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Operator: Greetings, and welcome to the Life Healthcare Annual Results Presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, CEO of Life Healthcare, Mr. Peter Wharton-Hood. Please go ahead, sir. Peter Wharton-Hood: Thank you, ma'am, and good morning, ladies and gentlemen. Welcome to Life Healthcare's Summarized Group Results for the Year of 2025. I'll start with an opening comment that the overall performance of the group was very strong operationally, and we had good activity growth for the 12 months under review. That's recorded in a PPD growth of 1.1%, and overall occupancy for the year of 69.7%. Pleasingly, in the second half of the year, we hit the magical 70% occupancy mark. Strong revenue growth under the prevailing conditions of 6% normalized earnings per share from continuing operations just above 10%, and Pieter will explain in due course the complexity -- the accounting complexities that have arisen from the very successful sale of LMI and how that has been included in the results. Very strong cash generation for the 12 months, 119.6% of EBITDA. And as you become accustomed to in the last 12 months, good dividends performance for shareholders. Our final dividend is up 12% to ZAR 0.56 per share, which including the special dividend during the course of the year, takes us to just over ZAR 2.81 per share. Our strategy is taking shape. Over the last 5 years, geographically, we've become more focused. Operationally, we become more specific. And as we outlined at the half year, we are talking in this business about where we grow, what we drive and what we seek to optimize. In the grow category of our strategy, we'll talk extensively later on about our greenfield expansion, our brownfield expansion of existing facilities, where we will be acquiring new facilities, and the expansion of our complementary lines of business. The improved utilization of our facilities is ever most important for us, and we'll get to that through both the occupancy levels that we talk to and the doctor recruitment drive that we are on. And crucially in this conversation and later on, we'll talk about what we really mean by the optimization of our asset utilization. The unsung head office here sit in technology and data, and I'll expand on their importance and what they've delivered in the 12 months. From a growth perspective, greenfield, we're very excited about the 140-bed Life Paarl Valley expansion opportunity. The spades have gone into the ground, and we look forward to delivering that both for patients, doctors and ultimately for shareholders. Our brownfield expansion opportunities during the course of the year, we delivered a further 30 ICU and high-care beds, and you'll see later on how intensively occupied our ICU beds are. We also added another 39 general ward beds during the year. Two imaging sites were acquired, and we added the Life Renal Dialysis in Namibia to our footprint. From a complementary lines of business perspective, we added another 24 acute rehabilitation beds and our 2 cyclotrons both built and completed according to design are awaiting final regulatory sign-off and the commencement of activities. From a drive perspective, we recruited 139 specialists onto the platform during the year. Our emergency channel saw more than 655,000 visits. We added a new cathlab to our cardiac network, and our funder and network channel now accounts for 35% of the PPDs through the network. Our value-based care initiative continues to go from strength to strength. We have proven excellent renal ICP outcomes where the quality of clinical outcomes for patients has improved. The cost to funders has been reduced, and we're now in a position to be able to expand that fairly significantly. We have an improved level of occupancy, as we reported at a high level at 69.7% off the back of a very strong second half, which was slightly over 70%. The optimization process included during the course of the year, the sale of LMI as we realized geographically and industry specifically that, that wasn't a business that belonged within the portfolio set. From a local geographic perspective, we concluded the sale of Life St Mary's Private Hospital, and we closed Life Isivivana Hospital. Furthermore, with detail to follow, we've identified a small number of hospitals and complementary facilities of a detailed and further asset optimization process during the course of the next 12 months. We've streamlined our business operations, good management of nursing and overhead costs, which grew slightly above 5%. And from a capital allocation perspective, our ROCE is at 17.8%, and I've spoken already about the dividends that we've paid. Our strategy remains unchanged, but commencing with the footprint, which you're now familiar with, that is the competitive advantage of which Life Healthcare trades and which we will take significant and deliberate care of as we think further about how we operate in South Africa. Our underlying capabilities, we start with a very strong balance sheet, which we refer to as our fortress balance sheet. Very pleased to report a net debt-to-EBITDA of 0.77 at the balance sheet date. And for the avoidance of doubt, that includes all our IFRS lease liabilities in the calculation. An improvement in our credit rating to zaAAA off the strong cash generation during the course of the year. From a technology and data perspective, it's an important part of our overall strategy, but must be seen in the context of a healthcare company in the South African -- with a South African presence. The strategic projects that we completed during the year included our network modernization and cloud migration, but excitingly, the new hospital information system was completed. That is built and delivered, but it's also been included in our enterprise architecture capability with a 3-year road map that has a very cleverly thought-out modular API-led approach that allows us to integrate the best-of-breed approaches to technology improvements that are available. We have initiated the digitization of the patient journey, and we will only use the word digitized or digital once in this presentation. From a doctor relationships perspective, we've initiated a 9-year program to train 40 surgical specialists, 35 medical specialists and 40 sub-specialists, a total investment of ZAR 450 million over the period, but with an anticipated return back to Life Healthcare slightly over 22%. From an underlying capabilities perspective, we are a care-based organization with care delivered by humans. So our people are particularly important to us. Employee turnover is the lowest that it's been in the last 5 years. The implementation of the employee value proposition and targeted remuneration initiatives have led to a strong focus both on employee development and training. And the employee share scheme, not for executives or senior managers, enabled employees to share in the success of the company. Employees have been able to share in the special dividend payments made during the course of the year. And overall, Life Healthcare is a great place to work. When one looks at the real purpose of the company, our clinical excellence metrics are of utmost importance, with an improvement in our reported patient experience. And our bundled compliance ratios at 97%, including the ventilator-associated pneumonia, surgical site infections, catheter-associated urinary tract infections and central line associated bloodstream infections. That level of compliance is commendable to all of our clinicians and experts and care workers involved in the delivery of care to patients. Moving on to the operational review for the year. We had a steady activity growth just under 1%, resulting in occupancies of 69.2% and up on the prior year. We had very high ICU occupancies, of over 84% and hence, our focus on adding ICU beds, of which we've added 46 over the past 2 years. We had good revenue per PPD growth of 5.8% of a tariff increase of 5.1%, a positive case mix impact despite a higher percentage of medical PPDs. The overall acute EBITDA margins were flat on the prior year. However, the vast majority of our acute hospitals overall had an excellent year, and I'll touch on that in a few slides. Our complementary services include mental health, acute rehabilitation, renal dialysis, oncology, imaging and nuclear, and overall strong revenue growth of approximately 25%, which included the Renal Dialysis acquisition, which is now included for 12 months versus the 6 months in the prior year, and 2 additional imaging transactions concluded during the course of the year. In mental health, we had a strong year with occupancies of 77% and PPD growth of 6%. In acute rehabilitation, we were negatively impacted during the year by a major upgrade in one of the units as well as two of the units that underperformed primarily due to poor location issues. In our Imaging business, we continue with our strategy of acquiring the nonclinical portion of imaging practices. We had good performance, with underlying activity growth of over 3%. We continue to make good progress in our nuclear business with increased volumes and 3 PET-CTs to open in 2026. We expect the 2 cyclotrons to be signed off from a regulatory perspective and be operable in Q2. In Renal Dialysis, we had good underlying activity growth of nearly 10%, reflecting the strong underlying demand. We had good performance from the in-hospital Renal units and a much improved operational performance from the Life Renal care units in the second half, reflecting a positive EBITDA in Life Renal care compared to a loss in the first half. Asset optimization will be a key focus of our conversations with shareholders and analysts during the course of the next 6 months. A key focus within our optimization strategy is how we strategically optimize our hospitals. Our first focus was on the top 20 hospitals. They make up the bulk of the acute hospital business, and optimizing their business operations and efficiencies was a key component of the initial exercise. If you look at the top 20 hospitals, they make up 65% of our acute beds, they make up 2/3 of the acute PPDs, 72% of the revenue and 84% of the acute EBITDA. These hospitals had an excellent underlying performance during the year. Their occupancies were 72%, PPD growth was 1.3%, revenue growth of 7.4% and EBITDA growth of 10.3%. The success of this initiative in the top 20 led us to expand the program to the top 30 hospitals. If we look at the top 30 hospitals, they account for 86% of our acute beds, 88% of the PPDs, 88% of revenue and 96% of the EBITDA generated by the group. Again, this group of 30 hospitals had a strong operational performance during the course of the year. The top 30 hospitals recorded occupancies of 71%, PPD growth of 1.5%, revenue growth of 7.2% and an EBITDA growth of 9.6%, reflecting the improved margins across these facilities. These are the hospitals that we want to be -- and these are the metrics that we want to be able to deliver for the complex of Life Healthcare. When one looks at asset optimization, this is the second area of focus, which we now dig into. And these are the assets that are not performing according to our expectations for a number of reasons, including their location and/or certain geography issues. It's a small number of facilities. And if we exclude these from the overall group result, we end up with occupancies of 72%, and we end up with PPD growth of 2%. This is how we want to look, robust activity and good revenue growth. The third area of focus is our asset optimization in renal dialysis and the renal dialysis business, including the FMC acquisition. There's been an improved performance with the increase in treatments and a shift to a positive EBITDA from a loss in H1. And the focus is now on improving the operational performance of this business, and we expect to see further improvements during the forthcoming year. To provide a clearer view of how the complementary business performed outside of the FMC acquisition, we show that excluding their poor performance for the 12 months, revenue growth was at 8.8% and EBITDA growth was at 9%. So I think it becomes absolutely clear from a management perspective on where the work needs to be done. We know that we've got to continue to support the strong performance of the top 30 hospitals. The small number of hospitals that are underperforming require deliberate and focused attention, and there's clearly an operational requirement to improve the integration of FMC into our overall business. I'll now hand you over to Pieter to take you through some accounting complexities. Pieter Van Der Westhuizen: Thank you, Pete. Just in terms of the Life Molecular Imaging or LMI transaction that was concluded during this year and even with our best efforts to explain the transaction, we found that it's still complex, and the investor community doesn't really understand it. So we're going to try again. The sale was concluded during -- as I said, during the year, just north of $750 million, of which we received an upfront payment of $355 million. Post transaction costs and provisions for liabilities that we have to pay the Piramal and the exiting management team, the net proceeds is roughly $200 million. And we will have potential further earn-outs of up to $400 million that we can receive up to 2034. And in addition to that, we've retained the rights to RM2 milestone payments as well as the right to manufacture, commercialize and distribute LMI products in Africa. From the $200 million, we've declared and paid a special dividend of ZAR 2.35 in the month of September. The complexity around this transaction is how from an accounting perspective, we have to account for it. The net profit on the disposal is the value of ZAR 2.4 billion. But due to accounting, we need to reflect the profit and the potential liability or the liability for the Piramal separately. The Piramal liability of ZAR 2.9 billion is recognized as part of continuing operations. And the reason for that is the liability remains with Life Healthcare. We didn't sell it across to the purchaser of LMI and hence, it will sit as part of continuing operations. We have accounted for the full liability of up to $200 million. And that is effectively ZAR 2.9 billion, and it will increase slightly due to a discount factor that we need to provide. The gross profit of ZAR 5.3 billion that sits as part of discontinued operations. In terms of financial highlights, good revenue growth, normalized earnings per share, and it's the one year where we had to do a normalized earnings per share due to reform because of the accounting mess with the LMI transaction, which is just north of 10%. And very strong cash generation, a great effort from our credit risk teams in terms of managing our debtors, probably one of the strongest years in the last few years that we had on debtors collections. Return on capital, still a healthy 17.8%, slightly down against last year and largely due to some of the big CapEx projects that we're investing in as we continue to see investment opportunities in South Africa to grow our footprint. And then the final dividend, up 12.9%, a ZAR 0.35 per share dividend, and that will be paid in December. On the income statement or profit and loss, we had -- we processed a pro forma adjustment, and the pro forma adjustment is effectively taking out the LMI liability and just showing it as part of discontinued operations effectively. So on a continuing basis, revenue is up 6%, normalized EBITDA of 4.7%. We would have liked to get that up to 6%. And as Pete explained in the operational slides, there's really 2 factors that are impacting us in terms of delivering the growth in EBITDA margin that we're looking for. The Fresenius or FMC transaction in terms of underperformance of that business, and we've got plans to address that, and then the impact of the asset optimization, assets that we're in the process of fixing. Just in terms of -- in addition to that, we have processed 2 large impairments to the value of ZAR 211 million. The bulk of it sits in the Fresenius business. And as we had indicated at the end of last year, and we did sell one of our hospitals in the Eastern Cape, and we made a profit of ZAR 54 million, and that's also reflected as part of other nontrading expenses, a net number of ZAR 160 million. From a segmental basis, really just want to show that the complementary service continued to grow, and it's largely due to the inclusion of the Fresenius business. Last year, it was only included for 6 months, and this year it's obviously included for 12 months. Very strong at the revenue side, but you can see the impact of the underperformance in the normalized EBITDA, where revenue is growing 24.7%, but normalized EBITDA is only 3.6%. And as we indicated in the half year for the first 6 months, the Fresenius business made a loss at EBITDA level. We have arrested or changed it effectively in the second 6 months, and it's a slight profit, but still nowhere where we wanted to be. We have, for the first time, also split out a bit in terms of -- at the corporate level. Employee cost, you can see, is flat against last year, and that's our efforts to manage the cost at the head office level. The other cost is up significantly at 50%, but the bulk of that is related to investment in future doctor pipeline where we contribute to various opportunities to train more doctors in the country. Cash, really strong cash generated from operations, close to ZAR 4.6 billion. And we were really looking for the extra ZAR 2 million just to make it around ZAR 4.6 billion, but we couldn't get there, 23.8% up against last year. Free cash flow is still healthy at 36.5%. And what's really pleasing is that we in the last 2 years, we've paid significant funds back to shareholders. We've paid a special dividend in the current year of ZAR 1 billion, up in January, and a further ZAR 3.4 billion in September. So a total of ZAR 4.4 billion. And if you look at last year, we've paid ZAR 8.8 billion. So in the last 2 years, shareholders got close to ZAR 13 billion. We're healthy. And then our ordinary dividend at ZAR 758 million compared to last year at ZAR 668 million. Included in the CapEx, ZAR 1.3 billion effectively in maintenance, replacement and infrastructure CapEx where we maintain our facilities and replace our equipment that's needed. Growth CapEx of close to ZAR 450 million. And as we indicated last year, we've concluded the acquisition of a property that we leased previously in the current year, and there's plans to buy one more in the next financial year, and Pete will talk about a bit about that as well. Our balance sheet, really strong. Net debt to EBITDA based on the bank covenants is close to 0. But what we have done is the Piramal liability that needs to be settled in the first half of next year -- the next financial year. We've treated as a debt -- if we treat it as a debt-like item, it will push our net debt to EBITDA up to close to 0.8. And we're very comfortable at that level. Obviously, there's still a bit of room to push it up more. And we have growth opportunities that we will then utilize our balance sheet effectively to fund. This is just how we want to show you in terms of the debt maturity. As you can see, most of our big debt is maturing at a longer-dated period. We've got bank debt and notes maturing in 2027. And we will, in the next 6 to 9 months, start refinancing some of this debt. Earnings per share. Earnings per share from continuing operations, significantly down against last year, but on a pro forma basis, up 2.1% and the pro forma is really taking out the Piramal liability. Headline earnings per share, up 14.7% on a pro forma basis and normalized earnings per share up at 10.1%. And the dividends, just demonstrating you to the total dividend for the year up 12%, final dividend up 12.9%. I'm going to hand you over to Pete to take you through the outlook for next year. Peter Wharton-Hood: Thanks, Pieter. I think it's clear to see that the fundamentals of our business are resilient, and the substantial returns to shareholders, both in this year and the prior period reflect our disciplined approach to capital management. Having said that, our focus is now firmly on the continuing operations, and investors now have a clear visibility into a stable, well-positioned healthcare organization. Our strategy will be to continue our focus to grow, drive and optimize the business. From a growth perspective, we remain excited about the opportunities in South Africa and investing therein. The 140-bed hospital is the cornerstone of our greenfield path. Our brownfield expansion, we will deliver a further 89 acute beds during the course of the year. Another cathlab at Mount Edgecombe. A new vascular lab at Rosepark Hospital. And there'll be further expansion in our complementary services business, with the delivery of a further 40 acute rehabilitation beds, 20 renal stations, another 3 PET-CT sites. And as we mentioned previously, the commencement of commercial production in our cyclotrons. From an outlook perspective, we see occupancies at 70%. We're forecasting or anticipating a PPD growth of 1% and improvement in revenue next year of 5%, with a further recruitment of specialist doctors of approximately 140. Management has their work cut out in the optimization category of business. We have to make sure that our top-performing hospitals, as we evidenced earlier in the presentation, are not only maintained but where they can be operationally improved. The hard work is in the cost savings that we need to deliver over the next 3 years. We are anticipating having to deliver ZAR 400 million worth of cost savings. And these are real cost savings of the existing cost base, not cost avoidance, real cost savings over the next 3 years. Our asset optimization process is absolutely clear with the ambition statement has been laid down that for the small number of underperforming units, there's work to be done. I'm pleased to say that this is not new work. This is work that's already commenced. We've made 2 significant management changes. We are in the process of relocating 2 of the businesses that are in the incorrect places and having their licenses reassigned, and we've already closed one of the underperforming units. Our overheads and cost of sales focus is crucial to the delivery of the savings target. And of course, the continued improvement of Life Renal Dialysis is the operational challenge at hand to basically get the integration complete, and those operations correctly streamlined on an appropriate clinical basis where Life Healthcare's clinical standards are maintained so that we deliver superb clinical outcomes for patients, but also done in a way that's operationally profitable and sustainable. We're also in the process of acquiring a significant -- one of our last remaining significant hospital properties that we don't own. This will cost about ZAR 475 million. The Board has given its approval. And with that in mind, our property portfolio will then be nearly 100% owned across the entire country. So it's with a sense of optimism that we approach the 2026 year, but the daunting task of getting this job done is both a challenge for the management team and has been set into the KPIs to deliver during the course of 2026. There will be no remaining outstanding optimization decisions by the time we speak to you at the end of the 2026 year, and we'll make sure that we deliver on the promises to take this business to the next level. With that, I conclude our presentation, and we're happy to take questions. Operator: Thank you, sir. We will now be conducting a questions-and-answer session. [Operator Instructions]. The first question we have comes from Alex Comer of JPMorgan. Alex Comer: A couple of questions from me. Just on the ZAR 400 million of cost savings, how does that play out over the next few years, i.e., what do we see this year, what do we see next year, what do you see the year after? First question. Also, you talked about the sort of underperforming assets. If my maths are right, the businesses that are -- or hospitals are outside your top 30 have got an EBITDA margin of around about sort of 5%. So just what particularly are you going to try and do to lift that? You talked about moving facilities. I wouldn't have thought that was that easy. That's the second question. And then just you haven't given any margin guidance for the year. I just wondered whether you'd like to give us some indications on that. And then also, clearly, CPI is pretty low this year. You've got revenue growth of sort of 5%, wage growth last year was around that level. How confident are you about being able to keep wage inflation below revenue growth? Peter Wharton-Hood: Let me take the asset optimization challenge first on. Your math is about right. We, for obvious reasons, have not specifically identified the individual units because that wouldn't be fair play. It's our job of work to fix and not to cause disruption to continuing activities. The relocation of certain of the facilities is easier than you think. It's a reassignment of licenses from one of our facilities. It's effectively a consolidation of license and beds into existing facilities. It's not the construction of new ones. So apologies if I didn't explain that correctly. So the confidence with which we see our ability to be able to optimize those assets break themselves into a couple of categories. There are those where the relocation makes sense or the consolidation makes sense. The next step up is to see whether or not we can trade our way into a more profitable set of circumstances in the location. And that's typically designed around the recruitment of subspecialties into the units that would be both revenue generative and consistent with the levels of acuity and disease burden in the region, i.e., generate more revenue. The third step from there is a context of whether or not the business needs to be or can be rightsized. So if it's under occupancy levels, and we've said that most of these are under 60%, can we rightsize the hospital, cut costs and appropriately run a margin-accretive business, but at a smaller scale. So those are the immediate management challenges that need to be addressed. And as I said, none of those are necessarily easy to execute, but we don't want decision processes left hanging in the wind for the next 12 months. I will leave the balance of your questions for Pieter to answer, the buckets on the ZAR 400 million and the CPI. Pieter Van Der Westhuizen: So in terms of ZAR 400 million cost saving opportunities, we are targeting between 20% to 25% in the first year of that value. And then depending on how quickly we can then operationalize, whatever the process that we're implementing, how quickly we can deliver on the ZAR 400 million. Just to elaborate on what we -- how we look at it is we've got the baseline effectively as 2025, and we are targeting real cost-saving opportunities, not in terms of things that we potentially not will be able to do. And from a cost, we are really looking at taking costs out of our base. And there are a number of projects on the go on that. In terms of the CPI, in terms of getting labor inflation below CPI, obviously, it's a challenge that we have every single year. And the real thing is can we get our tariffs, and the team is busy with the final tariff negotiations. And I think we will get close to getting labor inflation to the tariff. In this environment, things going to be tough. Peter Wharton-Hood: I think the last question that you asked was more guidance around margin. It will be publicly viewable that margin improvement is on the executive scorecards and how we will be compensated during the course of the year. And you'll see those thresholds quite clearly articulated -- published in the annual financial statements. But yes, it's a levels of margin improvement, not just in the underperforming units, we're expecting to deliver margin improvement across the top performing units as well. That guidance will become clearer a little bit later. Operator: At this stage, there are no further questions on the conference. I will now hand over to management for webcast questions. Please go ahead. Pieter Van Der Westhuizen: Thank you. There are a couple of questions in terms of, just elaborate what we mean with initiation of the digitization of the patient journey. Peter Wharton-Hood: I think in that context, it starts from how we have digitized the patient administration or admission forms and includes a road map all the way through to the digitization of patient data in patient files and claims to the medical aids. Pieter Van Der Westhuizen: And then there's a couple of questions just in terms of, we guided the market in terms of a 1.5% PPD growth, and we're talking at the acute side of 0.9% PPD growth. The 1.5% growth is in total. So it does include the complementary services, acute rehabilitation and mental health beds. And hence, the 1.1% growth relative to the 1.5% is what we guided. The key impact on us is we had a couple of hospitals where we -- large doctor that contributed significantly to those specific facilities, but left the hospitals for a variety of reasons. That had a negative impact. We also did see a bit of a slower winter season than what we normally have. But there's nothing other than the asset optimization, assets that we will focus on. As we said, our core business did really, really well, still attracted the 70% occupancy for the second half. And then there's just a couple of questions in terms of the margin guidance. And then in terms of the Renal Dialysis margin going forward, after we corrected the Fresenius business. Effectively, if we -- if you look at last year, we had kind of mid- to high teens in terms of a margin on the renal business. In the current year, overall renal business is single digit, and we are aiming to get it back to the 15% to 18% EBITDA margin. Peter Wharton-Hood: And I think it's fair to concede that the operational complexity of integrating the acquisition was more difficult than we anticipated when we signed the deal, and that has hurt us. But the underlying business is strong. The renal ICP is showing really good prospective results, as I said, both clinically and from a funder perspective. So we remain positive on the outlook for that business, but the operational challenges need to be addressed. And as we saw in the second half, we were getting the traction right because the second half of the year's performance was better than the first, but the job is not done. Pieter Van Der Westhuizen: And then kind of last question is just a clarification in terms of, is the LMI accounting adjustments excluded from normalized earnings per share? Yes, it is. The rest of the questions, I think, is addressed in our presentation and in the annual financial statements that's published on our website. I think we'll leave it there. Peter Wharton-Hood: And sorry, Alex, the guidance as to where management are being incentivized around margin improvement is actually in the rem report. Pieter Van Der Westhuizen: Thank you so much, operator. Thank you, ladies and gentlemen. Peter Wharton-Hood: Thank you, ladies and gentlemen. Thank you. Operator: Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.
