurent Delabarre: Maybe on the CapEx side, we had years of more important logistic investment in the past where we were below this 70%. That's why I think the above 65% is a reasonable target. Guillaume Jean Texier: If the question is, does it hide anything in terms of additional expenses or additional CapEx that you will have in mind, no, not really. I mean we feel that 2026 is going to be the same kind of profile in terms of CapEx as 2025. So no, no, no particular -- I don't know if it was your question, but I'm answering it. Daniela Costa: Great. And then just on this AI productivity benefits that you talked about. I was wondering if -- when you planned your targets in 2024, was this what you were already foreseeing would happen in '25? Or should we look at this sort of productivity improvements as over and above what you were expecting back then? And once the market comes, what should be the incremental upside to margin from these extra initiatives or extra productivity that you find if this is extra? Guillaume Jean Texier: So directionally, I think you're absolutely right. This was not completely in our minds, not to this extent when we did our initial midterm guidance in 2024. So the benefits of that, which is double digit in terms of productivity will come on top and above that. We have productivity targets. But clearly, GenAI potentialities are probably adding a layer to those productivity targets. But to the opposite, as we showed on our Slide 29, there are a few things which are probably temporary. I mean when we're talking about delayed cycle recovery, that's probably something, which you're right, in the long term is going to come back. And the same thing about delta inflation headwind. But -- so at some point, it will come over and above. So if you're talking about the absolute potential of Rexel, mid-cycle potential of Rexel, maybe that -- which is going to be an additional benefit to what we guided to in 2024, but I'm very focused on what we call midterm, which was 3 to 5 years. And in this time frame, I think this may be something which will help us offset potential macro delays. That's what we are saying. Operator: Next question is from Akash Gupta, JPMorgan. Akash Gupta: I have 2 as well. My first one is on copper prices dynamics because when I look at movement in copper price in Q4, we had roughly a 20% increase in U.S. We had 9% on LME. And when I look at your copper price, in Q4 of 0.8%, that looks a bit lower than implied by changes in copper prices. So maybe if you can talk about why it is not yet reflected in your growth rates? And then when it comes to the outlook, and thanks for specifying that your guidance is on $11,000 per copper. So if we assume that the current level of $13,000 stay for rest of the year, is it fair to assume that we need to add probably 200 basis points annualized to your growth rates? Guillaume Jean Texier: Laurent? Laurent Delabarre: Yes. First, I mean, the copper is not as mechanical as you see. What we guided in the past is that a $500 increase in copper would drive around 0.4% of top line growth. But with this sharp increase in copper recently and in the current environment, and there are also FX components into that, what we see today is that the supplier, they are lagging effect to pass through the copper improvement into the cable price increase. And we turn also our inventory in 2 months, so there is also this lag. That's why at the end, it will gradually come into our performance into '26, and that the effect in Q4 is slightly lower than what you were calculating. Guillaume Jean Texier: Yes. The wild card is really very much what the manufacturers, what the cable manufacturers and also what the other materials manufacturers, which include copper, are going to do with that. And in the follow-up, I'd say, I understand that it was very automatic. It's been a little bit less the case in the recent past because of strong variations. And so we'll see what happens there. And as far as if things were completely automatic, what would it mean in terms of top line? I think your ballpark calculation is probably approximately right, maybe slightly high because Laurent said that it's a 5:4 ratio, but we are not that precise anyway. So yes... Akash Gupta: And my follow-up is on the growth guidance. So at midpoint, you're guiding 4% organic same-day growth. And can you break it down into what sort of volume assumptions you have assumed in that calculation? And when we look at the margin drop-through, is the margin drop through of additional 1 percentage point growth from volume versus price? Is there any difference on the drop-through on margins, like, let's say, if we have 1% higher growth from volume, would that have any different drop-through than 1% higher pricing? Guillaume Jean Texier: Yes. I mean Laurent, do you want to answer on that. I mean first, I will answer the easy part of the question, which is that the assumption is half-half. Now Laurent, for the more difficult part, which is drop-through volume versus drop-through on price, et cetera. Laurent Delabarre: No, that mechanically, the drop-through on price is a bit higher because you have less variable costs. You have just the commission of the salespeople and some bonuses whereas a drop-through on volume will include transportation costs and other cost, inventory cost. But again, it's -- yes, the drop-through on price is a bit higher. Guillaume Jean Texier: But that's not exactly the way we calculate our bridge. I mean we look at the drop-through on volume. And if we look at -- if we try to do a back-of-the-envelope math, if we look at 2025 to 2026, we look at, let's say, 2% volume, we say, the drop-through on this volume is approximately 20 bps, so that's beneficial. Then you have additional action plans. But on the other hand, as I mentioned in my comments, we also think that our inflation, which should be around -- inflation of our costs, I mean, which should be around 2.5% is going to be higher than the inflation that we assume in our gross margin and in our products, the price content of the gross margin, which is going to be around 2%. So those 2 blocks should offset more or less each other. And that's the reason why, at the end of the day, and the drop-through on price is included in this calculation, in the second calculation between inflation of gross margin and inflation of cost. So that's the reason why at the end of the day, we are guiding for around 20 bps of improvement. Laurent Delabarre: And to be specific, on the bridge '24 to '25 that I presented to the point of Guillaume on the operating leverage, we had a lot with op volume only. The pricing part is in the delta inflation of that, yes. That's the way we do it. So yes. Operator: Next question is from William Mackie, Kepler Cheuvreux. William Mackie: A couple actually, maybe looking at the bridge again. Last year, well, in '24, you made great progress with your action plans in dropping out cost. In '25, I think you've called it out as 33 basis points. Could you put some color or financial color around the expectations for how the action plans in '26 should play out, obviously partly contingent on the market development? Guillaume Jean Texier: Laurent, do you want to take this one? Laurent Delabarre: Yes, it was quite heavier, and you have seen it in the restructuring cost that we have factored in '25 For '26, we expect to have a bit less restructuring costs more in the EUR 20 million range. So meaning that we will have at the end a bit less benefits in terms of cost savings. We have additional initiatives plus the carryover of the initiatives that we implemented in the second half. The carryover is a bit less than 10 basis points, and we'll have additional action next year, but we are in a year which we will grow on the top line. So the productivity will more come from the volume than by the reduction of cost. Guillaume Jean Texier: So I mean the answer is approximately half of what we had last year. We did a lot of the heavy lifting last year. And I think we have now a lean cost structure ready for growth. But still around 10, 15 bps of cost savings. 15 bps. William Mackie: The follow-up would be related to the portfolio or the capital allocation more broadly, 2x net debt after a very positive year of free cash generation. And you've made great progress over 4 years with the portfolio development on acquisitions and disposals. But at this sort of level of leverage and with the portfolio today, is there much that could leave after Finland? And what is the sort of target opportunity looking like? Guillaume Jean Texier: Look, I mean, I will give you -- I will not answer your question, but I will give you a very general and worthy answer, which is that everything is under review all the time. Whenever we are in a situation where we think that we can improve a country or a business to our goals, even if we have to invest, even if it takes some time, we do it. But in some cases, and it was the case in most of the divestments that we have made in Spain, in New Zealand, in Norway and in Finland. There are situations where we feel that either we will not get to it because of the competitive situation of the country or the business or that there is a very attractive offer on the table from somebody who wanted to buy the business. And then we are very pragmatic in terms of value creation. But our preference is to improve organically what we have in general. So which means that, no, we don't have immediate plans of selling something. But then everything is reviewed every year based on those criteria. One, are we able -- do we have a credible plan to the Rexel goals -- to contribute to the Rexel midterm goals? And two, is there a super attractive value creation offer on the table? So that's what we do. But at this stage, we have nothing in preparation in the next few months. William Mackie: And on the buy side, how do you see the sort of valuation range and range of opportunities? Guillaume Jean Texier: On the buy side, we will continue to be active in terms of acquisitions. We have a pipeline which is healthy those days. So you may see a little bit of that. We are talking small and midsized acquisitions. We are talking the same focus as we had in the previous years, which is mostly in North America and mostly focused on the most value-added parts of the business if we can, which are services, et cetera, but not neglecting the potential to do a synergistic consolidation, acquisition. So I think you will see acquisitions in 2025 -- in 2026. If I had to bet, but it's always difficult to bet before the acquisitions are done, I would say that you're going to see slightly more than what we have done in 2025. And in terms of multiple environment, look, I mean, the multiple environment is relatively rich. I mean there is competition out there when it comes to acquisitions. But as you have seen over the last few years, and I think this is in the slides that Laurent mentioned, or in the slides that I commented in terms of acquisitions because we are able usually to add a sizable amount of synergies, we were able, and that's not a forward-looking, but that's a backward-looking calculation. We were able to deliver an average multiple, which is around 7x, which compared to our current multiple, which fortunately at the same time, has increased also to 10x, is a good value creation. So we will continue to be disciplined in that to make sure that we continue to build this track record. Operator: Next question is from George Featherstone, Barclays. George Featherstone: I just wanted to come back to the price versus cost dynamic that you flagged. I mean it sounds like demand is getting better. Are you still flagging this headwind for 2026. So I just wondered what the main reason is that you're unable to sort of match the cost inflation with prices? Or is it simply just a timing? That would be the first question, please. Guillaume Jean Texier: No. I mean let me be clear. When we are talking about that, we are not taking the price versus cost inflation. That's not exactly what we mean. On one hand, we have the price increases from our suppliers. And usually, we are very good because it's our core business, passing through those price increases to the market. Here, the pass-through is extremely good or if not perfect. But that being said, we cannot -- if there is a price increase of 4% by supplier A, we cannot say to the market that the price increase is going to be 6%. We do not have this ability because those price increases are usually well-known in the industry. Now so that's one thing. This is a price effect that we get mostly by decisions of our suppliers about how they are going to go to the market. And then there is the second part, which is completely separated, which is our own cost equation. In our SG&A, 2/3 of our costs are salaries. The rest is occupation costs with leases, et cetera. And that we also try to optimize, but we are also bound by different arrays of constraints, which are basically the average salary increase in the given country. We always try to optimize, but that's a little bit what it is. And what we are saying, for example, for next year is that we think that our OpEx inflation, salaries, rents, et cetera, transportation costs, is going to increase around 2.5%. And that as far as we see today, based on what we see from our suppliers, but it's the early beginning of the year, and it may change. We think that the price increases, which is the price component of the gross margin is going to be around 2%. So to be clear, what we are saying is certainly not that we are not able to pass the price to the market, which is what I heard a little bit in your sentence, but more than this particular equation, sometimes it's very favorable when there is a strong inflation in the industry because, for example, of shortages. And in this case, the salaries continue to increase with general inflation and the price of product is increasing by 5%. It happened to us in the past. And sometimes in other years, the price increases passed by the suppliers are a little bit more shy because they want to protect their market shares. And in this case, we have to work on our self-help action plans, productivity, et cetera, to offset that. That's a little bit the way it works and the way we try to explain it. I hope I was clear. George Featherstone: No, that's perfect. That's makes total sense. Then maybe just a question on the backlog in the U.S. I just wondered how much of this is data center versus projects in other end markets? And just whether you can comment at all on how that backlog has evolved sort of data center versus non-data center, if it is split like that? Guillaume Jean Texier: Look, you're asking a question to which I was not prepared, unfortunately. I think -- I don't know. I don't know in the backlog, how much is data center, how much is the rest. What I know is that overall, the backlog remains at the North American level, very stable, higher than the historical average, with maybe Canada increasing a little bit which may be the effects of data centers and the U.S. being a little bit lower than Q3, but very incrementally. Now what I can tell qualitatively is that in data centers, we have a good degree of confidence that we will continue to deliver a good growth rate. And when I say the growth rate, you saw that our data center growth was more than 50% for the year and more than that in Q4. We think that we -- you can safely say that our data center growth next year is going to be at least north of 20%. Operator: Next question is from Andre Kukhnin, UBS. Andre Kukhnin: I'll just go one at a time. Firstly, on pricing, just to clarify what you said, if you talk about non-cable pricing specifically, and kind of low voltage and automation products, we've seen evidence of price increase letters being sent to customers by major suppliers in China. But your comments suggest that this hasn't happened in European countries or in the U.S. Is that the case? Guillaume Jean Texier: Can you repeat your last sentence, our comments? Andre Kukhnin: Yes. We've seen there was press that kind of published letters to customers announcing price increases by major international and local vendors in the voltage and industrial automation in China. And from your comments, it sounds like this hasn't happened in France, Germany, Netherlands, U.K. or the U.S. So I just wondered if that's the case, if I've got the right reading of that. Guillaume Jean Texier: I mean first of all, we think that we are going to see price increases during the year. We talk to suppliers, and we feel that they are willing to increase price. Now what we don't know is the extent of that and by how much it's going to be proportional to the copper evolution when it comes to cable, et cetera. So that's what we are saying. We're not saying that suppliers are not going to increase price. And as we said, we have an hypothesis of price increase for next year, which is around 2%. Now what I would say also is that the dynamics between the Chinese market and the other markets is totally different in terms of price. Price, especially when it comes to -- I mean, China, especially when it comes to industrial automation, has experienced a price war around -- during the last 2 years, which is coming down in the second part of 2025. And it's not a surprise that the suppliers would want to catch up and to increase price. So no, I want to be clear. If my comments were read as, we don't see suppliers wanting to increase price. It's not what I wanted to say. We think that there are going to be price increases very clearly. We have evidence -- I don't know if the letters were sent, but we have evidence of suppliers telling us that they will increase the price very clearly. Now the uncertainty is really about the quantum. Andre Kukhnin: Got it. Got it. And then the other question I had is along the lines of a couple of sort of questions on the delta inflation or the inflation gap. I'm just trying to think about a macro sort of external scenario where you could have your margins expanding like really meaningfully by, say, 30, 50 basis points in the year. What would you need to see for that to happen? Does it just need faster growth than 3% to 5% for that to take place? Guillaume Jean Texier: Look, I mean, that's very easy. If you look at the guidance for next year, we are guiding for 20 bps of drop-through improvement in volume on a reasonable year, which is a 2% growth year. I think a 2% growth year is a reasonable average year. So that's one thing. And we are guiding also to, as I said, 15 bps of cost savings improvement. So that's already 35 bps if you are in a balanced situation, which is going to happen on a given cycle between those 2 inflation figures. So right there, on a year like 2026, you're delivering -- I mean, it's not done. I mean we have to deliver it, but you're delivering 35 bps of improvement. If you have a little bit more growth, which is not crazy to think of when you think about all the prospects of data centers, electrification, et cetera, and the recovery in Europe. If you have a little bit more growth, you're going to easily get to 50 bps. So I think it's not crazy to imagine a scenario like that because what I should say is that when I look at the 15 bps of cost savings, I am quite confident that this is something which is sustainable on a yearly basis. You have seen our figures about productivity evolution. We are quite proud of what we have done in terms of setting the bar higher in terms of productivity. And when we come to cost savings, productivity is a good proxy of what we are doing. And we will continue to do that. And AI is a potential help in that. So yes, absolutely. I mean that's a good question because when you look at the 20 bps improvement between '25 and '26, you may think, okay, 7% is far away. But in reality, when we look at the prospects of a recovery in Europe or the prospects of having a normalization of this effect of differential between our cost inflation and the rest, we are quite confident. And when we look also at the acceleration of our action plans, we are quite confident about that. Andre Kukhnin: That's really helpful. If I may, just a very quick one. You mentioned solar and EV charging sort of prebuy in the U.S., I think, is what the comments implied ahead of some regulation change. Is that something we need to -- could you quantify that? Guillaume Jean Texier: Mostly on solar. I mean overall, solar, if I look at the solar business, the solar business in the U.S. grew by 4.2% in Q4 2025, which is the first time that we had -- I mean, no, I mean, I think it's at a group level, it grew by 4.2%, which is the first time in many quarters that it grew, and that's because of this U.S. effect. Now in the U.S., the situation is that there is on one hand some of the federal subsidies, which are going to disappear at some point during the year. So there is a little bit of to pre-buy to qualify the project, and it will be going to continue to go on for commercial projects during the year. And there is a fact also that there is also a lot of regulations which happen at state level and a bulk of our business is done in California, which means that on the other hand, I think California wants to try to offset that and to push solar. So we see where it goes. But at the end of the day, we got good figures in solar in Q4 '25 and positive figures. Now that being said, you know that solar today in our mix of businesses represents approximately 3.5% of our total sales. A few years ago, it used to be at 6% when there was a boom in Europe. We continue to see -- we will continue to see growth in the future. Is it going to come back to 6%, I don't think so. Not anytime soon, but that's a little bit the situation. Operator: [Operator Instructions] Next question is from Aron Ceccarelli, Bank of America. Aron Ceccarelli: I have 2, please. The first one is on Europe, in the presentation, you called out market share gains in a challenging market in France, but also in Austria. I was wondering if you can expand a little bit about how you think about the sustainability of these market share gains as we enter 2026, please? Guillaume Jean Texier: Look, I mean, first of all, I'm always quite cautious about market share gains. Now what I feel comfortable with is that those gains were not acquired by price. And you have seen that, and we have been able to be quite disciplined in terms of margin overall at group level. But I can tell you that in France and in Austria, we didn't buy market share. We gained market share through better service and competition, through better value add that we bring to our customers. And you have to understand that our B2B customers, they are obviously focused on the price of the products. But they are very interested in the value that we can add and in the value that they can lose if the distributor is not providing the right level of expertise, service, et cetera. So because of that, I'm quite encouraged by that to the fact that it's going to be durable. Is it going to last forever? Certainly not. We have good competitors. They will do their homework. And at some point, in the midterm, they will rebalance things probably. But right now, I think we are on the momentum, which is going to last for a few more quarters, I hope. And I have a good degree of confidence because of the way we have gained market share. Aron Ceccarelli: Got it. My second question is on your opening remarks. You mentioned several times, good momentum in industrial automation in different countries. Could you perhaps expand a little bit on this topic and how you see industrial automation at the moment for you? Guillaume Jean Texier: Look, I mean, first of all, I should give you an exposure to where we are big in industrial automation. We are big in industrial automation in the U.S., in Canada, a little bit in Europe, in China and in India. And I can also give you figures, our industrial automation business in Q1, Q2, Q3, Q4 in the U.S., which is the most important country, was minus 4%, 1%, 3%, 8%. We saw a clear acceleration during the year of industrial automation, which is due to the fact that when you look at the recent publications, the [ ISM ] is now, for the first time, significantly above 50, which is a good sign. You have the clear effect starting to kick in of the tariffs, which is triggering reshoring. We flagged since the beginning, the fact that at some point, it would happen. When I look at the prospects of the industrial automation suppliers, they seem to be quite encouraging also. So at the end of the day, what is happening is not a surprise. And because we are big in industrial automation in the U.S., we benefit from that. When it comes to other countries, I think we commented a little bit on China and on the price effect in the second part of the year. Now that being said, in terms of volume, it continues to be relatively subdued, and let's put it this way. India is good, but it's small. And in Europe, the topic is the overall industrial investment, which is not great, the level of confidence in many countries in Europe, including in Germany and in France, which are 2 big countries where we have industrial automation is not yet mid-cycle to say the at least. So there is potential in there. Aron Ceccarelli: If I may, just a clarification on pricing. So you -- am I correct saying you mentioned 2% is coming from the suppliers so the cable one, and then the remaining is going to be flat? Is that the guidance for the year? Guillaume Jean Texier: No. We said 2% overall average, including copper, including suppliers, including all suppliers. We think that there is going to be price in almost all categories. It's going to depend once again on the specific category, supplier/country situation, but we think there's going to be price a little bit everywhere. Operator: Last question is from Eric Lemarie, CIC Market Solutions. Eric Lemarié: I've got 2. The first one, you mentioned at the last strategic update. You said roughly that 10% of the data centers market is addressable by distributors? Is it still the case today? Or is it now more than 10%? And my second question regarding the so-called acceleration businesses you presented at the last Capital Markets Day this time. Could you tell us the growth generated by these businesses in 2025 and maybe the weight in the sales from acceleration businesses? Guillaume Jean Texier: Yes. So I don't remember saying 10% of the market of data centers was addressable by distribution. And if said it, it was more order of magnitude. I don't think that I had in mind precise studies saying that. What I can tell you is that, first of all, the proportion of data centers in our business is growing. When you look at North America, when you look at the U.S., I think it's North America, we are now at 7% of our business, which is data centers. So it's starting to be sizable. I mean a few quarters ago, we were talking about 3%. We are now at 7%. The second thing I would say is that the range of products that we supply to the data centers industry is expanding. We started with -- and it may be particular to Rexel. Some other competitors may be more advanced than us, but I think we are catching up fast. We started with cable, and now we get a little bit more into more advanced things, like switch gear, et cetera. Now we are staying in the gray part of the data centers. I don't think it's going to be easy for us to enter into the white part of the data center, which is very much going direct or through specialized players. But we are expanding the proportion that we were able to address and we're expanding that quarter after quarter, which I mean, first of all, the opportunity is growing fast and our ability to grab a bigger part of this opportunity is also progressing. I think on the acceleration businesses, I can give you the figure for Q4 because I have it under my eyes. I don't have the full year, maybe I'll find it back for the next opportunity. Basically, the total business accelerators, including solar, HVAC, EV, industrial automation, datacom, utilities, is representing in Q4, 30% of our mix, and it's growing at 3.9% which is very slightly above the overall growth of the group in Q4 2025, which was 3.8%. And so the fact is that data centers are not included in that. The datacom part is included in that, but data centers because we try to be consistent with what we have given you in 2024 is not included in that. If I was to add data centers, obviously, we would add 3% at group level, and we would add a 3%, which grew in Q4 at north of 50%. So it would improve a little bit the accelerating part of it. And I think that's the beauty also of those acceleration businesses. There are years where things are accelerating in solar. And then the next year it's going to be less good in solar, but it's going to be good in data centers, et cetera. And the good thing is because there is not one trend, but 5 or 10 trends supporting the acceleration of our business, we're always going to see the benefit of that. I hope I gave sufficient answer even if I didn't find the full year results. Eric Lemarié: Can I ask a follow-up one? Guillaume Jean Texier: Sure. Eric Lemarié: Yes. Could you -- you mentioned that your range of products are expanding for data centers, but could you tell us whether Rexel will be well placed in your view for the future deployment of 800 VDC solution within data centers. Is it something that you will be able to? Guillaume Jean Texier: Can I come back to you later on that because I don't have the answer to that. I need to talk with my teams. Operator: Mr. Texier, there are no more questions registered at this time. Guillaume Jean Texier: Look, I mean, thank you very much for your questions and your interest in Rexel. As you can tell, we had solid results in 2025. We are proud of those results. And we think that we're entering 2026 with good momentum, both on the market side and also on our internal momentum side, so we have confidence in the future. And we'll talk to you for the Q1 sales in April. Thank you very much, and have a good evening. Bye-bye.