Operator: Good morning, ladies and gentlemen, and welcome to the Goodfood Q4 and Fiscal 2025 Earnings Call and Webcast. [Operator Instructions] I would like to remind everyone that this conference call is being recorded today, November 27 at 8:00 a.m. Eastern Time. Furthermore, I would like to remind you that today's presentation may contain forward-looking statements about Goodfood's current and future plans, expectations and intentions, results, level of activity, performance, goals or achievements or other future events or developments. As such, please take a moment to read the disclaimer on forward-looking statements on Slide 2 of the presentation. Please be aware that during the call, presenters will refer to certain metrics and non-IFRS measures. Where possible, these measures are identified and reconciled to the most comparable IFRS measures in our MD&A. Finally, let me remind you that all figures expressed on today's call are in Canadian dollars, unless otherwise stated. I would now like to turn the meeting over to your host for today's call, Mr. Neil Cuggy, President and COO, Mr. Cuggy, you may proceed. Neil Cuggy: Thank you. [Foreign Language]. Good morning, everyone. Welcome to our Goodfood Earnings Call in which we will present our results for the fourth quarter ended September 6; Roslane Aouameur, our Chief Financial Officer is with me today. You can find our press release, presentation and other filings on our website and SEDAR+ and all figures on this call are in Canadian dollars unless otherwise noted. Let's begin with Slide 3. Fiscal 2025 was a challenging year for us and the overall industry. Yet we continue to demonstrate resilience and delivered positive adjusted EBITDA for the full year and now 11 consecutive quarters, along with positive adjusted free cash flow. For fiscal 2025, adjusted EBITDA was $6 million, representing a 5% margin compared to $9 million or a 6% margin the previous year. While the adjusted EBITDA is lower year-over-year, in the tough environment faced this year, it underscores the flexibility and resilience of our cost structure and the disciplined execution of our teams demonstrated. In fiscal 2025, we prioritized investments that strengthened the overall business and our customers' experience. Beyond the traditional meal-kit, we introduced the new features to help customers manage their deliveries better and customize their orders more easily and also introduced new products like our Heat & Eat trays in Quebec. These customer-driven innovations have helped drive record basket sizes as more members are choosing to build out their orders with a wider variety of meals and grocery add-ons. Our investments in fiscal 2025 also went beyond our platform. Our acquisition of Genuine Tea is proving to be both growth and margin accretive. The brand is growing sales at over 30% annually while delivering consistent and healthy EBITDA. Genuine Tea's growth supported by strong secular tailwinds has helped offset meal-kit top line weakness. Beyond financial performance, it has provided the blueprint for our M&A strategy acquiring growing cash flow-generating businesses with strong leadership that could benefit from our platform and marketing, human resources, finance and logistics networks. While we continue to remain prudent on capital allocation, given our limitations, we are looking to accelerate our M&A strategy. With those highlights in mind, I will now turn it over to Ross for a closer look at the financials. Roslane Aouameur: Thank you, Neil. Let's move to Slide 4 to discuss our top line metrics. Net sales for the fourth quarter were $25 million, down $9 million year-over-year. The year-over-year decline reflects a lower active customer base, 66,000 this quarter versus 101,000 last year. The lower active customers, which are customers who placed an order during the quarter are in part driven by lower order rates, but also a result of reduced marketing and incentive-led promotions. Overall, the headwinds in meal-kit demand persisted in this quarter and in the last 2 quarters of fiscal 2025. With that said, net sales per active customer did increase 12% year-over-year to $379 this quarter, driven by higher basket sizes and lower incentives. This was also the result of our expanded product offering like Heat & Eat, which we launched in late fiscal '25 as well as our strategy to drive higher quality cohorts through lower incentive promotions. Overall, our lifetime value curves have moved up as lower incentives bring in better customers and compounded with higher basket sizes have improved the economics per customer. We will now turn to Slide 5 to discuss margins and profitability. Gross profit came in at $10 million in the fourth quarter, with gross margin at 40.3% for the quarter, up 220 basis points from last year. The margin improvement was mainly the result of reduced incentive promotions. Adjusted EBITDA was $0.4 million for the fourth quarter or 1.7% of sales, relatively flat compared to the $0.5 million or 1.5% of sales last year, despite fixed costs being amortized on a lower order and sales basis. Our consistent SG&A discipline helped with stability or even minor improvements in margin. As Neil mentioned, this continued discipline in our efforts to bring flexibility to our cost structure have helped achieve this 11th consecutive quarter of positive adjusted EBITDA. Moving now to Slide 6. Cash flow from operations was a positive $0.3 million this quarter compared to negative $0.9 million last year. Adjusted free cash flow came in at $1.7 million, a $2.8 million improvement year-over-year or $1.5 million improvement over Q3. Capital expenditures were $0.2 million, largely related to maintenance and the kitchen relaunch at our Montreal facility. Overall, we generated positive adjusted free cash flow in 6 of the past 8 quarters, reinforcing a more stable financial foundation even as we adjust to current market dynamics driving a lower customer base. Turning to Slide 7, which summarizes our key financial metrics this year. In fiscal 2025, we worked very hard to maintain and in some instances, improve our profitability core metrics. In the face of sales declining 21%, we were able to bring in gross margin to 41.7%, a 50 basis point improvement compared to fiscal '24 and adjusted EBITDA margin to 5%, down only 90 basis points and adjusted free cash flow to $2.2 million, a second year with positive adjusted free cash flow. The results cement our discipline in managing our cost structure and the discipline our teams have displayed over the year. With that, I will now pass it back to Neil to walk through our outlook. Neil Cuggy: Thank you, Ross. Let's now turn to Slide 8. Fiscal '25 had its fair share of obstacles. As we look forward, we can expect a meaningful evolution of the company in the coming months, quarters and years. In August, we welcomed our new Chairman, Selim Bassoul, and began an operational review focused on product evolution, customer experience and acquisitions. While the review remains ongoing, its conclusions will focus on ensuring the Goodfood meal solutions, both meal-kits and Heat & Eat meals provide customers with the experience and value that stabilizes the top line and brings delicious excitement to our members. Our digital platform also needs to provide the flexibility that enables customers to order our product with limited friction. Beyond Goodfood's meal solutions, we will also focus on acquisitions to leverage the platform Goodfood built over the past 11 years. With Genuine Tea as a great case study, we can build a portfolio of businesses that can benefit from the expertise and infrastructure built over the years. This will require continued discipline and prudence in deploying limited capital. In the near term, we do expect to maintain cost structure resilience as we continue to see demand challenges in the meal-kit market. This trend is affecting Goodfood and is also present across the competitors around the world. Heat & Eat is progressing well and nearing $4 million of annualized sales and Genuine Tea is continuing to grow profitably, helping partially offset meal-kit performance. In closing, we have a strong belief that we can maintain capital allocation and cost structure discipline to build shareholder value through internal initiatives like the encouraging Heat & Eat launch and external initiatives like the Genuine Tea acquisition. With that, I will now turn it over to the operator for the Q&A. Operator: [Operator Instructions] And your first question comes from Etienne Larochelle with Desjardins. Etienne Larochelle: First off, in your comments on the operating review, you mentioned a focus on product evolution and a desire to refine your offering. I was wondering if you could please share an example or 2 on what type of changes you're looking to make on that front. Neil Cuggy: Etienne, thanks for the question. Like we said, I think it's still early days, like Selim has been in the business for about just under 90 days, I believe, and has spent a lot of time with the management team and myself, starting to really understand the levers that the business has, while the kind of macro landscape and competitor headwinds still exist. I think at a high level, it continues to be lean into Heat & Eat, focus on convenience and try to deliver as much value as possible. So things that our team has been executing well over the past couple of years and many quarters. So high level, it would be around that, and then we'll disclose more as we come through the next earnings calls. Etienne Larochelle: Okay. Got it. And also, you mentioned that tuck-in M&A, like Genuine Tea is something you're still interested in going forward. Could you please share an update on how's the M&A pipeline looking right now? And perhaps just give us a reminder on what type and size of the targets you're looking at. Roslane Aouameur: Yes. Thanks, Etienne. I think the pipeline is healthy. I think at the size we're looking at, which you can -- be around -- Genuine Tea is around the $5 million sales, we're probably looking slightly higher up in the sales category, so call it $10 million-plus. I think the pipeline is healthy. But the deals do take time in the sense that the businesses tend to be smaller, sometimes a little less structured from an information perspective. So I think we've had LOIs and diligence. It doesn't always convert. But I think we're continuing to not only explore but advance some specific situations. We have targets on what we're looking for. It's the execution is sometimes a little longer at the size we're looking at. Etienne Larochelle: Okay. That's helpful. And maybe a last one from me. Active customers were down to 66,000 this quarter. I was wondering if you could maybe guide us on how active customers should track over the next 2 quarters? And do you have some sort of visibility on meal-kit demand stabilization in North America in the near future? Or is it still too early? Roslane Aouameur: Yes. I think it's -- the stabilization across North America isn't quite here yet. That said, I think Q4, as you know, is -- has seasonality embedded in it. It is the summer months where people travel and spend more time outside than necessarily in their kitchen cooking. With that said, yes, we're seeing -- we're pretty realistic in seeing headwinds from meal-kit demand perspective. Hence, one of the pieces of the operating review being how do we bring the value and make sure that the customers see that and what kind of meal solutions, what kind of convenience they're looking for and then make sure to execute on delivering that. I think over the next few quarters, we are expecting the headwinds not to fully abate, but to definitely be near their peak. With that said, there are structural challenges to the market that we're fighting through. Neil Cuggy: And maybe, Etienne, if I can add to that. I think the other thing that's exciting right now is the Heat & Eat portfolio, we're able to sell a separate subscription now. So if you go to the website and try to sign up, you have our classic meal-kit weekly subscription and then you have also our Heat & Eat subscription. So that's actually providing us 2 different sales options to customers. And the Heat & Eat on-sub subscription is growing quite well and makes up a small portion of the $4 million annualized run rate, but a very fast-growing portion. And we're able to kind of tackle that market. And then as we said in the prepared remarks as well, we have been very, very focused on acquiring more profitable customers. So our 12-month lifetime value or 24-month lifetime value are up substantially over the past couple of years and are tracking really well on a quarter basis. Etienne Larochelle: Okay. That's good color. That's all I had. Neil Cuggy: Thanks, Etienne. Operator: And I'm showing no further questions at this time. I would like to turn it back to Neil Cuggy for closing remarks. Neil Cuggy: [Foreign Language] Thank you for joining us on this call. We look forward to speaking with you again in the near future on our next call. Have a great day. Operator: Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.
Operator: Greetings, and welcome to the Life Healthcare Annual Results Presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, CEO of Life Healthcare, Mr. Peter Wharton-Hood. Please go ahead, sir. Peter Wharton-Hood: Thank you, ma'am, and good morning, ladies and gentlemen. Welcome to Life Healthcare's Summarized Group Results for the Year of 2025. I'll start with an opening comment that the overall performance of the group was very strong operationally, and we had good activity growth for the 12 months under review. That's recorded in a PPD growth of 1.1%, and overall occupancy for the year of 69.7%. Pleasingly, in the second half of the year, we hit the magical 70% occupancy mark. Strong revenue growth under the prevailing conditions of 6% normalized earnings per share from continuing operations just above 10%, and Pieter will explain in due course the complexity -- the accounting complexities that have arisen from the very successful sale of LMI and how that has been included in the results. Very strong cash generation for the 12 months, 119.6% of EBITDA. And as you become accustomed to in the last 12 months, good dividends performance for shareholders. Our final dividend is up 12% to ZAR 0.56 per share, which including the special dividend during the course of the year, takes us to just over ZAR 2.81 per share. Our strategy is taking shape. Over the last 5 years, geographically, we've become more focused. Operationally, we become more specific. And as we outlined at the half year, we are talking in this business about where we grow, what we drive and what we seek to optimize. In the grow category of our strategy, we'll talk extensively later on about our greenfield expansion, our brownfield expansion of existing facilities, where we will be acquiring new facilities, and the expansion of our complementary lines of business. The improved utilization of our facilities is ever most important for us, and we'll get to that through both the occupancy levels that we talk to and the doctor recruitment drive that we are on. And crucially in this conversation and later on, we'll talk about what we really mean by the optimization of our asset utilization. The unsung head office here sit in technology and data, and I'll expand on their importance and what they've delivered in the 12 months. From a growth perspective, greenfield, we're very excited about the 140-bed Life Paarl Valley expansion opportunity. The spades have gone into the ground, and we look forward to delivering that both for patients, doctors and ultimately for shareholders. Our brownfield expansion opportunities during the course of the year, we delivered a further 30 ICU and high-care beds, and you'll see later on how intensively occupied our ICU beds are. We also added another 39 general ward beds during the year. Two imaging sites were acquired, and we added the Life Renal Dialysis in Namibia to our footprint. From a complementary lines of business perspective, we added another 24 acute rehabilitation beds and our 2 cyclotrons both built and completed according to design are awaiting final regulatory sign-off and the commencement of activities. From a drive perspective, we recruited 139 specialists onto the platform during the year. Our emergency channel saw more than 655,000 visits. We added a new cathlab to our cardiac network, and our funder and network channel now accounts for 35% of the PPDs through the network. Our value-based care initiative continues to go from strength to strength. We have proven excellent renal ICP outcomes where the quality of clinical outcomes for patients has improved. The cost to funders has been reduced, and we're now in a position to be able to expand that fairly significantly. We have an improved level of occupancy, as we reported at a high level at 69.7% off the back of a very strong second half, which was slightly over 70%. The optimization process included during the course of the year, the sale of LMI as we realized geographically and industry specifically that, that wasn't a business that belonged within the portfolio set. From a local geographic perspective, we concluded the sale of Life St Mary's Private Hospital, and we closed Life Isivivana Hospital. Furthermore, with detail to follow, we've identified a small number of hospitals and complementary facilities of a detailed and further asset optimization process during the course of the next 12 months. We've streamlined our business operations, good management of nursing and overhead costs, which grew slightly above 5%. And from a capital allocation perspective, our ROCE is at 17.8%, and I've spoken already about the dividends that we've paid. Our strategy remains unchanged, but commencing with the footprint, which you're now familiar with, that is the competitive advantage of which Life Healthcare trades and which we will take significant and deliberate care of as we think further about how we operate in South Africa. Our underlying capabilities, we start with a very strong balance sheet, which we refer to as our fortress balance sheet. Very pleased to report a net debt-to-EBITDA of 0.77 at the balance sheet date. And for the avoidance of doubt, that includes all our IFRS lease liabilities in the calculation. An improvement in our credit rating to zaAAA off the strong cash generation during the course of the year. From a technology and data perspective, it's an important part of our overall strategy, but must be seen in the context of a healthcare company in the South African -- with a South African presence. The strategic projects that we completed during the year included our network modernization and cloud migration, but excitingly, the new hospital information system was completed. That is built and delivered, but it's also been included in our enterprise architecture capability with a 3-year road map that has a very cleverly thought-out modular API-led approach that allows us to integrate the best-of-breed approaches to technology improvements that are available. We have initiated the digitization of the patient journey, and we will only use the word digitized or digital once in this presentation. From a doctor relationships perspective, we've initiated a 9-year program to train 40 surgical specialists, 35 medical specialists and 40 sub-specialists, a total investment of ZAR 450 million over the period, but with an anticipated return back to Life Healthcare slightly over 22%. From an underlying capabilities perspective, we are a care-based organization with care delivered by humans. So our people are particularly important to us. Employee turnover is the lowest that it's been in the last 5 years. The implementation of the employee value proposition and targeted remuneration initiatives have led to a strong focus both on employee development and training. And the employee share scheme, not for executives or senior managers, enabled employees to share in the success of the company. Employees have been able to share in the special dividend payments made during the course of the year. And overall, Life Healthcare is a great place to work. When one looks at the real purpose of the company, our clinical excellence metrics are of utmost importance, with an improvement in our reported patient experience. And our bundled compliance ratios at 97%, including the ventilator-associated pneumonia, surgical site infections, catheter-associated urinary tract infections and central line associated bloodstream infections. That level of compliance is commendable to all of our clinicians and experts and care workers involved in the delivery of care to patients. Moving on to the operational review for the year. We had a steady activity growth just under 1%, resulting in occupancies of 69.2% and up on the prior year. We had very high ICU occupancies, of over 84% and hence, our focus on adding ICU beds, of which we've added 46 over the past 2 years. We had good revenue per PPD growth of 5.8% of a tariff increase of 5.1%, a positive case mix impact despite a higher percentage of medical PPDs. The overall acute EBITDA margins were flat on the prior year. However, the vast majority of our acute hospitals overall had an excellent year, and I'll touch on that in a few slides. Our complementary services include mental health, acute rehabilitation, renal dialysis, oncology, imaging and nuclear, and overall strong revenue growth of approximately 25%, which included the Renal Dialysis acquisition, which is now included for 12 months versus the 6 months in the prior year, and 2 additional imaging transactions concluded during the course of the year. In mental health, we had a strong year with occupancies of 77% and PPD growth of 6%. In acute rehabilitation, we were negatively impacted during the year by a major upgrade in one of the units as well as two of the units that underperformed primarily due to poor location issues. In our Imaging business, we continue with our strategy of acquiring the nonclinical portion of imaging practices. We had good performance, with underlying activity growth of over 3%. We continue to make good progress in our nuclear business with increased volumes and 3 PET-CTs to open in 2026. We expect the 2 cyclotrons to be signed off from a regulatory perspective and be operable in Q2. In Renal Dialysis, we had good underlying activity growth of nearly 10%, reflecting the strong underlying demand. We had good performance from the in-hospital Renal units and a much improved operational performance from the Life Renal care units in the second half, reflecting a positive EBITDA in Life Renal care compared to a loss in the first half. Asset optimization will be a key focus of our conversations with shareholders and analysts during the course of the next 6 months. A key focus within our optimization strategy is how we strategically optimize our hospitals. Our first focus was on the top 20 hospitals. They make up the bulk of the acute hospital business, and optimizing their business operations and efficiencies was a key component of the initial exercise. If you look at the top 20 hospitals, they make up 65% of our acute beds, they make up 2/3 of the acute PPDs, 72% of the revenue and 84% of the acute EBITDA. These hospitals had an excellent underlying performance during the year. Their occupancies were 72%, PPD growth was 1.3%, revenue growth of 7.4% and EBITDA growth of 10.3%. The success of this initiative in the top 20 led us to expand the program to the top 30 hospitals. If we look at the top 30 hospitals, they account for 86% of our acute beds, 88% of the PPDs, 88% of revenue and 96% of the EBITDA generated by the group. Again, this group of 30 hospitals had a strong operational performance during the course of the year. The top 30 hospitals recorded occupancies of 71%, PPD growth of 1.5%, revenue growth of 7.2% and an EBITDA growth of 9.6%, reflecting the improved margins across these facilities. These are the hospitals that we want to be -- and these are the metrics that we want to be able to deliver for the complex of Life Healthcare. When one looks at asset optimization, this is the second area of focus, which we now dig into. And these are the assets that are not performing according to our expectations for a number of reasons, including their location and/or certain geography issues. It's a small number of facilities. And if we exclude these from the overall group result, we end up with occupancies of 72%, and we end up with PPD growth of 2%. This is how we want to look, robust activity and good revenue growth. The third area of focus is our asset optimization in renal dialysis and the renal dialysis business, including the FMC acquisition. There's been an improved performance with the increase in treatments and a shift to a positive EBITDA from a loss in H1. And the focus is now on improving the operational performance of this business, and we expect to see further improvements during the forthcoming year. To provide a clearer view of how the complementary business performed outside of the FMC acquisition, we show that excluding their poor performance for the 12 months, revenue growth was at 8.8% and EBITDA growth was at 9%. So I think it becomes absolutely clear from a management perspective on where the work needs to be done. We know that we've got to continue to support the strong performance of the top 30 hospitals. The small number of hospitals that are underperforming require deliberate and focused attention, and there's clearly an operational requirement to improve the integration of FMC into our overall business. I'll now hand you over to Pieter to take you through some accounting complexities. Pieter Van Der Westhuizen: Thank you, Pete. Just in terms of the Life Molecular Imaging or LMI transaction that was concluded during this year and even with our best efforts to explain the transaction, we found that it's still complex, and the investor community doesn't really understand it. So we're going to try again. The sale was concluded during -- as I said, during the year, just north of $750 million, of which we received an upfront payment of $355 million. Post transaction costs and provisions for liabilities that we have to pay the Piramal and the exiting management team, the net proceeds is roughly $200 million. And we will have potential further earn-outs of up to $400 million that we can receive up to 2034. And in addition to that, we've retained the rights to RM2 milestone payments as well as the right to manufacture, commercialize and distribute LMI products in Africa. From the $200 million, we've declared and paid a special dividend of ZAR 2.35 in the month of September. The complexity around this transaction is how from an accounting perspective, we have to account for it. The net profit on the disposal is the value of ZAR 2.4 billion. But due to accounting, we need to reflect the profit and the potential liability or the liability for the Piramal separately. The Piramal liability of ZAR 2.9 billion is recognized as part of continuing operations. And the reason for that is the liability remains with Life Healthcare. We didn't sell it across to the purchaser of LMI and hence, it will sit as part of continuing operations. We have accounted for the full liability of up to $200 million. And that is effectively ZAR 2.9 billion, and it will increase slightly due to a discount factor that we need to provide. The gross profit of ZAR 5.3 billion that sits as part of discontinued operations. In terms of financial highlights, good revenue growth, normalized earnings per share, and it's the one year where we had to do a normalized earnings per share due to reform because of the accounting mess with the LMI transaction, which is just north of 10%. And very strong cash generation, a great effort from our credit risk teams in terms of managing our debtors, probably one of the strongest years in the last few years that we had on debtors collections. Return on capital, still a healthy 17.8%, slightly down against last year and largely due to some of the big CapEx projects that we're investing in as we continue to see investment opportunities in South Africa to grow our footprint. And then the final dividend, up 12.9%, a ZAR 0.35 per share dividend, and that will be paid in December. On the income statement or profit and loss, we had -- we processed a pro forma adjustment, and the pro forma adjustment is effectively taking out the LMI liability and just showing it as part of discontinued operations effectively. So on a continuing basis, revenue is up 6%, normalized EBITDA of 4.7%. We would have liked to get that up to 6%. And as Pete explained in the operational slides, there's really 2 factors that are impacting us in terms of delivering the growth in EBITDA margin that we're looking for. The Fresenius or FMC transaction in terms of underperformance of that business, and we've got plans to address that, and then the impact of the asset optimization, assets that we're in the process of fixing. Just in terms of -- in addition to that, we have processed 2 large impairments to the value of ZAR 211 million. The bulk of it sits in the Fresenius business. And as we had indicated at the end of last year, and we did sell one of our hospitals in the Eastern Cape, and we made a profit of ZAR 54 million, and that's also reflected as part of other nontrading expenses, a net number of ZAR 160 million. From a segmental basis, really just want to show that the complementary service continued to grow, and it's largely due to the inclusion of the Fresenius business. Last year, it was only included for 6 months, and this year it's obviously included for 12 months. Very strong at the revenue side, but you can see the impact of the underperformance in the normalized EBITDA, where revenue is growing 24.7%, but normalized EBITDA is only 3.6%. And as we indicated in the half year for the first 6 months, the Fresenius business made a loss at EBITDA level. We have arrested or changed it effectively in the second 6 months, and it's a slight profit, but still nowhere where we wanted to be. We have, for the first time, also split out a bit in terms of -- at the corporate level. Employee cost, you can see, is flat against last year, and that's our efforts to manage the cost at the head office level. The other cost is up significantly at 50%, but the bulk of that is related to investment in future doctor pipeline where we contribute to various opportunities to train more doctors in the country. Cash, really strong cash generated from operations, close to ZAR 4.6 billion. And we were really looking for the extra ZAR 2 million just to make it around ZAR 4.6 billion, but we couldn't get there, 23.8% up against last year. Free cash flow is still healthy at 36.5%. And what's really pleasing is that we in the last 2 years, we've paid significant funds back to shareholders. We've paid a special dividend in the current year of ZAR 1 billion, up in January, and a further ZAR 3.4 billion in September. So a total of ZAR 4.4 billion. And if you look at last year, we've paid ZAR 8.8 billion. So in the last 2 years, shareholders got close to ZAR 13 billion. We're healthy. And then our ordinary dividend at ZAR 758 million compared to last year at ZAR 668 million. Included in the CapEx, ZAR 1.3 billion effectively in maintenance, replacement and infrastructure CapEx where we maintain our facilities and replace our equipment that's needed. Growth CapEx of close to ZAR 450 million. And as we indicated last year, we've concluded the acquisition of a property that we leased previously in the current year, and there's plans to buy one more in the next financial year, and Pete will talk about a bit about that as well. Our balance sheet, really strong. Net debt to EBITDA based on the bank covenants is close to 0. But what we have done is the Piramal liability that needs to be settled in the first half of next year -- the next financial year. We've treated as a debt -- if we treat it as a debt-like item, it will push our net debt to EBITDA up to close to 0.8. And we're very comfortable at that level. Obviously, there's still a bit of room to push it up more. And we have growth opportunities that we will then utilize our balance sheet effectively to fund. This is just how we want to show you in terms of the debt maturity. As you can see, most of our big debt is maturing at a longer-dated period. We've got bank debt and notes maturing in 2027. And we will, in the next 6 to 9 months, start refinancing some of this debt. Earnings per share. Earnings per share from continuing operations, significantly down against last year, but on a pro forma basis, up 2.1% and the pro forma is really taking out the Piramal liability. Headline earnings per share, up 14.7% on a pro forma basis and normalized earnings per share up at 10.1%. And the dividends, just demonstrating you to the total dividend for the year up 12%, final dividend up 12.9%. I'm going to hand you over to Pete to take you through the outlook for next year. Peter Wharton-Hood: Thanks, Pieter. I think it's clear to see that the fundamentals of our business are resilient, and the substantial returns to shareholders, both in this year and the prior period reflect our disciplined approach to capital management. Having said that, our focus is now firmly on the continuing operations, and investors now have a clear visibility into a stable, well-positioned healthcare organization. Our strategy will be to continue our focus to grow, drive and optimize the business. From a growth perspective, we remain excited about the opportunities in South Africa and investing therein. The 140-bed hospital is the cornerstone of our greenfield path. Our brownfield expansion, we will deliver a further 89 acute beds during the course of the year. Another cathlab at Mount Edgecombe. A new vascular lab at Rosepark Hospital. And there'll be further expansion in our complementary services business, with the delivery of a further 40 acute rehabilitation beds, 20 renal stations, another 3 PET-CT sites. And as we mentioned previously, the commencement of commercial production in our cyclotrons. From an outlook perspective, we see occupancies at 70%. We're forecasting or anticipating a PPD growth of 1% and improvement in revenue next year of 5%, with a further recruitment of specialist doctors of approximately 140. Management has their work cut out in the optimization category of business. We have to make sure that our top-performing hospitals, as we evidenced earlier in the presentation, are not only maintained but where they can be operationally improved. The hard work is in the cost savings that we need to deliver over the next 3 years. We are anticipating having to deliver ZAR 400 million worth of cost savings. And these are real cost savings of the existing cost base, not cost avoidance, real cost savings over the next 3 years. Our asset optimization process is absolutely clear with the ambition statement has been laid down that for the small number of underperforming units, there's work to be done. I'm pleased to say that this is not new work. This is work that's already commenced. We've made 2 significant management changes. We are in the process of relocating 2 of the businesses that are in the incorrect places and having their licenses reassigned, and we've already closed one of the underperforming units. Our overheads and cost of sales focus is crucial to the delivery of the savings target. And of course, the continued improvement of Life Renal Dialysis is the operational challenge at hand to basically get the integration complete, and those operations correctly streamlined on an appropriate clinical basis where Life Healthcare's clinical standards are maintained so that we deliver superb clinical outcomes for patients, but also done in a way that's operationally profitable and sustainable. We're also in the process of acquiring a significant -- one of our last remaining significant hospital properties that we don't own. This will cost about ZAR 475 million. The Board has given its approval. And with that in mind, our property portfolio will then be nearly 100% owned across the entire country. So it's with a sense of optimism that we approach the 2026 year, but the daunting task of getting this job done is both a challenge for the management team and has been set into the KPIs to deliver during the course of 2026. There will be no remaining outstanding optimization decisions by the time we speak to you at the end of the 2026 year, and we'll make sure that we deliver on the promises to take this business to the next level. With that, I conclude our presentation, and we're happy to take questions. Operator: Thank you, sir. We will now be conducting a questions-and-answer session. [Operator Instructions]. The first question we have comes from Alex Comer of JPMorgan. Alex Comer: A couple of questions from me. Just on the ZAR 400 million of cost savings, how does that play out over the next few years, i.e., what do we see this year, what do we see next year, what do you see the year after? First question. Also, you talked about the sort of underperforming assets. If my maths are right, the businesses that are -- or hospitals are outside your top 30 have got an EBITDA margin of around about sort of 5%. So just what particularly are you going to try and do to lift that? You talked about moving facilities. I wouldn't have thought that was that easy. That's the second question. And then just you haven't given any margin guidance for the year. I just wondered whether you'd like to give us some indications on that. And then also, clearly, CPI is pretty low this year. You've got revenue growth of sort of 5%, wage growth last year was around that level. How confident are you about being able to keep wage inflation below revenue growth? Peter Wharton-Hood: Let me take the asset optimization challenge first on. Your math is about right. We, for obvious reasons, have not specifically identified the individual units because that wouldn't be fair play. It's our job of work to fix and not to cause disruption to continuing activities. The relocation of certain of the facilities is easier than you think. It's a reassignment of licenses from one of our facilities. It's effectively a consolidation of license and beds into existing facilities. It's not the construction of new ones. So apologies if I didn't explain that correctly. So the confidence with which we see our ability to be able to optimize those assets break themselves into a couple of categories. There are those where the relocation makes sense or the consolidation makes sense. The next step up is to see whether or not we can trade our way into a more profitable set of circumstances in the location. And that's typically designed around the recruitment of subspecialties into the units that would be both revenue generative and consistent with the levels of acuity and disease burden in the region, i.e., generate more revenue. The third step from there is a context of whether or not the business needs to be or can be rightsized. So if it's under occupancy levels, and we've said that most of these are under 60%, can we rightsize the hospital, cut costs and appropriately run a margin-accretive business, but at a smaller scale. So those are the immediate management challenges that need to be addressed. And as I said, none of those are necessarily easy to execute, but we don't want decision processes left hanging in the wind for the next 12 months. I will leave the balance of your questions for Pieter to answer, the buckets on the ZAR 400 million and the CPI. Pieter Van Der Westhuizen: So in terms of ZAR 400 million cost saving opportunities, we are targeting between 20% to 25% in the first year of that value. And then depending on how quickly we can then operationalize, whatever the process that we're implementing, how quickly we can deliver on the ZAR 400 million. Just to elaborate on what we -- how we look at it is we've got the baseline effectively as 2025, and we are targeting real cost-saving opportunities, not in terms of things that we potentially not will be able to do. And from a cost, we are really looking at taking costs out of our base. And there are a number of projects on the go on that. In terms of the CPI, in terms of getting labor inflation below CPI, obviously, it's a challenge that we have every single year. And the real thing is can we get our tariffs, and the team is busy with the final tariff negotiations. And I think we will get close to getting labor inflation to the tariff. In this environment, things going to be tough. Peter Wharton-Hood: I think the last question that you asked was more guidance around margin. It will be publicly viewable that margin improvement is on the executive scorecards and how we will be compensated during the course of the year. And you'll see those thresholds quite clearly articulated -- published in the annual financial statements. But yes, it's a levels of margin improvement, not just in the underperforming units, we're expecting to deliver margin improvement across the top performing units as well. That guidance will become clearer a little bit later. Operator: At this stage, there are no further questions on the conference. I will now hand over to management for webcast questions. Please go ahead. Pieter Van Der Westhuizen: Thank you. There are a couple of questions in terms of, just elaborate what we mean with initiation of the digitization of the patient journey. Peter Wharton-Hood: I think in that context, it starts from how we have digitized the patient administration or admission forms and includes a road map all the way through to the digitization of patient data in patient files and claims to the medical aids. Pieter Van Der Westhuizen: And then there's a couple of questions just in terms of, we guided the market in terms of a 1.5% PPD growth, and we're talking at the acute side of 0.9% PPD growth. The 1.5% growth is in total. So it does include the complementary services, acute rehabilitation and mental health beds. And hence, the 1.1% growth relative to the 1.5% is what we guided. The key impact on us is we had a couple of hospitals where we -- large doctor that contributed significantly to those specific facilities, but left the hospitals for a variety of reasons. That had a negative impact. We also did see a bit of a slower winter season than what we normally have. But there's nothing other than the asset optimization, assets that we will focus on. As we said, our core business did really, really well, still attracted the 70% occupancy for the second half. And then there's just a couple of questions in terms of the margin guidance. And then in terms of the Renal Dialysis margin going forward, after we corrected the Fresenius business. Effectively, if we -- if you look at last year, we had kind of mid- to high teens in terms of a margin on the renal business. In the current year, overall renal business is single digit, and we are aiming to get it back to the 15% to 18% EBITDA margin. Peter Wharton-Hood: And I think it's fair to concede that the operational complexity of integrating the acquisition was more difficult than we anticipated when we signed the deal, and that has hurt us. But the underlying business is strong. The renal ICP is showing really good prospective results, as I said, both clinically and from a funder perspective. So we remain positive on the outlook for that business, but the operational challenges need to be addressed. And as we saw in the second half, we were getting the traction right because the second half of the year's performance was better than the first, but the job is not done. Pieter Van Der Westhuizen: And then kind of last question is just a clarification in terms of, is the LMI accounting adjustments excluded from normalized earnings per share? Yes, it is. The rest of the questions, I think, is addressed in our presentation and in the annual financial statements that's published on our website. I think we'll leave it there. Peter Wharton-Hood: And sorry, Alex, the guidance as to where management are being incentivized around margin improvement is actually in the rem report. Pieter Van Der Westhuizen: Thank you so much, operator. Thank you, ladies and gentlemen. Peter Wharton-Hood: Thank you, ladies and gentlemen. Thank you. Operator: Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.
Operator: Good morning, and welcome to the Rémy Cointreau 2025, 2026 H1 Results Presentation. [Operator Instructions] Now I will hand the conference over to Marie-Amélie De Leusse, Chairwoman, please go ahead. Marie-Amelie De Leusse: Good morning, everyone, and thank you for being with us this morning for Rémy Cointreau's First Half Results. I am here with Franck Marilly, our CEO; and Luca Marotta, our CFO. Both of them will, of course, take you through the detailed results. Let me begin by sharing a clear and honest picture of where we stand today. As you can see in the next slide coming up, part of our portfolio has already returned to growth. Please, this slide. Thank you very much. It seems we have a small technical issue, but we will resolve this in just a few seconds. Bear with us, and apologies for the delay. So as you can see, part of our portfolio has already returned to growth. In Cognac, 40% of our organic sales are back to positive territory. And in Liqueurs & Spirits, that figure rises to 85%. These are encouraging signs, which confirm the strength and relevance of our portfolio. But we must also acknowledge that despite this progress, it is clearly not enough. Yes, momentum is emerging across categories, but we remain far from where we need to be. This is why under the leadership of our new CEO, the group is entering a real turning point, a decisive moment where we deeply challenge ourselves, rethink our priorities and set the foundations for a stronger future. This transformation is anchored around 2 immediate priorities. Priority #1, revitalize Cognac, the historic heart of the group and a category with strong potential. Priority #2, accelerate the expansion of Liqueurs & Spirits, a resilient engine already showing solid signs of recovery. Our ambition over time is clearly to provide greater volume scale to absorb fixed costs, rebalance working capital, broaden our geographic footprint and reduce sourcing constraints. Our conviction is that we have everything we need to succeed. We can leverage the unique strength of our portfolio made of houses that have shaped our identity for centuries. We can rely on our highly committed, passionate and talented teams who continue to demonstrate remarkable dedication and resilience in every market every day. And we now have a clear direction, renewed energy and the willingness to move faster. This is the transformation we are now putting in motion. And I strongly believe that we can look to the future with confidence because our brands, our consumers and above all, our people give us exceptional foundations on which to build. The journey has begun. And together with determination, we will write the next chapter of Rémy Cointreau. Franck, the floor is yours. Franck Marilly: Thank you, Marie-Amélie. Good morning, everyone, and thank you for joining us today. I'm glad to be here for my first results presentation. I will begin with a quick overview of first half '25, '26. Luca will then detail our financial results, and I will conclude by giving you an update of the group situation and the outlook. Let's begin with a review of our first half results performance. I'm now on Slide 6. Group sales totaled EUR 489.6 million, representing an organic decline of minus 4.2% versus last year. COP reached EUR 108.7 million, down minus 13.6% on an organic basis, resulting in a margin of 22.2%, down 2.7 points organically. This performance reflects, first, a gross margin contraction of minus 2.4 points impacted by tariff, an unfavorable price/mix and to a lesser extent, some production cost pressure. Despite this additional tariff, our gross margin remains strong at 70.1% organically, slightly above H1 of '19, '20. Second, our deliberate decision to maintain marketing investment with A&P at 19.4% of sales, up 0.9 points year-on-year. These efforts were almost fully offset by continued discipline in cost management with OpEx declining versus last year. In this context, our net debt-to-EBITDA ratio increased slightly compared to March, reaching 2.96. Let's begin with our 3 main highlights for the semester, starting with the U.S. on Slide 7, our largest and most strategically important market. After 2 very challenging years, our underlying trends in the U.S. continued to improve during the first half, allowing the group to return to sales growth in first half. The improvement is real and consistent even if the pace of recovery has been slightly slower than we initially expected. On depletions, Rémy Cointreau U.S. shows a clear sequential improvement. Month after month, depletion volumes have strengthened, supported by gradual normalization of inventories at our distributors. Since the start of the calendar year, we have seen steady progress, bringing total volume close to stability by the end of the period. This confirms that the worst of the correction is now behind us. On sellout, Rémy Martin is now outperforming the Cognac category. After several quarters of underperformance, the brand has regained momentum, thanks to sharper pricing alignment and improved commercial execution. This marks an important turning point for the brand in the U.S. At the same time, Cointreau continues to demonstrate solid resilience, both in absolute terms and relative to its category. Despite a difficult market, the brand maintains healthy consumer demand and benefits from a strong brand equity and efficient brand activations. Overall, these trends give us confidence heading into H2, even though the U.S. spirits market remains challenging in the current macro environment. The sequential improvement is underway. Our objective is now to build on this momentum. I'm now on Slide 8. The market in China has become increasingly challenging during the first half, leading to a sharper-than-expected decline in our business. The overall environment has softened over the period, and the base of comparison remained high. As a result, sales in China were down mid-teens in the first half, in line with value depletions. Consequently, inventory levels remain healthy, providing solid fundamentals ahead of Chinese New Year. The execution of our Mid-Autumn Festival strategy has been complex, but the outcome is clearly positive. MAF has finally taken off. Greater pricing agility to adapt to the new market dynamics, combined with strong commercial execution and a relevant product offering has generated a favorable elasticity. This is an encouraging sign in a market where consumers are increasingly selective and value-driven. MAF delivered a low single-digit growth over the period, while our performance during the recent Double 11 e-commerce festival was also strong, with sales up plus 15%. These successes confirm that our strategy is the right one, even in a more challenging environment. Overall, while China remains difficult, we are seeing early green shoots that support our confidence over the midterm. A final word on the EMEA region on Slide 9. Consumption trends remained soft across most markets in first half, reflecting a more cautious consumer and pressured discretionary spending. That said, the region will benefit from solid drivers to support a rebound in H2, notably innovation, distribution gains and targeted pricing initiatives. In Africa and Middle East, the rollout of Rémy Martin VS is progressing well in a market largely driven by the VS segment. Our performance with wholesalers is currently ahead of our objectives, reflecting strong initial traction. As a result, we will be increasing our shipments in the coming months. In the U.K. and Nordics, we expect to improve sequentially. We have secured distribution gains on the The Botanist, Rémy Martin 1738, Telmont and Bruichladdich that should start to deliver in H2. We are also implementing smart pricing initiatives during the peak season, ensuring competitiveness while remaining aligned with our value strategy. In parallel, we are leveraging our innovation pipeline with recent launches supporting brand visibility and product testing. Across Europe with third-party distributors, our brands continue to gain traction. Our new Metaxa campaign was launched in key markets, driving awareness and recruitment. For Cointreau, on-trade activation will contribute to sustaining momentum despite softer category trend. We also expanded our presence through new launches, such as Telmont Rosé in Italy & Spain and secured additional distribution gains in Germany. Overall, while H1 remains soft, the region is building the right momentum and assets to support the expected improvements in H2. Luca Marotta: Thank you, Franck. Now let's move to a detailed analysis of the financial statement, starting with the H1 income statement. As previously mentioned, organic sales were down by 4.2%. Based on this, gross profit decreased by 7.4% in organic terms, implying 2.4, 240 basis points of deterioration in gross margin. this is still representing a slight improvement compared to pre-COVID levels. This H1 gross margin contraction has been driven by incremental customs duties, clearly, and unfavorable price/mix effect on the top line and to a lesser extent, some manufacturing and logistic cost pressure. Sales and marketing net expenses were down by 4.6% organically, so more or less in line with sales. Inside this total, we can say that A&P expenses were up plus 0.5% organically, representing a ratio of 19.4% of sales, which means an organic increase of the A&P pressure, compared to the top line of 0.9 points. Despite continued pressure on sales, we have, as you can see, decided to maintain our investments behind our brands to protect their desirability and to be prepared for the recovery. However, we have done so all that while keeping a clear focus on efficiency and selectivity. Accordingly, we increased since some quarters, the share of BTL, below-the-line, spending relative compared to the, above-the-line, ATL during this period. As a result, the share of BTL investment is higher now or the above-the-line spend. What is inside that? Above-the-line, as a reminder, it is traditional media, digital, PR, and that represented 45%, less than 50% of the total A&P, while below-the-line clearly represented 55%. On top, as a transversal point, digital investment inside A&P represented more than 65% of the ATL. So 2/3 -- So 2/3 multiplying 45%, we can say that around 30% of our total [ A&P ] spend is linked to digital activities and support. Talking about OpEx, let's start with distribution costs. They decreased by 10.6% organically, mainly due to a one-off related to a compensation indemnity. Administrative net expenses were almost flat on an organic basis, reflecting continued ongoing discipline on overhead costs following optimization made during the last 2 years, essentially, but not only. Overall, as a result, current operating profit was down 13.6% organically and more or less the double minus 26.2% on a reported basis. Why that? Because we have to take into account the negative currency impact of EUR 18.7 million on the bottom line. Talking about margin. COP margin stood, as Franck already highlighted, at 22.2%, down 2.7 points as reported, of which 5.4% clearly organically. Compared with H1 '19, '20, the margin is down by 4.7 points despite a slight improvement in gross margin, plus 0.4 points. So why we are down compared to pre-COVID level of margin because of the sharp increase of A&P investment, 4.4 points. Overheads were slightly increasing, but more or less in line and touch more than the top line. So let's move to Slide #12 to dig inside the group current operating margin bridge. It was down 5.4 points as reported, as said, reaching 22.2%. This breaks down into organic decrease of 2.7 points and a negative currency effect, the same magnitude, 2.7 points. The organic evolution of the current operating margin largely reflects a deterioration of the gross margin, which nevertheless remain, I repeat, it's very important, above pre-COVID levels, plus 0.4 points. This deterioration was likely amplified by the sustained level of A&P spend, along with continued discipline, as you can see, in distribution and structural costs. To be more precise, gross margin was down 2.4 points, of which more than 1/3 is linked to incremental custom duties alongside an unfavorable price mix on the top line, both in mix and in pricing in the current environment clearly. And to a lesser extent, inflation related to the cost of goods, particularly on the Cognac eaux-de-vie that has been bought and supplied some years ago. Second point to highlight is the A&P ratio. It increased by 0.9 points, as already said. Third, talking about OpEx, the ratio of distribution structure cost was down 0.6 points and decreased by EUR 9 million in absolute terms. This is an important key achievement considering, as you remember, the reintegration of more or less EUR 10 million of last year over one-off savings. So it is clearly a good performance in our opinion. Slide #13. Moving on the remaining items of the income statement. We can say that in H1 '25, '26, the operating profit included almost no other nonrecurring income or expenses. Financial charges were almost flat and slightly increased from EUR 21.1 million to EUR 22 million, but I will be more precise going more details on this in the next slides. Talking about tax rates, increased from 27.5% to 28% but is a global first sight analysis because it's mainly due to the additional charge related to the exceptional corporate tax contribution in France linked to 2025 French Finance Law. So if we exclude these nonrecurring items, tax rate are actually decreasing from 27.7% last year to 27.3%, a small one, but a reduction of 0.4%. For the full year, as a guidance, we expect the tax rate to land at around 29% partially, including 1.5 points of exceptional tax. As a result of that, net profit group share came in at EUR 63.1 million, down 31.3% on a reported basis, i.e., a net margin of 12.9%, down 4.3 points. EPS for the semester came out at EUR 1.22, down 32.6% as reported. As promised, a few comments on Slide #14 on net financial expenses, which amounted to EUR 22 million charge in H1 '25, '26 to be compared to EUR 21.1 million last year the same period. Net debt servicing costs were slightly down in absolute terms, as you can see. As a consequence, our cost of debt -- pure cost of debt decreased from 4.17% to 3.78%. Net currency losses increased from a loss of EUR 0.5 million last year to EUR 1.1 million, primarily due to the hedging of intragroup financing. Finally, other financial expenses stood at EUR 4.8 million in H1 '25, '26. For the year, globally, we expect as a guidance, financial charges to reach less than EUR 50 million. Now let's analyze one of the most important chart, as you know, in my opinion, for a company like Rémy Cointreau, which is a business model which is based on buying today where we can sell tomorrow and the day after tomorrow and the day, day after tomorrow, which is the free cash flow. Free cash flow generation and net debt evolution on Page #15. Free cash flow was negative in H1 '25, '26 and stood at EUR 16.5 million to be compared to a negative [ one of EUR 7.6 million ] in H1 last year. But last year, we had EUR 28 million of tax refund in '24, '25 related to prior overpayments done by ourselves to the tax bureau. And this represents, so in a comparable basis, an improvement from minus EUR 35.6 million to minus EUR 16.5 million, still negative, but on a comparable basis, improving. If we exclude this tax repayment refund, quite an exceptional one distortion, free cash flow evolution reflects a meaningful decrease in the first line, which is EBITDA, partially offset by 2 factors. First, a significant decrease of the other working capital items outflows. Actually, we had a positive variance effect of EUR 59.5 million. Why? While the working capital outflow related to eaux-de-vie and spirits in aging process was slightly up by EUR 10.8 million due to lower eaux-de-vie outflows for the same level of purchases. At the same time, we can say that the H1 of balance sheet eaux-de-vie that you can read inside our reporting and not in the slide, already recorded a reduction in commitment compared to the future. If you compare this year, long-term off-balance sheet commitment to what we reported 3 years ago at the same time when we have signed the long-term contract engagement, you can see that there will be a saving of more or less EUR 110 million. As I repeat that, it is not visible in this slide, but it's very important. Our future commitments have been reduced substantially and is clearly visible in off-balance sheet reporting. The first impact on our financial account, so let's back to this year result will be only -- will be recognized and visible at March 2026. Overall, global working capital outflow evolution is favorable and has been reduced by EUR 48.7 million, mostly driven by some phasing effect in trade payables between H1 last year and H2 -- H1 of this year. Why that? Because it depends on the timing and the phasing of the buying essentially A&P activities. Second element is a decrease of EUR 7.2 million of CapEx outflow following the optimization action that we decided to protect cash. In parallel, other cash flow items inflows decreased by EUR 7.9 million, and this was mostly driven by our equity investment made through RC ventures for minority shares in some companies. As a result, at the end of September 2025, our net financial debt stood at EUR 686.7 million, so slightly up EUR 11.3 million compared to March 2025. As a consequence, NE ratio is up from 2.4 in March 2025 to 2.96 in September 2025. If you compare ourselves to September last year, so in 1 year, not only 6 months, net financial debt increased by EUR 42.4 million and A ratio clearly is increasing more from 1.90 to 2.96 in September 2025. Now let's move on and talk about the impact of currency hedges, a very technical slide, I know. But in this moment, it's important to be the most precise we can in this very complex and volatile environment for currency. The group, as you have seen, reported a negative translation impact of EUR 21.7 million on sales and a negative transaction effect of EUR 18.7 million on COP in H1. This mainly reflects the evolution of the U.S. dollar and Chinese renminbi. In H1 '25, '26, we recorded deterioration of the average euro-dollar conversion rate from RMB 1.09 to RMB 1.15 per euro and the euro-RMB conversion rate from RMB 7.84 to RMB 8.28 for EUR 0.10. This was conversion. But our process of hedging determined that our average hedge rate deteriorated from USD 1.07 to USD 1.13 per euro in H1 '25, '26 and deteriorated at the same time from RMB 7.66 to RMB 8.37 for EUR 0.10. That's the reason why mathematically, we have a loss in bottom line. Looking at our forecast, which is most important, looking not in the past, but for the future. For the full year '25, '26, as you can see, -- assuming a conversion rate of 1.15 on euro-U.S. dollar and EUR 8.26 on euro-Chinese yuan as well an hedge rate of 1.12 on euro-U.S. dollar and EUR 7.94 of Chinese yuan, so better than conversion, we anticipate a negative impact between EUR 50 million and EUR 60 million on sales, of which 60% will be in the H2 and between minus EUR 25 million and EUR 30 million on negative in COP, of which only 1/3 will be in H2. So a dephasing between conversion and transaction. As you can read on the slide, you can have also the ForEx sensitivity by currency. As the evolution of the euro-dollar and also euro-RMB exchange rate remains very volatile, we will continue to share with you an update every quarter. At this stage, for the full year, we have already covered 95% of our net U.S. dollar exposure, of which around 60% of options. So we are still flexible. On Chinese yuan, it is 80% of our needs that we cover, net, of