Alexander Charles Hungate: [Audio Gap] like Trip.com and AliPay to enhance brand visibility even before users land in the region. And as a result of these initiatives, travelers MTUs have grown over 10x over the last 3 years, with airport rides driving over 10% of our Mobility GMV today. GrabMart is growing 1.7x faster than GrabFood, thanks to three important improvements to the customer proposition. First, deepening integration with major supermarkets to ensure that handling of fresh produce Deliveries is reliable and consistent. Next, curating our merchant selection to shift user behavior from daily essentials to weekly stock-ups. And lastly, [ GrabMore ] has been launched, where users can add groceries to their food order at no additional cost. And as a result, we've seen a 30% year-on-year increase in GrabMart users in 2025, while usage frequency continues to improve. There is still plenty of upside with GrabMart, only accounting for 10% of our Deliveries GMV today. The success of our merchants has always been at the heart of our mission. The powerful integrated suite of offerings that we built for them is intended to take them and the Grab platform to the next level. First, Grab offers merchants enterprise-level digital tools that help them maximize their return on advertising spend. Next, we provide integrated point-of-sale and payment systems to widen payments acceptance for them. And then we embed lending to improve cash flows and finally, transform their transaction data into actionable insights to help them scale their businesses. With these capabilities, Grab will be able to deliver the one outcome that matters most to our merchant partners, which is, of course, sustained earnings growth. In 2025, total active Deliveries merchants increased 9% year-on-year, while their earnings have seen a corresponding increase of 11%. Our Financial Services strategy is centered on embedded distribution that lowers customer acquisition costs with personalized offerings. For the majority of our users, drivers and merchants, GrabPay is their initial entry point into a range of Financial Services. And as they build a transactional history with us, we can also offer lending and insurance and even digital banking services in Singapore, Malaysia and Indonesia. In just 3 years, we have grown to 7.4 million deposit customers across our 3 banks. We have not had to invest heavily in acquiring new users or offering high deposit rates as we are converting the users who are already on our platform. This also drives our lending business because we see high-frequency daily transaction data on our platform. We can predict risk more accurately. And this allows us to scale our loan portfolio rapidly while risk-adjusted returns continue to track above our cost of capital and credit costs remain well within our risk appetite. In 2025, our gross loan portfolio surpassed $1 billion for the first time, ending the year at $1.3 billion. Our goal is to exit 2026 with a gross loan book of over $2 billion. I also want to touch on this morning's announcement on our acquisition of Stash, a U.S.-based digital investing platform. While we remain firmly committed to Southeast Asia and the growth of our regional lending business, this acquisition achieves two specific objectives. First, it accelerates our wealth management roadmap with the addition of new capabilities and talent. And second, it has an attractive financial profile. Stash has the potential to grow into a high-margin subscription revenue stream, contributing over $60 million in adjusted EBITDA by 2028. The last part of our strategy is potentially the most important for the long term. That is how we harness technology, including AI, for efficiency gains. We leverage AI to improve conversion at every stage of the funnel. For example, we automate menu translations to enhance conversion of high-value segments such as travelers. Over 97% of our merchant listings regionally are now available in English and Chinese. Our credit scoring models are also increasingly robust as we were able to white list a greater proportion of ecosystem partners. We have also improved real-time personalization by collating a database of over 1,000 attributes and segmenting our users and ecosystem partners into 200,000 distinct segments. And finally, we have improved our search and basket conversion with AI semantic search and real-time personalization. Our tech investments are helping us to gain operating leverage. We continue to lower our cloud costs per transaction by proactively retiring idle resources and transitioning to more cost-efficient solutions. And at the same time, payment processing costs as a proportion of total payment volumes is declining as we increase volumes through our wallets. And finally, we are maximizing head count efficiency by deploying in-house AI models. For example, you may be asking yourselves, how are we able to double the amount of cities in which we offer services with a reduction in operations headcount at the same time? The answer is that we have been deploying auto adaptive technology to optimize our core marketplace in each city, enabling us to scale in a lean and agile fashion. In fact, today, more than 90% of our Mobility rides are dispatched by using AI. Looking ahead to the future, we are investing in the next structural shift in On-Demand services. autonomous vehicles and robotics. In partnership with WeRide, we launched our first AV shuttle service for the public in Singapore. Our position as Southeast Asia's leading on-demand marketplace makes us the preferred commercialization partner for global autonomous technology leaders. We are committed to serving two critical functions: first, acting as a key thought partner for regulators to help define safety standards and operational frameworks for driverless transport. And next, supporting our driver partners through the transition to our hybrid fleet by uplifting them to take on specialized roles in safety and fleet management within the autonomous ecosystem. So in closing, I have updated on the strong progress we are making as we execute towards our strategy and share with you our priorities for the future. We will work closer than ever with a merchant and driver partners, government agencies, corporate partners and Grab-ers to execute this strategy. Thank you for your continued support. And with that, I will now turn the call over to Peter, who will discuss how these developments support our financial road map over the next 3 years. Peter Oey: Thanks, Alex. Anthony and Alex just laid a powerful strategic roadmap, focused on affordability, ecosystem-led lifetime values and Gen AI efficiency. I will now show you how that strategy is translating into our financial road map, which is driving durable, profitable growth at scale. Now what makes it particularly energized is how our execution over the past few years is already setting foundations to drive the financial outlook that we are setting today. Let me first deep dive into our fourth quarter and 2025 results, which sets us up for the next chapter of our financial road map. We delivered a strong finish for the year in the fourth quarter, characterized by product-led demand-driven growth. Our On-Demand GMV increased 21% year-over-year or 20% on a constant currency basis. with transactions outpacing GMV growth at 24% year-over-year. The strong volume growth is underpinned by our affordability and ecosystem expansion strategies that drive both user acquisition and also drive higher transaction frequency. Our group revenue grew 19% or 17% year-over-year on a constant currency basis to $906 million. This is fueled by this GMV momentum and also driven by increasing contributions from our Financial Services. Now Financial Services also achieved our goals with our gross loan portfolio hitting $1.3 billion. and our net loan portfolio reaching $1.2 billion, well above our guidance of $1 billion, while maintaining healthy risk-adjusted returns. Adjusted EBITDA reached $148 million for the fourth quarter marking our 16th consecutive quarter of EBITDA expansion. On a full year basis, adjusted EBITDA grew by 60% year-on-year to $500 million. These profitability is being powered by our robust top of the funnel growth and also our relentless focus on driving operating leverage as we scale. Finally, we generated $76 million in adjusted free cash flow for the quarter and $290 million for the full year, underscoring the efficiency of our platform. The scalability of our ecosystem is delivering clear trend of accelerating top line growth, coupled with expanding profitability. And when we take a step back to review 2025, we hit several key milestones. Let me show you what they are. First one, we have driven a strong acceleration in growth with On-Demand GMV growing by 21% year-over-year. We are able to do this as a result of years of effort to widen the top of the funnel and execute on the product-led strategies Alex just described. Our confidence in this momentum remains high because we are seeing a product-led and ecosystem-focused initiatives drive higher transaction frequency and also attract a broader user base than ever before. Now as we continue to scale the ecosystem, it translates into operating leverage as we benefit from greater network scale efficiencies. From our first quarter of adjusted EBITDA profitability achieved in the third quarter of 2023, we subsequently recorded positive adjusted free cash flow for the full year 2024. And I'm also proud to announce that in 2025, we achieved our first full year of net profit. As we look ahead, there are four core principles of our financial road map that will guide our execution in the medium term and serves as a framework for how we create long-term shareholder value. Firstly, we remain focused on growing in a sustainable and durable manner. We're not chasing growth at any cost. Instead, we are driving relentless improvements to the affordability and reliability of our core offerings to capture a larger share of our addressable market and also employing the product-led and ecosystem-focused approach to cross-sell high-margin services like Financial Services. Secondly, we will continue to drive improvements to operating leverage. Our priority is now to build on this foundation and compound the earnings growth of our ecosystem as we continue to benefit from the network efficiencies we've spent the last decade building. Third, we are laser-focused on free cash flow conversion. We expect our adjusted free cash flow conversion rates to improve as our profitability grows and achieving operating leverage. Finally, we will maintain a strong disciplined balance sheet. Our capital allocation framework is one which prioritizes organic growth with high returns and remaining disciplined on M&A while returning excess capital to shareholders. Now let's look at how this all comes together in our guidance for 2026. First, on the top line, we expect group revenues to grow between 20% to 22% year-over-year to $4.04 billion and $4.1 billion, accelerating from the 20% growth in 2025. This is not just a byproduct but larger base. It's a direct result of our sustained growth in our On-Demand GMV and Financial Services continuing to be our fastest-growing segment as we scale our loan portfolio. Now on adjusted EBITDA, we expect to grow by 40% to 44% year-on-year, reaching $700 million to $720 million in 2026. This step-up in profitability reflects that network scale efficiencies and cost leverage we've been building into the platform. This is supported by the continued growth in our On-Demand EBITDA, but also Financial Services segment moving towards EBITDA breakeven in the second half of the year. As we continue to lean into technology and Gen AI also to drive the corporate efficiency and the operating leverage in the business. Now I would also like to outline how we are thinking about the next 3 years and the goals we are focused to achieve. For the next 3 years, we expect robust momentum in revenue growing at a 20% CAGR from 2025 to 2028, with adjusted EBITDA tripling from 2025 to reach $1.5 billion in 2028, and for adjusted free cash flow conversion to expand to 80%. Now let me discuss each of these in the next three slides. Looking ahead through 2028, our revenue outlook is defined by a demand-led strategy across several high-velocity levers. First, for our On-Demand segments, we are very focused on new user growth by expanding our footprint into noncapital cities while broadening at the same time our product suite to capture the untapped segments of the market. This expanding base gives us our larger foundations to drive retention and frequency. And furthermore, we expect a gradual increase in basket sizes. Secondly, our Financial Services engine. We expect Financial Services to become an increasingly larger contributor to our total revenue base. By leveraging our proprietary ecosystem data, we can scale lending dispersal with high confidence in our credit costs, creating a high-margin revenue stream. Finally, on MSME and merchant solutions. We see significant upside from merchant-focused initiatives specifically in advertising and omni-commerce solutions like dining. These are services that allow us to enhance our value proposition to merchants. Collectively, these strategic pillars provide a clear trajectory towards our 2028 revenue targets. Now let's move on from revenue outlook to our EBITDA trajectory. Our focus is on driving operating leverage required to reach our target of $1.5 billion in adjusted EBITDA by 2028. Now to point it to context, this represents 3x growth from our 2025 performance and a more than doubling of the EBITDA we've guided for 2026. This is anchored by three key pillars. First, On-Demand. Our primary driver for absolute EBITDA growth is expansional our top of the funnel. As we continue to expand this ecosystem, we are benefiting from compounding network scale efficiencies, particularly within fulfillment and fixed cost leverage. This enables us to track towards our long-term steady-state margins of 9% plus of Mobility and 4% plus for Deliveries. Secondly, for our Financial Services, we are firmly on track to achieve EBITDA breakeven in the second half of 2026. And from that point onward, we will progressively expand margins. This transition will be fueled by the scaling of our loan book and the continuous maturation of our credit models, which allows us to grow interest income while keeping a tight lid on credit costs. Finally, on corporate costs. While corporate costs will naturally increase as we scale, our focus is on driving operating leverage and ensuring that these costs grow at a significantly slower pace than group revenue. By executing across these three fronts, we will aim to become more efficient as our business scales. As we scale both our top and bottom lines, we are entering a phase of accelerated free cash flow growth. The key takeaway here is our conversion efficiency. We expect that adjusted free cash flow conversion to move from 58% in 2025 to a target of 80% by 2028. This is driven by capital expenditures and taxes growing at a much slower rate than EBITDA. While we remain disciplined in how we deploy capital into critical assets like our fleet, including autonomous vehicles, we are also aiming to decouple our revenue growth from our capital intensity. This ensures that even as we invest for the long term, we are seeing a much higher portion of our earnings converting directly into cash. By 2028, we expect this efficiency to generate over $1.2 billion in full-year adjusted free cash flow. This level of cash generation allows us to self-fund our continued innovation while maintaining a strong balance sheet. Finally, I want to discuss our capital allocation principles. As we move into this next chapter, our framework continues to be anchored on four priorities. First, we remain disciplined in investing for organic and profitable growth. We are ensuring that our core segments have the resources needed to capture the deep market opportunities that we see. And also we'll be prudent towards deploying capital where it generates the highest returns. Second, we are staying highly selective on inorganic opportunities. We will maintain a high bar and only pursue acquisitions if they strategically accelerate our roadmap, bringing critical technology or talent and meet our strict return thresholds. Third, we'll aim to maintain a strong balance sheet with ample liquidity. Our robust cash position is a competitive model. It ensures we can navigate macro volatility with ease while continuing to innovate. And finally, where we have excess capital, we will continue to return capital to our shareholders. We're pleased to announce a new $500 million share repurchase program this quarter. This follows the completion of our previous $500 million share program last year and brings a total commitment to $1 billion in share repurchases. To wrap things up, 2025 has been a milestone year for us. If our first decade was about proving that the Superapp model could work, then this past year was a critical proof point that we can scale this engine with durable growth and profitability. While we are proud of our progress, we recognize we are still in the early chapters of our long-term journey. The graph that you see today is a fundamentally different company than the one that went public 4 years ago. We have reached a stage where growth and profitability are no longer a trade-off. We are driving significant top line expansion by maintaining strict discipline in our capital allocation. What is most meaningful to me as well is that our financial progress is now the engine for our wider mission. By generating robust cash flow, we are in a strong position to deliver our triple bottom line. We are delivering sustainable value for our shareholders by building a profitable compounding business enabling us to create positive societal impacts by expanding earnings opportunities for our partners and also at the same time, protecting the environment. We are more energized and ever to continue this work and keep growing the business for our users, our partners and shareholders. Thank you for watching and listening to Anthony, Alex and I. I will now turn it over to Ken Lek as we begin the Q&A session. Ken Vin Lek: Sure. We now open the call to questions. And as a reminder, to audience, please submit your questions via investor.relations@grab.com. With that, our first question comes from the line of Pang Vitt from Goldman Sachs as well as Horng Han from CLSA. The question is about our EBITDA -- 2028 EBITDA guidance. Just a question for management. You provided a strong outlook of tripling EBITDA between 2025 and 2028. Could you outline the key assumptions by segment? And what are the biggest drivers to this step-up? Peter Oey: Let me take this one here, Horng Han and Pang. There's really two key themes. If you really step back and in the last 40 minutes, we've actually gone outlined what they are. The first is sustainable growth. You're seeing the momentum of the revenue growth that you're seeing in the business, and that translates to what you see in the guide, the 2026 guide in terms of revenue, the 20% to 22%, and then also to even gone beyond that to 2028, where you see that 20% revenue CAGR growth from 2025 to 2028. So that's the first theme. The second theme is operating leverage in the business and the cost structure. Now let's step back here. It's really -- if you look at how -- in terms of how we think about profitability, that $1.5 billion of EBITDA target that we're aiming for, there is four key things. The first thing On-Demand revenue. The On-Demand engine is working. And you see that continued momentum in driving user growth at the top of the end of the funnel that we're seeing right now. Now that is going to translate into also absolute margin expansion and absolute margin dollar in the business. We are driving cost down so we can lower the cost of serving the business. That affordability that we're working on so focused on is working, and we're going to continue to extend that. But to do that and drive margin at the same time, you've got to drive also a lowering of cost to set up. So we're going to go and continue to double down on driving that top line, but also lowering our cost to serve so that we can deliver margin improvement in both the Deliveries and the Mobility business. So that's the first critical pillar that we're going to drive. The second one is around Financial Services. You're seeing the engine working now. You're seeing that loan book now continuing to scale. We clipped the $1 billion in terms of loan book. And what you're going to see is that as the business turns breakeven in the second half 2026, you'll enter into a new inflection point, and you're going to see that profitability continuing to grow. We're very bullish in where Financial Services is going as that low -- as we lower the credit cost also of that business. And the risk-adjusted return that you're seeing is already tracking above our cost of capital. So you have the Financial Services segment and also the On-Demand business working together to really lift that operating margin in the business at the same time. Now the third and the fourth is really a combination of operating leverage in the business, which is the corporate cost side of the house. And you're seeing that copper cost coming down. If you look at 2023, it was roughly about 17% as a percentage of revenue. In 2025, we just -- we've gone down to 11%. So you see a 600 basis points of margin improvement of that business. So as we continue to drive cost in the business, whether we -- it's our cloud cost, whether it's the cost of funds or just using more AI to drive productivity in the business, you are going to see that absolute margin improve overall as a business. So that's how you think about it. Two pillars, continuing to drive that growth across all our core segments of our business, drive operating leverage, and that generates the margin continued absolute dollar improvement to that $1.5 billion. Ken Vin Lek: Okay. Our second question and then related one comes from Venugopal from Bernstein. And this is a question for Peter as well. What prompted us to provide a 2025 -- 2028 guidance, as such long-term guidance is typically not common? How predictable is the business model? And is this all going to be driven by organic growth? Peter Oey: So Venu, yes, it's all organic growth. That's what we've given out here today. If you look at the strategy, actually hasn't changed in terms of how we're going to continue that momentum. Just to earlier point of the previous question, we're continuing that momentum in the revenue side of the business. And we feel that the timing is right. The last time that we provided a 3-year guidance was back in September 2022. And now the business has changed. The business has continued to scale, we're seeing a momentum, it's an inflection point. And we are seeing all the ingredients that we've been building over the last 2 years now are coming into action, and 2025 was the year demonstration of that. then we want to continue to expand that. But we also we want to provide our investors our longer-term long-term financial roadmap, what are we heading for over the next 3 years? And really, the acceleration of growth that we're seeing, we're going to continue to maintain that. We clipped over 50 million of MTU today, and we think there is still a lot more MTUs that we can reach in South Asia. If you look at the number of cities added in the last 4 years, we had over 400 cities. Imagine that in Southeast Asia, there are more than 400 cities. These are noncapital cities, and there are more cities that we want to go and enter and serve the Southeast Asians. So we want to continue to maintain that growth. But at the same time also, we know that we have to grow the profitability and the free cash flow conversion. So we've given up all ourselves as a management team as well as Grab as a target to go for. And that is that $1.5 billion EBITDA that we want to reach in 2028 and the free cash flow conversion of our business. We're on the right. All the cylinders are firing and the engine is going, which is great to see. And 2025 was a testament. We're able to demonstrate we can do that. And now we're in 2026, we're confident in the next 3 years. Ken Vin Lek: All right. We'll move on to a few questions on Indonesia. The next question comes from Navin Killa from UBS as well as Pang Vitt from Goldman Sachs. A question for Alex. Is there any update on Indonesia's proposal to lower ride-hailing commissions? And if implemented, how would this impact take rates and segment margins? And what levers do you have to offset that potential pressure? Alexander Charles Hungate: Okay. Thanks for this question, Navin and Pang. This is actually a great opportunity to clarify because there's been a lot of speculation in the media about what might happen in Indonesia. So we can confirm that the government have not proposed any changes in commission caps. We're in close consultation with them. And we're aligned and committed to their ultimate goal, which is improving the welfare of drivers in Indonesia. So those of you that have been following closely will know that we have unveiled so social security initiatives for our hardworking drivers, plus Hari Raya bonus coming up as well. And we're able to use the technology that we've developed, particularly AI and a product called Ride Guide, to help them get more productive so that they can get more orders and earnings for every hour that they choose to work. We'll continue to do this because both ourselves and the government have aligned interest to develop a sustainable platform that operates reliably for our customers and affordably for our customers to enable us to continue to create and enhance livelihoods for driver partners and micro SMEs across Indonesia. And then a follow-up question on the margins, I think, from Divya is coming up. So Ken, do you want to read the question? Ken Vin Lek: So Divya asked a follow-up question in Indonesia. Also for Alex, could you provide updates on Grab's GMV growth and market share trends in Indonesia in the fourth quarter? Do you expect margins for Indonesia to be impacted by higher driver welfare costs in 2026? Alexander Charles Hungate: Yes, Divya, thanks. So despite the macroeconomic headwinds, we have driven affordability as a key part of our strategy. and the product-led strategy in Indonesia. So we've been able to improve our