which 40% touch less on option. Now let's move to the balance sheet, Slide #17 overview, where total assets and liabilities stood at EUR 3.46 billion, up EUR 87 million compared to last year at the same time. On the asset side, global inventory increased by EUR 129 million to reach EUR 2.1 billion due to the purchase of young eaux-de-vie and also an increase of our inventory levels given the current context. Inventories now represent 61% of our total assets, up 3 points from previous year. This was the left side. Talking about the right side, the liability side, shareholder equity is up by EUR 25 million, mainly driven by the net income, partially offset by the payment of the dividend related to the fiscal year '21 -- '24, '25. Net gearing, so the group's net to debt-to-equity ratio was slightly up over the period from 34% to 36%, reflecting the increase of our financial debt. So now I get the mic back to Franck. Franck Marilly: Thank you, Luca. To conclude on the short term, let's now turn to Slide 19. A few words on the guidance we updated a month ago. We are today confirming our expectations, both for sales and for COP. In more detail, we expect organic sales growth to land between flat and low single digit. For COP, we anticipate an organic decline ranging between low double digits and mid-teens. This guidance includes the impact of tariff, which we estimate at around EUR 25 million. Finally, we expect a negative ForEx impact of between EUR 50 million and EUR 60 million on the top line and between EUR 25 million and EUR 30 million on COP. As we confirm our guidance for the year, it is also clear that the environment ahead demands more than short-term adjustments. We need to step back, reassess our assumptions and rethink how we operate across the entire group. It is time to challenge the way we think in that and to lay the foundation for the next phase of Rémy Cointreau long-term journey. As we step back, it is important to recognize the environment in which we are operating today. I'm on Slide 21. What we see is a transitional context, one that is mostly cyclical rather than structural. The industry continues to face a series of global headwinds, including the persistent increase in the cost of living and the ongoing geopolitical tensions. If the U.S. consumers remain relatively resilient, but they are also more polarized and increasingly price sensitive. Societal anxiety is also weighing on shopping behavior, adding further volatility to demand patterns. These pressures are contributing to the evolution of consumer dynamics. You're already familiar with them, so I will not detail them here. Taken together, this shift defined a landscape that is challenging, yes, but also full of opportunities for those who adapt with agility, discipline and clarity of focus. When I joined the group last June, my first priority was very simple, take the time to listen. Over the past month, I traveled across our regions, met our teams, visited markets and partners. This listening phase was essential. It allowed me to understand our strengths and our challenges on what truly matters to our people and our consumers. Based on this diagnosis, it is clear that the transformation is needed and transformation requires rhythm. There is a time to listen and time to rethink and a time to reignite while acting fast. This slide reflects the timeline I have set for us. We're currently in a rethink and reset phase while targeting quick wins that will help us regain agility and improve performance in the short term. By June, we will be able to articulate a clear annual guidance. And by next November, we will present a detailed midterm roadmap. From this first diagnostic, I have identified 5 short-term priorities: first, accelerate decision-making by building a more agile, business-driven organization. Second, optimize and strengthen our commercial resources, ensuring we are fully equipped to capture market opportunities. Third, redefine how our brands express their DNA to ensure relevance amid evolving consumer trends and unlock additional growth. Let me be clear, this is not about changing who we are or diluting our identity. It is about redefining our own limits, understanding how far we're willing to stretch a brand while remaining true to our identity. In today's environment, we must be less dogmatic and more pragmatic. Redefining our DNA boundaries means embracing these opportunities where they make sense in a way that strengthens our brand rather than limiting them. Fourth, stay true to our value strategy while revisiting mix and pricing with greater sharpness and alignment to today's market conditions. Here again, let me be clear, this is not about changing our strategic North Star. We remain fully committed to our value strategy. It is part of who we are, and it has served us well over time. But we also need to be less dogmatic than we were 2 years ago. At that time, we made the deliberate choice to make no concession. Yet today, the context has changed, reigniting volume growth has become essential. And lastly, shift our A&P allocation model and review our brand portfolio to better manage the long tail and maximize ROI. These priorities will help us stabilize the business, regain momentum and prepare the group for the next stage. Because once we emerge from this crisis, we must and we will go further. We will broaden our horizons and shape the medium-term future for the company. This is a journey we are on together listening, rethinking, resetting and ultimately, reigniting Rémy Cointreau for the next chapter. As part of the assessment phase, my objective has been to identify what will matter most for the next chapter of Rémy Cointreau. Building on the diagnostic, we have defined 5 strategic priorities that will guide the reset of the group. First, we need to reignite growth with a strong focus on immediate value creation through top line initiatives. This means renewing our go-to market, strengthening our revenue growth management, leveraging innovation more effectively and reallocating A&P with greater discipline and impact. Second, we must reassess our brand portfolio architecture to simplify its complexity and enhance A&P ROI. This is essential to ensure that our investments are concentrating on what truly drives value. Third, we will unlock efficiencies to reverse the COP trajectory, fuel future growth and ultimately improve cash. That includes procurement synergies, simplifying operations and streamlining the way we work. Fourth, we need to improve cash generation. Beyond reigniting COP growth, this requires reducing order repurchases, being extremely selective on CapEx, keeping a consistent and reasonable dividend policy and reviewing our brand portfolio through a cash generation angle. Fifth, we will build a new organization that is more agile, faster and better connected, breaking down silos and enabling teams to execute with greater clarity and alignment. All of this feeds into a broader ambition to unlock the resources needed to dissociate our performance on the macro environment and fuel the next phase of growth. This is why we are now structuring these priorities around 10 concrete levers that will be fully detailed in the next stage. Let me finish with one important message. My intention today is to be transparent with you, to give you as much visibility as possible. And to show you clearly where we stand. We are driving a real transformation, and we need the time to implement it properly. As you saw on the timeline, there will be, of course, a moment in a couple of months. when we will be able to detail this road map much more concretely. Today is about the directions. The next steps will be about execution. And while we're building the strategic plan, we must also seize every short-term growth opportunity available to us. This is not an either/or situation. We are transforming the group while continuing to drive the business forward. And one of our strongest short-term levers is our innovation pipeline. For the next 6 to 12 months, we have a robust and exciting set of consumer-driven launches. First, the trend of convenience. This is exactly where our pipeline gives us an edge, where quality meets convenience, the recent RTS launch from Cointreau is a perfect illustration of savoir-faire. The quality is truly exceptional. Second, the trend of affordability. Consumers are looking for accessible propositions that remain aspirational. The rollout of Rémy VS in Africa is a perfect example that offer potential for next year. And beyond that, we are working on a very exciting project for Rémy Martin that I hope will see the light of day in 12 months. This will allow the brand to recruit more broadly in the U.S. while staying absolutely true to its core DNA. Third, the trend of flavors and cocktail culture. We're seeing consumers increasingly seeking flavors and cocktails. This opens up new possibilities for refined spirits and helps broaden recruitment and enhance relevance among consumer, younger consumers. Taking Mount Gay as an example, the silver expression will be a perfect ingredient for Mojito, the world's third most consumed cocktail. Fourth, the trend of cultural relevance. We have opportunities to bring our craftsmanship and heritage into formats and stories that resonate more deeply with local culture, where savoir-faire meets cultural relevance. In parallel, we are also acting on 2 other critical short-term levers, enhancing pricing flexibility, combined with the growth of small format, maintaining strict overhead discipline and optimizing cash generation. As we come to the end of this presentation, I'm going to leave you with one clear message. Rémy Cointreau is at the pivotal moment in its history. We are only at the very beginning of this journey. What I have shared with you today may still stand somehow conceptual and that is normal. A true transformation always starts with the vision with clarity of direction and with the conviction that we can and must do better. But let me reassure you, behind this vision, there is total determination, mine and that of all our teams across the world, we are already in motion. We are rethinking how we operate, we're setting our priorities, reigniting innovation desirability and already preparing the group for the next chapter. I'm genuinely excited about what lies ahead. And I look forward to presenting the full plan and more importantly, to show you the first tangible results of this transformation over the next 12 months. Thank you. We're now happy to take your questions. Operator: [Operator Instructions] The next question comes from Richard Withagen from Kepler Cheuvreux. Richard Withagen: I have two questions, please. First of all, Franck, you talked about quick wins. So let's take really Rémy Martin, which remains the biggest brand of the company. So what kind of quick wins are you thinking about specifically? Is it more about better marketing or more marketing? Is it about price changes? Do you think about distribution changes? So some more color on that would be useful. And the second question is on the balance sheet. That's the balance sheet at 3x net debt-to-EBITDA limit or flexibility in strategy execution. Franck Marilly: Thank you very much for your question. I will answer the first question on other quick wins. Quick wins means being opportunistic in a crisis. There are always opportunities to look for. This translates into additional A&P, where we're certain to get a right ROI. This is an example of what we did during MAF Festival. I'm glad we put more money on the table as we had a very good positive return on the sellout performance. It can be on extension of geographies as well that we are looking at right now. It can be, you mentioned, the price flexibility, price supporting activities on the trade as well. It could be into specific promotional activations in the trade, in the points of sales as well. It is depletion incentives that we have already in some regions. It can be business developments in other geographies as well. It's a set of different opportunities. We're looking at everything that is possible today. Everybody is in a difficult situation, and we have to be having a fighting spirit in that case and really be opportunistic while preserving our DNA, honoring obviously, our brand equity. Luca Marotta: On the balance sheet structure, I will answer. So today in terms of global resources, we are clearly well equipped compared to crisis 2008 or previous one. The group has a lot of weapons to face. Clearly, it's more the EBITDA depressed in the last 2 years and this year, we are guiding for a negative impact, on top, we have ForEx negative wins. -- that is causing the increase of the ratio to almost 3 now. Let me surprise you. It is a welcome and candid friends. 3 is a very good news. It's a spicy news. It obliged ourselves to react, to rethink, not to sleep with a large pillow, but with a cervical pillow that drives your head more right. So everything, Franck as highlighted, will be more focused on cash generation. P&L for Liqueurs & Spirits company, even more for aging company, it's only a small part of the true. We have to think more, more than we are used to in terms of free cash flow and balance sheet shifts on the very long term, even before P&L. So it's not limiting. It is a candid friends waking up every day with the need and eager to improve ourselves on the cash generation side. Operator: The next question comes from Trevor Stirling from Bernstein. Trevor Stirling: So 2 questions from my side, please. The first one in terms of sell-out trends, it sounds as if you're getting a little more optimistic on China, those numbers you were quoting for Mid-Autumn Festival and D11 sound very positive. . Maybe if you have any -- is that right that we're exiting the half in much better shape in China. But at the same time, perhaps things getting slightly worse in total in the U.S., relative trends are a little bit better, industry trends a little bit worse. So if you can comment on that, that would be great. And the second question, Franck, intrigued by your reset and reignite and your question around moving from dogmatic to pragmatic, and it sounds as if in particular, you might be looking reexamining your pricing strategy in the United States. Is that the right way to interpret what you said? Franck Marilly: Thank you, Trevor, for your question. There are many questions in one question. Let me start with China and be very pragmatic. As I mentioned before, some of the quick wins were to reinject some A&P with a measured ROI, obviously, as a target. That's what we did with our Chinese organization. I'm glad we did that because CLUB was the only brand positive in Cognac during the MAF, we had a good double-digit increase actually in sell-out. So we were very proud of that. It is obviously down to the great execution of the team together with our distributors. This is one clear example it can work. To your second question, price elasticity. Yes, there's no taboo about that, we're on a crisis, I mean, we could talk about brand margin. We could talk about elasticity, the impact it can have. At the end of the day, what do we want? My #1 objective is to grow the top line. We need to reconquer our position. Obviously, we're looking -- targeting a profitable growth. We need volume. We need to reignite the top line starting with Cognac, where our stronger categories to fuel the other brands as well in the second stage. So this is really the top priority, grow the volumes. So price elasticity, yes, it is something I'm looking at, absolutely, in different regions, including the U.S., as you mentioned, the U.S. Luca Marotta: To complete on the -- to complete at this point with some indicators or the temperature of the depletion and the best approx of sellout, let's start with the short term and then go to the guidance for the full year of depletion according to the top line. So what happened in the last 2 months to 3 months with some volatility between months, we can say the last 2, 3 months in top line, so talking about sales has been improving, as you can see, still negative, it is improving. In terms of value depletion, to be more granular in October, China, as I highlighted, was clearly very positive also for a calendar effect, but not only because Mid-Autumn Festival has delivered a very very good growth, clearly beating the market and with CLUB playing the big guy role and Double 11 as well. So overall, every time we have the possibilities to get in touch with the consumer in China in a very humble way, we are beating competition. But it is more volatile because of the context and the lack of trust to the wholesaler. So the indirect part, which is waiving more than 50% is more volatile. So it's true compared to the month of -- compared to June, July, our result in China overall in terms of depletion are a bit down. U.S., it is improving, still on negative land, but is improving constantly. This was the reason why the top line at the end of the Q2. So the H1 was positive on sell-in. And EMEA depletion still negative so far, but improving a bit. So this is the short term. But what is important, what look to the full year. And then one last point, a technical one, which I never touch base, where I thinks is important. So talking about the top line is in -- for the group, it's low to mid to -- flat to low single digit, 0 to 2, 0 to 2.5, something like that in your translation. Americas, clearly U.S. in terms of top line sell-in will be high single, low double, because we have the restocking part which is already there and then the compound part linked to the depletions. For what concerned value depletion. We are improving, but still for the year, we are targeting the Americas level, so including Canada, LatAm, flattish to minus. For the U.S., a touch lower. So in value depletion something between low single-digit decline. Are we stocking? No. Because we are destocking. That's an important point that I will be back maybe also next week in London, even more clearly if you want. Overall, the absolute value at comparable unit value per product sold is showing this year, like last year that the absolute value delivered in depletion is bigger than the sell-in. So plus one in sell-in and minus 1 in depletion, if you want, is giving destocking because we destocked so hard in many markets in the U.S. in the last 2 years enough that the base and rebalance and are more healthy. Talking about Asia Pacific and China in terms of the full year algorithm, top line, it will be around mid- to high single-digit decline with a value depletion better than that. So still negative, but better. And for EMEA, top line will be low to mid-single-digit decline with better performance in the but not a fantastic one. As a transversal channel, one point on Travel Retail. Double-digit sales, double digit in sellout. It is enough? No. We count a lot to reimprove, to reaccelerate on this channel for the future as well. One last point in terms of division. Clearly, this is a year of Liqueurs & Spirits and less of the Cognac. We are improving Cognac. We are still lagging behind the performance of Cognac of Liqueurs & Spirits division, that is a bit more dilutive. It is an impact on the profit and loss. Sorry, it was a bit long, but I think it's interesting for you, both in the short and for the full year guidance. Operator: The next question comes from Laurence Whyatt from Barclays. Laurence Whyatt: A couple from me, if that's okay. Just firstly, on your inventory on eaux-de-vie. We've seen a number of, I guess, false starts in both China and the U.S., where you've sort of been expecting improvements and perhaps they haven't materialized and they're coming through now. But in terms of Cognac, of course, you need to lay down stock many years in advance before the product is produced. As a result, given that perhaps the China and the U.S. are somewhat weaker than you predicted years ago, are you potentially sitting on still quite a lot of stock in terms of aging eaux-de-vie ready to go into bottle now. And I was wondering if you could give a commentary not only on your own inventory, but perhaps what you see in the wider Cognac sector, if you're saying that the industry perhaps has a lot of stock or the right level of stock for what you're expecting in terms of Cognac sales over the next few years. And then secondly, with regard to a lot of your comments, Franck, you clearly pushing more volume growth, you talked about volume growth becoming more essential. Slide 24, when you're talking about your new products, a lot of those seem rather entry-level products with relatively low price points versus the rest of your portfolio. And you also talked about revisiting mix in your portfolio. If we see sort of lower price point products across Rémy, what sort of expectation can we have on the margin going forward, given that was one of the key areas of gross margin improvement over the past few years when you premiumized your portfolio? Franck Marilly: I will let Luca answer the first question and answer on the second question. Luca Marotta: Yes. So eaux-de-vie stock, we have 2.1 billion stock, 80%, 85% is eaux-de-vie of cognac sold daily. We have a lot of stock clearly quantity is unbeatable. But it's more in terms of the spectrum of the stock that we need to reassess the priorities that is in terms of do we have another stock, which will not be able to sell considering the footprint, our future plan. . Knowing that the first priority of our new general manager of the company is to reignite and put the top line as the first priority is reassuring a lot also this financial because all innovation project will be driven to speed to foster the working capital speed to market. If you look at the eaux-de-vie free cash flow for the H1, more and the guidance for the year will be more or less EUR 100 million. So more or less what I shared with you some months ago. But inside that, the point that we are increasing the speed of the exit rate, if you want or the volumes of the Cognac to be able to accelerate the capital rotation. All the innovation projects will be focused on that. So also, your second question, which will be answered by Franck, every time you are able to increase volume, we'll be able to generate cash. The only point that you might, for the future, as all analysts reconsider and we will be more precise also during next quarters and the 4 years is that consider all the context, tariff and a more convenient and more pragmatical approach by the company, gross margin in terms of ratio is a little bit less global priority, compared to the global amount massive margin and absolute value and generated cash. So that pushed pressure on the profile of P&L. So I insist on what already Franck said, ROI and streamlining and focus on A&P and clearly, rethink the way we are doing things to be able to generate additional synergy and overheads. We cannot count our margin -- gross margin go to 72%, 75%, 77% that we were projecting before. It is another world, in which gross margin is less of help in terms of ratio but in which top line increase can give a lot more of cash to increase the -- improve the return on capital employed. Franck Marilly: Thank you, Luca. I fully agree with Luca on the fact that growing the volumes would grow our cash, obviously. To grow our cash, there many perspectives later on the reduction of our cost of goods. There are many ways to reduce our cost of goods, and we started working on that already. . Optimizing our A&P is crucial, obviously, where is it generating value creation in what region or what brands. Setting priorities is extremely key. Cognac is very key, and there are many, many opportunities ahead. Cognac is far from being dead, like I read in the newspapers at some stage. We need to work on streamlining our overheads as well, which is important. The whole objective is not just to put this in COP, but also to grow our A&P capacity to be more competitive in this difficult environment. On your question on Cognac start going back there, it is my key priority because we need to deplete the levels of stock, obviously, we'll be having a great financial impact on our company. But not only that, Cognac is a high proportion of our business. We have extraordinary brands between Rémy Martin, but also Louis XIII. We don't talk so much about Louis XIII. We need to reignite Louis XIII as well. It is an amazing brand, the maximum of the brand equity. Talking about lower prices, yes, of course, to a certain extent, we're preserving our brand equity. This is very important. There are just some euros, dollars, some reduction we need to make to be more competitive. And some euros can make a difference in the sell-out perspective. Of course, there will be an impact like on your question on the gross margin. As Luca perfectly illustrated, we're in a different world. There will be a natural erosion. What we're looking is for volume at the end of the day, top line and cash. We're looking at generating cash. So there should be no taboo on this as well. Again, we're not talking a dramatic reduction of prices or whatever. It's just being flexible to be in line with the realities of the market. I said to you earlier on I spent a lot of time on the field. I probably need to spend even more time. I very much enjoy visiting the stores and making comparisons by category. So I think we need to go a little bit further. It doesn't take so many efforts. That's why I call it a quick win. There are many opportunities on how to sell more Cognac according to me, let alone the expansion, geographic expansion. Luca mentioned GTR. I think we have some wealth of opportunities in GTR, where we're tracking -- 80% of our business is done in airport. GTR is much bigger than airport. There are many other channels in GTR, let alone the cruises, for instance. Channel diversification is very key as well. We're looking at that in different channels. Digital first. Digital is very important because it also gives us the control of our distribution, and is generating profits. Efficiencies in A&P, as I mentioned before, ROI, but also experiential luxury is important in today's world. It's more important than owning the product to some extent in some geographies. And we might take away amazing brands, we can deliver amazing experiences. We have amazing sites, production sites for people to visit. So I want to expand that activity as well to grow our visitor centers to leverage a D2C business. D2C is very key through CRM to e-com, e-retail. I want to leverage our B2C business as well, where I think there is a great wealth of business, a lot of potential there. I haven't mentioned emerging markets as yet, but emerging markets are very key. I have a long list of emerging markets where we can do better, like Brazil to start with, like Middle East, like India. I know the limitations about India, but we can -- we have to crack the system for some groups, India represents a big business. I know we're touching a different business model, but why should we not be looking at? They're not frontiers, where there is a will, there is a way. So we need to explore any potential opportunities. Operator: The next question comes from Sanjeet Aujla from UBS. Sanjeet Aujla: A couple of questions from me, please. Franck, just touching upon your comments on A&P. Do you think the current ratio has scope to go lower, I think -- can you make it more effective? I think some of your peers have been on a journey of really trying to get more out of the A&P bucket. I'd love to get your thoughts on that. And is that how you can fund some of the price adjustments you're talking about? So shifting from A&P to price adjustments? And secondly, just coming back to the portfolio, I think you highlighted in your presentation, complexity tail disposals potentially on the table as well? Franck Marilly: Thank you very much for your question. The ratio of 20% is not a bad one. I believe in essence is quite competitive. It's just 20% of the level of net sales we generate. It's just not enough in value. But for what it is worth, we have to play with what we have in a good way, in a positive way. That's why I require a lot more analysis on how we spend on our efficiencies? Is it above the line? Is it below the line? What is it exactly? Is it bringing value to our business. So I need really to look at strong KPIs to measure, to monitor like I really want to do small on our novelties, less is more. Innovation is a key driver for growth. Maybe we need to do a little bit less but with a stronger impact. A&P needs to support those launches. A&P is very essential. So the growth is going to be fueling basically those A&P. I believe, it's Richard, who asked me about quick wins. Quick wins are also on the effectiveness of our procurement. We need to leverage efficiency in our procurement. What we're going to leverage or the economies we may realize will go into A&P. I really want to boost the A&P to be even stronger than what it is today. This is going to be fueling the growth but we need to spend really that money in the right place. I just want to... Sanjeet Aujla: Portfolio disposal. Franck Marilly: Portfolio disposal. Again, there is no taboo here. Our portfolio is something we're considering looking at obviously might take away, when I joined this company is that we have amazing brands. Believe me, I've visited most of them. I haven't been to some locations as of yet, it's a matter of time. But while we have beautiful brands, we have to consider our future now. It is important. We need to strengthen our core portfolios. It is important. We cannot be dilutive in our spending. We cannot just be -- we have to set priorities on the geographies on given brands basically. So we are -- I have no decision at that stage that is taken, but we're looking into it. I don't want this to be a taboo either, but nothing has been decided at this point of time. Luca Marotta: Sanjeet, one additional comment on your first question. In this world, which is changing with -- changing the rules very quick, and we need the reactivity. We need also to be able to get a different reading of the financial dynamics. And we have all, as an industry, to make good improvement in that, starting from ourselves. Classical P&L, as I said, is not enough. Classical way of analysis of P&L is not enough. We need to be able to dig in and to be able to valorize what we are doing all along the P&L. Sometimes the feeling that all starting myself, we consider A&P quite a novel land and overhead land of cost and chunky -- and chunky money. It is not that way. When we say that we need to be more convenient with different packs, small sizes, part of the gross margin dilution can be also be valorized and put in place as an alternative way to do A&P. So when Franck is saying, clearly, efficiency is talking also as well as a different transversal way to let the profit and loss, able to talk a more comprehensive and understandable language because otherwise, we will remain in silos also inside our reading of the P&L, which is not we can do in this changing environment. Operator: There are no more questions. So I hand the conference back to the speakers for any closing comments. Franck Marilly: One very quick comment from my part. Thank you very much. It's a pleasure to get to meet you for the first time. And thank you for your great questions. I just want to say as a closing remark, if we want to dream big, we really need to act bold. We need to make a transformation as a team. Collaboration is very important. We need to be bold. We need to be audacious. We need to have ambitions. We need to have creative thinking. We need to drive altogether with my team a real transformation. We need to challenge inertia. We need to challenge the status quo. We need speed, energy and that's also why I'm looking on new governance and a new organization, and we'll discuss that more at a certain time, obviously, building on the team and the tapping into the great talent we have in this company. Again, thank you very much and look forward to talking to you again soon.
Operator: Good day, and thank you for standing by. Welcome to the Exco Technologies Limited Fourth Quarter Results 2025 Conference Call and Webcast. [Operator Instructions]. Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Mr. Darren Kirk, President and CEO. Please go ahead, sir. Darren Kirk: Thank you, and good morning, everyone. Welcome to Exco Technologies Fiscal 2025 Fourth Quarter Conference Call. I'll begin with some high-level comments on our performance and the operating environment for the quarter and full year and then I'll turn the call over to our CFO, Matthew Posno, for a more detailed review of the financial results. After our prepared remarks, we'll open the line for your questions. Before we start, I'd remind listeners that our discussion today will include forward-looking statements. These statements are subject to various risks and uncertainties, and actual results may differ. Please refer to the cautionary language in our Q4 press release, MD&A and annual report, all of which will be available on our website and on Sedar+. Fiscal 2025 was a year that tested the resilience of our business model, and I'm pleased with how the organization responded. For the full year, we generated approximately $615 million of revenue, nearly $70 million of EBITDA and $0.63 of earnings per share. Free cash flow remained a clear highlight at roughly $41 million which we use to fund growth and strengthen our balance sheet. We invested about $16 million in growth capital expenditures, returned approximately $20 million to shareholders through dividends and share repurchases, and reduced net debt to about $67 million. These results capture the essence of our fiscal 2025 theme, resilient by design, a reflection of how our diversified product portfolio, geographic footprint and operating model allow us to navigate a difficult environment and still create value. Let me briefly touch on our performance of the 2 segments. In Auto Solutions, fourth quarter sales were down about 2% year-over-year. The decline primarily reflects customer-driven launch delays and an unfavorable vehicle mix, including lower U.S. imports of certain foreign built vehicles where we have meaningful accessory content. Industry conditions remain challenging. Tariff uncertainty, shifting regulations and consumer affordability pressures continue to weigh on overall sentiment, even as OEMs supported demand with higher incentives and dealer inventories normalized. At the same time, we are encouraged by structural support, such as an aging vehicle fleet, the potential from lower interest rates and the continued adoption of advanced safety and connectivity features. These factors should underpin relatively stable North American and European production levels over the medium term. Against this backdrop, our strategy in Automotive Solutions is clear. Increased content per vehicle through interior trim and accessory programs that enhance vehicle appeal and functionality, intensify our focus on higher-margin OEM accessory platforms and continue embedding automation, lean manufacturing and disciplined cost management across our operations. We've taken actions to streamline our operations, including selective restructuring and headcount reductions in this in prior periods, which have improved structural efficiency and position this segment to benefit as new programs ramp up and market conditions normalize. As well, newer programs are launching and healthier margins and our quoting pipeline for both interior and accessory products remains robust. In the quarter and year, pretax profit in Automotive Solutions was impacted by lower sales volumes, product mix and higher labor costs, particularly in Mexico, partially offset by ongoing efficiency initiatives and pricing actions. We have incurred a modest amount of restructuring costs to support automation, lean manufacturing initiatives, and we expect -- that we expect will drive better margins over time. Turning to Casting and Extrusion. Fourth quarter sales were down about 5% versus last year. The picture within this segment is mixed, but encouraging. Extrusion tooling continued to perform relatively well, supported by a diverse set of end markets including building and construction, transportation, electrical, AI infrastructure and sustainable energy. Our ongoing efforts to standardize processes, centralized certain support functions and increased automation have improved lead times, quality and capacity, which we believe is translating into market share gains. In die-cast tooling, sales for new molds and related tooling remained comparably soft in the quarter, as customers previously delayed or reprioritized programs in response to slower EV adoption, regulatory uncertainty and tariff-related risks. However, we are now seeing a meaningful pickup in quoting activity and orders, particularly as OEMs pivot to work hybrid and smaller ICE platforms and move ahead with new powertrain programs after a period of reassessment. We continue to believe that the slowdown in die-cast orders has been more about timing than structural change, as evidenced by our current backlog, which is now above historical norms. Regardless of the ultimate powertrain mix, EV, hybrid or internal combustion engine the industry's direction towards lightweight aluminum structural components is firmly aligned with our capabilities in both die-cast and extrusion tooling. We're also seeing growing demand for 3D printed tooling, particularly for larger and more complex applications, including giga-presses, our in-house additive manufacturing capabilities, combined with deep die-cast engineering experience allows us to deliver high-performance, highly complex solutions that will be difficult, if not impossible, to produce with conventional methods. Our newer cash fuel facilities in Morocco and Mexico are progressing, bringing us closer to key customers in Europe, Latin America and the U.S. Sunbelt. While these greenfield sites are ramping up behind our prior expectations and remain a drag on near-term profitability, we are seeing operational improvement and expect them to become important contributors in volumes built over the year ahead. In casting and extrusion pretax profit was lower year-over-year, reflecting reduced die-cast volumes, higher labor and overhead and underabsorbed fixed costs related to newer facilities. At the same time, continued progress in AI-enabled automation, process standardization and value-added heat treatment services is enhancing productivity and improving the quality and cost effectiveness of our offerings. Let me spend a moment on the broader environment and how it ties into our strategy. Fiscal 2025 was characterized by significant industry headwinds. U.S. tariff actions and retaliatory measures from trading partners, which disrupted trade flows and weighed on demand for certain foreign built vehicles and components. Shifting emissions regulations and policy uncertainty, which slowed the pace of EV adoption extended the life of ICE platforms and increased interest in hybrids, and softer macroeconomic conditions, particularly in Europe, combined with weaker consumer confidence and ongoing affordability concerns. These factors affected many of our automotive-related businesses, including interior and accessory products, die-cast molds and rebuilds, consumable tooling and extrusion tooling for automotive applications. By contrast, we saw a healthy demand in a range of nonautomotive end markets such as building and construction, machinery and equipment, electrical, AI infrastructure, sustainable energy and nuclear energy. Nonautomotive extrusion tooling represents about 30% of Exco's overall revenue, and this diversity helps stabilize our results, underscoring the advantages of our multi-segment multi-market footprint. Encouraging, we are seeing constructive developments across several fronts. In die casting, OEMs are moving forward with powertrain programs after a period of reassessment, and we are participating in a robust recovery in both quoting and award activity. As I mentioned, our backlog level in this segment has now been rebuilt above historical norms. There is also greater clarity on tariffs for several export markets into the U.S., which is supporting higher vehicle import volumes for models that feature our accessory content. Additionally, some OEMs are now planning to shift production for foreign built vehicles into the U.S. market as well, reassuring and supply chain regionalization in North America are gaining momentum, driving incremental demand for extrusion and high-pressure die-cast tooling where we have exceptionally strong competitive positions. We also benefit from a balanced powertrain stance. Our operations are designed to support EV, hybrid and ICE platforms without relying on any single technology, that flexibility allows us to capture value in today's mix of ICE and hybrid programs while positioning ourselves for the next wave of EV platforms and advanced manufacturing technologies, such as giga-presses as they scale over time. Beyond automotive, we are increasing our involvement in nuclear energy and other critical infrastructure markets that is important as emerging pillar. Customers in these sectors are seeking domestic partners with high precision machining capabilities and long-term reliability and our capabilities are well aligned with those needs. Our strategy is to build a company that is structurally resilient and positioned for long-term growth regardless of short-term macro volatility. On the operational side, we have expanded our casting extrusion footprint through acquisitions and greenfield investments, including newer Castool facilities in Morocco and Mexico and advanced in-house heat treat capabilities. We've invested heavily in automation and process standardization to drive product, quality and scalability and continue to optimize our automotive solutions headcount, aligning capacity with current and expected volumes while maintaining low-cost manufacturing base. On the technology and innovation side, we are a leader in 3D printing of tool steel components, enabling complex geometries and optimize tooling that improve tool performance and reduce waste. We are increasing our use of AI and machine learning in CAD and CAM and operations to accelerate design -- reduce -- design, reduce rework, optimize tool pass and improve machine utilization and yield, and we're designing workflows and leveraging common systems to centralize select functions in lower-cost jurisdictions, improving consistency while reducing structural costs. From a financial and strategic perspective, I'll reiterate a point that we made earlier this year. In light of the heightened uncertainty around global trade policy, particularly tariffs, we made the difficult decision in Q2 to withdraw our previously announced fiscal 2026 revenue, EBITDA and EPS targets. Those targets originally set in 2021 envisioned reaching $750 million in revenue, $120 million in EBITDA and approximately $1.50 in EPS by the end of '26. While the current tariff environment makes it impractical to reaffirm that specific time frame, the underlying strategic drivers remain intact and in our view, achievable over a longer horizon. A key competitive advantage for Exco is that nearly all of our products are sold in North America -- that are sold in North America comply with USMCA rules of origin. We expect USMCA compliant products to remain exempt from tariffs, which positions us favorably versus many global peers. Our substantial North American footprint, particularly in the U.S. for extrusion dies and large die-cast molds means a significant portion of our business is inherently aligned with the ongoing trade and reshoring dynamics. At elevated tariffs on imports from noncompliant jurisdictions persist, we could see a further competitive tailwind as customers look for reliable local suppliers. Stepping back, the long-term fundamentals of our markets remain attractive, continued light-weighting and increased use of aluminum and other advanced materials, gradual ramp-up of EV and hybrid platforms, continued investment in AI infrastructure, sustainable energy and nuclear and broad reshoring and supply chain localization trends across North America. We are realistic about the macro environment. We know it will remain choppy in the near term, but we are confident in Exco's long-term trajectory. Our balance sheet is strong. Our operations are becoming more efficient and technology-enabled and our teams around the world are executing at a high level. With that, I'll now turn the call to Matthew for a detailed review of the financial results. After his remarks, I'll return with some closing comments before we open the line for questions. Matthew Posno: Thank you, Darren. Good morning, ladies and gentlemen. Consolidated sales for the fourth quarter ended September 30, 2025, were $150.7 million compared to $155.4 million in the same quarter last year, a decrease of $4.8 million or 3%. Foreign exchange movements increased sales by $4.1 million during the quarter. Consolidated net income for the quarter was $8.2 million or $0.22 per share compared with $7.7 million or $0.20 per share last year, primarily reflecting the reversal of provisions and recognition of previously unrecorded tax assets. Adjusting for these discrete items, our normalized tax rate was approximately 24.2%. Quarterly consolidated EBITDA was $18 million, representing 11.9% of sales compared to $20.6 million or 13% in the prior year period. Fourth quarter sales for the Automotive Solutions segment were $77.9 million, down 2% from the prior year quarter. The decline primarily reflects customer-driven launch delays and an unfavorable vehicle mix, particularly reduced U.S. imports of foreign built vehicles where Exco has meaningful content. Tariff uncertainty, affordability pressures and broader macroeconomic softness continues to weigh on industry volumes. Despite these challenges, quoting activity remains solid and management expects to benefit from recent and upcoming program launches that should increase content per vehicle and support a recovery in both sales and margins. Additionally, reductions in U.S. tariff rates for certain countries provide incremental relief and ongoing reshoring trends by foreign OEMs are expected to benefit future activity. Pretax profit for the Automotive Solutions segment was $5.1 million, down $2.7 million or 35% from last year. This decline was primarily driven by lower volumes, product mix shifts and higher labor costs, particularly in Mexico. The segment incurred $300,000 in restructuring charges, supporting lean manufacturing and automation initiatives aiming at improving cost competitiveness at current production levels and positioning the segment for stronger results as new programs ramp up. Fourth quarter sales for the Casting and Extrusion segment were $72.7 million, a decrease of $3.5 million or 5% from last year. Extrusion tooling sales increased, supported by strong diversified end markets such as building and construction, transportation, sustainable energy, AI infrastructure and electrical components. Process standardization and centralized support functions continue to enhance lead times, quality and capacity contributing to market share gains. Die-cast tooling sales, however, remains relatively soft to previously delayed EV-related program launches and extended platform life cycles as OEMs reassess product strategies amid regulatory and tariff uncertainty. Quoting activity and order intake for die-cast molds have improved meaningfully in recent months and demand for Exco's additive 3D printed tooling continues to grow, particularly in large and more complex applications such as giga-press molds. The segment reported pretax profit of $4.5 million, down $1.8 million or 29% from the prior year quarter. This was driven by lower volumes, unfavorable mix, higher direct labor and overhead and underabsorbed fixed costs. Start-up challenges at Castool's Mexico and Morocco facilities continue to weigh on profitability, although trends are improving. Management remains highly focused on pricing initiatives, operational efficiency, process standardization and automation, all of which are expected to drive improved results going forward. Corporate expenses were $900,000 compared to $2 million last year. The reduction reflects foreign exchange gains and lower compensation and stock option expense. Operating cash flow before working capital changes was $14.9 million compared to $16.7 million last year. The variance primarily reflects difference in deferred income tax, interest and depreciation expense partially offset by higher net income. Working capital changes contributed $6.7 million in cash this quarter compared to $12.2 million in the prior year quarter. Cash generated from working capital was driven by favorable movements in accounts receivable, accounts payable, provisions and accruals, partially offset by higher inventory and reduced customer advanced payments. Capital expenditures totaled $11.1 million, including $4.5 million of growth capital. Exco ended the quarter with net debt of $67.1 million compared to $73.4 million last year, we also had $61.6 million in available liquidity under our banking facilities. Our financial position remains strong, providing the flexibility to continue funding strategic investments growth initiatives, dividends and other opportunities that may arise. That concludes my comments. We can now transition back to Darren for his closing remarks. Darren Kirk: Thanks, Matthew. Let me close with a few brief thoughts. Fiscal 2025 underscored both the challenges and opportunities in our markets. We faced softer automotive production, delayed program launches, trade-driven uncertainty and macro headwinds, particularly in Europe. Yet, in that context, Exco delivered solid profitability, strong free cash flow, lower net debt and continued investment and strategic growth initiatives. We are entering the new year with cautious optimism. The tariff environment remains complex but some of the extreme scenarios that we once contemplated have proceeded, and we are seeing evidence of greater clarity and stability in several key trade corridors. At the same time, secular trends such as reshoring, light-weighting and increased investment in critical energy and infrastructure are moving in our favor. Most importantly, Exco today is a stronger, more agile and more innovative company than it was just a few years ago. We have expanded our footprint, deepened our capabilities and embrace new technologies while remaining disciplined stewards of capital and committed partners to our customers. I want to close by thanking our employees around the world for their dedication and resilience and customers for their trust and our shareholders for their ongoing support. That concludes our prepared remarks. Operator, please open the line for questions. Operator: [Operator Instructions] We are now going to proceed with our first question. And the question comes from the line of Nick Corcoran from Acumen Capital. Nick Corcoran: Just my first question is on SG&A. If you take a step down in the quarter, is this reflecting the ongoing kind of restructuring that you've done? Matthew Posno: Yes. I'd say, definitely, we saw a reduction in salaries and wages and some of those overhead functions, for sure. Nick Corcoran: Good. And then maybe on the demand side, what are you seeing in the first quarter so far? Darren Kirk: So I guess let me just take it by the kind of 3 pillars segments, but -- so on extrusion tooling, I would say that demand is consistent with the high level that we have been experienced over the last several quarters. So no change there. That business, of course, is very diverse, and it does seem that AI infrastructure spending is a bit of a tailwind there. Lots of extrusions go into AI data center structures and right through the racking systems for tooling and whatnot. So ultimately, that drives increased demand for extrusion tooling which can offset other sectors that may periodically be slower. Die-cast tooling remains in a strong demand environment, as we've indicated, about 9 months ago, there was a falloff in demand for new orders for die-cast tooling as OEMs reassess their future vehicle platform plans, pivoting away from EVs towards hybrids. And that's obviously impacted our sales through the last couple of quarters for die-cast products, but the demand flow is continuing, and we should start to see the benefit of our sales -- that on our sales towards the end of Q1, but certainly by Q2. And then in Automotive Solutions, I would say it's picked up a bit in the first quarter relative to the fourth quarter. One of the key factors for us there our performance for Q4 and fiscal '25 was the tariffs that U.S. imposed on foreign markets, particularly the Japanese and South Korean, Asian markets and that resulted in a reduction in vehicle imports from those territories. And there seems to be some stabilization there. Nick Corcoran: And maybe a question for Matthew. What should we expect in terms of CapEx for fiscal '26? Matthew Posno: So our CapEx in '26, I'd say, $27 million, $28 million is kind of where we see things looking right now. We are watching it closely. As you know, we've spent a lot in recent years in some real growth areas. And it's not a maintenance CapEx, but it's getting closer to that. Nick Corcoran: Good. And maybe one last question for me. What are you seeing on the M&A front right now? And what would potential verticals be of interest to you? Matthew Posno: Well, I think we've mentioned before, Darren and I are always looking at M&A targets or kind of looking at SIMs and ideas, but we want to be strategic. We want to find one best fit within our value stream and what we produce and what we know. Automotive side, we like the accessory market and -- but we're not going to take anything that doesn't provide an accretive value right away or that we don't have the management and the support to be able to take it on properly, I think... Operator: [Operator Instructions] We have no further questions at this time. I will now hand back to you for any final remarks. Darren Kirk: Okay. Thank you, [ Raz ], and thank you, everyone, for joining us today. We look forward to speaking with you again in the New Year. Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good rest of your day.
Operator: Good morning, and welcome to the Rémy Cointreau 2025, 2026 H1 Results Presentation. [Operator Instructions] Now I will hand the conference over to Marie-Amélie De Leusse, Chairwoman, please go ahead. Marie-Amelie De Leusse: Good morning, everyone, and thank you for being with us this morning for Rémy Cointreau's First Half Results. I am here with Franck Marilly, our CEO; and Luca Marotta, our CFO. Both of them will, of course, take you through the detailed results. Let me begin by sharing a clear and honest picture of where we stand today. As you can see in the next slide coming up, part of our portfolio has already returned to growth. Please, this slide. Thank you very much. It seems we have a small technical issue, but we will resolve this in just a few seconds. Bear with us, and apologies for the delay. So as you can see, part of our portfolio has already returned to growth. In Cognac, 40% of our organic sales are back to positive territory. And in Liqueurs & Spirits, that figure rises to 85%. These are encouraging signs, which confirm the strength and relevance of our portfolio. But we must also acknowledge that despite this progress, it is clearly not enough. Yes, momentum is emerging across categories, but we remain far from where we need to be. This is why under the leadership of our new CEO, the group is entering a real turning point, a decisive moment where we deeply challenge ourselves, rethink our priorities and set the foundations for a stronger future. This transformation is anchored around 2 immediate priorities. Priority #1, revitalize Cognac, the historic heart of the group and a category with strong potential. Priority #2, accelerate the expansion of Liqueurs & Spirits, a resilient engine already showing solid signs of recovery. Our ambition over time is clearly to provide greater volume scale to absorb fixed costs, rebalance working capital, broaden our geographic footprint and reduce sourcing constraints. Our conviction is that we have everything we need to succeed. We can leverage the unique strength of our portfolio made of houses that have shaped our identity for centuries. We can rely on our highly committed, passionate and talented teams who continue to demonstrate remarkable dedication and resilience in every market every day. And we now have a clear direction, renewed energy and the willingness to move faster. This is the transformation we are now putting in motion. And I strongly believe that we can look to the future with confidence because our brands, our consumers and above all, our people give us exceptional foundations on which to build. The journey has begun. And together with determination, we will write the next chapter of Rémy Cointreau. Franck, the floor is yours. Franck Marilly: Thank you, Marie-Amélie. Good morning, everyone, and thank you for joining us today. I'm glad to be here for my first results presentation. I will begin with a quick overview of first half '25, '26. Luca will then detail our financial results, and I will conclude by giving you an update of the group situation and the outlook. Let's begin with a review of our first half results performance. I'm now on Slide 6. Group sales totaled EUR 489.6 million, representing an organic decline of minus 4.2% versus last year. COP reached EUR 108.7 million, down minus 13.6% on an organic basis, resulting in a margin of 22.2%, down 2.7 points organically. This performance reflects, first, a gross margin contraction of minus 2.4 points impacted by tariff, an unfavorable price/mix and to a lesser extent, some production cost pressure. Despite this additional tariff, our gross margin remains strong at 70.1% organically, slightly above H1 of '19, '20. Second, our deliberate decision to maintain marketing investment with A&P at 19.4% of sales, up 0.9 points year-on-year. These efforts were almost fully offset by continued discipline in cost management with OpEx declining versus last year. In this context, our net debt-to-EBITDA ratio increased slightly compared to March, reaching 2.96. Let's begin with our 3 main highlights for the semester, starting with the U.S. on Slide 7, our largest and most strategically important market. After 2 very challenging years, our underlying trends in the U.S. continued to improve during the first half, allowing the group to return to sales growth in first half. The improvement is real and consistent even if the pace of recovery has been slightly slower than we initially expected. On depletions, Rémy Cointreau U.S. shows a clear sequential improvement. Month after month, depletion volumes have strengthened, supported by gradual normalization of inventories at our distributors. Since the start of the calendar year, we have seen steady progress, bringing total volume close to stability by the end of the period. This confirms that the worst of the correction is now behind us. On sellout, Rémy Martin is now outperforming the Cognac category. After several quarters of underperformance, the brand has regained momentum, thanks to sharper pricing alignment and improved commercial execution. This marks an important turning point for the brand in the U.S. At the same time, Cointreau continues to demonstrate solid resilience, both in absolute terms and relative to its category. Despite a difficult market, the brand maintains healthy consumer demand and benefits from a strong brand equity and efficient brand activations. Overall, these trends give us confidence heading into H2, even though the U.S. spirits market remains challenging in the current macro environment. The sequential improvement is underway. Our objective is now to build on this momentum. I'm now on Slide 8. The market in China has become increasingly challenging during the first half, leading to a sharper-than-expected decline in our business. The overall environment has softened over the period, and the base of comparison remained high. As a result, sales in China were down mid-teens in the first half, in line with value depletions. Consequently, inventory levels remain healthy, providing solid fundamentals ahead of Chinese New Year. The execution of our Mid-Autumn Festival strategy has been complex, but the outcome is clearly positive. MAF has finally taken off. Greater pricing agility to adapt to the new market dynamics, combined with strong commercial execution and a relevant product offering has generated a favorable elasticity. This is an encouraging sign in a market where consumers are increasingly selective and value-driven. MAF delivered a low single-digit growth over the period, while our performance during the recent Double 11 e-commerce festival was also strong, with sales up plus 15%. These successes confirm that our strategy is the right one, even in a more challenging environment. Overall, while China remains difficult, we are seeing early green shoots that support our confidence over the midterm. A final word on the EMEA region on Slide 9. Consumption trends remained soft across most markets in first half, reflecting a more cautious consumer and pressured discretionary spending. That said, the region will benefit from solid drivers to support a rebound in H2, notably innovation, distribution gains and targeted pricing initiatives. In Africa and Middle East, the rollout of Rémy Martin VS is progressing well in a market largely driven by the VS segment. Our performance with wholesalers is currently ahead of our objectives, reflecting strong initial traction. As a result, we will be increasing our shipments in the coming months. In the U.K. and Nordics, we expect to improve sequentially. We have secured distribution gains on the The Botanist, Rémy Martin 1738, Telmont and Bruichladdich that should start to deliver in H2. We are also implementing smart pricing initiatives during the peak season, ensuring competitiveness while remaining aligned with our value strategy. In parallel, we are leveraging our innovation pipeline with recent launches supporting brand visibility and product testing. Across Europe with third-party distributors, our brands continue to gain traction. Our new Metaxa campaign was launched in key markets, driving awareness and recruitment. For Cointreau, on-trade activation will contribute to sustaining momentum despite softer category trend. We also expanded our presence through new launches, such as Telmont Rosé in Italy & Spain and secured additional distribution gains in Germany. Overall, while H1 remains soft, the region is building the right momentum and assets to support the expected improvements in H2. Luca Marotta: Thank you, Franck. Now let's move to a detailed analysis of the financial statement, starting with the H1 income statement. As previously mentioned, organic sales were down by 4.2%. Based on this, gross profit decreased by 7.4% in organic terms, implying 2.4, 240 basis points of deterioration in gross margin. this is still representing a slight improvement compared to pre-COVID levels. This H1 gross margin contraction has been driven by incremental customs duties, clearly, and unfavorable price/mix effect on the top line and to a lesser extent, some manufacturing and logistic cost pressure. Sales and marketing net expenses were down by 4.6% organically, so more or less in line with sales. Inside this total, we can say that A&P expenses were up plus 0.5% organically, representing a ratio of 19.4% of sales, which means an organic increase of the A&P pressure, compared to the top line of 0.9 points. Despite continued pressure on sales, we have, as you can see, decided to maintain our investments behind our brands to protect their desirability and to be prepared for the recovery. However, we have done so all that while keeping a clear focus on efficiency and selectivity. Accordingly, we increased since some quarters, the share of BTL, below-the-line, spending relative compared to the, above-the-line, ATL during this period. As a result, the share of BTL investment is higher now or the above-the-line spend. What is inside that? Above-the-line, as a reminder, it is traditional media, digital, PR, and that represented 45%, less than 50% of the total A&P, while below-the-line clearly represented 55%. On top, as a transversal point, digital investment inside A&P represented more than 65% of the ATL. So 2/3 -- So 2/3 multiplying 45%, we can say that around 30% of our total [ A&P ] spend is linked to digital activities and support. Talking about OpEx, let's start with distribution costs. They decreased by 10.6% organically, mainly due to a one-off related to a compensation indemnity. Administrative net expenses were almost flat on an organic basis, reflecting continued ongoing discipline on overhead costs following optimization made during the last 2 years, essentially, but not only. Overall, as a result, current operating profit was down 13.6% organically and more or less the double minus 26.2% on a reported basis. Why that? Because we have to take into account the negative currency impact of EUR 18.7 million on the bottom line. Talking about margin. COP margin stood, as Franck already highlighted, at 22.2%, down 2.7 points as reported, of which 5.4% clearly organically. Compared with H1 '19, '20, the margin is down by 4.7 points despite a slight improvement in gross margin, plus 0.4 points. So why we are down compared to pre-COVID level of margin because of the sharp increase of A&P investment, 4.4 points. Overheads were slightly increasing, but more or less in line and touch more than the top line. So let's move to Slide #12 to dig inside the group current operating margin bridge. It was down 5.4 points as reported, as said, reaching 22.2%. This breaks down into organic decrease of 2.7 points and a negative currency effect, the same magnitude, 2.7 points. The organic evolution of the current operating margin largely reflects a deterioration of the gross margin, which nevertheless remain, I repeat, it's very important, above pre-COVID levels, plus 0.4 points. This deterioration was likely amplified by the sustained level of A&P spend, along with continued discipline, as you can see, in distribution and structural costs. To be more precise, gross margin was down 2.4 points, of which more than 1/3 is linked to incremental custom duties alongside an unfavorable price mix on the top line, both in mix and in pricing in the current environment clearly. And to a lesser extent, inflation related to the cost of goods, particularly on the Cognac eaux-de-vie that has been bought and supplied some years ago. Second point to highlight is the A&P ratio. It increased by 0.9 points, as already said. Third, talking about OpEx, the ratio of distribution structure cost was down 0.6 points and decreased by EUR 9 million in absolute terms. This is an important key achievement considering, as you remember, the reintegration of more or less EUR 10 million of last year over one-off savings. So it is clearly a good performance in our opinion. Slide #13. Moving on the remaining items of the income statement. We can say that in H1 '25, '26, the operating profit included almost no other nonrecurring income or expenses. Financial charges were almost flat and slightly increased from EUR 21.1 million to EUR 22 million, but I will be more precise going more details on this in the next slides. Talking about tax rates, increased from 27.5% to 28% but is a global first sight analysis because it's mainly due to the additional charge related to the exceptional corporate tax contribution in France linked to 2025 French Finance Law. So if we exclude these nonrecurring items, tax rate are actually decreasing from 27.7% last year to 27.3%, a small one, but a reduction of 0.4%. For the full year, as a guidance, we expect the tax rate to land at around 29% partially, including 1.5 points of exceptional tax. As a result of that, net profit group share came in at EUR 63.1 million, down 31.3% on a reported basis, i.e., a net margin of 12.9%, down 4.3 points. EPS for the semester came out at EUR 1.22, down 32.6% as reported. As promised, a few comments on Slide #14 on net financial expenses, which amounted to EUR 22 million charge in H1 '25, '26 to be compared to EUR 21.1 million last year the same period. Net debt servicing costs were slightly down in absolute terms, as you can see. As a consequence, our cost of debt -- pure cost of debt decreased from 4.17% to 3.78%. Net currency losses increased from a loss of EUR 0.5 million last year to EUR 1.1 million, primarily due to the hedging of intragroup financing. Finally, other financial expenses stood at EUR 4.8 million in H1 '25, '26. For the year, globally, we expect as a guidance, financial charges to reach less than EUR 50 million. Now let's analyze one of the most important chart, as you know, in my opinion, for a