category leadership across all verticals in Indonesia. It's growing about in line with the overall group and faster than the market in Indonesia. So we've been able to demonstrate a sustainable double-digit GMV growth for our On-Demand segment, and we've expanded the profitability year-on-year. So in answer to your question, we do not expect margins to be impacted by the social programs that I just described because we're getting more operating leverage as we scale up in the country because of our scale. So probably the most important aspect of the results in the fourth quarter for Indonesia were the increased velocity in Financial Services for us in the country. The highlight was, of course, the IPO of Superbank in December, which came out now, I think, with a $1.8 billion market cap and was incredibly successful, 300x oversubscribed with over 1 million shareholders. And I believe at this point, we've got more shareholders in Superbank than any other stock on the IDX. So that's just an indication of the potential of the market for Financial Services, and we're just getting going now with an increase in velocity to be expected in 2026. Ken Vin Lek: Okay. With that, we now have a two-pronged question from Piyush Choudhary from HSBC. We'll take the first question first before we pause for the second. So first question is for Anthony on our AV initiatives. So Grab has done various partnerships in cutting-edge AV companies. Can you provide an update on the progress of your various pilots? And apart from Singapore, do you see commercial rollout in other ASEAN countries in the next few years? Ping Yeow Tan: Great question, Piyush. Piyush, our long-term strategy is centered on a single goal of building supply resilience. We view AVs not as a replacement for our driver partners, but as a critical buffer to ensure 100% reliability. That is the key driver for customer retention, especially during peak hours or in underserved areas. You may actually have seen us make, as you talked about just now, small minority investments. Now these position us in Southeast Asia in a way where we can have a geopolitical and technological [ hedge ] because we can partner global leaders across both U.S. and China ecosystems, whether it's a WeRide or [ May Mobility ] from the States or Momenta and even hardware leaders like [indiscernible] in LiDAR. Now this agnostic approach allows us to leverage this unique position we are in with the ability to take the best technology from the world to adapt it to specific nuances of Southeast Asian infra. Over the next 3 years, you asked, we see actually Singapore as our blueprint. You look at Ai.R. Ai.R is our first public AV shuttle service in Singapore's Punggol district. That's a great example. Ai.R has covered over 25,000 kilometers with zero safety critical incidents or near misses. This is the highest mileage recorded and the most data collected by any AV operator in Southeast Asia. Our in-house fleet operations tooling will also enable real-time alerting for AV issues, which allows our operations center to respond quickly to potential incidents. And most importantly, we strongly reiterate our commitment to transitioning our driver partners into new and emerging roles as we move towards a hybrid human and autonomous fleet. We are already retraining our strong Grab driver partners to form a pool of qualified safety operators during this pilot. They are part of our growing AV fleet operations ground team, which also comprises customer support and depot operations. And we do all this to ensure as we move to a hybrid fleet, we maintain our operational heart, while, as Peter just now shared, lowering our long-term cost per kilometer. We will, of course, continue to work hand-in-hand with regulators like Singapore's Ministry of Transport to collectively define the safety standards and operational frameworks that allow driverless transport to coexist safely with traditional traffic. Ultimately, we see this transition as a way to future-proof our platform and network, and we ensure that we can remain the most efficient marketplace as we lead Southeast Asia into its next chapter of mobility. Ken Vin Lek: Thank you, Anthony. So second part of Piyush's question is a two-part question for Alex. How is the performance of the various new product initiatives you launched in 2025? And what are the key learnings from these rollouts? As for 2026, what new products could we potentially anticipate? So first part of the second question. The second part of the question is, I note that Grab's MTUs has grown 15% year-over-year to now cross over 50 million users as of the fourth quarter of 2025. Could you share with us your outlook for MTU as a percentage of ATU penetration over the coming years? Alexander Charles Hungate: Thanks, Piyush. Yes, you're right. At the start of 2025, we did say that we would be focusing on user growth and frequency. And it was indeed a key driver of our growth acceleration in 2025. I remember 2 years ago, we were talking about Grab being used by 1 in 20 of the folks here in Southeast Asia. Now we're at 1 in 15. And I would make the same point, although we're growing very fast and penetrating very fast, we're still just scratching the surface. There's lots of upside left in this young, dynamic region for Grab to continue to penetrate. So our GMV growth accelerated by 21% year-on-year, but the transaction growth, which is key, grew even faster at 24% year-on-year in this last fourth quarter. That MTU to annual transacting user penetration is at 37%, as Anthony said at the start of the presentation today, and that's an increase from last year. And ATUs, the overall base has grown even further to 129 million users now. So the product strategy is working. We will continue. We updated the new product initiatives in Deliveries when we last updated at the half year, contributed to about 1/3 of our GMV. On a full-year basis, I can tell you that now is represented by almost half, so 46% year-on-year GMV growth from our new products, so a massive contribution. Just to summarize what the product strategy has been and what we will continue to focus on, so the ladder pricing strategy is working. Affordability drives a lot better frequency. So Saver gives us 1.5 higher frequency than the average. And the high-value customers are here in Southeast Asia as well, less price sensitive, looking for limo rides to airports, et cetera. So we'll continue to grow at the top end of the ladder also, allowing us to manage the margin mix very nicely, as you saw in the overall results. We like viral products for users. So we've been building viral products where usage brings in new users through the platform. So Group Order is a great example of that. We get to double the retention and frequency from Group Order that we get from the average. Family Account is another example of that. And then GrabMore, the cross-sell from food into GrabMart, is also operating extremely well for us to help build long-term value. And then the last and probably the most important aspect is the focus on the merchants and their success. So now we've got a whole suite of integrated solutions, as I was describing earlier, that go from demand generation on delivery, dining in, loyalty as a service, all the way through to payments, fintech lending, et cetera. We are the only provider in Southeast Asia that can bring all of those together for the merchants. And the more successful those merchants are with Grab, the more successful Grab will be in the long run as well. In the future, we're not only talking about penetration of MTUs into ATUs, but we're now increasingly inside Grab talking about daily usage. We want Grab to be embedded in the daily lives of people in Southeast Asia every single day. So the frequency of once per day is how we think about the challenge in 2026, and we're making good progress towards that. Thank you. Ken Vin Lek: Next question comes from Alicia Yap from Citi. This is a three-part question on our 3-year revenue guidance. So first part of the question could be, could you provide us with the breakdown by segment of how this will contribute to your revenue growth? Second part to the question, could you also provide color on Deliveries EBITDA margin by 2028? And third part to the question, will you still achieve Financial Services breakeven by the second half of 2026? So all pointed questions, and this is a question for you, Peter. Peter Oey: Okay. Alicia, if you look at the top line, what you're going to see over the next 3 years is with the Financial Services of our business is going to be growing much faster than our On-Demand. And that's the product is just scaling. You've got the banks now on fire going really all out in building the loan book. We've clipped the $1 billion loan book. We expect to double that loan book by exiting 2022 -- 2026 and continue to increase from that. So with the banks continuing to increase their penetration in the marketplace and also with some of the other products that they're coming up with, we expect that growth to continue to accelerate, outpacing the growth of our On-Demand business. That's not to say that our On-Demand business will also continue to grow, which there will be. If you look at what Alex has been sharing across the product portfolio of our Deliveries business, we're seeing strong growth on our grocery business. which is growing 1.7x faster than our food business, and that will continue to also -- to be maintained and sustained as we get into 2026 and beyond in the Deliveries segment. We still have work to do also in affordability. We're not stopping on affordability. There's still a lot of things that we want to do on the ride side of the house as well as on the Deliveries side that will continue to also fuel the momentum on the growth business of our On-Demand. Margin, you'll see margin expansion, as I said earlier, when Pang asked about the margin side, the On-Demand business will continue to grow for that -- for both On-Demand. But also, you'll see the Financial Services margin continuing to grow faster than our On-Demand business also and also when it comes to the absolute margin versus our On-Demand portfolios of our business. And then also, we're continuing to double down on our advertising business at the same time to supplement and complement our On-Demand business, which is really critical also as we continue to grow. I think there was one more question from Alicia, which I haven't answered. I've lost track to that. Ken Vin Lek: Fintech breakeven. Peter Oey: Fintech breakeven. That's right. Alicia, I can tell you right now, second half 2026 will happen. Ken Vin Lek: All right. Thanks, Peter. So we're getting a couple of questions on AI from both Alicia from Citi as well as Navin from UBS. So Anthony, a question for you. Given the rapid evolution of AI models and the increasing penetration of AI chatbots, what is management's view on the positioning of Grab's Superapp strategy in light of this? How does Grab anticipate potential shifts in user behavior and the use of AI chatbots as discovery funnels and ordering gateways, which could disrupt its services? Ping Yeow Tan: Great question, Navin and Alicia. Look, we view the evolution of AI not as a threat to the Superapp model, but as a high-velocity engine that will scale our model. Now to address your point on disruption, we see three strategic pillars that strengthen our position rather than pose a threat. Let's talk about LLMs. LLMs are exceptional at discovery and digital commerce. We have now become embedded -- we, as Grab have now become embedded in the everyday lives of Southeast Asians. And this is the beauty of how we use and leverage this embedding. The hyperlocal physical infrastructure that we've built by being embedded across Southeast Asia, it allows mobility, food delivery services to become our strong moat, and Grab has become the indispensable fulfillment partner. So LLMs can be a great channel, but we are the indispensable fulfillment partner. We own real-time mapping, the merchant relationships and the fleet logistics across Southeast Asia. And these assets, these -- a lot of them are physical on-the-ground assets are incredibly difficult to disintermediate. Number two, you mentioned earlier about search engines directing traffic. Now our partnerships with OpenAI now as our first lighthouse partner some time ago and Tropic aren't just for internal efficiency. They allow us to ensure that when a user asks a third-party AI, for example, how do I get home or what should I eat? Grab is the integrated fulfillment engine behind that answer. I would say the third part, now for users, they want deep personalization, they want efficiency. So we are deploying semantic search and generative AI to turn our Superapp into a personalized concierge, if you may. We aren't just waiting for search, we are leveraging the data, we have leveraging generative AI and the best foundational models to predict intent. For our ecosystem, with over 1,000 proprietary AI models, as Alex shared before, we're already powering merchants with our AI agent. We talked about Mai before. We're powering drivers with an AI Ride Guide that Alex talked about as a coach. We've dispatched over 90% of our rides are fully dispatched with AI, and we continue to improve our credit underwriting with AI. This has directly translated into higher retention and improved unit economics. If you remember, from 2022 to 2024, headcount basically stayed flat, but revenues doubled. That's what we see. We've seen the power of AI. Ultimately, we continue to build the AI-led operating system for Southeast Asia. We're excited to showcase the next generation of these tools at our upcoming GrabX Product Day. So we hope to see all of you there. Ken Vin Lek: Okay. So the next question is actually on our new acquisition, Stash. As a reminder to the audience, we announced this morning that we are acquiring a digital investing platform Stash based in the U.S., which Alex shared more details on earlier. So two questions, one from Ranjan Sharma from JPMorgan and another from Venu Gopal from Bernstein. So firstly, could you share with us management some of the financial metrics of this business, including its burn as well as near-term earnings? What did you pay for these assets on a valuation basis? And second question, what does this signal? Is it a platform that's meant to be rolled out in Asia? Or is it a formal entry into the U.S. market? Does our 2028 guidance include contributions from Stash? Peter Oey: Lots of questions there. Let me just start, our long-term strategy remains very rooted in Southeast Asia. We still have a lot of work to do in Southeast Asia. It's our core markets, and there's still a lot of products and users that we want to touch with, whether it's across all our different segments of our business today. Now why did we do Stash? It's really a unique asset. If you look at the trend of when we do acquisitions, if we looked at the last unique asset that we acquired was around Supermarkets, the Jaya and Everrise, we see Stash as a very unique asset with a few things. One is it's got a very strong IP. It's got a strong talent pool and a platform that we don't have today. If you look at Financial Services as a business, what do we have? We have a very strong payments, we have a strong lending business, which is continuing to scale, we have a big deposit base over 7 million customers on the deposit side on the banking side of the house. What's missing? We don't have an investing platform today. And that's really critical for us as we continue to complete the full picture of Financial Services in Southeast Asia or also in other parts of the market where Stash operates today. Now it is a positive EBITDA business today. It is generating free cash flow positive, and we see this business generating $60 million in EBITDA in 2028. So it's an accretive business that we see. But really, it's important that we also serve our user base today, not only in extending loans, but also teaching them how to save. It's critical in terms of our mission for the underserved, especially on Financial Services. So we're very excited to have the Stash family joining us. We expect to close this transaction sometime in Q3 or Q4. It's a great team. We already have over 1 million customers that we are continuing to serve that they have continued to prove that, that product works. And as they continue to build that product set out, they're going to continue to penetrate the U.S. market, but also over time, we'll introduce the product here in Southeast Asia. Ken Vin Lek: We're getting several questions now from various analysts on our grocery strategy. So notably questions from Jiong from Barclays, Divya from MS, Wei from Mizuho and Sachin from Bank of America. This is likely a question for you. Alex, can you provide us with an update on our grocery strategy and recent growth trends? What changes are you seeing in the competitive landscape across Southeast Asia? And how do you plan to invest capital into this vertical? Alexander Charles Hungate: Okay. Thanks. So our most upvoted question. Well, first of all, let me start with the market opportunity. In ASEAN, the modern retail penetration is less than 40% of the overall grocery market. And then online grocery penetration is even lower at less than 3% in the majority of our markets. That compares with much higher numbers in U.S., China, U.K. of 15%, 20%, even 30% in some of those markets. So for Grab, currently, [ Mart ] is only 10% of our Deliveries GMV, although it is growing a lot faster at 1.7x faster than food year-on-year. So we're starting to get a lot of traction. The way that we are growing is that we are adding selection that is adjacent to the food consumption that we see. So beverages and groceries make a lot of sense when you're ordering food. And we're getting the input from the searches and the behaviors of customers on the food side to understand how to expand the SKU selection and using Grab more to do the cross-sell from food users into [ Mart ]. And when we do that, we see that the higher frequency is 1.5x and the spend is 1.5x when they're just a food-only user. We're also improving the integration with our partners using tech, and that's helped us to improve the reliability. So the fulfillment rate and the customer experience is getting better and better. So those of you out there that haven't used GrabMart, please give it a go, and you'll see this tremendous improvement in selection and the availability of those items. When we do that, we get higher engagement, we get higher long-term value, and that reinforces our conviction to invest in this space, but we're investing with discipline. So we can get sustainable returns because we're leveraging our on-demand capabilities. We're growing supply chain by integrating more deeply using our tech with the partners in each market, so we can leverage their supply chain assets, and that improves the financial performance. And then finally, we can enhance monetization through the Financial Services capabilities that we talked about earlier, so the pay later capabilities, moving into installment loans. So you can see that we've got multiple levers to monetize, and that means that we can invest with discipline and continue to grow rapidly in the grocery space at the same time. Ken Vin Lek: Okay. With that, we now have time for one last question. The final question comes from Divya from Morgan Stanley on our capital allocation strategy. So Peter, this is one for you. The cash on our balance sheet is notable, and it will build up further with our improving free cash flow outlook. While we welcome the share repurchase, it does contribute a very small amount of your total capital you have today. Where do you expect to allocate capital if there are no opportunities for inorganic growth in the region? Are there new geographies to consider? Peter Oey: If you look at the -- there's one slide I had in my remarks earlier about capital allocation. And it hasn't actually changed. If you look at the previous comments that I made around capital allocation to what I just presented also, it hasn't changed a lot because we've been consistent in terms of how we think in capital allocation. When it comes to inorganic opportunities, we're going to be continuing to be very disciplined. And that high bar is so important. So for every opportunity that we look at in using every dollar that we deploy, and you've seen a couple of examples that we deployed those assets, whether it's the Stash or whether it's the supermarkets. We've also deployed certain capital around our autonomous vehicles product roadmap, robotics also; those come with a very high threshold in terms of valuing those companies, but also the synergies we can extract as well as the tech and the talent that we can bring into the ecosystem. So that lens, Divya is going to continue to maintain. It's not going to change. The priority for us continues to be in organic growth, our existing businesses. And the banks is one that we're continuing to make sure that the scalability and the expansion continues. And it's where we do see opportunities in organic growth, we are going to double down. We talked about -- Alex just talked about supermarket or grocery, the opportunity there that we see in modern retail in terms of where we can penetrate more. And we will have a high bar also when it comes to those organic opportunities, so we'll continue to deploy those. Now the share repurchase program is important to us as we return capital back to our shareholders. So $1 billion, our wall is not small that we've continued to make sure that we bring the commitment back to shareholders. We'll continue to evaluate that over time. But the -- what I want to finish up is that it's important that we always continue to have a strong balance sheet. That ample liquidity is important because it gives us flexibility, Divya. It gives us the leverage also in terms of how we can invest in the right areas. So we're going to continue to maintain the very strong capital allocation framework. Ken Vin Lek: All right. With that, it brings us to the end of our Q&A session. I'll now turn the time over to Peter for his closing remarks. Peter Oey: Great. Well, I know it's been a lot longer than our traditional calls and also this format is a little bit different. But I thought it was important for Anthony, Alex and I here to really just go to a little bit more details in terms of how we think about the business over the next 3 years. We are entering an inflection point as a business overall. The business that you look at today is very different to what we were 14 years ago, 10 years ago and when we went public. And that's important because we are going to continue to execute and out serve. If you look at the number of the results that we just posted, what did we do? We exited 2025, much more stronger top line growth, profitability and our first year net profit. And our 3-year guidance is that reflection of our confidence. We want to go to continue to drive sustainable and profitable growth. Now I just want to also just thank you to all the partners, the drivers and the merchants that we serve today. I had the opportunity of visiting a few cities in the last 3 weeks, and it's just been another just sobering moment for me just to talk to those drivers and the merchants and the sweat that they put through and the effort and the sacrifice that they put in into the Grab ecosystem. So thank you to all the drivers and the merchants out there who are our beloved partners. To all our customers, we have over 50 million monthly transacting users today. Thank you for continuing to support Grab, and I hope we are fulfilling the products and the services that you're continuing to use to the Grab-ers for the mighty effort in 2025 and to also for our shareholders for their continued support. The IR team and myself will be on the road over the next few weeks. Look us up, visit us, knock on our doors, give us a call. We'll be in the U.S. and across Asia in different parts. We'd love to meet up and sit down with you also as we go through our journey of 2026 and also go through our 3-year guidance. So thank you again for listening and for watching us all today. See you at the next quarter.