company like Rémy Cointreau, which is a business model which is based on buying today where we can sell tomorrow and the day after tomorrow and the day, day after tomorrow, which is the free cash flow. Free cash flow generation and net debt evolution on Page #15. Free cash flow was negative in H1 '25, '26 and stood at EUR 16.5 million to be compared to a negative [ one of EUR 7.6 million ] in H1 last year. But last year, we had EUR 28 million of tax refund in '24, '25 related to prior overpayments done by ourselves to the tax bureau. And this represents, so in a comparable basis, an improvement from minus EUR 35.6 million to minus EUR 16.5 million, still negative, but on a comparable basis, improving. If we exclude this tax repayment refund, quite an exceptional one distortion, free cash flow evolution reflects a meaningful decrease in the first line, which is EBITDA, partially offset by 2 factors. First, a significant decrease of the other working capital items outflows. Actually, we had a positive variance effect of EUR 59.5 million. Why? While the working capital outflow related to eaux-de-vie and spirits in aging process was slightly up by EUR 10.8 million due to lower eaux-de-vie outflows for the same level of purchases. At the same time, we can say that the H1 of balance sheet eaux-de-vie that you can read inside our reporting and not in the slide, already recorded a reduction in commitment compared to the future. If you compare this year, long-term off-balance sheet commitment to what we reported 3 years ago at the same time when we have signed the long-term contract engagement, you can see that there will be a saving of more or less EUR 110 million. As I repeat that, it is not visible in this slide, but it's very important. Our future commitments have been reduced substantially and is clearly visible in off-balance sheet reporting. The first impact on our financial account, so let's back to this year result will be only -- will be recognized and visible at March 2026. Overall, global working capital outflow evolution is favorable and has been reduced by EUR 48.7 million, mostly driven by some phasing effect in trade payables between H1 last year and H2 -- H1 of this year. Why that? Because it depends on the timing and the phasing of the buying essentially A&P activities. Second element is a decrease of EUR 7.2 million of CapEx outflow following the optimization action that we decided to protect cash. In parallel, other cash flow items inflows decreased by EUR 7.9 million, and this was mostly driven by our equity investment made through RC ventures for minority shares in some companies. As a result, at the end of September 2025, our net financial debt stood at EUR 686.7 million, so slightly up EUR 11.3 million compared to March 2025. As a consequence, NE ratio is up from 2.4 in March 2025 to 2.96 in September 2025. If you compare ourselves to September last year, so in 1 year, not only 6 months, net financial debt increased by EUR 42.4 million and A ratio clearly is increasing more from 1.90 to 2.96 in September 2025. Now let's move on and talk about the impact of currency hedges, a very technical slide, I know. But in this moment, it's important to be the most precise we can in this very complex and volatile environment for currency. The group, as you have seen, reported a negative translation impact of EUR 21.7 million on sales and a negative transaction effect of EUR 18.7 million on COP in H1. This mainly reflects the evolution of the U.S. dollar and Chinese renminbi. In H1 '25, '26, we recorded deterioration of the average euro-dollar conversion rate from RMB 1.09 to RMB 1.15 per euro and the euro-RMB conversion rate from RMB 7.84 to RMB 8.28 for EUR 0.10. This was conversion. But our process of hedging determined that our average hedge rate deteriorated from USD 1.07 to USD 1.13 per euro in H1 '25, '26 and deteriorated at the same time from RMB 7.66 to RMB 8.37 for EUR 0.10. That's the reason why mathematically, we have a loss in bottom line. Looking at our forecast, which is most important, looking not in the past, but for the future. For the full year '25, '26, as you can see, -- assuming a conversion rate of 1.15 on euro-U.S. dollar and EUR 8.26 on euro-Chinese yuan as well an hedge rate of 1.12 on euro-U.S. dollar and EUR 7.94 of Chinese yuan, so better than conversion, we anticipate a negative impact between EUR 50 million and EUR 60 million on sales, of which 60% will be in the H2 and between minus EUR 25 million and EUR 30 million on negative in COP, of which only 1/3 will be in H2. So a dephasing between conversion and transaction. As you can read on the slide, you can have also the ForEx sensitivity by currency. As the evolution of the euro-dollar and also euro-RMB exchange rate remains very volatile, we will continue to share with you an update every quarter. At this stage, for the full year, we have already covered 95% of our net U.S. dollar exposure, of which around 60% of options. So we are still flexible. On Chinese yuan, it is 80% of our needs that we cover, net, of which 40% touch less on option. Now let's move to the balance sheet, Slide #17 overview, where total assets and liabilities stood at EUR 3.46 billion, up EUR 87 million compared to last year at the same time. On the asset side, global inventory increased by EUR 129 million to reach EUR 2.1 billion due to the purchase of young eaux-de-vie and also an increase of our inventory levels given the current context. Inventories now represent 61% of our total assets, up 3 points from previous year. This was the left side. Talking about the right side, the liability side, shareholder equity is up by EUR 25 million, mainly driven by the net income, partially offset by the payment of the dividend related to the fiscal year '21 -- '24, '25. Net gearing, so the group's net to debt-to-equity ratio was slightly up over the period from 34% to 36%, reflecting the increase of our financial debt. So now I get the mic back to Franck. Franck Marilly: Thank you, Luca. To conclude on the short term, let's now turn to Slide 19. A few words on the guidance we updated a month ago. We are today confirming our expectations, both for sales and for COP. In more detail, we expect organic sales growth to land between flat and low single digit. For COP, we anticipate an organic decline ranging between low double digits and mid-teens. This guidance includes the impact of tariff, which we estimate at around EUR 25 million. Finally, we expect a negative ForEx impact of between EUR 50 million and EUR 60 million on the top line and between EUR 25 million and EUR 30 million on COP. As we confirm our guidance for the year, it is also clear that the environment ahead demands more than short-term adjustments. We need to step back, reassess our assumptions and rethink how we operate across the entire group. It is time to challenge the way we think in that and to lay the foundation for the next phase of Rémy Cointreau long-term journey. As we step back, it is important to recognize the environment in which we are operating today. I'm on Slide 21. What we see is a transitional context, one that is mostly cyclical rather than structural. The industry continues to face a series of global headwinds, including the persistent increase in the cost of living and the ongoing geopolitical tensions. If the U.S. consumers remain relatively resilient, but they are also more polarized and increasingly price sensitive. Societal anxiety is also weighing on shopping behavior, adding further volatility to demand patterns. These pressures are contributing to the evolution of consumer dynamics. You're already familiar with them, so I will not detail them here. Taken together, this shift defined a landscape that is challenging, yes, but also full of opportunities for those who adapt with agility, discipline and clarity of focus. When I joined the group last June, my first priority was very simple, take the time to listen. Over the past month, I traveled across our regions, met our teams, visited markets and partners. This listening phase was essential. It allowed me to understand our strengths and our challenges on what truly matters to our people and our consumers. Based on this diagnosis, it is clear that the transformation is needed and transformation requires rhythm. There is a time to listen and time to rethink and a time to reignite while acting fast. This slide reflects the timeline I have set for us. We're currently in a rethink and reset phase while targeting quick wins that will help us regain agility and improve performance in the short term. By June, we will be able to articulate a clear annual guidance. And by next November, we will present a detailed midterm roadmap. From this first diagnostic, I have identified 5 short-term priorities: first, accelerate decision-making by building a more agile, business-driven organization. Second, optimize and strengthen our commercial resources, ensuring we are fully equipped to capture market opportunities. Third, redefine how our brands express their DNA to ensure relevance amid evolving consumer trends and unlock additional growth. Let me be clear, this is not about changing who we are or diluting our identity. It is about redefining our own limits, understanding how far we're willing to stretch a brand while remaining true to our identity. In today's environment, we must be less dogmatic and more pragmatic. Redefining our DNA boundaries means embracing these opportunities where they make sense in a way that strengthens our brand rather than limiting them. Fourth, stay true to our value strategy while revisiting mix and pricing with greater sharpness and alignment to today's market conditions. Here again, let me be clear, this is not about changing our strategic North Star. We remain fully committed to our value strategy. It is part of who we are, and it has served us well over time. But we also need to be less dogmatic than we were 2 years ago. At that time, we made the deliberate choice to make no concession. Yet today, the context has changed, reigniting volume growth has become essential. And lastly, shift our A&P allocation model and review our brand portfolio to better manage the long tail and maximize ROI. These priorities will help us stabilize the business, regain momentum and prepare the group for the next stage. Because once we emerge from this crisis, we must and we will go further. We will broaden our horizons and shape the medium-term future for the company. This is a journey we are on together listening, rethinking, resetting and ultimately, reigniting Rémy Cointreau for the next chapter. As part of the assessment phase, my objective has been to identify what will matter most for the next chapter of Rémy Cointreau. Building on the diagnostic, we have defined 5 strategic priorities that will guide the reset of the group. First, we need to reignite growth with a strong focus on immediate value creation through top line initiatives. This means renewing our go-to market, strengthening our revenue growth management, leveraging innovation more effectively and reallocating A&P with greater discipline and impact. Second, we must reassess our brand portfolio architecture to simplify its complexity and enhance A&P ROI. This is essential to ensure that our investments are concentrating on what truly drives value. Third, we will unlock efficiencies to reverse the COP trajectory, fuel future growth and ultimately improve cash. That includes procurement synergies, simplifying operations and streamlining the way we work. Fourth, we need to improve cash generation. Beyond reigniting COP growth, this requires reducing order repurchases, being extremely selective on CapEx, keeping a consistent and reasonable dividend policy and reviewing our brand portfolio through a cash generation angle. Fifth, we will build a new organization that is more agile, faster and better connected, breaking down silos and enabling teams to execute with greater clarity and alignment. All of this feeds into a broader ambition to unlock the resources needed to dissociate our performance on the macro environment and fuel the next phase of growth. This is why we are now structuring these priorities around 10 concrete levers that will be fully detailed in the next stage. Let me finish with one important message. My intention today is to be transparent with you, to give you as much visibility as possible. And to show you clearly where we stand. We are driving a real transformation, and we need the time to implement it properly. As you saw on the timeline, there will be, of course, a moment in a couple of months. when we will be able to detail this road map much more concretely. Today is about the directions. The next steps will be about execution. And while we're building the strategic plan, we must also seize every short-term growth opportunity available to us. This is not an either/or situation. We are transforming the group while continuing to drive the business forward. And one of our strongest short-term levers is our innovation pipeline. For the next 6 to 12 months, we have a robust and exciting set of consumer-driven launches. First, the trend of convenience. This is exactly where our pipeline gives us an edge, where quality meets convenience, the recent RTS launch from Cointreau is a perfect illustration of savoir-faire. The quality is truly exceptional. Second, the trend of affordability. Consumers are looking for accessible propositions that remain aspirational. The rollout of Rémy VS in Africa is a perfect example that offer potential for next year. And beyond that, we are working on a very exciting project for Rémy Martin that I hope will see the light of day in 12 months. This will allow the brand to recruit more broadly in the U.S. while staying absolutely true to its core DNA. Third, the trend of flavors and cocktail culture. We're seeing consumers increasingly seeking flavors and cocktails. This opens up new possibilities for refined spirits and helps broaden recruitment and enhance relevance among consumer, younger consumers. Taking Mount Gay as an example, the silver expression will be a perfect ingredient for Mojito, the world's third most consumed cocktail. Fourth, the trend of cultural relevance. We have opportunities to bring our craftsmanship and heritage into formats and stories that resonate more deeply with local culture, where savoir-faire meets cultural relevance. In parallel, we are also acting on 2 other critical short-term levers, enhancing pricing flexibility, combined with the growth of small format, maintaining strict overhead discipline and optimizing cash generation. As we come to the end of this presentation, I'm going to leave you with one clear message. Rémy Cointreau is at the pivotal moment in its history. We are only at the very beginning of this journey. What I have shared with you today may still stand somehow conceptual and that is normal. A true transformation always starts with the vision with clarity of direction and with the conviction that we can and must do better. But let me reassure you, behind this vision, there is total determination, mine and that of all our teams across the world, we are already in motion. We are rethinking how we operate, we're setting our priorities, reigniting innovation desirability and already preparing the group for the next chapter. I'm genuinely excited about what lies ahead. And I look forward to presenting the full plan and more importantly, to show you the first tangible results of this transformation over the next 12 months. Thank you. We're now happy to take your questions. Operator: [Operator Instructions] The next question comes from Richard Withagen from Kepler Cheuvreux. Richard Withagen: I have two questions, please. First of all, Franck, you talked about quick wins. So let's take really Rémy Martin, which remains the biggest brand of the company. So what kind of quick wins are you thinking about specifically? Is it more about better marketing or more marketing? Is it about price changes? Do you think about distribution changes? So some more color on that would be useful. And the second question is on the balance sheet. That's the balance sheet at 3x net debt-to-EBITDA limit or flexibility in strategy execution. Franck Marilly: Thank you very much for your question. I will answer the first question on other quick wins. Quick wins means being opportunistic in a crisis. There are always opportunities to look for. This translates into additional A&P, where we're certain to get a right ROI. This is an example of what we did during MAF Festival. I'm glad we put more money on the table as we had a very good positive return on the sellout performance. It can be on extension of geographies as well that we are looking at right now. It can be, you mentioned, the price flexibility, price supporting activities on the trade as well. It could be into specific promotional activations in the trade, in the points of sales as well. It is depletion incentives that we have already in some regions. It can be business developments in other geographies as well. It's a set of different opportunities. We're looking at everything that is possible today. Everybody is in a difficult situation, and we have to be having a fighting spirit in that case and really be opportunistic while preserving our DNA, honoring obviously, our brand equity. Luca Marotta: On the balance sheet structure, I will answer. So today in terms of global resources, we are clearly well equipped compared to crisis 2008 or previous one. The group has a lot of weapons to face. Clearly, it's more the EBITDA depressed in the last 2 years and this year, we are guiding for a negative impact, on top, we have ForEx negative wins. -- that is causing the increase of the ratio to almost 3 now. Let me surprise you. It is a welcome and candid friends. 3 is a very good news. It's a spicy news. It obliged ourselves to react, to rethink, not to sleep with a large pillow, but with a cervical pillow that drives your head more right. So everything, Franck as highlighted, will be more focused on cash generation. P&L for Liqueurs & Spirits company, even more for aging company, it's only a small part of the true. We have to think more, more than we are used to in terms of free cash flow and balance sheet shifts on the very long term, even before P&L. So it's not limiting. It is a candid friends waking up every day with the need and eager to improve ourselves on the cash generation side. Operator: The next question comes from Trevor Stirling from Bernstein. Trevor Stirling: So 2 questions from my side, please. The first one in terms of sell-out trends, it sounds as if you're getting a little more optimistic on China, those numbers you were quoting for Mid-Autumn Festival and D11 sound very positive. . Maybe if you have any -- is that right that we're exiting the half in much better shape in China. But at the same time, perhaps things getting slightly worse in total in the U.S., relative trends are a little bit better, industry trends a little bit worse. So if you can comment on that, that would be great. And the second question, Franck, intrigued by your reset and reignite and your question around moving from dogmatic to pragmatic, and it sounds as if in particular, you might be looking reexamining your pricing strategy in the United States. Is that the right way to interpret what you said? Franck Marilly: Thank you, Trevor, for your question. There are many questions in one question. Let me start with China and be very pragmatic. As I mentioned before, some of the quick wins were to reinject some A&P with a measured ROI, obviously, as a target. That's what we did with our Chinese organization. I'm glad we did that because CLUB was the only brand positive in Cognac during the MAF, we had a good double-digit increase actually in sell-out. So we were very proud of that. It is obviously down to the great execution of the team together with our distributors. This is one clear example it can work. To your second question, price elasticity. Yes, there's no taboo about that, we're on a crisis, I mean, we could talk about brand margin. We could talk about elasticity, the impact it can have. At the end of the day, what do we want? My #1 objective is to grow the top line. We need to reconquer our position. Obviously, we're looking -- targeting a profitable growth. We need volume. We need to reignite the top line starting with Cognac, where our stronger categories to fuel the other brands as well in the second stage. So this is really the top priority, grow the volumes. So price elasticity, yes, it is something I'm looking at, absolutely, in different regions, including the U.S., as you mentioned, the U.S. Luca Marotta: To complete on the -- to complete at this point with some indicators or the temperature of the depletion and the best approx of sellout, let's start with the short term and then go to the guidance for the full year of depletion according to the top line. So what happened in the last 2 months to 3 months with some volatility between months, we can say the last 2, 3 months in top line, so talking about sales has been improving, as you can see, still negative, it is improving. In terms of value depletion, to be more granular in October, China, as I highlighted, was clearly very positive also for a calendar effect, but not only because Mid-Autumn Festival has delivered a very very good growth, clearly beating the market and with CLUB playing the big guy role and Double 11 as well. So overall, every time we have the possibilities to get in touch with the consumer in China in a very humble way, we are beating competition. But it is more volatile because of the context and the lack of trust to the wholesaler. So the indirect part, which is waiving more than 50% is more volatile. So it's true compared to the month of -- compared to June, July, our result in China overall in terms of depletion are a bit down. U.S., it is improving, still on negative land, but is improving constantly. This was the reason why the top line at the end of the Q2. So the H1 was positive on sell-in. And EMEA depletion still negative so far, but improving a bit. So this is the short term. But what is important, what look to the full year. And then one last point, a technical one, which I never touch base, where I thinks is important. So talking about the top line is in -- for the group, it's low to mid to -- flat to low single digit, 0 to 2, 0 to 2.5, something like that in your translation. Americas, clearly U.S. in terms of top line sell-in will be high single, low double, because we have the restocking part which is already there and then the compound part linked to the depletions. For what concerned value depletion. We are improving, but still for the year, we are targeting the Americas level, so including Canada, LatAm, flattish to minus. For the U.S., a touch lower. So in value depletion something between low single-digit decline. Are we stocking? No. Because we are destocking. That's an important point that I will be back maybe also next week in London, even more clearly if you want. Overall, the absolute value at comparable unit value per product sold is showing this year, like last year that the absolute value delivered in depletion is bigger than the sell-in. So plus one in sell-in and minus 1 in depletion, if you want, is giving destocking because we destocked so hard in many markets in the U.S. in the last 2 years enough that the base and rebalance and are more healthy. Talking about Asia Pacific and China in terms of the full year algorithm, top line, it will be around mid- to high single-digit decline with a value depletion better than that. So still negative, but better. And for EMEA, top line will be low to mid-single-digit decline with better performance in the but not a fantastic one. As a transversal channel, one point on Travel Retail. Double-digit sales, double digit in sellout. It is enough? No. We count a lot to reimprove, to reaccelerate on this channel for the future as well. One last point in terms of division. Clearly, this is a year of Liqueurs & Spirits and less of the Cognac. We are improving Cognac. We are still lagging behind the performance of Cognac of Liqueurs & Spirits division, that is a bit more dilutive. It is an impact on the profit and loss. Sorry, it was a bit long, but I think it's interesting for you, both in the short and for the full year guidance. Operator: The next question comes from Laurence Whyatt from Barclays. Laurence Whyatt: A couple from me, if that's okay. Just firstly, on your inventory on eaux-de-vie. We've seen a number of, I guess, false starts in both China and the U.S., where you've sort of been expecting improvements and perhaps they haven't materialized and they're coming through now. But in terms of Cognac, of course, you need to lay down stock many years in advance before the product is produced. As a result, given that perhaps the China and the U.S. are somewhat weaker than you predicted years ago, are you potentially sitting on still quite a lot of stock in terms of aging eaux-de-vie ready to go into bottle now. And I was wondering if you could give a commentary not only on your own inventory, but perhaps what you see in the wider Cognac sector, if you're saying that the industry perhaps has a lot of stock or the right level of stock for what you're expecting in terms of Cognac sales over the next few years. And then secondly, with regard to a lot of your comments, Franck, you clearly pushing more volume growth, you talked about volume growth becoming more essential. Slide 24, when you're talking about your new products, a lot of those seem rather entry-level products with relatively low price points versus the rest of your portfolio. And you also talked about revisiting mix in your portfolio. If we see sort of lower price point products across Rémy, what sort of expectation can we have on the margin going forward, given that was one of the key areas of gross margin improvement over the past few years when you premiumized your portfolio? Franck Marilly: I will let Luca answer the first question and answer on the second question. Luca Marotta: Yes. So eaux-de-vie stock, we have 2.1 billion stock, 80%, 85% is eaux-de-vie of cognac sold daily. We have a lot of stock clearly quantity is unbeatable. But it's more in terms of the spectrum of the stock that we need to reassess the priorities that is in terms of do we have another stock, which will not be able to sell considering the footprint, our future plan. . Knowing that the first priority of our new general manager of the company is to reignite and put the top line as the first priority is reassuring a lot also this financial because all innovation project will be driven to speed to foster the working capital speed to market. If you look at the eaux-de-vie free cash flow for the H1, more and the guidance for the year will be more or less EUR 100 million. So more or less what I shared with you some months ago. But inside that, the point that we are increasing the speed of the exit rate, if you want or the volumes of the Cognac to be able to accelerate the capital rotation. All the innovation projects will be focused on that. So also, your second question, which will be answered by Franck, every time you are able to increase volume, we'll be able to generate cash. The only point that you might, for the future, as all analysts reconsider and we will be more precise also during next quarters and the 4 years is that consider all the context, tariff and a more convenient and more pragmatical approach by the company, gross margin in terms of ratio is a little bit less global priority, compared to the global amount massive margin and absolute value and generated cash. So that pushed pressure on the profile of P&L. So I insist on what already Franck said, ROI and streamlining and focus on A&P and clearly, rethink the way we are doing things to be able to generate additional synergy and overheads. We cannot count our margin -- gross margin go to 72%, 75%, 77% that we were projecting before. It is another world, in which gross margin is less of help in terms of ratio but in which top line increase can give a lot more of cash to increase the -- improve the return on capital employed. Franck Marilly: Thank you, Luca. I fully agree with Luca on the fact that growing the volumes would grow our cash, obviously. To grow our cash, there many perspectives later on the reduction of our cost of goods. There are many ways to reduce our cost of goods, and we started working on that already. . Optimizing our A&P is crucial, obviously, where is it generating value creation in what region or what brands. Setting priorities is extremely key. Cognac is very key, and there are many, many opportunities ahead. Cognac is far from being dead, like I read in the newspapers at some stage. We need to work on streamlining our overheads as well, which is important. The whole objective is not just to put this in COP, but also to grow our A&P capacity to be more competitive in this difficult environment. On your question on Cognac start going back there, it is my key priority because we need to deplete the levels of stock, obviously, we'll be having a great financial impact on our company. But not only that, Cognac is a high proportion of our business. We have extraordinary brands between Rémy Martin, but also Louis XIII. We don't talk so much about Louis XIII. We need to reignite Louis XIII as well. It is an amazing brand, the maximum of the brand equity. Talking about lower prices, yes, of course, to a certain extent, we're preserving our brand equity. This is very important. There are just some euros, dollars, some reduction we need to make to be more competitive. And some euros can make a difference in the sell-out perspective. Of course, there will be an impact like on your question on the gross margin. As Luca perfectly illustrated, we're in a different world. There will be a natural erosion. What we're looking is for volume at the end of the day, top line and cash. We're looking at generating cash. So there should be no taboo on this as well. Again, we're not talking a dramatic reduction of prices or whatever. It's just being flexible to be in line with the realities of the market. I said to you earlier on I spent a lot of time on the field. I probably need to spend even more time. I very much enjoy visiting the stores and making comparisons by category. So I think we need to go a little bit further. It doesn't take so many efforts. That's why I call it a quick win. There are many opportunities on how to sell more Cognac according to me, let alone the expansion, geographic expansion. Luca mentioned GTR. I think we have some wealth of opportunities in GTR, where we're tracking -- 80% of our business is done in airport. GTR is much bigger than airport. There are many other channels in GTR, let alone the cruises, for instance. Channel diversification is very key as well. We're looking at that in different channels. Digital first. Digital is very important because it also gives us the control of our distribution, and is generating profits. Efficiencies in A&P, as I mentioned before, ROI, but also experiential luxury is important in today's world. It's more important than owning the product to some extent in some geographies. And we might take away amazing brands, we can deliver amazing experiences. We have amazing sites, production sites for people to visit. So I want to expand that activity as well to grow our visitor centers to leverage a D2C business. D2C is very key through CRM to e-com, e-retail. I want to leverage our B2C business as well, where I think there is a great wealth of business, a lot of potential there. I haven't mentioned emerging markets as yet, but emerging markets are very key. I have a long list of emerging markets where we can do better, like Brazil to start with, like Middle East, like India. I know the limitations about India, but we can -- we have to crack the system for some groups, India represents a big business. I know we're touching a different business model, but why should we not be looking at? They're not frontiers, where there is a will, there is a way. So we need to explore any potential opportunities. Operator: The next question comes from Sanjeet Aujla from UBS. Sanjeet Aujla: A couple of questions from me, please. Franck, just touching upon your comments on A&P. Do you think the current ratio has scope to go lower, I think -- can you make it more effective? I think some of your peers have been on a journey of really trying to get more out of the A&P bucket. I'd love to get your thoughts on that. And is that how you can fund some of the price adjustments you're talking about? So shifting from A&P to price adjustments? And secondly, just coming back to the portfolio, I think you highlighted in your presentation, complexity tail disposals potentially on the table as well? Franck Marilly: Thank you very much for your question. The ratio of 20% is not a bad one. I believe in essence is quite competitive. It's just 20% of the level of net sales we generate. It's just not enough in value. But for what it is worth, we have to play with what we have in a good way, in a positive way. That's why I require a lot more analysis on how we spend on our efficiencies? Is it above the line? Is it below the line? What is it exactly? Is it bringing value to our business. So I need really to look at strong KPIs to measure, to monitor like I really want to do small on our novelties, less is more. Innovation is a key driver for growth. Maybe we need to do a little bit less but with a stronger impact. A&P needs to support those launches. A&P is very essential. So the growth is going to be fueling basically those A&P. I believe, it's Richard, who asked me about quick wins. Quick wins are also on the effectiveness of our procurement. We need to leverage efficiency in our procurement. What we're going to leverage or the economies we may realize will go into A&P. I really want to boost the A&P to be even stronger than what it is today. This is going to be fueling the growth but we need to spend really that money in the right place. I just want to... Sanjeet Aujla: Portfolio disposal. Franck Marilly: Portfolio disposal. Again, there is no taboo here. Our portfolio is something we're considering looking at obviously might take away, when I joined this company is that we have amazing brands. Believe me, I've visited most of them. I haven't been to some locations as of yet, it's a matter of time. But while we have beautiful brands, we have to consider our future now. It is important. We need to strengthen our core portfolios. It is important. We cannot be dilutive in our spending. We cannot just be -- we have to set priorities on the geographies on given brands basically. So we are -- I have no decision at that stage that is taken, but we're looking into it. I don't want this to be a taboo either, but nothing has been decided at this point of time. Luca Marotta: Sanjeet, one additional comment on your first question. In this world, which is changing with -- changing the rules very quick, and we need the reactivity. We need also to be able to get a different reading of the financial dynamics. And we have all, as an industry, to make good improvement in that, starting from ourselves. Classical P&L, as I said, is not enough. Classical way of analysis of P&L is not enough. We need to be able to dig in and to be able to valorize what we are doing all along the P&L. Sometimes the feeling that all starting myself, we consider A&P quite a novel land and overhead land of cost and chunky -- and chunky money. It is not that way. When we say that we need to be more convenient with different packs, small sizes, part of the gross margin dilution can be also be valorized and put in place as an alternative way to do A&P. So when Franck is saying, clearly, efficiency is talking also as well as a different transversal way to let the profit and loss, able to talk a more comprehensive and understandable language because otherwise, we will remain in silos also inside our reading of the P&L, which is not we can do in this changing environment. Operator: There are no more questions. So I hand the conference back to the speakers for any closing comments. Franck Marilly: One very quick comment from my part. Thank you very much. It's a pleasure to get to meet you for the first time. And thank you for your great questions. I just want to say as a closing remark, if we want to dream big, we really need to act bold. We need to make a transformation as a team. Collaboration is very important. We need to be bold. We need to be audacious. We need to have ambitions. We need to have creative thinking. We need to drive altogether with my team a real transformation. We need to challenge inertia. We need to challenge the status quo. We need speed, energy and that's also why I'm looking on new governance and a new organization, and we'll discuss that more at a certain time, obviously, building on the team and the tapping into the great talent we have in this company. Again, thank you very much and look forward to talking to you again soon.
Operator: Ladies and gentlemen, thank you for standing by. I am Mena, your Chorus Call operator. Welcome, and thank you for joining the Intralot conference call and live webcast to present and discuss the third quarter 2025 financial results. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Robeson Reeves, CEO of Intralot. Mr. Reeves, you may now proceed. Robeson Reeves: Thank you, operator, and thank you all for joining us today for the Q3 results of Intralot. The transaction completed in October 2025 to bring together Bally's International Interactive and Intralot. As you will have seen, Intralot has delivered strong third quarter results despite FX headwinds. Bally's International Interactive has delivered around EUR 548 million in revenue with a hefty 43% adjusted EBITDA margin for Q3, which is on track with our stated guidance. Full year 2025 pro forma of the 2 entities annualized is more than EUR 1 billion in revenues and EUR 435 million in adjusted EBITDA with a combined margin of 40.65%, which is in line with previously stated full year guidance. As you are aware, yesterday, the U.K. government revised gaming taxes by increasing remote gaming duty from 21% to 40% beginning in April '26. This was higher than anticipated, but we are going to follow the aggressive mitigation scenarios. We still intend to deliver growth in wages accepted, which combined with generosity reductions, marketing reductions and accelerated synergies will limit the tax impact. However, this will delay our growth plan by 1 year and impact our total EBITDA by 4% versus 2025 guidance. I'll ask you all to refer to Page 4 of the presentation as I want to walk you through the bridge. So if you look at 2025 EBITDA, I will highlight our mitigations for '26. So I start with EUR 435 million as we've provided that already in our guidance. 315 million of EBITDA is from the Bally's International Interactive segment. The U.K. online EBITDA contributes GBP 275 million with revenue of GBP 660 million. The remote gaming duty increase from 21% to 40% has a direct impact of GBP 95 million when applied to 2025. That gives us a starting point of GBP 180 million of EBITDA from the U.K. before mitigation. I want to break down the mitigations. As I said, we will look at generosity reductions, marketing reductions such as advertising and cost cutting, which amounts to GBP 35 million. In addition, there will be GBP 15 million from the transaction synergies, which will deliver a total of GBP 50 million. Our forecast organic growth is expected to be GBP 34 million from all markets, including Intralot. In summary, mitigations are GBP 35 million, which is 28% of full year tax impact, plus the GBP 15 million of transaction synergies and growth of GBP 34 million. We end up with GBP 435 million, minus GBP 95 million for tax, which equals GBP 340 million. We have GBP 34 million for growth and GBP 35 million in mitigations, plus GBP 15 million for the transaction synergies, leaving GBP 424 million, which is a 4% impact versus 2025. Another way to look at it is GBP 810 million of turnover from Bally's International Interactive with an EBITDA margin of circa 30% is GBP 245 million, plus GBP 35 million of mitigation, GBP 15 million of synergies and GBP 125 million from Intralot gives GBP 420 million. We believe these estimates are conservative. A significant market consolidation is possible. The full year tax impact will be higher by GBP 30 million as this GBP 90 million is a 9-month impact. We will also realize GBP 25 million more in '27 in committed intra-lot synergies, and we believe that generosity and marketing will have further flex. Our growth in sports, expansion into new markets and the full realization of synergies will alleviate tax rate pressures in the U.K. from a full year of tax increase in '27. In 2027, increased tax for online sports betting will be introduced and drive further consolidation. Such tax increases have happened periodically in our markets and historically have highlighted vulnerability for others, leading to market consolidation and market share growth for companies like Bally's, who have higher margins than other peers. We achieved in Q3 a 43% EBITDA margin, whilst most others are below 25%. Hence, there will be other operators that cannot adapt to this change due to lower margins and lack of scale. This will result in fewer players, and I welcome a less competitive environment. The point of the combined Bally's International Interactive and Intralot was to create a platform for both organic opportunities and accretive acquisitions. We believe this improves our prospects. I do understand that the U.K. government has a need for revenue. My message is I will continue to embrace public-private partnership and regulations, but that the UKGC will have to be extra vigilant to police offshore gambling given that the incentive to do so has increased. The UKGC has been progressive with consideration to grow into areas such as crypto and prediction markets to lead and expand the market rather than zero-sum reallocation. I love our business, and we have been through such experiences over the years and will continue to adapt. I know that we will be very strong in the medium term. I intend to make a recommendation to the EGM, obviously, subject to Board approval to allow the company to make share buybacks. Now I'll hand over to Andreas to walk you through Q3. Andreas Chrysos: Thank you, Robeson. Good afternoon, ladies and gentlemen. On October 8, Intralot completed the acquisition of the Interactive International segment of Bally's for a total transaction value of EUR 2.7 billion, EUR 1.53 billion in cash and EUR 1.136 billion in newly issued shares of Intralot. With this transaction, Bally's Corporation became the largest shareholder of Intralot with a 58% participation. The closing followed the successful completion of Intralot's comprehensive acquisition financing and satisfaction of required shareholder, regulatory and other customary closing conditions. Moving on to the Slide #5 of the presentation. On the left-hand side, we see the pro forma capitalization table post closing, including Intralot's financing package comprising of EUR 900 million aggregate principal amount of senior secured notes due 2031, EUR 600 million fixed rate notes and EUR 300 million floating rate notes. Secondly, a GBP 400 million, EUR 460 equivalent, a 6-year senior secured term loan with institutional lenders and a EUR 200 million 4-year amortizing term loan provided by a consortium of Greek banks. To finance the transaction, Intralot also raised EUR 429 million through the issuance of 390 million new ordinary shares at a price per share of EUR 1.1. Total funds raised were used to pay the consideration to repay all the outstanding debt of Intralot, except for the retail bond of EUR 130 million, which survived the transaction plus the transaction fees. Following all these financing activities, the pro forma net debt -- funded net debt stands at around EUR 1.5 billion and the total enterprise value at around EUR 3.2 billion. The new combined entity on the right side of the slide, on a pro forma basis for the 9-month period would have a total revenue of EUR 790 million, an adjusted EBITDA of EUR 320 million and a robust EBITDA margin of around 41% and a healthy EBITDA minus CapEx metric of around EUR 280 million. Now moving to the 9 months of 2025 financial results of Intralot and turning to Page #6. We see the revenue analysis. Highlights here is the contribution of the Americas of around 60% and the B2B, B2G having the majority of the Intralot business with more than 95%. Turning to the next page, #7, where we focus more on the revenue line. The key takeaway is that the group showed a stable underlying performance in constant currency terms with FX headwinds, however, in all markets, which is functional currency is different than the euro, leading to an overall reported deficit of 2.9x or EUR 7.3 million, with the majority of the impact coming from the markets of the United States and Turkey. If we move on to Page #8, we have the overall P&L performance for the first 9 months of 2025 compared to the previous year and for the third quarter. Revenue is lower by 2.9% for the year-to-date period and 11.8% for the third quarter, with negative FX being the major contributor for this variance, accompanied by a slower growth in Turkey and Argentina in the third quarter. Same picture for the gross profit line. However, through efficient cost management, the group has managed to present an almost stable EBITDA performance for the 9-month period by maintaining the EBITDA margin at around 37%. Net interest was substantially lower this year due to the scheduled repayments of the bank loans in Greece, the United States and Turkey of around EUR 25 million and lower interest rates due to both Euribor and SOFR lower levels compared to the 2024 respective period. Net income variance is attributed entirely to an accounting treatment in relation to the hyperinflation adjustments in Turkey, which had a positive effect in 2024 and a negative in 2025. Turning to Page #9. The upper 2 graphs have been analyzed in the previous slide. And on the bottom left graph, we see the operating cash flow, which was higher by EUR 4 million as a result of favorable working capital movement and the lower tax payments. CapEx in the 9 months of 2025 was lower by EUR 4.3 million compared to the respective period of last year, mostly due to the nonrecurring license renewal payment in Turkey back in 2024, partially offset by higher U.S. investment needs in the current period. On the bottom right, we see that the net debt and leverage ratio adjusted for the restricted cash referring to debt servicing and repayments was EUR 299 million and 2.3x, respectively, for the third quarter of 2025, better by EUR 57 million and 0.4x compared to 2024 year-end. Turning to Page #10 and focusing on the adjusted net debt movement bridge from December 2024 through September 2025, we see that the contributors to the EUR 57 million reduction have been the solid financial performance in the 9-month period as evidenced by the generation of EUR 48.1 million in free cash flow, accompanied by a positive movement in debt, primarily due to favorable foreign exchange effect in our U.S.-denominated debt, while the net interest payments stood at EUR 21.9 million. Lastly, on Page #11, we see the contributions per region and to our revenues and EBITDA. Revenue was almost stable in all jurisdictions, apart from Turkey presented in the rest of the world. performing, however, better in terms of EBITDA in this region as well due to efficient cost management, counterbalancing the top line deficit. EBITDA in all other jurisdictions at almost equal levels year-over-year with North America performing better. And at this stage, the presentation of the results for the 9 months of 2025 is finished, and I hand over to Robeson for his closing statement. Robeson Reeves: So thank you all for joining us today. This tax change is higher than anticipated, but we will aggressively deliver our mitigation scenarios, as I've already described to you. And I've said that these changes lead to opportunities. The way I look at it is the strong don't only survive this. They get much stronger. So I'd like to hand back to the operator so we can open the line for Q&A. Operator: [Operator Instructions] First question is from the line of Tzioukalia Fani with Euroxx Securities. Fani Tzioukalia: Just 2 questions on our end. First of all, you mentioned the launch of the share buyback program. I was wondering, is there any indication that the major shareholder would be looking to increase their stake in the company? And the second question is, you provided the outlook for 2026 and 2027, how you would be looking for the medium term? Would you expect that at some point in 2028, we would see the numbers that we were initially expecting as an EBITDA outlook? Robeson Reeves: I'll take that. Thank you very much for your question. With respect to share buyback, your question relates to, do you expect the majority shareholder to increase their stake in Intralot? Fani Tzioukalia: Yes. I mean separate [indiscernible]. Yes. Robeson Reeves: As I've said, I believe in this company and Bally's Corporation will no doubt be looking to increase its stake in the company. If we see it as value, which we do. I've already described that today, we will be increasing our stake in the company. With respect to your next question, as I said, this essentially delays our plan by a year, so I still expect the same growth prospects for us. We just have to play catch up against what has happened to us with the U.K. tax changes. I do think this means that in the long term, you end up with a much more consolidated market in the U.K. So that is protected. You make these mitigations, you're protected, but our growth pathway is still there. So yes, it just changes the year by 1. So it's just the latest slightly. So thank you for your question. Operator: The next question is from the line of Raman Narula with Principal Asset Management. Unknown Analyst: Just a couple from my side. On the mitigations, just wondering, I mean, if you could touch a bit more, I mean, how much you're looking to flex sort of marketing and generosity spend? I mean, is it your expectation that your competitors, given they're at lower margin, will sort of be forced to flex a lot more than you and do you expect to be able to acquire a lot more customers by way of that? How are you guys thinking about that? Robeson Reeves: The way I look at it, so as we've already said, we've got synergies, which we had already been planning for and already starting to execute for '26 anyway. So that leaves us with the remaining EUR 35 million. I view it as the generosity piece being essentially half and then marketing being half again. We have already, and it tells you that this is a significant shock to the industry, seen people pull back from marketing. So we will judge it if we're going to chase more growth, which would always be my preference if we're getting the right returns, but we can see already that there is substantial flex that we won't have to spend the same amount of marketing money to get the same growth. If we see greater opportunity there, we'll make sure we accelerate the growth and increase our EBITDA margins once again. But just understand that the majority of operators have an EBITDA margin in the U.K. sub-25% and many are sub-20% and in the teens. So this change wipes out all profitability and makes some loss-making. Unknown Analyst: That makes sense. And just as a segue into that, I mean, you've said that consolidation will be a direct consequence of this. I mean, other than the share buyback, will you be looking to opportunistically do any bolt-on acquisitions to further consolidate your share? Or is the sort of focus solely on deleveraging in the medium to near term and delivering synergies as planned? Robeson Reeves: I think we'll have to be opportunistic and see what opportunities arise in the market. This is obviously day 1. We do want to delever in the medium term and continue that delevering pathway. But if there are great opportunities, which in itself are delevering by an operator essentially is loss-making and we can absorb that revenue. It depends what price we would have to pay. So we're looking at everything. I do already sense that consolidation is here and growth will be driven by a few operators rather than many on the go forward. Unknown Analyst: Perfect. My next one, just on sports betting. Just would be helpful to get a sense on how that's performing relative to the core sort of iCasino. And if you could give sort of growth rate at which that's been growing and what your assumption is going forward, that would be helpful. Robeson Reeves: Sports betting is a small percentage of our revenue in the U.K., very, very small. So we actually have most of our revenue is in iGaming. We are seeing acceleration there due to our sponsorship of Notting & Forest. We expect our sports revenue to triple in the next year. That was prior to these changes. So we may be reviewing our product mix further anyway, obviously, because of the tax differential between iGaming and sports in the year of 2026. So I think there's quite a few levers to pull, but we are small in sports. We can -- I guess the narrative is we're small in sports today, we'll grow it. We can mitigate this tax rate even though we are heavily concentrated to the highest tax burden, but that's -- we can mitigate it better than others because our EBITDA margins are sitting already in excess of 10 to 15 percentage points higher than others. Unknown Analyst: Understood. And just as a last one for me, maybe on -- just to help on modeling. I mean, is there some sort of scale-up assumption that you can disclose in order to get from NGR to sort of GGR? And if you're unable to disclose, maybe it would be helpful if you can comment on like how the intensity of sort of bonuses and free spins that you guys give out to your consumers relative to sort of other competitors in the market, that would be helpful. Robeson Reeves: I guess you can do the proxy based on our revenue sitting at EUR 660 million in '25 and understand the tax impact over 9 months would be EUR 95 million. So you can use that as a reverse proxy if you want to do it that way. Operator: The next question is from the line of [indiscernible] with LGT. Unknown Analyst: I have 3 questions. I'll ask them in order. The first one, just going off my colleague's question on Slide 4. So $229 million is the new EBITDA you present for fiscal year '26, and this is prior to any growth. But my question is, what gives you confidence that volumes will remain stable, let alone grow? And correct me if I'm wrong, but in the Netherlands, we saw similar increases and the impact there was volume pressure. So the first question is why will volumes remain stable and not decline given the move to the black market potentially? Robeson Reeves: Good question. The key things which drive growth in the black market, yes, one of the key factors is tax. The other factor is regulation. Now if you roll back and say, before yesterday, we had our existing tax rate and displacement to the black market wasn't happening. We can see that there's such a large long tail of operators in the U.K. market, there's approximately 1,000, right, who have substantially lower margins. We believe that our current numbers and everything still points to the fact that we will continue our marketing spend. There is a reduction there, but we're seeing people already pulling back from auctions and advertising that we believe our growth will continue. The regulatory balance with tax is on the edge. I won't deny that. And as you heard in my comments, I want to ensure that the UKGC focus on preventing the black market. Having said that, in all of the numbers we're seeing already, our growth comes from, yes, new player acquisition, but also our existing players becoming more loyal. In historic presentations, you would have seen that over time, our player spends grow. Now if you think there's fewer players in the market and people spread their spend across multiple operators, this will accelerate as well. So we think that we'll gain more players because fewer people are bidding for the same traffic, but also we see further upside, which I haven't accounted for here in increased player spend because their spend is more concentrated amongst fewer operators than would have been previous. Unknown Analyst: But just to confirm -- very helpful. But just to confirm, in the Netherlands, what was the impact on volumes there on the legal market? Because my understanding is we did see volume pressure and quite significant margin -- volume pressure, excuse me. Robeson Reeves: Yes. So in the Netherlands, if you look at the data, you'll see that the majority of players, the counter players are within the regulated market. The pressures that came, and we've already had these pressures, by the way, on limiting spend of individuals. So individual player spend, so VIP spend, call it, gets displaced. That has already occurred in the U.K., very limited VIP spend. It's much more about the regular recreational player, which is exactly what we're built on. We have a high-volume, lower spend audience. So black market in Netherlands, over 50% of revenue. 90-plus percent are playing in the regulated market. It's about the VIP displacement. This has already occurred in the U.K. And we are actually -- when you look at the regulated market in the U.K., we don't see further displacement from recreationals. And our business model is based on recreationals. We already hold a stake limit of maximum GBP 5 on a slot machine, GBP 2 for under 25 on slots. So our spending profile is much, much lower with an average stake of 63p a spin on a slot machine. Unknown Analyst: Very clear. And if I can just ask the other 2 questions together. In terms of CapEx guidance, you've given that to be low to mid-double digits for fiscal year '26 and 2027. But is it possible to provide a bit more disclosure on the exact level, which leads me to the last question, which is you renewed Arkansas, so congratulations. And then on Illinois, Ohio, Australia, when do you expect decisions on those expectations still to renew and importantly, at similar or perhaps lower margins given competitive intensity in the U.S. Robeson Reeves: I'm going to hand over to Nikolaos to address. Nikolaos Nikolakopoulos: Andreas, let me take the second part and you talk about the numbers of CapEx. So we do have a pipeline that for -- which is going to materialize, I mean the customers are going to take decisions rather soon. It has to do with the Ontario lottery, the Maryland that still is an active process, and we are waiting to see how the next step -- the next step is going to be. Minnesota and also the VLT monitoring in OPAP that we are expecting a decision really soon, plus the VLT monitoring in Illinois that the submission date has moved to January 5. There is still also Texas that is going to issue an RFP in the first quarter. most probably of next year and some other smaller projects in Latin America and the rest of the world. On the 3 projects that you mentioned, first of all, Ohio, it is something that we have announced a year before that Scientific Games won. So this is something that is going to run until 2027, mid-'27 for us. On Australia and Victoria, we are in a bidding process, in the middle of the bidding process for the licensing. And on Illinois, both the PMA and the technology contract that we do have expires in -- both expire in 2027. Still, there is no movement on issuing any RFP either for one or for the other. I understand based on what I hear from the legislation and what we read in the news that there is a debate what is going to happen with the PMA, if the PMA is going to be continuous as it is, if legislation is going to change. Still, we are waiting to see what will happen there. And my view is that according to what the decision the state is going to take for the PMA, then we're going to decide when they are going to issue the RFP for the technology provider. Andreas, can you please take the numbers for the CapEx numbers for next year? Andreas Chrysos: Yes. Let me take this one. It's Chrys here. As we've mentioned, we have on average, both companies combined, we estimate about EUR 60 million of CapEx per annum average for renewals and normal course of business. On top of that, there may be spike years and '26, '27 is one of those spike years because our projects, especially in the United States, as you know, they spread over 10 years. They have the CapEx in the beginning and then the revenue share model. So there's a first cycle of the project where you don't -- where you're trying to recover your investment in 3, 4 years. And then in the second half, of the project, you are generating all the cash. And if you have an extension, which is typically the case because these contracts extend to 15 years, that's even more cash generative. Now '26 and '27 are years where we expect big spending in certain projects, as Nico was mentioning. So the additional spending will be between EUR 50 million and EUR 80 million because we are spreading these investments over time. Of course, this will depend on the overall situation because these contracts may delay, the time line may slide a little bit. But the '26 and '27 will be exceptional years. But we think we are in a very good situation to cover whatever CapEx we need. Unknown Analyst: And just to make sure I heard the number, so it's EUR 60 million for maintenance, normal course of business CapEx on top of... Andreas Chrysos: Maintenance [indiscernible] on average. Like, for example, the extension in Arkansas is part of the renewals, which is a much lighter CapEx case than if you win a tender from scratch. So on average, that's a EUR 60 million. And then you have the spike years. Operator: The next question comes from the line of Osman Memisoglu with Ambrosia Capital. Osman Memisoglu: Just going back to the top line for U.K. from '25, EUR 660 million to EUR 720 million, that does include market share gain, but the upside is from higher spend per customer. Did I understand that correctly? And also coming back to the black market, is it fair to say BII will be less impacted by leakage to the black market given the profile of the customers? That's my first question. And then coming back to the share buyback comment, when -- what is the time line on that? When will the AGM could be held? When could the share buybacks, if approved, could start? And finally, related to that, the dividend consideration, the 35% out of 2026 results, is that still the case? Or are there any potential changes there? Robeson Reeves: Okay. I'll take... Andreas Chrysos: Robeson, let me take the [indiscernible]. There are a couple of issues post transaction that we were planning to hold the AGM. So the intention is to hold an AGM within the month of December, which may include the issue of the share buybacks. And the dividend forecast, the percentage we have quoted is still the intention. Robeson Reeves: Okay. And I will pick up the other questions. So part of the growth that we're expecting is in ARPU increase, but we're still expecting natural growth that we see from our marketing acquisition because we'll still be spending in the marketplace. I don't think our reduction in marketing will be as substantial as our peers. Also, as I was trying to emphasize before, player spends grow over time. So growth comes from actually your retained audience, not only adding new players on top. And you -- and we get that because our players are lower spending. So they actually spend very little at the beginning, and they continue to build over time. That means for a more sustainable business. But also, to your exact point, we're less exposed to the black market because we don't have high-end customers. We haven't got those big VIPs who get displaced by regulation and they go over to the black market, so they can still get their big bets away. Operator: The next question is from the line of [indiscernible] with Optima Bank. Unknown Analyst: So coming back to Slide #4 and your projections on EBITDA for 2026 and 2027, I can see that there's almost flat assumption for Intralot. I guess you haven't taken into account any potential new contracts. Is that correct? Robeson Reeves: Nikolaos, do you want to take it? Nikolaos Nikolakopoulos: Yes, can you please repeat the year, 2026, you mean? Unknown Analyst: Yes. And 2027. I can see almost flattish EBITDA for Intralot. So... Nikolaos Nikolakopoulos: I think the slight increase in 2026. If I'm not mistaken, significant EUR 5 million, if I'm mistaken. Andreas Chrysos: In the table, we have published, we have not taken into account new projects like the one. Nikolaos Nikolakopoulos: This is probably -- let me tell you something. First of all, this is mainly on Robeson 's comment that this buildup and the bridge that we have here is really conservative. What I can tell you for next year is that we are going to start 2 new projects in British Columbia. The first is going to be the iLottery, which it's going to start either on April or May. And I'm not talking about contract wins because this is already there. I'm talking about implementation. So this is the first one. And the second one, we have not announced yet, but we're going to announce a contract with Managed Services, which is going to we're going to sign in the next weeks. It is already approved by British Columbia Board. And we are going practical to outsource a significant part of the operation of the system to us. We are also going to have growth in markets that we're going to deploy the Vitruvian platform, as we have said repeatedly. And the main one is in Croatia, where we are going to start the UAT in January, and we believe that by the end of the first quarter, we are going to be live and operational. We are expecting, obviously, the organic growth that we have every year, but especially in the U.S., give or take, follows the inflation. And last but not least, we do believe that we are going to have growth by adding some significant states that I cannot disclose guessing what we are saying. So this game is going to really take off. So all in all, there are prospects that some of those we have already secured. We are cautious because of the situation, especially in the States, if there's