Operator: Good day, and thank you for standing by. Welcome to the Outset Medical Q4 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I will now turn the conference over to Jim Mazzola, Head of Investor Relations. Please go ahead. James Mazzola: Good afternoon, everyone, and welcome to our fourth quarter 2025 earnings call. Here with me today are Leslie Trigg, Chair and Chief Executive Officer; and Renee Gaeta, Chief Financial Officer. We issued a news release after the close of market today, which can be found on the investor pages of outsetmedical.com. This call is being recorded and will be archived on the Investors section of our website. It is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Outset assumes no obligation to update these statements. For a list and description of the risks and uncertainties associated with our business, please refer to Outset's public filings with the Securities and Exchange Commission, including our latest annual and quarterly reports. Leslie? Leslie Trigg: Thanks, Jim. Good afternoon, everyone, and thank you for joining us. 2025 was a year of progress and transformation at Outset Medical, a year where we overcame adversity to emerge with a stronger foundation and even deeper capabilities to help hospitals, health systems, post-acute and home providers improve patient care outcomes at lower cost and with less complexity. During the year, we substantially reduced our cost structure while making significant investments to extend our technology and service leadership. These investments were key to our announcement 2 weeks ago about the FDA clearance of our next-generation Tablo platform. Second, we meaningfully strengthened our team and infused new talent into key leadership roles, in finance, medical affairs and field service. Third, we recapitalized the company with less debt and new capital to fund Outset through cash flow breakeven and beyond. Fourth, we expanded our base of published evidence, demonstrating the significant clinical, operational and financial benefits that can be achieved by in-sourcing with Outset and Tablo. In particular, the clinical value proposition came into clear focus as our customers documented even more evidence of improved clinical outcomes. Fifth, we maintained a very high customer satisfaction or CSAT score, above 95%, for the exceptional customer service we provide. And lastly, we continue to sign new agreements for the in-sourcing of dialysis at new and expansion sites, including at one of the largest national health systems in the country with well over 100 facilities. Tablo is now used at roughly 1,000 acute care sites in the United States. Turning to our financial results for the year, we announced preliminary fourth quarter revenue last month, which came in at the high end of our revised guidance range. At $119.5 million, revenue grew by 5% over 2024 and sets us up for what we anticipate will be an even stronger growth year in 2026. As we have worked toward greater consistency and predictability in our top line results, we continued our steady 5-year expansion of gross margin to finish the year at 39.6% non-GAAP gross margin. Gross margin exiting the year was well above 40%, which keeps us on a trajectory to our next milestone of 50%. Moving to our end markets, I am most proud of the progress we made during 2025 strengthening our partnership and presence with acute and post-acute care providers. We began to see vocal champions emerge throughout our customer base because of the clinical and operational benefits that can be achieved by in-sourcing with Outset. The financial benefits have long been understood and remain a key selling point. In 2025, we saw new momentum from nursing leaders sharing their experiences with improved clinical outcomes as well: lower infection rates, reduced length of stay and higher nurse satisfaction with the dialysis service line that is in-sourced with Outset. Operationally, from gross margin expansion to product innovation, to operating expense performance, we made meaningful progress in 2025 and took strides on our path to profitability. In the past year, we reduced cash usage by $70 million, increased gross margin by more than 500 basis points and continued to narrow our operating loss. Additionally, we made investments in innovation to further extend our technology lead and, just 2 weeks ago, received FDA clearance for the next-generation Tablo platform. This new platform is the first dialysis system cleared under the FDA's 2025 cybersecurity requirements and includes hardware and software enhancements that improve performance and system reliability as well. A 2025 survey of U.S. health care IT and cybersecurity professionals, published in The HIPAA Journal, found that 93% of health care organizations had experienced at least 1 cyberattack in the past 12 months, with an average of 43 attacks per organization annually. Cyberattacks slow patient care, reduce the hospital capacity and create staffing strain. More than 70% of hospitals experiencing a significant cyberattack report direct patient care disruption, which is why health systems now treat cybersecurity as a critical patient safety issue. A dialysis system that meets FDA's most stringent cybersecurity requirements helps protect hospitals by reducing the risk of compromise, limiting the risk of spread and safeguarding patients. We view Tablo's secure-by-design architecture, multilayer authentication and resilience against unauthorized access, as well as its compliance with FDA's rigorous cybersecurity standards, as a significant new competitive advantage. It provides yet another compelling value proposition, on top of cost savings and on top of clinical outcomes improvement, that we believe will be recognized by health systems amid ever-increasing concerns over cybersecurity, continuity of care and patient safety. This clearance is the 10th 510(k) for Outset, building on our track record of innovation in the dialysis market. The next-generation Tablo is also a new foundation from which we intend to innovate further with future enhancements planned, to widen and deepen the moat we have already established in the acute and home market. We are excited for the planned launch toward the end of the second quarter. Turning to our commercial organization, our team executed well in the fourth quarter against many of the largest opportunities in our pipeline. We closed the deal that had shifted out of the third quarter and made meaningful progress on several others. I am proud of the fourth quarter execution our sales leadership team demonstrated and optimistic about the additional strides we can take in 2026. Our strong pipeline is reflective of the benefits that can be achieved by in-sourcing dialysis with Outset's proven technology, expert know-how and exceptional service. And now together with the next-generation Tablo launching this year and a rich roadmap of additional innovations to follow, we expect to drive growth for many years to come. With that, I'll turn it over to Renee for more detail on the year and our guidance for 2026. Renee Gaeta: Thank you, Leslie, and good afternoon, everyone. Revenue in the fourth quarter of $28.9 million consisted of $19.9 million in product revenue, which, as expected, was below $21 million in the fourth quarter of last year. The components of product revenue include console sales, which grew 11% to $6.4 million, and consumable sales of $13.5 million. As we indicated last quarter, consumable sales were lower in the quarter compared to the fourth quarter of last year due to order timing. Consumable revenue did rebound sequentially, just as we had anticipated on last quarter's call based on our Tablo utilization data, growing nearly 11% over the third quarter. We were very active during the quarter to tighten up our forecasting methodology for treatments, which now includes closer collaboration with our largest customers on their ordering patterns. I believe we have made improvements to better predict treatment demand, and we will continue to monitor Tablo utilization and ordering data as we hone our approach. Service and other revenue of $9 million grew 6% from $8.5 million in the prior year period. Recurring revenue from the sale of Tablo consumables and service was $22.5 million, again growing sequentially, as we anticipated on last quarter's call, but down from the fourth quarter of 2024 due to customer ordering patterns that resulted in a strong fourth quarter in the prior year. Next, I will walk through our gross margin and operating expenses for the quarter. Please refer to the tables in today's earnings release for a reconciliation of GAAP to non-GAAP measures. Non-GAAP gross margin expanded more than 500 basis points from last year, reaching 42.9% for the quarter, even with another 130 basis-point headwind from the under-absorption of manufacturing overhead. Excluding the manufacturing headwind, we would have seen non-GAAP gross margin closer to the mid-40% range. Product gross margin increased 640 basis points year-over-year to 50.7%, from 44.3% in the fourth quarter of 2024. This marks the first time product gross margin has exceeded 50%. Service and other gross margin was 25.6%, growing 470 basis points from 20.9% in the fourth quarter of 2024. This progress keeps us right on our path to the next milestone of 50%. Moving to operating expenses. Non-GAAP operating expenses declined nearly 4% to $25.7 million, compared to $26.6 million in the fourth quarter of 2024. Non-GAAP operating loss was $13.3 million, 14% below the operating loss of $15.5 million in the prior year period. Non-GAAP net loss of $15 million was 22% lower than $19.3 million in the fourth quarter of 2024. These positive results reflect our drive to profitability. Moving to our balance sheet, we ended the quarter with $173 million in cash, cash equivalents, short-term investments and restricted cash. We used approximately $9 million in cash during the quarter. To close out the full year of 2025, we reported revenue of $119.5 million, a 5% increase over 2024. Product revenue was $84.8 million, a 5% increase over $81 million in 2024. Service and other revenue was $34.7 million, a 6% increase over $32.7 million in 2024. And recurring revenue was $88.7 million, also a 6% increase over $83.9 million in 2024. Non-GAAP gross margin for the year increased 400 basis points to 39.6%, or 41.1% excluding the impact of manufacturing under-absorption. For the full year, the under-absorption headwind was 150 basis points, right on our forecast, and will have a diminishing effect in 2026. Non-GAAP operating expenses in 2025 were $97.8 million, a 19% reduction from $120.7 million in 2024. Non-GAAP net loss was $65.4 million, a 31% decline compared to $94.8 million in 2024. Turning to our guidance for 2026, we expect revenue to be in the range of $125 million to $130 million, a 5% to 9% increase over 2025. In terms of revenue timing, we expect the first quarter to be roughly flat to the fourth quarter of 2025, and then stepping up through the rest of the year. For non-GAAP gross margin, we expect to be in the low to mid-40% range. A higher console mix would move gross margin lower in the range just as a higher mix of consumables would move gross margin to the higher end of the range. We expect the manufacturing under-absorption that was a headwind in 2025 to attenuate as we move through 2026. Finally, we anticipate continued operating leverage this year with operating expense growth at roughly half the rate of expected sales growth. In terms of cash use, we expect Q1 to be our highest cash use quarter for the year due to planned investments in inventory and manufacturing. On a full year basis, the combination of revenue growth, gross margin expansion and expense discipline will enable us to use less cash in 2026 than the $46 million we used in 2025. With that, I will turn the call back to Leslie for closing comments. Leslie Trigg: Thanks, Renee. I want to close by reiterating that we operate in 2 large end markets where we remain the clear technology leader. Tablo consoles have performed more than 3 million cumulative treatments. And what is even more astounding is the depth and the breadth of our data repository. There are now more than 8 trillion data points in our cloud platform, which helps fuel our analytics and innovation engines, improves the customer experience and ultimately enhances patient care. We're gaining scale with significant growth runway ahead through hundreds of master sales and service agreements already in place and a pipeline of new customer opportunities. All of this progress sets a powerful foundation for value creation over the long term. Providers, including many of the largest health systems in the country, are realizing the advantages that in-sourcing with Tablo can deliver. Our team is differentiated by its expertise and an unwavering commitment to our customers and the patients they serve. I expect we will demonstrate that commitment again in 2026 as we drive growth and move ever closer to profitability. With that, I think we are ready for Q&A. Operator, please open the lines. Operator: [Operator Instructions] One moment for the first question today, which will be coming from the line of Marie Thibault of BTIG. Marie Thibault: I wanted to start here with next-gen Tablo. Thanks for the background on the advantages that system will offer. Can you tell us a little bit about how that might change the markets that you can go after, the types of hospitals you can go after, whether it might change your sales cycle time lines? And any ASP lift that we might see as well from that launch? Leslie Trigg: Sure. I'm happy to address that. Thanks for the question and hello. Yes. So let me talk a little bit more about that. It's one of my favorite topics right now because we are really proud of the work that went into this and what we believe will be the value that we deliver to hospitals. I myself have talked with so many hospital leaders around cyber, and particularly those that view vendor devices as their biggest vulnerability. They not only have to worry about the security of their own network, but of course, increasingly, all of the different devices that are connected to it. So I think it's more than fair to say that health system executives have an extremely heightened focus on the cyber safety of the medical devices being used in their environment. So given the fact that we now have the first dialysis system harmonized with FDA's very rigorous cybersecurity standards, I do believe it will help us generate incremental attention and interest among potential customers, I'd say, regardless of size, maybe to hit on one part of your question. I haven't seen a big difference in the level of cybersecurity attention between small, medium or large hospitals. They're all concerned about it, because it's something that they increasingly view through the lens of like fundamental patient safety. So yes, I do think that this will be a potential tailwind, a potential catalyst for us in 2026 and obviously beyond. I do think that it could -- again, very early, we just got the approval a couple of weeks ago, so too early to speculate. But minimally, I think that we will see incremental attention and interest. And I do think that our ability to offer hospitals sort of advanced cyber safeguards will be very positively received. In terms of the ASP lift, look forward to giving you more specifics on that as we get a little closer to the launch a little bit deeper in the year. We do, I think, philosophically, we have always followed a philosophy around pricing for value. And we believe that value to this upgrade is quite significant. But I'll close by saying stay tuned as we get a little deeper into the year on specifics. Marie Thibault: Okay. Very helpful, Leslie. And then a quick follow-up on the sales force and the deal pipeline. It certainly sounds like you've tightened up the process so that you have cleaner visibility into timing and the deals. But can you tell us anything about the stability of the sales force? Was there any attrition post the leadership leaving? And are there any updates on the search for the leader? And anything sort of on how you're viewing the deal pipeline now given the guidance of sequentially flat for first quarter? Leslie Trigg: Absolutely. Yes. Well, I think as I reflect on Q4, and I'll say, current state, today, we do have an experienced sales leadership team. They did an excellent job at keeping the organization focused on the quarter. I think the results of Q4 reflect that, albeit on a revised guidance range. We did execute at the top of that revised guidance range. We did see the treatments renormalize. We did see the deal from Q3, that slipped, close in Q4. We did see console sales bookings land exactly where we expected them to land in Q4. So all of that was encouraging. Now as we kind of look forward, Renee and I remain very hands-on inspecting the pipeline and forecasted deals. And we're still operating at a very detailed level. We'll obviously continue vigilant monitoring. But in terms of the stability and focus of the sales organization, I'd say, so far, so good. We do still have a search underway, which is being done for us by a leading executive search firm. Because we do have a very strong and capable sales leadership team in place today, it is affording us the time to find the best of the best. So we're being very deliberative and to ensure that we have the best cultural and operational fit for the business. Maybe lastly, I think -- what? Marie Thibault: Sorry. I was just saying thank you. Leslie Trigg: Thank you. But I was going to address the third part of your question, which I think was pipeline in Q4 and kind of across 2025. So looking back on the year in full, yes, the pipeline did grow across all the key metrics that we measure, which are the overall size of the pipeline, the average deal size, in particular, deals over $1 million in console value. And then we also look at: does the pipeline look healthy in terms of diversification? And we look at diversification a couple of different ways. One is diversification between new customers, who are coming into the pipeline interested in moving from outsourcing to in-sourcing with Outset, and then existing customers who are already in-sourced with Tablo and looking at expansion to new facilities based on the clinical or operational and financial benefits that they've already seen and proven after themselves. So yes, we do see good diversification between new and existing. We also look at the diversification in terms of hospital size. We see good diversification between kind of the big, brand-name, beachhead health systems that have entered our pipeline, but also medium-sized hospitals and small hospitals. And I'll maybe take an opportunity just to touch on a point that's adjacent to your question, Marie. When I talk about small hospitals, we're really proud of the impact, albeit early, it's nascent, but the impact that we have had in '25, and we expect to have in '26, with critical access hospitals. These are hospitals that are increasingly looking at standing up new dialysis service lines because dialysis clinics in their local, rural communities have closed. And the patients, therefore, in these rural areas do not always have access to any sort of dialysis care, which obviously is problematic because it is a life-sustaining therapy. And so we are proud of the partnership that we're starting to effectuate with critical access hospitals, to ensure that these rural communities have consistent access to dialysis. So very long-winded answer, I apologize for that. But in terms of pipeline diversification, across the size and type of the hospitals, I think we are very well balanced, again, across large enterprise solution level deals, again, all the way down to critical access hospitals and sort of everything in between. Operator: And our next question is coming from the line of Joshua Jennings of TD Cowen. Joshua Jennings: I wanted to follow up on Marie's question you answered, Leslie, just on the pipeline diversification. Is there any way to -- or 2 questions within one. One, can you quantify the pipeline growth entering '25 versus entering '26 or vice versa? And then just as we think about the potential to expand your current customer base and just the sales cycle associated with those deals, is there any -- is there a prioritization for the sales force to reduce the sales cycle? Or is the mix appropriate, I think, as you stated? Any strategic attack plan just in terms of the different buckets within the pipeline, thinking about contracting the sales cycle over the next 12 to 24 months? Leslie Trigg: Yes. Thanks, Josh. Those are all great questions. I'm going to answer them with a little bit of sensitivity from a competitive standpoint, but let me see if I can at least provide some helpful color. So you really hit the nail on the head when you talked about the sales cycle. And that's exactly why diversification in the pipeline around deal size is important and why the diversification between sort of new customers and expansion customers is important. The larger the deal, the longer the sales cycle. And that's not unique to Outset. That's, I think, universal to any capital equipment business. When customers are new to Outset, obviously, you've got a few extra steps around master sales and service agreements and OAs, et cetera, long before you get to a PO. And that always adds some time. When you're dealing with enterprise solution opportunities, you are talking about 10 hospital conversions, 15, 20 or more hospital conversions, sometimes all at the same time. And those are big decisions. We recognize that those are big, important decisions. And so understandably, those types of deals are going to involve more stakeholders at the health system level. You not only are working with a system CNO. As for example, if it's a 15 or 20-hospital system, you also need to make sure that all other 15 or 20 local level CNOs are on board and enthusiastic. And so that takes a bit more time. So when we look at the larger enterprise opportunities, our sales cycle, and we've shared this before, it remains, I would say, in that 9 to 12-month plus-plus range that it can be as long as 1.5 years. At the same time, when we look at deals that are much smaller, that is closed, that can be as little as 3 to 6 months. And so as we think about the design of our pipeline, the management of the pipeline, that's exactly how we're thinking about it, Josh, is really about a balance between sales cycle time. You also asked me about the sales force focus, and here I'll be a little bit more artful. But I would say that we are focused on serving any and all hospitals and post-acute facilities that want to kind of control their own destiny when it comes to the clinical, operational and financial benefits of in-sourcing versus outsourcing. With that being said, yes, you're right that if you're thinking about customers who already have a footprint with in-sourcing in Tablo, in the theoretical, that often can have a shorter sales cycle with lower barriers to adoption. But again, I want to stress, we're focused on serving everyone who wants to control their own destiny moving forward for better patient care. Hopefully, that provides a little bit of helpful color. Joshua Jennings: No, definitely. And maybe a little bit too granular, but just any color on or quantification of, I guess, the pipeline ending '26 versus '25? Leslie Trigg: Yes. We saw about the same amount of growth in the pipeline as we did between '24 and '25. We saw, again, about the same rate of growth between '25 heading into -- year-end '25 heading into the beginning of -- sorry, year-end '24 and the year-end '25, about the same rate of growth as we did the prior 12 months. So I continue to be very encouraged about the demand that we're generating. And I think that some of the pipeline -- I know that some of the pipeline expansion more recently has been because of this new clinical value proposition that's been emerging and then published increasingly by our own customers, seeing a reduction in length of stay, a reduction in CLABSI rates, even a reduction in code blues during dialysis treatment. And I have understood from potential customers that that has driven, I would say, an incremental wave of interest beyond the financial ROI benefits that have been long understood with in-sourcing with Tablo for a couple of years now. Joshua Jennings: Great. Just sneaking one more, sorry. Multipart question on that last one. But just thinking on the guide and 5% to 9% revenue growth, any help just thinking about, as we're forecasting, updating our models, console growth versus consumable growth within that range? Renee Gaeta: Sure, Josh. Happy to step in here. I think as we sat back and thought about the guidance range, we absolutely looked at it across the 3 primary components of revenue and the different puts and takes to each of those. So you're right in that our 5% to 9% growth is our -- what we believe is our balanced, best approach for right now for the full year. And I would believe that -- my position is that you should think about forecasting growth for recurring revenue to be roughly in line with that top line growth. And as you can even see from what we just performed on for 2025 against 2024, we saw very consistent revenue growth in console, consumables and service. Operator: Our next question will be coming from the line of Kendall Au of RBC. Kendall Au: I just had like 2 modeling questions. I know you guys continue to track ahead of expectations on gross margins. Is there any update on the time line to get into that 50% mark? Can you achieve that prior to exiting 2027? And then also, I have a quick question, does your current cash -- is that enough right now for you to reach profitability? Or do you need to raise any more cash before reaching that point? Renee Gaeta: Sure. Yes, great questions. I think as you can see -- on gross margins alone, you can see that year after year we continue to execute against our gross margin and, just last year, had a 500 basis point improvement. So we are continuing to march towards that pathway. And as you've indicated, our goal is 50%. And we just saw that even with just product gross margin for Q4. We're going to guide for the current year to, as I mentioned, sort of the low to mid-40% range. But we do feel as though that that 50% absolutely is within our planning horizon. I'm just not going to give a formal year to when we're going to achieve that, but we absolutely look forward to doing that and sharing that with everyone at that time. Specific to cash on the balance sheet, I think as you think about we've got $173 million in cash, cash equivalents and investments, as you've seen just from our performance in this past year, we brought operating cash burn down from $116 million in 2024 down to $46 million in 2025. And as stated on our call, we will look to better improve against that in 2026 as well. And we absolutely believe that we've got sufficient cash on the balance sheet to get us to profitability and beyond. Kendall Au: I really appreciate the color there. And then I have just quick question on capital budget. I was wondering what you're seeing on the hospital capital budget environment right now. Do you feel like it's up year-over-year? And also, what's the state right now? And then also, can you give me a little commentary, I know you talked about having a backlog, is that still -- like, can you talk about the size and maybe the scale of that right now for Tablo? Leslie Trigg: Sure. Yes. Well, on the capital spending front, we are not seeing any material changes, at least in the customers that we're calling on or the customers that are in our pipeline, we have not really observed any material changes in their planning or how they're thinking about capital spending for 2026. So nothing systematic or widespread that changes our outlook either near term or long term. Backlog, yes. That has been an important lever for us in the past. It remains an important lever for us as we move forward over the planning horizon. And I would say we feel very good about where we're entering 2026. And that will continue to be one of the KPIs that we measure ourselves against as we move through the year and into '27. Operator: And our next question is coming from the line of Rick Wise of Stifel. Frederick Wise: Just I want to have some follow-up questions sort of building on a lot of the excellent questions already discussed. On the next-gen Tablo system, it's great to see it, a couple of follow-ups. One, is there an upgrade opportunity here? Like, does your existing installed base upgrade for a nominal fee? Is it a whole new Tablo they would buy? Is there an opportunity to upgrade your entire existing base at a full cost of a new Tablo, whatever that ASP would be? Maybe just help us understand that. Could you talk a little bit more -- the cyber security topic is obviously compelling alone, but help us understand some of the additional, some of the other new features and capabilities and how that might add to Tablo's luster and ease of use and clinical utility? And then I have a related follow-up question to that. Leslie Trigg: Okay. Great. Yes. Perfect. Why don't I -- I'll try to address the first part and then we can go to your part two. So on the next gen and the upgrade opportunity, short story long, yes. Our existing installed base customers will have full access to this upgrade. They will be able to upgrade. At the same time, new customers will also have an opportunity to buy new Tablos that already contain, because they've been manufactured in, already contain all of the software, hardware and cyber upgrades that I'm about to elaborate on in 1 second. So yes, this is a full access upgrade both for -- that will be available to the current installed base and also new customers moving forward. You also talked about or asked about what are some of the details around -- on the cyber front, what does that really mean? Gosh, this could be like an hour-long conference call that I -- a podcast, that I'm sure you all would really enjoy, but I will try to keep my answer brief. This was a massive amount of work for our team and took us many, many, many months of technical achievement to reach. But for example, we updated physical network cloud connections with new software and hardware changes. We added many, many, many new security controls. We have -- our software now has round-the-clock cyber monitoring. In terms of the device performance itself and some of the reliability improvements, those, again, it's new software, a new operating system, new hardware. And how this translates to the customer benefit was something you also asked me about. Well, number one, we're always focused on improving uptime, which in and of itself improves the user experience. And so when you've got device performance enhancements, reliability enhancements, you are improving uptime. The availability of that device, the more the device is available, the better the patient care experience, patient care can be delivered when it is needed by the patient. And then, of course, the user experience with nurses and biomeds in the hospital, will be beneficiaries of the device performance and the reliability improvements as well. And I think I'll say moving forward, we're not done. We are extremely committed to what I like to call customer-centric innovation. Not inventing things because we can, from an engineering standpoint, but inventing things because we've heard them from users. Feedback, ideas. The improvements in this next-gen are a direct example of kind of this customer-centric orientation and very reflective of many of the suggestions and ideas we've gotten directly from our nurse users and others within the acute care and post-acute environment. Frederick Wise: Great. And just to build on that, just in the simplest of terms, is -- and you haven't told us the ASP or whether it's more or less or equal to the current generation of Tablo. But if I assume it's -- there are more features and the cybersecurity is an incremental value and it's higher, what does this all mean for your gross margins once you're fully launched? Is this margin-accretive at that point? Is there a manufacturing learning curve, and so it actually depresses them initially as you launch? And maybe just related -- sorry to ask such a multipart question, but what's in your guidance at this point? A first or second half guide. Then bringing that gross margin question into it, how do we think about the new Tablo impacting margins? Thank you for dealing with all that. Renee Gaeta: No problem, Rick. This is Renee. I'll help sort of answer some of the gross margin questions and, in particular, how we're thinking about this. So as Leslie mentioned, we're working on the commercial launch strategy and how the Q2 time frame around that where, hopefully, we'll give additional clarity specific to ASPs. But I would say we absolutely think that there is value to product innovation and that this product just continues our innovation pipeline and that customers will see value in that. Specific to gross margin, you could imagine then that could be a potential tailwind specific to revenue throughout the year, but also gross margins. We've strategically thought about this product launch, this product generation, as Leslie just mentioned, the ability for current customers to upgrade their devices if they so choose, what future manufacturing of devices look like, plus also the units that I have on hand in finished goods at the moment. The functionality, we really thought about this when we were designing this next generation. And the ability to have that flexibility to upgrade, to add the components and, of course, add the software. So current state within our gross margin guide, we've factored it in, I would say, similar to how you can think about gross margin. Right now, we currently don't expect it to be sort of a big detriment. I know sometimes companies have that when they're switching generations or versions of their device. We think this will be relatively a mild impact. And of course, the more consoles that we do sell, that has a dampening effect on gross margin, as you know, from our history. So in some ways, I'd love to sell -- have a tailwind from this and sell more consoles, have higher top line revenue growth, that could dampen in the near term gross margin. But as we've thought about it in the current guide, both from a revenue perspective and a gross margin range, we need -- the commercial launch will be sort of late Q2. So it will be back-end -- included in our back-end assessment, and let's see how that launch goes and how it rolls through the summer months. Operator: That does conclude today's Q&A session. I would like to turn the call back over to Leslie now for closing remarks. Please go ahead. Leslie Trigg: Great. Thanks to everybody for joining today. I'd like to thank -- close by thanking our customers and our team for the very, very meaningful difference that they make every day in the lives of dialysis patients. I hope you all have a great evening. Operator: Thank you so much for joining today's conference call. This does conclude today's meeting. You may now disconnect.
James Fitter: Thanks very much, and good morning, everyone, in Australia. Good afternoon to those in the United States, and good evening to those here in Dublin, where I am calling from, joined with me by Darragh Lyons, our CFO; Niall O'Neill, our Chief Product Officer; and Toni Pettit, our Company Secretary. Firstly, as always, I just want to draw your attention to the legal disclaimer, and as usual, remind you that we are a calendar year-end. So we're presenting our full year results for the year ended December 2025, and then our reporting currency is in euros. We have released this deck for those of you who are on the phone rather than the webinar, we have released the deck to the ASX. That has not yet been published. So apologies to that. But hopefully, we'll be able to get through this with the deck as is. So the agenda today, we're going to talk about, obviously, the 2025 financial results, provide commercial and sales updates. Niall is going to talk through our product innovation. I'm going to address where we are on our AI journey. And then, of course, we'll provide an outlook and hopefully provide ample time for some Q&A. So just a reminder, Oneview Healthcare is a global leader in connected care experience solutions. We have been listed in Australia for 10 years, and we are enjoying commercial success on 4 continents. As part of that, we're proudly partnered with 3 of the top 25 hospitals in the United States, which remains our key focus of attention. Nearly 85% of our business today is in the United States. Just a reminder of how [indiscernible] value for our customers. We have 4 key pillars. Firstly, enhancing the patient experience, really empowering the patients to be more control of their own environment, providing them with a digital journey to get them home safer, faster, better informed. Secondly is to enhance the care team experience. And as those who know the company well will know that this has been a massive focus since the pandemic. Obviously, if we're putting technology in the room, we better make sure that it's driving operational efficiency. Thirdly, the technology is improving safety and outcomes through intelligent sensing, anticipating risk and monitoring adherence to protocols and providing a layer of transparency that typically isn't available without systems like ours. Fourthly, and most importantly, we're optimizing operational efficiency for hospitals and moving to more of a proactive delivery of care rather than a reactive delivery of care. So for 2025 and review, on Page 9, we have the financial snapshots. I'm not going to steal Darragh's thunder because he's going to talk to them in detail in a very few minutes. But I would just draw your attention to the new user interface, a really important part of the product we're delivering this year that Niall is going to refer to. In terms of business and innovation highlights for the year, I think perhaps the most significant for the company last year was Michael Dowling joining the Board of the company, which was effective from the 2nd of December last year. Michael, for the last 23 years, has been the CEO of the largest health system in New York. It's the largest private employer in New York with over 140,000 employees. And Michael brings with him unparalleled expertise in healthcare. He's going to bring us incredible insights into the way that enterprise healthcare is run and reimbursed in the United States. But perhaps most importantly, he brings a huge level of optimism, a growth mindset that I think is going to be incredibly exciting for us as a company as we embark on this next chapter of growth. And I think if I'm thinking about where we are today, I don't think we've ever had as much momentum in the business. And a big part of that has been generated by Michael joining the Board. So a huge welcome to Michael, and we're super excited to have him as part of the Oneview team going forward. We're delivering a next-generation experience, which Niall is going to talk to today around the new front-end user interface, and that obviously has some really exciting elements of AI embedded into design. And I'll let Niall talk at length around how that's going to drive greater value for us and our customers. So why don't I pass it across it to Darragh, who's going to talk through the numbers in some detail for you. Over to you, Darragh. Darragh Lyons: Thanks, James. Good evening, and good morning, all. So we posted a 21% increase in revenues in 2025 compared to 2024, and that increase was driven by a EUR 1.6 million increase in non-recurring revenue and a 7% growth in our annual recurring revenue channel. That strong momentum that we have seen and adding 18 new logos over the past few years is the driver of that revenue growth that we were able to deliver in 2025. Our growth was negatively impacted by the weakening Australian dollar, and in particular, the U.S. dollar during 2025. Almost 80% of our revenues are now generated in the United States. So on a constant currency basis, our year-on-year growth was actually over 25%. With the larger proportion of non-recurring revenues in 2025 compared to 2024, our gross margin declined by 3 percentage points to 64% in 2025. Our margins within the recurring and non-recurring revenue channels are holding. So the decline in the overall gross margin is due to mix only. Our operating EBITDA loss for the year reduced by 8% to EUR 8.1 million, and the decrease is attributable to the higher revenue generation during 2025. Our cash OpEx remained consistent with 2024. But of significance is the decline that we're seeing in our cash OpEx during the second half of 2025 following the restructuring that we executed in May 2025 and also some other efficiencies that we're driving through the business, and we are doing that on an ongoing basis. So our H2 2025 cash OpEx was 9% lower than the first half of 2025 and was actually 13% lower than the same period, so H2 2024. And as we'll cover later in the presentation, we expect to drive further efficiencies in our OpEx during 2026. Turning to the balance sheet on the next slide. So our cash position at 31 December, 2025 was EUR 4.6 million, and the decline in our cash over the course of the year was broadly in line with the operating EBITDA loss that we had in the year. Our net working capital position is broadly consistent with the prior year balance sheet. Importantly, on our balance sheet, I would refer to the strong inventory balance of EUR 2.9 million that we have on the balance sheet. That's largely comprised of proprietary hardware. And that does give us a benefit in terms of insulating us against potential future pricing or tariff volatility and gives us strong cash generation potential from our planned deployment activity during 2026. Turning then to our live endpoints. So at the end of December 2025, we had 14,880 endpoints live. As we previously highlighted at our half year results, our net deployment growth in 2025 was impacted by the decommissioning of about 900 endpoints at an Australian customer due to budgetary constraints. But notably, our new endpoint additions are generating more than double the revenue per endpoint compared to the decommissioned endpoints. Also important to note on this slide is the 31% acceleration in deployment activity that we've enjoyed during the second half of the year compared to H1 2025. And that is attributable to the efforts that we're making in terms of making our deployments more efficient, and obviously, the momentum that we're seeing in terms of adding new customer logos over the past few years. So on the next slide then, as we look forward, we are continuing to see efficiency, and we've invested a lot of time and resources into gaining efficiency in terms of deployments. And we're now at a position where we can turn on endpoints at new customers within that 90-day window. That efficiency and the continued momentum we're seeing across our existing and new customer logos is giving us the potential to add 20% endpoints -- increase in endpoints by the end of 2026 to land at just under 18,000 endpoints at the end of '26. So that's the target for 2026. So I'll hand it back to you, James. James Fitter: Thanks, Darragh. So let me just get into the commercial and sales updates. So as Darragh already mentioned, we've had a really fertile period over the last 3 years, adding 18 new logos, which is almost double the number that we landed since the IPO. So it's been a really fundamental change. And in the first couple of weeks of this year, we announced a very significant development that Baxter had us added to the group purchasing organization of one of the 10 largest health systems in the United States. Again, it will be impossible to overstate the significance of that. This is a really important development for us and for the Baxter partnership, and I think really speaks to the power of that partnership, which we'll talk a little bit later further in the presentation. But I wanted to help give you a sense of what these logos mean in terms of our commercial strategy because it's incredibly hard. Those of you who followed the company so patiently know that the sales cycle in this business is incredibly challenging. It's typically 18 months to 2 years. But once you're in, you have a unique opportunity to build partnerships and relationships with some of the most sophisticated health systems in the country, which is what we've done. And this concept of landing and expanding is very, very powerful. It's even more powerful for us because in the last 15 months, we've added 3 significant new products to our portfolio with the Digital Whiteboard and Digital Door Sign and MyStay Mobile. And those products, as we've specified before, give us the ability to basically grow our revenue with existing customers by nearly 100%. So on this Slide 18, you can see we've just highlighted some of our older legacy customers dating back to 2014. You can see in green the initial deployment we have at those customers. And then you can see the expansion that we've received since then. And in pretty much every case, the expansion has been multiples of the initial deployment. In the case of customer A, we will be fully deployed across their enterprise. At customer D, we've been fully deployed across their enterprise since 2014. Customer B is the exception. You'll note there, there's a lot of endpoint potential in gray. That endpoint potential is a function of the fact that, that customer made a very major acquisition in 2024 and we have not yet been able to convert that customer's acquisition, but we do know that they do not have a solution like ours, and we think there's a real opportunity to do that in the fullness of time. So as we think about the 18 logos that we've landed in the last 3 years, those 18 health systems together manage 11,631 licensed beds. You can see the vast majority of those beds that we've landed have been in the United States with just over 500 here in Ireland, which we're very excited to have our first European customer and a fairly small number of 183 customers at Adeney and Avive in Australia. And I just want to explain a little bit of the logic behind why these health systems are so focused on providing an equitable patient experience. Firstly, the obvious point being that if you visit one of these large health systems like NYU and you turn up at their flagship facility where they have the state-of-the-art Oneview experience, they don't want you going to one of their other fully-owned facilities and finding yourself back in the sort of 1980-style patient experience that a lot of health systems are still running. So the patient experience is important. They want to have a consistent baseline experience. That helps reduce variation that can often contribute to inequity. They want to provide consistent access to health information, to education, to care plans. They want to reduce disparities tied to literacy and language. Most importantly, perhaps they want to have data and real-time dashboards to surface any inequities in utilizations and response patterns. And if you don't have it across the entire system, it's obviously impossible to do that. And I think amongst some of our more Midwestern-style customers, there's a real desire to make sure that their flagship facilities in major cities are also delivering the same experience to rural low-income and more underserved communities. So there's a real desire to standardize across the enterprise, and we've seen that. I think it's a consistent theme amongst the customers that we have secured. So what's that mean in terms of addressable market? And I think there's been a little bit of confusion in the market when we made the decision last year with these new products to move away from focusing on beds to focusing on endpoints. So the endpoints are defined as any revenue-generating data point in the room. So that could be the TV, it could be the tablet, it could be the digital whiteboard or it could be the digital door sign. So in every room, we now have 4 revenue-generating opportunities, which creates amongst these 18 customers, 46,000 endpoints that we are able to target. And in recent contracts, we are averaging around 2.5 endpoints per room. So if we were to assign that across the 18 logos that we won on the 2.5 point average, we'd have an addressable market of nearly EUR 16 million in average recurring revenue. Now I would point out there's a slight disparity between licensed beds, which is the number of beds that's approved by the state licensing agencies with staffed beds. So staff beds are the number of beds that are physically available based on the staff on hand. So the licensed bed number might be slightly higher, but it would be relatively consistent. But I think it really speaks to the opportunity. And on Slide 21, we try to provide a visual of that, where you can see that where we finished the end of the year 2025 with these logos are in green, the forecast delivery for 2026 is in orange and the white space, which is the gray bars, shows the potential opportunity that we have to deliver new products and expand across these enterprises. And I think what this tells you is we're very early in our journey. And if you think back to some of the earlier examples I showed from 2014 and 2016, in the fullness of time, we'd expect to be filling in a huge amount of this white space. And I would point out that this graph does not include any beds from the Baxter general purchasing organization we announced back in January. And that health system would in itself be larger than these 18 new logos combined. So I think that gives you a bit of a sense of the opportunity that, that system is putting before us, and that's what's leading to so much momentum in the business. So as we think about the endpoints in the room, again, I just want to -- I think this is a Slide 22 is a really important reminder of the power of the Baxter partnership. So I think as most of you know, Baxter is through their Hillrom acquisition one of the largest suppliers of smart beds in the United States. They're one of the largest suppliers of nurse call. They're one of the largest suppliers of infusion pumps. There really aren't too many health systems in the country that they don't touch. So as we think about the smart room of the future, which is the vision that Niall has built for us over the past few years, we have a series of data points. They're all being orchestrated by a common ecosystem. So we are controlling the patient TV. We're controlling the tablet. We're controlling the door sign, the whiteboard, the voice assistant, which Niall is going to speak to momentarily. And then Baxter is providing the bed, the nurse call and the precision locating or the RTLS system within the room. The one piece that neither of us are delivering is the camera and computer vision, which has been the driver of the virtualization of care. And again, I think those who know the company well know that our strategy on that has been to create a virtual care API and to certify the leading vendors in this space. So Caregility was the first. We've now also licensed care.ai, Artisight and Teladoc through that API to be able to deliver their capabilities through the Oneview platform. So that's the -- I hope gives you a sense of the synergy between ourselves and Baxter. And the Baxter partnership is obviously starting to deliver. The news we announced in the 4C was obviously hugely significant. It brings a real confidence I think to the sales organization at Baxter that one of the 10 largest health systems in the country has embraced what we're doing. In terms of the partnership itself, we have over 156 qualified opportunities in the pipeline. We have delivered already some significant integrations into the Voalte Nurse Call. Niall is actually presenting at their national sales conference next week in Dallas. And we've got further active engagement going on, on the co-innovation pipeline. So I think we are really blessed to have this partnership. It's opening opportunities with these large integrated delivery systems, which for a smallish company like ours would be almost impossible to access on our own. So with that, I'm going to pass control of the deck to Niall, and he is going to share an update on the innovation road map. Over to you, Niall. Niall O’Neill: Thanks, James. So AI is having a really significant impact on software development. And we've been thinking a lot about this in 2025. We've redesigned our software development life cycle. So this is the way in which we deliver and deploy our software to leverage AI. And really, that's around the goal of velocity with quality. We want to make sure that we're moving quickly, but with the quality that is so important to our customers. So we've continuously improved this delivery life cycle during 2025 and we continue to improve it now. We're now on our third iteration, leveraging Agentic AI as part of our software development life cycle. And we have set maturity targets for each of the phases of the SDLC. And our goal in 2026 is for us to be at least 4 out of 5 for maturity for our key phases of requirement definition of software build and software test, which are the really sort of intensive, resource-intensive parts of software delivery. And this relentless focus that we have is already bearing results. And I think the most tangible example is we will be previewing our new Ovie Console product. I'm going to talk a little bit more about that at the upcoming U.S. trade shows, so ViVE in a couple of weeks' time and then HIMSS in March. And this product will have gone from concept to pilot in 2026 with just one high agency engineer using AI to deliver the product. So not needing an entire team, but one person working with agency and using AI. Another data point, every quarter, we survey our engineering team. And the share of the team that report time savings of more than 15% daily grew from 58% to -- sorry, to 76% in 2 quarters, and we fully expect that trend to continue in the next quarter's survey. We're taking the approach and the learnings from this AI transformation of software development and we're now building a repeatable playbook that we're going to apply across the organization as part of our move to become an AI native company. So we move with velocity and quality, not just in software delivery, but in all aspects of our business. So I want to talk a little bit about our new user interface. Our focus in 2025 from a product delivery perspective was delivering our new user interface. So this is for our MyStay TV and MyStay tablet products that patients use in the hospital room. And this new design have 3 goals. The first was to provide a simple, intuitive and accessible experience for all types of users. And one example you can see on the right-hand side here is the ability to increase the tech size. It sounds like a very simple thing, complex to design for and was one of the most requested features from our customers. The second thing is providing a personalized interface with demographic-specific layouts. So this enables us to meet the needs of pediatric users. It enables us to -- or it makes it easier for patients to select the language if they're non-English speaking. And it also introduces concepts like AI suggested meals to help patients who have very restrictive diet orders and they find it hard to be able to order something digitally through Oneview because their diet order is so restrictive to be able to easily order meals. And every meal ordered through the Oneview system is effort avoided for our customers and for their staff. And the third goal is that it facilitates Ovie. So Ovie was originally conceived as a voice assistant. So those of you that would have been following us would have seen reference to Ovie or a voice assistant in 2025. We previewed this at trade shows last year. As we've shown this to customers and they've been able to use Ovie and test it and provide feedback, this has really evolved. This concept has evolved, and it's evolved into this concept of a digital care assistant that helps patients help themselves. But it's not just focused on the patients, it also ensures that the care team can focus on what matters. Interruptions are a huge problem for nursing as they try to provide care during the day, they're getting constantly interrupted and Ovie is all about trying to reduce those interruptions. Ovie runs on Oneview devices, tablet, television, a voice assistant and on clinician devices. So it's supporting patients, it's helping manage non-clinical needs and it's also giving staff real-time visibility. So just to kind of drill into that a little bit more in terms of the personas. So for patients and families, Ovie provides real autonomy. So they can request meals, they can request comfort items or non-clinical needs via voice. And this is all about reducing their reliance on the call light, so having to call their nurse for everything. They can also control their environment, so lights and lines, temperature, the system using simple voice commands. Beyond that, it also delivers timely prompts. So on their home screen, it will give them reminders whether that reminder is about ordering a meal, whether it's about watching education that they need to watch, whether it's about preparation for discharge. And it will also answer natural language questions instantly. So when is my procedure? What meals can I order? The types of questions that patients either just don't get answered or have to interrupt their nurse to get answers. For nurses, Ovie will reduce interruptions by routing those non-clinical request, things that the nurse doesn't actually have to fulfill for the patient, directly to the right team. Nurses are able to monitor the patient's experience in real-time. So they'll have visibility of who's using the Oneview system, who's not using it, who's ordered meals, who might have not completed their education or who might have requested services. They can also access care information hands-free in the room via Ovie Voice. So for our customers that don't have a dedicated whiteboard in the room, for example, the nurse will be able to come into the room and say, "Hey, Ovie, open the whiteboard" and that will allow them to access important care information all without having to touch the pillow speaker or the tablet. And when Ovie detects an issue requiring nurse follow-up, it will escalate appropriately. And by automating repetitive workflows and reducing these interruptions, this noise, Ovie really is all about protecting nursing focus so they can stay centered on clinical care. For operations and care support staff, those teams will be able to receive those non-clinical requests. So that would be something like a drink of water, a blanket, a request for a chaplain visit, non-clinical needs without the bottleneck of having to go through the call lights or without nurses having to mediate the fulfillment of those requests. They'll also be supported in driving activation and utilization. So many of our customers will have volunteer or care support roles that will go and visit patients and help them use the system. And every patient using Oneview is more value for our customers. And it will also provide visibility into the experience and into these operations, and that's all about helping operational leadership pinch points, demand surges, delays or issues so they can address those. Often, that is not visibility that exists in one system today. And finally, for leaders and for patient experience teams, we have the ability to move from a reactive rounding model where leaders or patient experience teams will just go and try and visit every single patient and ask them the same set of questions about their experience to a proactive guided rounding approach where you actually focus on the patients based on what's happening and based on patient needs. For example, where a patient has provided feedback through the Oneview system that is negative to focus on those patients and trying to address their issues. Leaders can also monitor operational and experiential performance, whether that's at the unit level or the hospital level, again, trying to spot those risks before they impact satisfaction. And I think this is a key shift for Oneview while we have provided care team-facing products in the Australian market that have filled the gap that hospitals without electronic health records have for these types of tools. These will be our first star-facing products in the U.S. market. And these are not competing with the electronic health record, they are complementing it. Where the electronic health record is focused on clinical care, we are focused on experience and operations, and this is going to help us drive greater value and support end-to-end as well as integrated workflows. So the Ovie ecosystem is made up of 4 products. Ovie Engage is that context-aware widget on the patient's home screen that you would have seen on the new user interface. It ensures that patients are aware of what they need to know or do all towards a safe and timely discharge, which is very important that patients leave hospital timely, but also prepared. It's built into our new user interface, as I mentioned. And this will be launching at the ViVE show later this month in L.A. It will also be live with customers in the coming months. Ovie Voice is the natural language voice assistant. It builds on the prototype that we launched in 2025. And we have now integrated Ovie Voice with MyStay TV and MyStay Tablet, enabling patients to engage with and control the system as well as ask those questions and make requests. Ovie Voice will go into pilot in 2026. And the new front-end was a key enabler for this, hence, our revised timing on this pilot. Ovie Console, as I mentioned, is a new star-facing product, providing that staff visibility into operations and experience. One of the #1 requests we've had from customers is they want real-time data. They want an understanding of the experience and understanding of operational needs and Ovie Console will provide that visibility and control. We really think about it as mission control for all of the non-clinical aspects of care. Ovie Console is in development at the moment. We will be showing a first iteration at ViVE, and we will be piloting it in the coming months. And finally, the last piece of the jigsaw is Ovie Rounds. This is a smart rounding tool, as I mentioned. Like all of the Ovie products, it will use context to ensure that staff focus on the right patients at the right time to recover service where needed. Ovie Rounds is still in prototype stage. We will be showing it at ViVE to get feedback. And our plan would be that we would deliver it in 2027, subject to customer validation. So just to bring all of this together, Ovie is an intelligence engine that connects our products and it connects hospital systems to enable self-service, to focus patients and staff on what's most important and to drive workflow automation. Ovie's superpower, and this is the hard bit, is all of the context that it has about the patient, the environment and the patient's care, as James alluded to. And it's the context that come from Oneview, it's context that comes from the electronic health record, from the building management systems, from real-time location systems and all of the systems that we integrate with today, all of that hard work we've done over the years has given us this ability to have this unique context. Patients can ask questions, request services or provide feedback. For example, if a patient asked a question that requires a virtual nurse, Ovie can create a follow-up action that is visible on Ovie Console and alert a virtual nurse in the command center that the patient needs help. That virtual nurse can then call straight into the room with seamless integration to virtual care. They can address the patient's question with that full context for the patient. They have the clinical record and the electronic health record and they have the insight into the patient's experience and operations in Ovie Console. Ovie is always available, always monitoring and always orchestrating to ensure that care is timely and efficient. And with that, I will hand it back to James. James Fitter: Thanks very much, Niall. So I want to just talk about -- obviously, it goes without saying, the world is very confused about the impact that AI is going to have on software companies and I think on the industries in general. And I just want to remind everyone that this is a journey that we've been on. Niall has been doing a phenomenal job. We were the first ASX-listed company to be ISO 42001 certified, which means that our artificial intelligence management systems have been independently verified by the International Standards Organization. That's something we're incredibly proud of. We have taken a very serious focus around the governance and the privacy, because what we all know about healthcare is that trust and security are the 2 most important things. And without that, we really don't have a business to stand on. So I think as you just heard from Niall, we are leveraging AI across every aspect of our business. Today, we appointed Greg -- Dr. Greg Jackson as our AI Transformation Lead. Greg has worked with all of the operational leaders here at Oneview to identify ways that we can automate and ways that we can challenge the way we've been doing business historically. He's identified 54 different projects that we can -- that we have then scored and sized. And we have given him 3 tasks to commence with to start working across every aspect of the business, whether it be HR, finance, project management, software development, Niall has already spoken to. And I think for anyone who's involved in the technology industry, it's never been a more exciting time. For us, we see this as a massive enabler of our business, something that's accelerating our product development. Niall talked about velocity and quality. They're the 2 things that we're focused on. And there is no doubt we are going to be able to deliver a much better quality product at a much faster velocity for our customers, which is going to create more value, it's going to allow us to deliver the Ovie feature set, and it's going to allow us to fill in all of that white space amongst those 18 logos that we looked at earlier. The reason it's so difficult for someone to compete with us is just how hard it is to be successful in healthcare. So we've been on this journey, as you know, for over a decade. We have won some of the most discerning health systems in the country, and we've retained those relationships for over a decade. That is our moat. It's incredibly difficult for anyone to come in. The easiest part about our job is building the software. The hardest part is how do we comply with the operational workflows, with the integrations in the back end of the hospital, with the compliance and the complexity that goes with that. And we're also deploying physical infrastructure in patient rooms and supporting multiple operating systems. So this is a really incredibly complex business. As Nader Mherabi, the CIO at NYU Langone likes to say, listen, James, what's great about your product is it looks really simple on the front-end, but it's really complex on the back-end. And I think any good piece of software has that feature. So on Slide 33, I think we've just tried to visualize that and talk about what looks very simple on the surface is incredibly complex beneath the surface. And just managing the hardware remotely, the device management, making sure that the privacy and PHI of the patients is cleansed on admissions, discharges and transfers is a really significant undertaking. So as important as AI is and as exciting as it is for people building software, doing what we do is incredibly complex. And I would go so far as to say, a couple of guys in a garage are going to have a really hard time competing with what we do. So with that, let me talk about the outlook. As you heard earlier, great revenue growth for the year, up [ 21% ] following 5% growth last year, best growth we've had since the pandemic. That's not a coincidence. We're seeing a real turnaround in operating margins in the United States. I don't think it's a coincidence. If you look at the listed hospital operators in the U.S. at HCA and Tenet, they're both trading at all-time highs. I think most of our customers for the first time since the pandemic, returned to some semblance of profitability last year, which means that capital budgets are being more freely available, and that's obviously really manifesting itself in the 18 new logos we've added in the last 3 years. Really proud of the work that JP's team has done around our deployments. As you saw, we had a 31% acceleration in deployments in the second half of last year. And I think that's only just scratching the surface in terms of the potential. And obviously, we've been added to this general purchasing -- group purchasing organization of one of the 10 largest health systems in the country, and we are super excited about what that's going to bring in 2026. And then on the cost side of the business, as Darragh mentioned, we've sort of passed the peak of innovation. The work that Niall's and Declan's teams have been doing has been stellar. We've delivered and shipped 3 super impressive new products in the last 18 months. We're about to deliver the biggest change to the product suite in our history with the new front-end. And with that comes all of the embedded AI features that Niall has already spoken to. That Ovie ecosystem I think is going to be incredibly powerful. And then on the cost front, as Darragh already mentioned, we've seen a very significant decrease in our OpEx since 2025. And as you see in this chart on Page 35, we're forecasting another significant decrease in OpEx in 2026. So what does that mean as we think about the path to breakeven, which of course, is the promised land that everyone on the phone is aspiring to, as are we. Our OpEx very clearly peaked in the second half of 2024. We now have unparalleled access to the U.S. market through the Baxter partnership. And again, I can't overstate how powerful that is in terms of opening doors for us. As you saw earlier, we've got really material revenue growth opportunities within the existing portfolio from upselling our new products and expanding within those footprints. And in order to facilitate that, we've invested in a world-class account management team, which is run by Gabi Mitchell in the U.S. And Gabi has been adding some really important resource to that team this year because we also know that our best salespeople are our customers. So happy customers and the network effect is what drives the business. And then we've got AI enhancing the velocity and quality of our software, as I already mentioned, and shortening our deployment time lines. And we know that the Ovie ecosystem and the feedback we've already had is going to drive fresh value and that's going to give us pricing power, which we've already demonstrated this year that we have, but we think that's going to help us sustain that as we move forward. So just in closing, in terms of performance, revenues heading in the right direction, OpEx heading in the right direction, great commercial traction with the new logos we've added in the last few years and the upside of the Baxter pipeline. The new product suite that I think Niall has spoken to today, I think is incredibly exciting. It's certainly very exciting for our customers. And then the productivity gains that we're seeing across the business are pretty significant. And of course, it would be remiss of me not to mention the usual risk factors. We've obviously seen some regulatory uncertainty with the current U.S. regime, which could delay capital spending. We haven't seen any evidence of that, but it's always a risk. And obviously, the Baxter pipeline, the conversion of that pipeline is beyond our control. But certainly, we're very pleased with the progress to date and certainly very excited about the breaking news earlier this month. So with that, I will pause and pass it across to questions. Operator: [Operator Instructions] Your first phone question comes from Dan Hurren from MST Marquee. Dan Hurren: We're still -- the accounts have only just come through on the ASX. So look, I'll take all the detail of the accounts offline. But I just want to ask about endpoints and understand the transition to endpoints rather than beds. But you previously talked about new endpoints being significantly more valuable than those being acquired. Is there anything you can teach us about revenue per endpoint into the future? James Fitter: Darragh, do you want to take that one? Darragh Lyons: Yes, sure. So Dan, so we previously disclosed at the half year that our revenue per endpoint was about EUR 1.50 per day. So that -- and that revenue per endpoint is solid during the second half of the year as well. So it obviously -- that's a blend of the 4 different products that we now have. And it will depend on ultimately the mix of those products that we deploy over time. But obviously, with the core platform that we have, as we previously disclosed, there's a 92% upsell. So for every bed that we previously have won, there's a 92% upsell in terms of adding those additional endpoints. And obviously, we have a lot of legacy customers that these new products that we've developed over the past few years weren't available when we signed those customers initially, which was the slides that James referred to earlier. So that there is a significant white space in terms of expanding into those customers. Dan Hurren: Look, I've got another question. I'm not sure what you'd be willing to say about this, but would you -- I did want to ask you about the appointment of Mr. Dowling. He's a very important person in the U.S. hospital community, and particularly within the Northwell Group. But as far as we know, Northwell is not an existing customer. So am I right to draw some conclusions there? James Fitter: Look, Northwell is not an existing customer, but they have been in our sales pipeline for some time. And I should stress that, that won't be Michael's decision. That would be the people who run technology and patient experience there. Look, what I'd say, Dan, just to give you a sense of the scale of Northwell. I mean, Northwell did USD 18 billion in revenue in 2024, which I think is 50% more than Ramsay did. So I guess, the analogy I would give is, if an outgoing CEO of Ramsay was to suddenly turn up on the Board of Oneview Healthcare, that's kind of the magnitude of Michael's business that he's been running. But more importantly, he's just someone who has a deep passion for patient experience. He's obviously seen in us a technology platform that resonates with him as the CEO of one of the larger health systems in the country. But I don't think you can draw any conclusions and assume that just because he's joined the Board that we're going to win Northwell. Dan Hurren: Okay. All right. Can I just push that a little bit further? Okay. Let's just -- I'm not sure taking any real conclusions from your comment there. But I mean, we've got a new potential logo with 16,000 beds. If I personally would assume that Northwell is 9,000 beds, which looks to me you've got a chain of 120,000 endpoints to which you have, to varying degrees, a warm welcome. So does this make your endpoint target for FY '26 look modest? Are you being modest there? Or is this more about the length of the sales cycle? James Fitter: Well, Darragh is a very conservative man. Let me just say that. Operator: [Operator Instructions] There are no further phone questions at this time. I'll now hand back to your speakers to address any of your webcast questions. Toni Pettit: Thanks, Harmony. There's just one question here from Tom Ford from [ Myuna ] Investments. And he says, thanks for the presentation. What is the annualized run rate impact of the overhead cost reductions delivered in H2? Darragh Lyons: Yes. Thanks, Toni. I'll take that one. So our run rate in H1 2025 was just under EUR 8.4 million. And obviously, then the second half OpEx has come in at just over EUR 7.63 million. So there's over EUR 700,000 saving in the second half of the year. So we will carry that through in terms of -- as we look forward to 2026. So that's a 1.4 -- over EUR 1.4 million saving on an annualized basis. So as the chart that James presented there in the outlook section on OpEx, we are continuing to drive further efficiencies in the business. So we'd expect that OpEx level that we had in the second half of '25 to hold during the first half of 2026, while we drive through some of these further efficiencies and then to really see the benefit -- further benefit of those efficiencies during the second half of the year and obviously then through into 2027. Toni Pettit: There are no further questions, Harmony. Operator: We do have a follow-up question on the phone from Dan Hurren from MST Marquee. Dan Hurren: I didn't want to hog all the questions, but if there's space. Look, another question for Darragh. Thanks for the OpEx guidance. That's great. But can you just talk specifically around gross margin and the expectations for FY '26? Darragh Lyons: Yes. Sure, Dan. So I think we saw a slight decline in gross margin in 2025. And that was, as I said, driven by the mix of non-recurring, which is the lower margin revenue in our business and the recurring revenue. So we'd expect that sort of gross margin to hold into 2026 as well around that level because we've obviously guided only a modest increase in terms of deployments in 2026. So yes, I would still assume that sort of mid-to-low 60s is where we're going to end up on gross margin. Dan Hurren: And just one more. Look, I'm sort of -- I don't want to sort of understate the excitement around the product itself, but just sort of bring it back to numbers. But how will those AI tools affect operating costs in the long term? Does this just suggest there are savings to be had just on your cost page there? Darragh Lyons: So Dan, do you mean in terms of Oneview or the hospital? Dan Hurren: Sorry, talking about the Oneview implementation. Does this change the cost of implementation and so forth in the future? James Fitter: No, no, because I think the beauty of the new product is that the configuration tooling work has been done in parallel with it. So it's actually going to be simpler and hopefully faster to deploy than a legacy product. Operator: There are no further questions at this time. I'll now hand back to Mr. Fitter for closing remarks. James Fitter: Thanks, Harmony. That's all from us. If anyone has any follow-up questions and would like to ask them privately, I think everyone knows where to find us. So thanks very much for your time.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Charter Hall Long WALE REIT 2026 Half Year Results Briefing. [Operator Instructions] Please note that this conference is being recorded today, Thursday, the 12th February 2026. I would now like to hand the conference over to your host today, Mr. Avi Anger, Diversified's CEO. Thank you, sir. Please go ahead. Avi Anger: Good morning, everyone, and welcome to the Charter Hall Long WALE REIT Results Presentation for the 2026 half year. Presenting with me today is Erin Kent, Head of Long WALE REIT Finance. I would like to commence today's presentation with an acknowledgment of country. Charter Hall acknowledges the traditional custodians of the lands on which we work and gather. We pay our respects to elders, past and present and recognize their continued care and contribution to country. The format for today's presentation is that I will start with an overview of CLW and key highlights for the FY '26 half year. You will then hear from Erin, who will provide an overview of the financial performance of the REIT. I will then return to provide an operational update and portfolio overview and provide guidance for FY '26. We will then offer the opportunity for questions. Turning now to Slide 4 and key highlights for the half year. I'm pleased to report that we have delivered operating earnings of $0.1275 per security, representing 2% growth on the prior corresponding period. Our NTA at 31 December is $4.68 per security, an increase of 2% from June 2025. The portfolio delivered 3% growth in like-for-like net property income with 52% of income of the REIT being CPI linked and the balance being fixed reviews. 86% of the portfolio was independently valued during the half year with $139 million net valuation uplift achieved, representing an increase of 2.8% for the properties independently valued. The portfolio is sitting at a very high occupancy level of 99.9%. CLW has a long WALE of 9.2 years, providing security and continuity of income to our investors. We completed $1.1 billion of new interest rate hedging with average forecast hedging of 80% for the balance of this financial year. We remain focused on prudent capital management. Balance sheet gearing is 29.8% within the target range of 25% to 35%. In December 2025, Moody's reaffirmed CLW's Baa1 investment-grade credit rating. We are pleased to reaffirm FY '26 guidance of operating earnings and distribution per security of $0.255, reflecting 2% growth over FY '25. Turning to Slide 5. Today, CLW has a best-in-class $6 billion diversified real estate portfolio secured by long leases to blue-chip tenants with a weighted average lease term or WALE of 9.2 years. Our portfolio has an occupancy level of 99.9% and continues to be diversified by tenant, industry, geography and property type, which contributes to the stability of our cash flow. Our portfolio has delivered strong like-for-like net property income growth of 3%. CLW has 49% of its income derived from triple net lease properties. This is an important feature of our portfolio given that under a triple net lease structure, the tenant is responsible for all outgoings, maintenance and capital expenditure. The security of income of the REIT is also reinforced by the high-quality income stream generated from blue-chip tenants with 99% of the tenants of the REIT consisting of government, ASX, multinational or national businesses. Our largest tenants are federal and state governments, Endeavour Group, Telstra and BP. All leases in the portfolio have annual rent increases with 52% of annual rent reviews linked to CPI with the balance being fixed reviews. Turning to Slide 6. In the following slides, I'd like to provide an overview of the net lease real estate sector, its unique and distinguishing features and why we believe it's an attractive investment proposition. The net lease real estate sector is a sleep well at night investment class, providing investors with stable and resilient income. Long-term leases provide resilient and predictable cash flows. Tenants are blue-chip best-in-class operators, which reduces default risk. Properties are mission-critical to tenants, which reduces vacancy risk and portfolios are diversified by tenant, industry and property type. Turning to Slide 7. On this slide, we outline the features that make CLW Australia's largest and most diversified net lease REIT. CLW has predictable long-term rental cash flow as a result of its long 9.2-year WALE and 30-year WALE plus. The CLW portfolio has average annual rent increases of 3.1% with 52% of lease rent reviews being CPI-linked. CLW's portfolio has relatively minimal landlord expenses as a result of the net, double net and triple net leases in the portfolio. CLW features blue-chip tenant covenants with portfolio occupancy consistently near 100%. 99% of leases are to secure government and leading ASX-listed multinational and national tenants operating in non-discretionary essential industries. CLW's portfolio is diversified across core property sectors and 79% of the portfolio is located on the Eastern Seaboard in prime locations. Turning to Slide 8. CLW provides an attractive distribution yield relative to domestic and global investment options. Based on yesterday's closing price of CLW securities, CLW is forecast to deliver a 6.8% distribution yield in FY '26. This distribution yield is considerably higher than what are often considered alternative investment options such as Australian government bonds, big 4 banks, term deposits, the AREIT index and the ASX 200 Index. I would now like to hand over to Erin, who will provide an overview of the financial performance of the REIT. Erin Kent: Thank you, Avi, and good morning to everyone on the call. Commencing on Slide 10, which provides a summary of CLW's earnings for the first half of FY '26. The REIT achieved like-for-like net property income growth of 3%, which has been further supported by net transaction activity adding incremental income to the portfolio in the current period. Finance costs have increased by 13.6% due to the higher average debt drawn in the first half of FY '26 to fund transaction activity, combined with a higher weighted average cost of debt in the current reporting period. Both operating earnings per security and distribution per security for the first half of FY '26 were $0.1275, representing growth of 2% on the prior corresponding period and in line with our guidance provided to the market. Turning to Slide 11 and CLW's balance sheet position. During the current reporting period, the REIT completed $376 million of net property acquisitions, including the on-completion value of the new Coles distribution center in Truganina, which Avi will talk through shortly. 86% of CLW's portfolio was independently valued throughout the last 6 months, resulting in a total portfolio valuation uplift of $139 million. The REIT's NTA per security is $4.68, as at 31 December 2025, reflecting an increase of $0.09 since 30 June 2025, driven by the positive revaluations achieved during the half, which was partly offset by the fair value movement of debt and derivatives. Turning to Slide 12, which provides a summary of the REIT's capital management initiatives. During the first half of FY '26, CLW completed approximately $700 million of earnings accretive debt refinancing initiatives. $270 million of new facilities were established on CLW's balance sheet to fund the acquisitions completed in the half. These facilities were 5-year terms and reflected 5 to 10 basis points lower all-in margins versus CLW's current bank facilities. New and refinanced secured debt facilities of $430 million were successfully completed within CLW's joint venture investments. This includes the establishment of a new $375 million secured debt facility within CLW's ALE joint venture partnership, which was previously an unlevered investment. This refinance generates an equivalent capital return to CLW's balance sheet. Financing within the joint venture structure, which owns a high-quality, diverse portfolio of 80 properties resulted in a superior pricing outcome of over 20 basis points lower weighted average credit margin. An additional $55 million of existing joint venture facilities were also refinanced during the period, resulting in an enhanced covenant package and reduced margins of 20 to 45 basis points. As at 31 December 2025, balance sheet gearing was 29.8%, calculated on a pro forma basis, including the return of capital to CLW from the refinance of the ALE partnership. Look-through gearing sits at 41%. The REIT has total facilities calculated on a look-through basis of $3 billion with a weighted average debt maturity of 3.4 years and a smooth expiry profile from FY '27 through to FY '32. Moody's has also reaffirmed its Baa1 investment-grade credit rating for CLW. As at 31 December 2025, CLW's weighted average cost of debt was 4.4% based upon look-through debt drawn of $2.5 billion and look-through hedging of $1.8 billion at an average fixed rate of 2.6%. During the period, the REIT progressively established $1.1 billion of new hedges across its balance sheet and joint venture investments. This has resulted in materially higher hedging coverage of 80% across the second half of FY '26 and 71% on average during FY '27. I will now hand back to Avi to provide an operational update and portfolio overview. Avi Anger: Thank you, Erin. In the following slides, I would like to provide an operational update, overview of our portfolio and some key attributes of the portfolio. Turning to Slide 14. During the half year, we settled $376 million of net transactions, consisting of $455 million of acquisitions and $79 million of divestments. The acquisitions settled consists of acquisitions announced at CLW's 2025 full year results in August last year, together with the investments announced today in the Coles Core West Distribution Center and the Charter Hall Long WALE office partnership. The divestments consisted of the sale of CLW's interest in the Coles distribution center in Truganina and non-core divestments from our BP Australia and LWIP pub portfolios. The decision was made to sell our interest in the existing Coles distribution center in Truganina and reinvest these proceeds into the new Coles distribution center in Truganina. This is an attractive WALE-enhancing transaction for CLW, converting a 6.6-year WALE to a 20-year WALE from completion. Further details are included on the following slide. In our BP portfolio, which is co-owned alongside BP, BP identified 2 properties over the past 6 months that were considered non-core and recommended these for sale. As previously reported, in our LWIP portfolio, we sold the Brunswick Hotel after receiving an unsolicited offer. The property was sold at a 75% premium to our purchase price and 10% premium to our December book value, demonstrating the embedded value of our long WALE portfolios. Turning to Slide 15. We are pleased to announce that CLW has acquired a 49.9% interest in a super prime automated distribution center currently under construction in the core industrial market of Truganina in Melbourne's West. The facility is 100% pre-leased to Coles for an initial 20-year term. On completion, the facility will be a 68,100 square meter state-of-the-art distribution center and is expected to service all stores in Victoria and Tasmania and will integrate into Coles existing supply chain in South Australia and Western Australia with significant investment by Coles in the automation capabilities of the facility. Construction is expected to complete in 2027 with a forecast on completion value of $440 million with CLW share being $219.6 million. Turning to Slide 16. CLW has acquired a $17.6 million equity interest in a new Charter Hall Long WALE office partnership alongside Charter Hall Group and an institutional capital partner. The partnership owns a portfolio comprising interests in 5 modern prime office buildings in core CBD markets. The portfolio is 98% occupied and leased to Commonwealth and state government and blue-chip multinational tenants with an 18-year portfolio WALE at the time of acquisition and average fixed annual rent reviews of 3.8%. Slide 17 is our portfolio overview. At 31 December, the REIT consisted of a portfolio of 515 properties valued at approximately $6 billion. The portfolio average cap rate is 5.4%. The portfolio is virtually fully occupied with an occupancy of 99.9% and a long-dated WALE of 9.2 years. At December, CLW had 49% of its income derived from triple net lease properties. This is an important feature of our portfolio given that under a triple net lease structure, the tenant is responsible for all outgoings, maintenance and capital expenditure. The properties in the portfolio feature a blend of annual lease review structures, both fixed and CPI-linked. The mix of annual rent reviews resulted in a weighted average rent review of 3.1%. Turning now to Slide 18 and an outline of our tenant customers and the tenant diversification of the REIT. Our portfolio of long WALE properties is leased to high-quality tenants, including government, Endeavour Group, Telstra, BP, Metcash and Coles. The REIT's largest tenant exposures are to government tenants and best-in-class pub and bottle shop operator, the $6.5 billion Endeavour Group. In the data center and telecommunications sector, we have a partnership with another best-in-class operator, the $55 billion Telstra Corporation, which includes our portfolio of 37 exchange properties on long triple net leases. Our BP Australia and New Zealand portfolio of 285 properties on long triple net leases provides us with exposure to the resilient fuel and convenience retail sector. We also have a high proportion of tenants operating in the non-discretionary grocery and food sectors such as Woolworths, Coles, Metcash and Arnott's. Turning to Slide 19 and the industry diversification of our tenant customers. Within our overall portfolio, approximately 99% of tenants are ASX-listed, government or multinational or national corporations, with the vast majority of these tenants operating in non-discretionary defensive industries. The REIT's major sector exposures are to convenience retail, government, data centers and telecommunications, grocery and food manufacturing. Turning to Slide 20 and geographic and sector diversification of the REIT. Our portfolio is diversified by geography and sector type. 79% of the portfolio is located on the Eastern Seaboard in prime locations, whilst the REIT's largest sector exposures are to the convenience, net lease retail and industrial and logistics sectors. Turning to Slide 21. As can be seen from the chart on this slide, the REIT's portfolio has a long-dated lease expiry profile and reflects a low-risk position relative to our peers in the sector. Our portfolio WALE is a long-dated 9.2 years. We have minimal leases expiring in the near term, and we are in discussions with a number of tenants with expiries in FY '26 and beyond regarding lease renewals and extensions. We continue to work to push out our expiry profile as far as possible to the right of this chart, both through portfolio curation and negotiating lease extensions with our valued tenant customers. On Slide 22, we would like to outline that a significant portion of CLW's portfolio is comprised of properties that are of critical importance to the business operations of our tenant customers with the tenants likely to be in occupation well beyond the current lease term. 49% of CLW's portfolio consists of triple net leases. And if these tenants were to remain in occupation for all option periods under their leases, this would increase the WALE of the portfolio to 30 years today. This is particularly relevant in the context of our Endeavour leased ALE portfolio. This represents approximately 11% of CLW's portfolio by income with an expiry and market review in November 2028, less than 3 years away. This is dragging down the average WALE of our portfolio. These properties are very important to Endeavour's business with the tenant likely to remain in occupation of these properties at expiry of the current lease term. This also represents a significant positive market rent reversion opportunity for the REIT. Turning now to Slide 23 and environmental, social and corporate governance. We remain focused on implementing sustainability initiatives across our portfolio and consider ESG as a driver of long-term value for investor and tenant customers. As a business, we've taken accelerated climate action. CLW has maintained net zero Scope 1 and 2 emissions for assets that fall under the operational control of Charter Hall. Additionally, CLW has been focused on clean energy transition with 9.4 megawatts of solar installed across its portfolio, an increase of 500 kilowatts over the past 6 months. CLW's predominantly modern office portfolio features high environmental credentials, with 5.4 star NABERS Energy and 4.9 star NABERS Water ratings, an uplift of 0.2 stars over the past 6 months. CLW remains committed to aligning with best practice frameworks to support transparency and disclosure. The fund achieved a score of 82 in the 2025 GRESB assessment, a 4-point increase from last year. These preceding slides demonstrate the resilience and strength of our portfolio. Our portfolio WALE, quality of tenants and proportion of triple net leases provides better downside protection and more resilient income streams for our investors. Turning now to Slide 25. CLW's strategy is to provide investors with stable and secure income and target both income and capital growth through an exposure to a diversified portfolio leased to corporate and government tenants. The portfolio maintains a long 9.2-year WALE and occupancy remains near 100% with leases to secure blue-chip tenants underpinning stable rental cash flow, which continues to grow with annual rent increases. Active curation and asset recycling continues to enhance portfolio and tenant quality with recent transaction activity included in the FY '26 guidance. Based on information currently available and barring any unforeseen events, CLW reaffirms its FY '26 operating earnings per security of $0.255 and distribution per security of $0.255, which reflects 2% growth over FY '25. This is a distribution yield of 6.8% based on yesterday's closing price of CLW securities. Finally, I would like to acknowledge and thank the teams of people across the Charter Hall platform that contribute to the performance of CLW and the results delivered today. The Charter Hall Group provides the REIT with access to a high-caliber team of experts across all areas of the REIT's management and provides CLW with access to a best-in-class management platform. That concludes the presentation, and I would now like to invite questions. Operator: [Operator Instructions] Our first question comes from the line of Richard Jones with JPMorgan. Richard Jones: Just wondering if you can talk me through your thoughts around balance sheet gearing versus look-through gearing, which measure you focus on? And I guess, why do you see that being more relevant? Avi Anger: Richard, thanks for the question. Look, we have a balance sheet target, as you're aware of 25% to 35%, and we sit comfortably within that range. Look, we provide look-through gearing measure as well given that our covenant is pegged to that. So we give that measure as well. But bearing in mind that we have sufficient buffers to those covenants and also in our underlying JVs, we've got plenty of headroom to covenants as well. So they're both relevant at present, but the balance sheet one is the one that we have the target towards and probably the more relevant one going forward. Richard Jones: Okay. And can you clarify how much capital was released from the ALE debt facility being put in place? Erin Kent: Yes, sure. Richard, there was about $340 million representing CLW's 50% share released back to balance sheet. Richard Jones: And just on the Coles DC acquisition, what was the yield on cost on that? And what are the fixed escalators? Avi Anger: Yes. Look, Richard, we're limited in the information we can provide on that given it is commercial in confidence between us and Coles. So we could only provide at this point the information that we've given in the presentation. Richard Jones: Okay. And then -- Avi Anger: Suffice to say, I can say though, what I can say, Richard, is that it is accretive to us. So the yield at which we sold our existing Coles facility is lower than the yield on which the yield on cost will achieve through this development. So it's accretive in that sense. And the rent reviews are also better than what we've got. Operator: Our next question comes from the line of Simon Chan with Morgan Stanley. Simon Chan: A couple of simple ones. So what's your average debt margin across your portfolio now that you've done all this debt restructuring, jamming stuff into the ALE level, et cetera? Erin Kent: Simon, our all-in margin across the entire platform has come down closer to 140 basis points. Simon Chan: And what's the quantum of savings there relative to before all these activities? Erin Kent: We're sitting at around 145 before the restructuring to the JVs. Avi Anger: It's been coming down [indiscernible]. It's -- we were at 150, then 145, now 140. And I think we are seeing competitive margins from the banks. Our treasury team has done a great job at being able to secure and refinance our facilities at attractive margins. So at the moment, based on other discussions that are going on, I wouldn't be surprised to see that coming down. So yes, we've got some headwinds with rates, but I think we've got a little bit of tailwinds as well with those margins. So yes, that's sort of the way we're seeing things at the moment. Simon Chan: If you reckon it could head towards like 120 like as low as some of your other stable banks or because the asset class is different, we should hold you to the same benchmark? Avi Anger: Well, I don't want to be held to numbers at this point, but I think we can -- as I mentioned, I think I'd like to see that number coming down going forward, but we'll keep working with our treasury team and hopefully can deliver some positive news in future results periods. Simon Chan: Look forward to that one. Can we -- can you give me a bit of a color on this long WALE office partnership? Like what's the rationale there? I mean $17 million is not exactly a huge number. Like is there a strategic reason for owning the stake? And also, what is this fund? Because from memory, 275 George and 10 Franklin were assets that were in CHOT2 right? So is this partnership more of a fund-of-fund style investment? Avi Anger: No. Look, I'll give you the background to this. So there's a few questions in your -- in that sort of what you've just said, so I'll try and sort of separate them out. So the rationale is that we believe that long lease, modern, high-quality core CBD office is going to perform very well going forward. We've seen cap rates expand and unlike other sectors haven't started contracting yet. We see very strong tenant demand for that type of office, which is different to, say, other less desirable types of office product. So we're very -- we see a lot of upside going forward in sort of modern core CBD, long WALE office. The WALE of this portfolio fits what we're about, given it's sort of an 18-year portfolio WALE with some of the properties -- the 2 largest investments in that portfolio having close to 30-year WALE. So that ticks the WALE box for us. We would have liked to make a larger investment in that partnership. We're somewhat limited at present, but it's something we can look at in the future, and we're able to secure a position that we can build on given that some of it is owned still by Charter Hall Group. And that's sort of the thesis behind it. Is it -- do I miss -- I may have missed part of the question, but I think that covers most of it. Simon Chan: Yes, that covers most. The other part is just in relation to 275 George and 10 Franklin. I thought they were actually CHOT2 assets. Avi Anger: No. So this is one -- that's part of it and then part of it is owned in this vehicle. But I might just say that it is -- those 2 assets are the smallest interests in the portfolio, and they probably represent not even -- not about 15% of the overall. So they're pretty small. The largest 2 assets in the portfolio -- sort of 60% of the portfolio is made up of an interest in 52 Martin Place, which is a 30-year WALE to New South Wales government and 140 Lonsdale in Melbourne, which is a 20 -- 27-year WALE remaining to Australian Federal Police. So that gives you a bit more color around the portfolio. The -- by far, the largest weightings to those -- that flavor of asset as opposed to the 2 you've mentioned. Simon Chan: And just one more for me. Telstra Canberra, what's the latest there? Avi Anger: Well, as we mentioned previously, they're vacating. We secured a 6-month extension with them over part of the building. So they'll start vacating part of the building in the next month or 2 and then the balance at the end of the year, and we've been active in the market talking to potential tenants. And we had -- we're having good dialogue with tenants on that building, and we've had good interest. What's good about that property is that it's a good size for Canberra being about 14,000-odd square meters in the heart of the Canberra CBD. It's a very prominent corner location right next to the Canberra center, which is the largest sort of best quality regional mall in the ACT. And it's probably -- that area is probably considered the CBD of Canberra. So we've got interest from both private and government type tenants. And I'm hopeful that we can provide some more updates on progress on leasing at our next results. But I'm encouraged by the interest we're seeing. Operator: Please standby for our next question. Our next question comes from the line of Daniel Lees with Jarden. Daniel Lees: I just got a question on the ALE portfolio. Can you just give us a sense of how under-rented that portfolio is today and perhaps if you've got any potential to bring the negotiation forward? Avi Anger: Yes. Sure, Daniel. Look, as we've mentioned previously, at the time of acquisition, the LEP trust that we acquired had come out to the market and said that their view was the portfolio was about 30% under-rented. We haven't come out with a number. We -- although we can -- we're very strongly of the view that it's improved from when we acquired the portfolio. So that's probably increased. But we're not going to give our number because that's going to be a negotiation that we're going to have to enter into with the Endeavour Group when the market review comes up in November 2028. So we are -- it's significantly under-rented, and we'll work towards that market review in November '28. Bringing it forward, there's no active dialogue in relation to that, but we're open to discussions if they were to eventuate. Daniel Lees: And just on the Department of Defense in Canberra, any news in your strategy there? Any approach for the shorter WALE lease assets there and what you're doing about it? Avi Anger: Yes. I mean the approach there was always to work with that tenant. We're a long lease REIT, so to work with the tenant to keep them in occupation and extend the lease. So that's the strategy, and that's what we'll be working towards. Operator: Our next question comes from the line of Solomon Zhang with UBS. Solomon Zhang: [indiscernible]. Maybe a question for Erin. It's good to see the lift in hedging and it looks like you're sort of swapped or hedged at the mid-3 range. Just wanted to confirm, did you pay any capital for the swaps in the period? The reason I ask, I can see a reference to payment in the derivative financial instruments in the cash flow statement, but it hasn't been separately split out. Erin Kent: Solomon, yes, there were some usual swap execution costs, although these are minimal. And I think as you've noticed, our hedge rates have increased to delay -- due to us layering in close to market-based swap rates. So it's very immaterial in the period. Avi Anger: Yes, you'll see in our -- if you compare the swap charts from last period to this period, you see the rates gone up. So that reflects the market, right? Solomon Zhang: Yes. So it was pretty immaterial in terms of the size of the amounts paid. Could you quantify it? Avi Anger: Yes, they were just the amounts we would need to pay in terms of upfront and execution costs that we would ordinarily incur. Solomon Zhang: Yes. And maybe just phasing of the new Coles DC CapEx. Could you just talk to that? Avi Anger: Sorry, what was it -- can you repeat the question? Solomon Zhang: The phasing of the new distribution center, CoreWest. So could you just talk to how the phasing of the CapEx? Avi Anger: Yes, yes. Solomon Zhang: Looks like in the next few years. Avi Anger: Sure, sure. So that's going to complete in 2027. So over the next 1.5 years, we -- it's about half -- we're about halfway there. So we've contributed about half of the $220 million to date. And then over the next 18 to 24 months, we'll fund the balance. Operator: Please standby for our next question. Our next question comes from the line of Suraj Nebhani of Citi. Suraj Nebhani: Maybe one question for Erin first. Just on this ALE facility. Is it fair to say that essentially that puts the gearing out of the balance sheet into the joint venture? Is that the way to think of it? And then what happens with the capital that comes back? Are you paying down debt at the balance sheet level? Erin Kent: Yes. Suraj, this facility was within that joint venture structure. So it did result in a reduction in our balance sheet debt drawn number and it also reduces our investments in JVs line within total assets as this is now a share of a net JV investment number rather than a gross. Suraj Nebhani: That makes sense. And I guess just one question, Avi, for you on the development asset with Coles. Obviously, you acquired on a non-completion basis over here. Are you looking at more such deals in the future? And how do you think about the appetite that you guys have and the capacity from a balance sheet perspective? Avi Anger: Yes. I mean, as you know, Suraj, we're always looking for sale and leaseback or long WALE deals like this. It's been a large part of what we've done since we listed almost 10 years ago. So it's very much on our radar. How we fund those deals going forward is going to be a combination, as you've seen, [ of ] recycling as we've done in this instance, where we've taken an asset that's sort of an older one with a shorter WALE, and we're able to recycle the proceeds of that into this. We'll look at opportunities like that. And we'll also -- as time passes and the market inevitably moves in cycles, we'll hopefully get back to a point in the not-too-distant future, where we can grow through actively raising capital. But we'll -- both those sources of funding new deals are available to us. So yes, look, it's -- and we're very fortunate that as part of the Charter Hall Group, we get access to those type of deals. That's not a deal that was available on market. That was something that Charter Hall was able to negotiate and secure given our relationships with the likes of Coles. So we'll continue to look at deals like that, and we're fortunate to have the opportunity to do those. Suraj Nebhani: And one final one, Avi. There were some comments -- I mean, there's obviously a chart in the presentation around the attractive distribution yield. I agree, 7%, almost 7% is a very good yield. I guess, if you look at it on a price to NTA basis as well, the stock is obviously pricing a big discount to NTA, which is going into the yield number. But do you -- as a management team, I guess, from your perspective, how are you thinking about being able to close that discount? I know in the past, you resort to a $50 million buyback as well. Is that on the cards or some other measures that you can take? Avi Anger: Yes. Look, I think at the moment, we're in a volatile market. A few -- not that long ago, only a few months ago, we were $4.70 and now with circa $3.75 or $3.80. The price is jumping around a lot. It's volatile interest rate environment is impacting that. I'm hopeful it's short term, as you say, it's a very attractive distribution yield. It's a large discount to NTA. And I think performance and delivering on earnings, delivering on earnings growth, that's the way we're going to keep delivering value for investors and close that gap. But that's -- and that's what we're focused on. We don't -- there's no intention at this point for -- to do a buyback. Operator: Standby for our next question. Our next question comes from the line of Ben Brayshaw with Barrenjoey. Benjamin Brayshaw: Av, just on the DC you acquired in Truganina, I just want to, I guess, clarify, will Coles be relocating out of the building that you previously owned? Or is it a new requirement that will support the lease for the fund through? Avi Anger: Yes. I'm not aware of what their intentions are for the building that we've divested. They still have close to 7 years on that lease and it's a growing business. They may well -- I don't know, but they may well retain that and use the new one. But I'm not privy to that information. Benjamin Brayshaw: No problem. And just on the pricing achieved for the sale, are you able to clarify how that compared with the book value at 30 June prior to the transaction? Avi Anger: It was at -- at book value. Operator: Please standby for our next question. Our next question comes from the line of David Pobucky with Macquarie Group. David Pobucky: Just one follow-up on look-through gearing, which is now at 41%. Are you able to provide where covenants sit? And does that level and the fact that rates have moved higher constrain your ability to acquire for growth without continuing to divest lower-yielding assets? Avi Anger: So David, in terms of where our covenant sits, the current target -- sorry, the current covenant is 50%, and there's sufficient headroom there, particularly what we're seeing with valuations increase, and we expect notwithstanding movements in interest rates, I think cap rates have stabilized, and we have rental growth year-on-year coming through the portfolio that should continue to drive valuation growth. We're very comfortable with where we sit on that front. But in terms of new acquisitions, we need to, as I mentioned earlier, recycle or look at points in the market and the cycle, where we can continue to grow through equity raisings or something like that. But there's no intention at this stage to do more debt-funded acquisitions if that's the -- that's the question. David Pobucky: And just a follow-up on the Coles DC as well. What's the development risk? Is there a construction or income guarantee, builders coupon, anything of the like? Avi Anger: It's just a straight construction of a facility that's 100% precommitted to Coles. We have a builder delivering the facility. The vast majority of risk has been absorbed by the builder. So that's how we would usually structure those type of deals. David Pobucky: And just one final one around guidance. Are you able to provide what weighted average cost of debt is in guidance? And has that changed since the start of the year given the debt initiatives you completed? Avi Anger: The weighted average cost of debt remained -- the guidance hasn't changed. So we've reaffirmed guidance today. So the weighted average cost of debt is as per pack. Yes. Erin Kent: Yes. So we expect over FY '26, we'll be at around that 4.4%, and that doesn't move much from 31 December, given we've just rolled our March quarter debt at 3.8% floating, and we've assumed market floating rates over that last quarter. And the hedge percentage is obviously outlined in the pack as well. Operator: [Operator Instructions] Please standby for our next question. Our next question comes from the line of Winky Tan with Morningstar. Yingqi Tan: Just a very quick one for me. Would you be able to share your interest coverage ratio as of December 31? Erin Kent: Yes, sure. Winky, our ICR was sitting at about 2.9x at 31 December. Operator: Please standby for our next question. Our next question comes from the line of Peter Davidson with Pendal. Peter Davidson: Just a quick question on this CoreWest at Truganina. Is that an Ocado facility or the previous one was Ocado? What's the purpose of that Coles DC? Is it to home or is it to shops? Avi Anger: Yes. No, it's not Ocado. This one is to shop, so it services their network, their main Victorian distribution center, but it will be fully automated, that type of structure like the current breed of DCs. Peter Davidson: The second one, Avi, I just noticed your comments about BP nominating a couple of service station sites that they were quite happy to sell. The question is, do you go through them yourselves as well with a sort of fine-tooth comb just to find whether you can -- there's a few assets you could sell perhaps well above book and just incrementally increase returns to shareholders. Avi Anger: So -- yes, the way it works, Pete, and you may have noticed in our results, there's usually every results period, there's a couple of small surveys that we announced that we've sold. And the way that works is BP, given if we're in a joint venture with them, they'll come to us and identify assets that they believe are non-core to the portfolio that the joint venture wants to sell, and we do that and we have made whole. So we don't -- we're not left with -- but we're very happy with the portfolio, and we're happy with the WALE. And so long as BP is happy with those -- the sites, then we continue to own them long term and the ones that they want to curate, we're happy to participate along with them. And as part of the deal, we're no worse off. Peter Davidson: Same question again for the Endeavour relationship, the old LEP portfolio. I mean, do you go through that portfolio and identify sites because a lot of that's supported by bottle shop sales, but bottle shop sales are more difficult now than they used to be. It's a weaker market than it used to be. So do you go through and identify potential sites there, which you might be able to perhaps realize, make the portfolio a bit smaller, increase the returns, sell above book value. Avi Anger: Yes. I mean, we have done. And as just reported today, there was one asset, where we received an offer well above book and decided to sell, and that happens from time to time. We're more than happy to look at that. And yes, we're happy to -- but otherwise, longer term, we think there's a lot of value in the portfolio. Unless we get an offer well above book that's -- then we want to own these assets and continue to benefit and enjoy the strong rental growth and the growth in underlying land value. And particularly in the case of the ALE portfolio, we've got a big rent reversion coming. So we're not really inclined to want to give that away. So we just keep working towards that. Peter Davidson: Okay. And then just last one for Erin. Just is there any opportunity for margins to come down Erin, in this portfolio? I know that rates are going up in the background, and we've probably got a couple of rate hikes coming. But what about the margin, the margin outlook? Erin Kent: Yes, sure. Peter, so credit spreads are at cyclical lows and the bank and loan markets do remain highly constructive with strong support received for assets like CLW's portfolio. The Charter Hall team, I think, as Avi mentioned earlier, very active in driving these refinancing opportunities to try and capture some of the favorable margins in the current environment. So yes, that's definitely a priority. Peter Davidson: And what sort of savings might you capture? So you captured 20 points would -- what impact -- so 20 points lower margin. How would that sort of play out in terms of borrowing costs? Is it all in 1 year? Or is it going to be staggered over time? Or how do people factor that in? Avi Anger: Well, if we were able to renegotiate debt facilities that typically -- that would become applicable straight away. So yes, I mean, if we did the whole $2.5 billion of debt and renegotiated it all in the next few months, then yes, you could realize that the way you're looking, it's correct. But it just depends how quickly we can work through the book and renegotiate facilities. Peter Davidson: Yes. So I mean that's really the question, Avi, it's just like how would it actually play out within the portfolio, you might do it piece by piece as each fund matures. Avi Anger: Correct. I mean we've just done ALE, and that was a favorable outcome. And we'll continue to work with our treasury team to look across the portfolio and identify opportunities for further savings. Operator: Please standby for our next question. We have a follow-up question from the line of Ben Brayshaw with Barrenjoey. Benjamin Brayshaw: Avi, thanks for taking my follow-up question. Just wanted to go back to our discussion earlier on the Coles DC in Truganina. The book value in the presentation, just gone back and checked that June was $75.9 million versus the transaction price in the accounts of $71.4 million. So I just wanted to clarify, I think you indicated that the transaction went through at book. But just by way of that comparison, it would appear to be about 6% below. Avi Anger: Below June book, not December book. Benjamin Brayshaw: That's right, below June book. Avi Anger: Yes. But I'm saying that there was a valuation at the time the transaction was undertaken. So we -- that was -- that valuation stale being almost 8 months old. So the most recent valuation that was done on the property was the price at which the transaction occurred. Benjamin Brayshaw: So you marked it down. Avi Anger: [indiscernible] the value down. Yes. Because as the WALE comes down on that asset, the valuation was impacted and there was a bit of cap rate movement as well. Operator: Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Avi for closing remarks. Avi Anger: Thanks, everyone. Appreciate your time today and for joining the call, and we look forward to catching up with you in one-on-one meetings in the coming days and weeks. Thank you.
Operator: Thank you for standing by, and welcome to the Northern Star Fiscal Year '26 Half Year Financial Results. [Operator Instructions] I would now like to hand the conference over to Mr. Stuart Tonkin, Managing Director and CEO. Please go ahead. Stuart Tonkin: Good morning, and thanks for joining us to discuss our first half FY '26 financial results. We will be referring to the presentation as published on the ASX this morning. With me on the call today is our Chief Financial Officer, Ryan Gurner. This first half result demonstrates the resilience and growing returns we are embedding in our business. Our balance sheet remains in a net cash position, notwithstanding the significant investments we are making to transform Northern Star into a lowest half-cost global gold producer. Given our positive outlook for the company, the Board has declared a fully franked $0.25 per share interim dividend whilst recognizing a soft operating performance in the second quarter. The KCGM mill expansion remains on schedule for commissioning in early FY '27 with the actions of increasing labor being positive there. I want to assure our investors that Northern Star remains committed to improving our operating performance. Notwithstanding recent challenges, we reaffirm our commitment to operational excellence. We continue to prioritize medium-term production growth while advancing initiatives to reduce unit costs. Our diversified portfolio provides a pipeline of options that underpins long-term value creation and returns for shareholders. While today is about the half year financial results, I would like to briefly touch on the operational performances so far this year. At KCGM, milling performance is stabilizing, but will continue to be disruptive until we transition to the new plant. At Jundee, remedy works are expected to be completed this month in line with expectations with milling throughput normalizing and focus now turning to mine volumes and grades. Pleasingly, at Pogo, mine grades have increased, but I'd still like to see further improvement and focus on dilution. Our team remains firmly focused on driving productivity improvements and strengthening cost discipline to deliver a stronger second half for our shareholders. Before I hand over to Ryan, I would like to take this opportunity to thank our team for their efforts and commitments over 2025 as it was a challenging period. With that, over to Ryan, who will discuss the first half FY '26 results in more detail. Ryan Gurner: Thanks, Stu. Good morning, all. I'll step you now through the first half financials. So I'd like to begin on Slide 4, which outlines our key financial metrics for the group, being the company delivering a record underlying EBITDA of $1.9 billion for the first half of FY '26, which was up 34% from the previous corresponding period. Underlying free cash flow was impacted by soft operational performance during Q2, tax payments relating to FY '25 and investment in our growth projects to drive our future cash flows higher. Looking ahead over the next 6 to 12 months, we expect free cash flow to improve with a stronger second half operational outlook, normalized tax payments and the commissioning of the KCGM mill expansion project in early FY '27. Adjusting for abnormal items, our underlying earnings of $0.53 per share grew 19% over the prior corresponding period, and we recorded strong first half cash earnings of $1.1 billion, which has enabled our Board to declare a fully franked interim dividend of $0.25 per share. Over to Slide 5. Our balance sheet supports our strategy and gives us flexibility through the cycle to fund opportunities that may arise to enhance our portfolio to deliver long-term superior shareholder returns. Our investment-grade balance sheet remains strong and in a net cash position of $293 million at 31 December. And we have significant liquidity totaling $2.7 billion, which includes $1.5 billion of facilities, which remain undrawn. Now Slide 6. As mentioned, we continue our strong track record of returning funds to shareholders with the Board declaring a fully franked interim dividend of $0.25 per share, totaling $358 million. The record date of the dividend is 5 March and payment date of 26th of March. A reminder that the company's dividend policy is 20% to 30% of full year cash earnings. Over to Slide 7, where we highlight the EBITDA margin achieved by the group for the half year ending 31 December and the preceding half year for each production center. All 3 production centers are achieving healthy EBITDA margins, resulting in a group margin of 55% for the period. Yandal Production Center experienced disruptions over the December quarter and higher associated operating costs, which impacted margins in the period. With these disruptions behind us, we expect margins to lift in the second half at this production center. Similarly, at Pogo, we are forecasting a lift in mining grades, which in turn will drive margin improvement over the second half of the financial year. And across the Kalgoorlie Production Center, our focus remains on completing the final stages of our mill expansion at KCGM with commissioning on track for early FY '27. This milestone will mark the beginning of a step change in returns and cash flow at this asset. Before I hand over to Stu to finish the presentation, I'd like to step you through Slide 8. It's pleasing to see our improving return on capital employed, which has been a focus since the merger in FY '21. We are confident this will continue to grow over the near term with stronger production forecast in the second half of this financial year as well as the commissioning of the expanded KCGM mill. This reflects progress on our multi-year strategy and focus on allocating shareholder funds to generate superior returns. It also highlights the strength of our first half underlying earnings before interest and tax, which is up 47% from the prior year to $1.1 billion. Thank you. I'll now hand back to Stu. Stuart Tonkin: Thanks, Ryan. Turning to Slide 9. We're nearing completion of the 3-year build for our KCGM mill expansion, which remains on track for commissioning early FY '27. KCGM is positioning the business for a significant uplift in cash generation and return on capital employed from FY '27. This enhanced cash flow outlook strengthens our ability to deliver attractive returns on investment, supports capital management and allows us to advance further growth options in the portfolio. At the January quarterly call, we announced an increase to the project's total capital investment to $1.65 billion to $1.69 billion, reflecting a lower-than-planned rate of productivity and the addition of labor to keep the project on schedule. I'm pleased to report that we are seeing benefits to this additional labor at the end of January, and the project build was 86% complete on schedule. As we near the final stages to commissioning, labor levels will reduce. Turning to Slide 10. We continue to advance the Hemi Development Project in a disciplined manner. The state and federal permits continue to progress, which will then enable secondary approvals to be sought. I'd like to remind everyone that both primary and secondary approvals are required prior to early works commencing. And given some of that uncertainty and things out of our control, the approval of timing, we now expect final investment decision to be sometime during FY '27. With an estimated 2.5-year build, this corresponds to first gold being forecast for FY '30 at the earliest. This timing also allows our internal project team to smoothly transition following the completion of the KCGM expansion to focus on Hemi. Further, it provides time for our balance sheet to strengthen from the uplift of free cash flow at KCGM. Now to Slide 11. Slide 11 reiterates our revised FY '26 guidance as disclosed on the 22nd of January. We have also provided financial guidance at the bottom of the slide in green to reflect first half FY '26 actuals. To Slide 12. Northern Star's exploration program remains a highly attractive approach to value creation to support our purpose to deliver superior shareholder returns. And since March '22, our average cost of resource addition is a compelling $37 an ounce. We are in the enviable position where we have over 70 million ounces of mineral resources and 22 million ounces of ore reserves, excluding Hemi. This corresponds to over a 10-year reserve-backed production profile. And in May, we look forward to including the Hemi mineral resource and ore reserves into our group's annual statement. And finally, on Slide 13, our business is set for a structural uplift in portfolio quality over the coming years. The company cash flow is forecast to grow significantly with increased production, lower costs and lowering CapEx over the coming years. We are confident that our return on capital employed will increase as we bring on projects that are long life and low cost while improving stability and reliability of the assets in our portfolio today. Our balance sheet is strong and of investment-grade quality. We continue to review the portfolio to sustain high-margin production. Now that concludes the formal part of our presentation, and I'd now like to hand back to the moderator for Q&A. Operator: [Operator Instructions] The first question comes from Daniel Morgan with Barrenjoey. Daniel Morgan: Just on Hemi and approvals, can you just expand on -- I know approvals are an issue across the industry and the time lines tend to extend. But what are the major works that are outstanding on the approvals front? What are the major risks to the time line? And it appears that you are flagging that this is taking a little bit longer than expected, and it's just you're flagging that FID is going to potentially move back further into FY '27. Stuart Tonkin: Yes. Thanks, Dan. I guess the final investment decision, we don't want to rush. We need adequate time to consider that. So we're really anticipating the timing and to reprice the capital, put that into the business case to present and consider. On the primary approvals, so state, we expect essentially this quarter, the submissions have been in the public comments being sought and returns of those -- that information for the regulators is there. The primary approvals on the federal EPBC, again, expecting that to be published for public comment soon. It will be a 4-week public comment period, and then there'll be iterations of request for information back and forth between the regulators. So we don't really control that time frame. The processes have those time locks that you enter into. So again, we expect that during this year, ideally this financial year, but we can't be certain on that process. And history has told us things do slip they don't go quicker. The secondary approvals around the dewatering and other clearances that we're working on. Again, we expect and plan for those things to occur this calendar year. And therefore, we just want that time to prudently go through and present that case to the Board. I think the couple of things I've said, which we would like to do, obviously, once the approvals and the timing is clear to us, we reprice the capital. That's what goes in with some pretty hard firm all-encompassing numbers into the financial case that is considered by our Board. And then ideally, that's subsequent to the KCGM commissioning. So learnings from KCGM can go across to Hemi and the cash flow generation from Hemi is generating to fund organically the growth of KCGM funds Hemi. Daniel Morgan: And do you anticipate a delay between like -- well, KCGM coming on, the mill expansion and then the FID, like is there going to be a period of time? Do you anticipate of, say, 6 months or more where the business has the opportunity to generate significant free cash flow from the KCGM expansion? And then the second part of that question is just what would the business do with that period of cash harvest? Stuart Tonkin: I think that the 2 will occur. The timing -- the balance sheet is already healthy net cash and that will grow so that we're not concerned around the funding aspects of Hemi or the profile of its spend. We're certainly not concerned around the considerations around hedging and those types of things we've spoken about that we needed to do for KCGM years ago. I agree that if there was a period of 6 months where KCGM is on full noise and we haven't been investing in Hemi, there's some surplus cash there. So all those capital management concepts will be considered by our Board, including all the usual aspects that we consider from time to time. Daniel Morgan: And just last question, still on Hemi. You stated resources and reserves are going to be included in the update in May '26, which is from a Northern Star perspective. Can you just talk through what conceptual changes from De Grey we might expect, i.e., could it benefit from more drilling that you've undertaken, a potential change to the gold price assumption? Or might there be more conservatism around mining shapes and the fact that you're actually going to be delivering an operational project rather than a concept? Stuart Tonkin: I think a blend of everything there, Dan. We certainly will adjust gold price across the group, reflecting where our costs are and where the spot is. It will still be modest. There'll still be a lot of headroom to spot prices and long-term forecasts. We probably have stricter views on mining shapes and scrutiny, wall angles, all those things on the resource. So certainly be a stricter cut on some of the designs. There has been some infill drilling occurring, which is really around the classifications and confidence of the resources there. So that's what we have been doing in recent months. So a blend of all that, pluses and minuses. We're trying to make this as bulletproof as we can for the consideration for entry into FID. Operator: The next question is from Matthew Frydman with MST Financial. Matthew Frydman: Can I ask a question on Slide 9 there where you've reaffirmed some guidance you've given previously on what KCGM looks like post the expansion and the ramp-up. Maybe just starting with the FY '27 range, 750,000 to 800,000 ounces. That seems like a pretty narrow range given obviously some uncertainties around commissioning and the cutover period and all that sort of stuff. Is it right to think that the -- I suppose, the marginal tonne of feed into KCGM in FY '27 is going to be low-grade stockpiles. And so therefore, that the actual production impact from some of those risk factors like the exact timing of the cutover or the pace of the ramp-up isn't as significant? Or I guess to put the question another way, is the real driver of your production in FY '27 and over the medium term at KCGM more about the high-grade material from the pit and the mining sequence, which is ultimately why you're comfortable with that fairly narrow range. I hope that is sort of a clear question. Ryan Gurner: Yes, it is. The -- yes, the outlook is -- it's narrow for the asset. I appreciate that. The concept is that the best grade goes in first and that if there's any throughput reduction either through later commissioning and/or greater planned or unplanned downtime throughout the year and 23 million tonnes wasn't met that the last 1 million tonnes is that 0.6 low-grade stockpile. So the incremental grade incremental ounces are minimal. And then any of the main primary Golden Pike higher-grade material plus the underground Fimiston, Charlotte material is milled that goes first. And then that's the buffer and thinking. We'll obviously update FY '27 guidance later this -- or end of this financial year such that we've got delivery schedules, planned, stockpiles as we have -- there's 82 million ounces stockpiled on the ROM there in the last month. That gives us the greater confidence of how narrow that band could be. But you're right in saying it's less about the overall throughput. That's more a sign of the confidence that the build is correct as opposed to the grade going into it. Matthew Frydman: Okay. Got it. And then I guess in that vein is -- halfway through the quarter, is there any more info that you can give us in terms of how that grade performance is coming out of the pit. Ultimately, what the bottom of the pit looks like now that it's fully destacked, et cetera? Any sort of incremental update since the quarterly would be appreciated. Stuart Tonkin: Yes. We believe we're still pulling that sort of 1.8-gram material high grade out of the Golden Pike North. As I said, we've got a large stockpile of that material on the ROM in front of the mill. It's been the mill that's held us up with that unplanned disruptions. So really, it's a game of just keeping that managed along until the cutover. But yes, the mining volumes, and we've had some record tonnage movements over the period. So it's been great to see not just ore but ore and waste in that fleet being very efficient. There's about 8 million tonnes moved in January, which again is well above the rate that we forecast there. So very happy with the mining activity. And the grade, we always -- until it goes through the mill intensity into a gold bar, that's the element we -- it's all theory until it goes through based on that drilling. Operator: The next question is from Adam Baker with Macquarie. Adam Baker: Just firstly, on dividends. It looks like it's around 33% of cash earnings for the first half. Was this just a driver from your considerations of expected stronger second half? Or -- just keen to hear your thoughts on why you elected to go above that range for the first half? Stuart Tonkin: Yes. Thanks, Adam. Look, we look at it on a full year basis. So we're aware of where it sits against policy in the half. But again, given we had a very strong second half forecast and outlook, we believe that we'd stay within that band and policy over the full year. We'll obviously consider that on the full year results, but we appreciate it departs from that in the midpoint. Adam Baker: And just secondly, looking to the uplift in free cash flow expected in the second half and with heavy being pushed out furthermore. Just wondering if you've given any thoughts to pre-delivering into your hedge book similar to what some of your peers have done, maybe some of those longer-dated hedges in FY '28 to get unencumbered free cash flow earlier on in the piece. Ryan Gurner: Yes. Look, Adam, it's been a consideration. I think what I'd say is we want to be flexible to that. It's probably unlikely. Any additional cash flow, we'll consider it. We've been thinking about it, but it's probably unlikely at this stage. Operator: The next question is from Alex Barkley with RBC. Alexander Barkley: Quick one on the upcoming resource update. Is there likely to be any impact from the KCGM expansion lifting the mill and lowering your cost base? Does that bring new ounces to life? Or is that maybe going to be seen in later iterations of your resource updates? Stuart Tonkin: I think it will be in later iterations. We'll absolutely -- we kind of look at understanding that cutoff grade of material that's coming out currently as waste or mineralized waste out of the pit. You appreciate that the stockpile is 0.6, there's nearly 3 million ounces sitting in low-grade stockpiles of 0.6 grams per tonne, taking rehandle costs and the value of gold today, 0.5 coming up in the back of a truck out of the pit could be financially better than that stockpile rehandled and milled. So that's fascinating when you look at the overall mill cost. It's going to be -- the milling cost is essentially 0.1 of a gram. So if that's already been moved, it's waste, it's in the back of a truck, it's moving to the surface. It could go direct tip into the crusher into the mill and be very economic. So yes, 0.35 starts to really produce a significant margin out of the pit, which today may be called waste, but in the future, it could be ore. We're not changing that into the resource at the moment. But I think over the future years, it will be pretty important to look at what the overall ounces are. Appreciating all-in sustaining costs lift, so you start bringing that low-grade material in. So we've got to be quite sensitive to that. Operator: The next question is from Hugo Nicolaci with Goldman Sachs. Hugo Nicolaci: First one for me, just are you able to provide any update in terms of the grade reconciliation work at some of the Yandal mines? And maybe any commentary there on how we should think about the medium-term mine plan relative to the existing reserve grades? Stuart Tonkin: Yes. So the areas for Yandal, I think one of the concerns was the Orelia open pit reconciling. We're getting a lot of that material coming down into the feed of reconciling well. It's about 1.4 grams. There's about 215,000 ounces remaining. So it's only less than 2 years of feed contribution. So that will be something that we'll keep a close eye on. But at the moment, yes, pretty pleased with what's coming out of Wonder underground, what's coming out of the TBO underground and obviously, Orelia's contribution to it. So yes, 1.3 to 1.6 has been the Bannockburn that's also going to be a feed in the future. We're doing all the waste stripping in that at the moment. That will start to be a better grade than the current sources for the Thunderbox. In the north at Jundee, there's new mines being developed and opened at Griffin Cook (sic) [ Cook-Griffin]. So once they start to come into the feed, we'll get greater feel on the reconciliations. And then the paste plant that's being commissioned allows us to get back into some of those secondary tertiary stopes that are the pillars from the higher grade at the upper levels. That will help us as well start to lift overall average grades at Jundee. Hugo Nicolaci: And then just maybe one for Ryan. You noted earlier in your piece that the balance sheet strength allows you to fund opportunities that may arise. Should we interpret that as organic and operational improvement opportunities? Or are you perhaps signaling that Northern Star is open to further acquisitions? Ryan Gurner: No, I think the former, Hugo. We've got plenty on our plate. We're focused on delivering the mill expansion, heavy will be upon us. So plenty on our plate, looking to get the best return for our capital deployed. Hugo Nicolaci: Fantastic. So that might be the case, but just worth clarifying. And then last one for me. Has there been any progress in considering either some of the portfolio rationalization you've previously talked to or maybe the ability to bring some of that regional material into the expanded KCGM? Stuart Tonkin: You're talking divestments, sorry, Hugo? Hugo Nicolaci: Yes, both sort of divestments or maybe bringing some of the higher-grade mines that you have in the region into the KCGM and displacing some of that low-grade stockpile feed? Stuart Tonkin: Yes. Look, we certainly see that in the medium- to long-term benefit, things like Hercules, Red Hill, et cetera. We'd be pleased to see how that could overall improve the ounce profile for KCGM. I think we want to -- before we run here, really get it commissioned, get it bedded in and delivering growth. I think it was as per Slide 9, those step-ups in production from that new plant from the KCGM sources before we cloud it with some of the regional stuff. There's still quite a bit of an approval time frame on some of those additional feeds regionally. Rationalization, I think over the years, we certainly are migrating towards these longer life, lower cost, higher-margin production centers, simplifying the business. We've always done it. You'll see subsequent to the half year, we sold our interest in the Central Tanami joint venture for $50 million. You see us regularly doing this over time anyway. So that's probably a natural course of our business. Operator: There are no further questions at this time. I'll now hand back to Mr. Tonkin for closing remarks. Stuart Tonkin: Great. Thank you so much for joining us on the call today, and I appreciate your interest in our company on what is a busy day. Have a good day. Thank you. Operator: This does conclude our conference for today. Thank you for participating. You may now disconnect.
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