going to be any recession, if there's going to be still a flat line, especially with the scrap card, the instance that represents, give or take, 65% of the market. But as I said in the beginning and Robeson in his initial statement, this is a conservative forecast. And it is not incorporate any new contract. Keep in mind that apart from the renewals, the contract that we are going to win, even if we win contract today a new contract, we're not going to realize any revenue in 2026. So we are not projecting any revenue there because the experience that we have in the U.S. is in the last couple of years that there is significant delays both in legislation in iLottery, but also in the evaluation and in the awarding of contracts. Andreas Chrysos: If I may add something to this, the table that we presented on Slide 4 was intending to just explain the mitigation part on the U.K. tax, and that's why these estimates are conservative. As you may have noticed, the general range given by Robeson's court is between EUR 420 million and EUR 440 million. So in the optimistic scenario, it may include Intralot incremental revenue and EBITDA, which is not on this table. That's why we end up in the lower side of the spectrum that we said in our renewed guidance. And of course, this is even more for 2027. That's further out. We have not calculated any of that incremental potential here. This was just the exercise to present the mitigation plan, and that's why the numbers that we come in the end are on the lower end of the spectrum. Unknown Analyst: Okay. And because I missed the previous question, you said about the dividend, you are sticking to your intention to distribute from the next year. Andreas Chrysos: 35% of net profits, yes. Operator: The next question is from the line of Pointon Russell with Edison Group. Russell Pointon: Two questions. First one, I suspect is for Robeson. On Slide 4, the generosity marketing savings are broadly equally split. I note your answer earlier about you will be flexible. Does that mean the revenue elasticity of cutting marketing versus Generosity is on a like-for-like basis, very similar? Robeson Reeves: I deliberately broadened the definition of saying generosity. Generosity means a few different things. It's however you can give returns to your customer. So it can be across the space of odds, can be across the space of reward and so on. I think we have to be flexible there. We can easily cut more marketing, to be clear, but I don't intend to. So there's much more flex. We chose a balance because we have to watch what happens in the marketplace. And that's why we've said 50-50. In reality, I suspect that there is potentially more revenue elasticity, which comes from concentration of wallet share of existing players because of the pressures that are coming to other operators who, as I've said, this entire tax rate removes all profitability. But we have flex in our marketing. That's for sure. We are already observing and as I've said, I was a little bit shocked that I saw this on day 1, that we don't have to spend the marketing in the same places to have the same volume of traffic. So people have already -- and it isn't like you might assume everyone will reduce. Many operators have removed fully, right? So you could easily make assumptions on what it means for the overall required marketing spend to capture the entire marketplace. But we believe it's sensible that it's 50% -- call it, we've put it into buckets of maybe $15 million for generosity and $15 million for marketing, but I'm not going to hold myself to that. We have to adapt in times of change, and that's what we've shown we're good at doing over the last 20 years. Russell Pointon: Great. And my second question, I think the answer is I already know to this, but I just want to make sure with the now lower profitability expected for the group in the coming year or so, that doesn't frustrate any aspirations the group might have had in terms of new contract wins elsewhere across the globe. Nikolaos Nikolakopoulos: On the contrary, as Chrys, I think, mentioned before, we are not shy of the necessary CapEx, either on the lottery side or on launching B2C operations. The plan remains the same. And as I mentioned before, especially on the lottery stuff, we are moving on going after the contracts that we have in our pipeline. And the same goes also on the launches that we have planned on the B2C space. Operator: The next question is from the line of [indiscernible] with Arini Capital Management. Unknown Analyst: I understand on a year-to-date basis, your performance is stable with some impact of FX. But if we look at just the quarterly performance, the decline is part announced at double digit. Would you be able to just explain this? Andreas Chrysos: Okay. Let me take this one. The variance in the third quarter compared to last year, again, is attributed to the FX, but also accompanied, as I said during my analysis on a slower pace in relation to the growth of markets in Argentina and Turkey. So the market had a slower growth compared to last year. And this is why the FX hit was higher, although normally, the market catches up with the devaluation. In this case, in this quarter, this was at a slower pace. So this is the variance compared to the full year effect. And of course, it's not only the Argentina and Turkey. I mean we saw the same effect even in the U.S. So overall, the FX was negative. Unknown Analyst: Sorry, just to clarify. So in use the year-on-year set within the Americas. There's around EUR 10 million decline in the revenue. Is it driven by 1 particular region? Or is it across the different geographies within the U.S? Andreas Chrysos: It is across different geographies. Unknown Analyst: And can you confirm that there wasn't anything different last year, perhaps higher marketing spend or any project behind this? This one. Andreas Chrysos: No, no. It was just the FX. Operator: Next question is a follow-up question from Raman Narula with Principal Asset Management. Unknown Analyst: A quick follow-up for me. Sorry, I didn't quite catch what you said earlier about the share buyback. So is that going to be from Bally's Corp. in the U.S. increasing their stake? Or will the combined sort of Intralot Bally's Group look to buy back shares from the exchange? Robeson Reeves: I can take that. So with respect to Bally's Corporation, Bally's Corporation will purchase shares and not buybacks, but purchase shares and increase its stake. Taking a recommendation though, they're obviously dependent on approvals to -- as Bally's Ir-lot to make share buybacks as well because this company is strong for the medium and long term. Unknown Analyst: And for Bally's Intralot, is there any sort of -- are you able to give any sort of quantum like Max Quantum, which you'll be looking to buy back assuming your approvals are given or... Robeson Reeves: I think we will just review that as a Board plus. We still have a focus on delevering. We want to make sure that we grow appropriately since leasing together. We want to do all of these things in... Operator: Ladies and gentlemen, there are no further questions at this time. I will now hand over the conference to management for any closing comments. Robeson Reeves: Thank you for joining us today. This company is very strong for the medium term, and I'm very proud of being part of it and delighted that we have the combined Bally's International Interactive and Intralot together. I look forward to speaking to you again very soon, and all the best for the festive season. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.
Neville Brink: Good morning, everybody, and thank you for joining us on this fine Monday morning in Cape Town, our annual results presentation for 2025. And let me just take you through the format. So we've got about 1.5 hours. I will take you through an overview and I'll cover our three pillars, and then I'll hand over to Zaf, who will take us through the financial results, and then I'll go back to our outlook and give you an indication of what we're facing for the next year and then happy to answer some questions. So let's kick off. Just when -- and I just want to take you back a step, what I've done is slightly different this presentation. I put four context slides in the presentation, one for group and one for each of the divisions. And the purpose of that is to give you a view not only of the numbers of the environment that it currently exists both from a group point of view and each of the divisions and what they're facing and some of the issues that affect their business. And I want to start off with the group because we put out a trading statement about 2 months ago. And obviously, you've all seen the trading statement and it showed our figures, our results were going to be somewhere between 38% and 42% down. And immediately, I started getting questions from the market and from friends and everybody about Oceana. Was Oceana in trouble, what was happening. And it made me think a bit about where Oceania is quite right now. And the more I thought about it, the more I wanted to put this slide up in here because Oceana is, in fact, in a very, very good position at the moment. Numbers and performance are annual, but structure, strategy and position is far more important in terms of taking this business forward. So this opening slide, I just really wanted to cover where we believe we are. So Lucky Star, once again, a great business, iconic brand that is in strong demand and loved by the SA consumer and remains that brand and has lots of potential going forward. We've invested heavily in over the last 3 years in our Wild Caught business. And enhance both the vessels from a maintenance point of view and a reliability point of view, but also from a productivity point of view, upgrade the factories, made the vessels much more reliable and productive. And that's starting to pay dividends going forward and we'll pay dividends going forward, and I'll go through some of the details later on. And then as you know, in both U.S. and in the SA, we've invested quite heavily in the fishmeal and fish oil plants. We -- and we underinvested and deliberately over the last couple of years because we didn't have certainty around rights. And once the frac process was over and we had some certainty in terms of rights, we invested quite heavily in both SA plants and in our U.S. plant. And those are starting to pay dividends. So despite the figures, I think, Oceana and in covering all of that, we have a great team that is running Oceana. I think that the management team and the people who work for Oceana are settled. It's a fantastic culture. And I think we are very well positioned to take advantage of issues that change. And I can't control climate, I can't control catching. I can't control the weather, but those are cyclical. And when those turn, I think Oceana and I know Oceana is in a fantastic position to take advantage of that. So figures aside, I think this group is in a very, very good position. So let's now look at the actual performance for the year, and I'll start off with just giving you some of the highlights in the various parts of our business, Lucky Star, very good performance, very solid performance here. Once again, in a very tough environment, and I'll talk a little bit about that later. Our Wild Caught had a significant turnaround in performance obviously, off a low base last year, but notwithstanding that low base, a very, very good performance coming through, particularly from our hake business. In our two fishmeal and oil businesses, despite the price of oil dropping significantly, the factories in both the U.S. and the SA performed extremely well, and I'll take you through some of the stats there that showed how the investments that we put in those states have started to deliver and will deliver going forward. And then I've put a point there about Africa, African businesses, our collective African business have done extremely well, 58%. And the reason I put it up is just to show the diversity of our group. We are multi-species, multi-geographies, multicurrencies. And when one doesn't do well like the oil prices declined, our African businesses have done extremely well. So again, it just shows the strength of this business and being our continued diversity. I'm going to go through the three pillars now, and there are a lot of stats in here. And I want to -- and I won't cover all of the stats, but I'll talk about the business. So again, a context slide. And this slide and a lot has been spoken about the SA consumer. And what I've tried to focus here is not the broad SA consumer. This is Lucky Stars consumer. [ SA 125 ]. And what are the things that are affecting them. As you can see, the minimum wage has gone up by 38% over the last 5 years. The food basket has increased by 68%. So they're under pressure to keep their families fed, and buy affordable protein. Our sale costs, as you say, 30% of their disposable income is spent on food. Everybody has spoken about the gambling spend that has become a problem in this country. And I know I read a comment from the ghost writers saying that everyone FMCG companies were blaming, drop in volumes on the spend on gambling. And in fact, that's despite the spend in gambling. Lucky Star has done extremely well. We've seen volume growth in Lucky Star. And what is -- and shopping habits have changed. Those shoppers that are really needing to make that rand go longer are looking at different ways of spending. So they are shopping largely on deals. They cross shop. They don't shop at one particular store. They will look at what the deals are on [ Pamphlet ] and they'll move between them. And then they're leaning on spaza convenience. And spazas are becoming much more effective in terms of being cost competitive versus the major retailers. They've got buying groups now. They've become very, very organized in their structure and their pricing is relatively priced considering that the consumer doesn't have to travel by taxi to one of the major centers. So the spaza stores have become a major factor in the spending habits of our consumers. And then what we've seen is the retailers and wholesalers are also trying to amend their structure in terms of taking advantage of it. The retailers are going and expanding their footprint into the townships in various formats, container store formats. And even the wholesalers are now starting to open their stores on a periodic basis to invite consumers -- household consumers into their stores to take advantage of wholesale prices. So the market is a tough market out there. And within that tough market, Lucky Star has done extremely well. Revenue up 6%, operating profit up almost 10% and our OP margin increasing slightly by 0.3% to just below 10%. And I always get asked this question about OP margin and the correlation between volume, value and margin. And this -- we play a very careful game and Lourens and Zafar and his team are always looking at managing price, price points and volume growth in Lucky Star. Certainly, we could put an additional price increase through, and we've been very prudent in terms of our price increases. But we want to maintain our market share and the volume growth. This year, we sold just over 9.5 million cartons, up slightly 2% volume growth with -- given what's happened in the consumer, a very commendable performance. People are looking for affordable and available protein. What is interesting, our export, what we call our cross-border countries, Botswana, Zambia, Zimbabwe, Mozambique, we've seen strong growth in Lucky Star in those categories. We -- last year, you remember, we closed both factories for a period of time to do major upgrades. So our production volume that went through the factories this year substantially up, 24% up on last year, produced 5 million cartons through the two factories here. Our canned meat production, we've expanded our lines. We've added additional lines and canned meat production is up almost double on last year. And we've taken a conscious decision to increase the pricing on canned vegetables. Our canned vegetables is all our contract pack basis, so we have no fixed costs, and it's a highly competitive market, and we produce a quality product -- products in the canned vegetables. We've decided to reduce the volume targets, increase the margin to assist the overall margin of Lucky Star. So that is a deliberate strategy in canned vegetables. The factory performance, once again, as I said, the investment that we put into these factories have done extremely well. Look at the damage rate that has dropped from 1.5% down to 1% in the full year. Our throughput substantially up on a ship basis. And then what has improved is the yields that we have achieved. That 73 relates to 73 cartons per ton of fish that they process. So moving from 69 cartons to 73 cartons per ton. And obviously, production costs have come down. On a closing stock, which is an important issue for us, remember, 80%, 85% of our production and sales is from imported raw material and the lead time to buy a pilchard somewhere in Mexico or Japan or Morocco and get it processed and delivered to South Africa in a can and cleared by the NRCS takes anywhere between 3.5 to 4 months. So stockholding and the managing of that stock holding is a key component to keeping Lucky Star on shelf all the time. So we closed with a reasonable amount of stock. That's about 5 months stock, 3.94 million cartons, a little bit of frozen, most of it in finished goods. So a good position to going into the new year on our raw material supply, our finished goods supply. On the resource point of view, from a supply of fresh fish from our own factories and from Namibia, a little disappointing in the fact that what we're seeing from our vessels, what are we seeing from our vessels catching and what the scientists are telling very different. So you saw last year, we had a 65,000 ton quota going up quite nicely on the previous year. This year, they initially gave us 35,000 tons of quota. And the reason being the research that was commissioned by the department was late and their findings were disappointing. And yet when we went to see and our vessels went to see, our catches were phenomenal. We -- remember, half the quota is issued on the East Coast and half is on the West Coast. And our vessels went out and caught that 35,000 tons in record time. So anecdotally, our findings of the availability of pilchard is far better than what the science is saying. They've recently given us an additional allocation of 9,000 tons up to 4,000 tons, and our vessels are fishing right now. We've seen some signs, which is quite positive because generally pilchard are not -- this time of the year, generally have started to disappear, but we're still seeing pilchards. Unfortunately, those of you living in Cape Town at the moment will have experienced the high wind that we've experienced for the last 3 weeks, and that has prevented our vessels getting to sea. But they are -- they have been able and they've seen good signs of pilchards. What is very positive is the allocation of a quota for the first time. It's an experimental quota in Namibia. As you know, Namibia scientists and government put a moratorium on pouches for the last 5 years. In the latest research, the biomass has rebounded strongly, just below 1 million tons, and they did an experimental issue of 10,000 tons of pilchard to our factory in No. We're a shareholder in the last factory in [ Walvis Bay ]. We own 45% of that factory, and they issue a quote of 10,000 tons. I can tell you that the catch has been really, really good, both from a daily catch point of view and from a quality of fish. The sizes and the quality of the pouch that we're catching has been very positive. And we're hoping it was a very late allocation, so we haven't had the time that we would like to, but we're hoping that we're going to land that full 10,000 tons through that factory, which is positive. And then obviously, Lucky Star being one of their major customers will acquire that product into South Africa and Namibia because Lucky Star is in Namibia as well. So very positive from a resource recovery. And why that is important, both from a South African and a Namibian point of view, own catch of fresh pouches is far more marginal enhancing than frozen product we buy from somewhere in the world. So certainly, the higher that percentage of input, the better for us as a company. The other issue that has changed quite dramatically over the last couple of years is where we buy pouches. As I said, 85% is bought from somewhere in the world. Traditionally, over the last 10 years, we buy a bulk of that comes from Morocco and Mauritania. This year and the latter part of 2024, we see Morocco and Mauritania resource not performing well, but the Pacific has performed extremely well. So we've switched our purchase pattern, and we bought almost 93% in the first half of the year because the Pacific season runs from about November -- late October, early November through to January, February. So we have to buy a large portion of our raw material in a very short period of time. Obviously, it puts pressure on our balance sheet because we're spending that money upfront and carrying that stock for almost a full year. But the quality of the fish that's coming out of Pacific is very, very positive, and it certainly has -- so in terms of Zaf and the way he manages our balance sheet, it is -- it means a way of thinking, but it's certainly positive from a quality of fish. So going forward, where are we? As I said, canned meat, we now have acquired the final 25% of the plant that we bought in [ Kraftonett ]. So we now own 100% of that. We've introduced two further lines in our factory on the West Coast. We've seen strong demand from our customers, and we've almost doubled our production out of those two factories. We are looking at some new developments in terms of ranges out of that factory. And then as with any factory, we are focusing on input costs. A large portion of that -- of the input is Brazilian, chicken that comes in from Brazil that forms the basis of the raw material. So we are focusing because we have a very strong procurement team that sources product, both pouches and chicken [ MDM ] from Brazil to focus on reducing costs. 2-minute noodles, a new category for us, a category in excess of ZAR 5 billion in South Africa. We started last year with contract packing under the Lucky Star brand. We've seen some very positive signs for the product, in particular, one of the major retailers. Very interesting market. It is a combination of price and quality from a range of high quality to low price. We have positioned Lucky Star more or less in the middle. We have strong demand for the brand. We certainly won't be doing anything that will damage the brand. Lucky Star is too important a brand, so we would never compromise on quality. So it's been an interesting development. We are certainly -- have learned a lot over this year. And we believe that this has some very positive outlook for us to invest through the full value chain in 2-minute noodles. And then on the pilchards side, strategy remains the same. affordability, availability and making sure that we -- our service levels to our customers as close to 100% as possible. We want to be in every store across the country all the time at affordable price, and that remains the same. So we are very structured in terms of how we get that product out. Our market share remains very high and remains at a very competitive basis. Remember, we don't only compete in the poultry market. We compete in the broader protein market. And in fact, we compete against starches as well. So price is key. And that ratio between margin, value and volume is a key component that we're looking at on a constant basis to manage our price and retain our customers. We have introduced a new flavor this year, peri-peri flavor. And certainly, it has made some nice inroads into the market and is helping with the volume growth. And then just recently, I visited Ghana about 2 months ago. We entered this market with a partner. So we're not just selling into the wholesalers. We've gone in properly with a local partner who has established a sales team and a marketing team that is supported by our South African team. Ghana is a country that has very similar eating habits to South Africa. They eat and they recognize a tall can with canned pouches and canned fish. So it's not changing the eating habits. It's basically introducing the Lucky Star brand into that market, both in Accra and Kumasi, which is a big -- a big canned fish eating area. And we've seen some very nice progress in that market. So certainly watch the space, and we will -- and I'll certainly report back in the half year of how that business is going. So the strategy remains there, grow Lucky Star, keep our customers supplied with affordable protein. Just on the right-hand side, just those two graphs there. It's interesting that our export market is growing substantially. So the cross-border markets that we see, all of the SADC countries have shown strong growth in volume. And then that top graph is the foods allocation, the non-fish allocation of our total basket, 10% and growing. So very positive. It gives us some nice road to develop this business. On the Wild Caught seafood, and again, I want to put a context slide. I attend a conference annually and which is called the groundfish conference. It's all of the major species and companies that catch and produce ground fish, fish that is caught close to the bottom. And hake, our product is in that sector. And this was a graph that was presented at that conference 2 months ago, stats supplied by the FIA fishery stats showing the world fisheries production. And you can see the bottom blue line on that, I think that is total Wild Caught, wild capture seafood. And it's been approximately the same around 90 million tons for the last 20 years. It's fairly static. One species goes up, one species go down. What is interesting is the aquaculture growth. And you can see in 2023, this is the last update that FIA gave us. In 2023, aquaculture accounted for 100 million tons of fish of farmed fish per annum, which is now in excess of the wild capture species. Within the wild capture, we have ground fish, the species that we compete in, and that is cod, pollock, hake, ling, a number of ground fish printing. And that has been fairly -- also fairly static at around 7 million cartons -- 7 million tons, as you can see on the top right there. And what is projected for 2026 is a drop -- a slight drop in that down to 6.6 million tons. But what is more important is the global cod supply. Cod is the #1 white fish supplied and demanded by consumers worldwide, in particular, European customers. And over the last 5 years, the biomasses and the hake -- the TAC allocation has dropped from about 1.5 million tons to about 950 tons, a massive drop in the supply of cod, both in the Atlantic and the Pacific. That is the species that is -- that hake generally competes with from a pricing point of view. They're more expensive to us, and we sit just below them. With the massive shortage, there is a switch from cod and the availability of white fish into hake. And hence, our market has been very, very strong in terms of demand. But what -- the point that I want to make on this slide is that wild capture seafood is finite and will be going forward. Most of the species are well managed by governments. So you do have some -- obviously, some poaching and some small areas, but generally, they're well managed. But the key is that wild capture species is finite and will continue to grow in demand. Consumers, as much as they don't mind and eating aquaculture or farm fish, their preference is for a Wild Caught sustainable seafood. And with static supply, demand will continue to grow and pricing will continue to grow. Important component -- and remember, this is what we compete in all of the Wild Caught seafood division. All of the species are in this global fisheries production. So let's look at the overall performance of this division. Obviously off a low base operating loss last year of ZAR 53 million, but a nice turnaround, ZAR 222 million, revenue up almost 20% and margin up to 12%, a little bit disappointing. And I'll go through the various species. Certainly, I would like to see that improve. But the business is based on the investment we put in this business is certainly right to start delivering on future upturns in biomass and catch. Started with the hake business and really an exceptional performance and driven by the investments that we've put into this business unit over the last couple of years. We've spent on all of the hake vessels and the horse mackerel vessels in upgrading both the level of reliability and maintenance and upgrade the production. So you see that top left-hand for sea days. That's an important component of how we measure this business. A fishing vessel alongside doesn't make any money. A fishing vessel at sea is when we really make. So we've moved our sea days from 859 days at sea to 1,027. That's a collective hake vessels at sea. Catch costs have come down almost 12.5% because of a combination of less maintenance, more sea days and better catch rates, and I'll talk about catch rates just now. And that's resulted in improved volume going through to the market, 12,000 tons relative to 10,000 tons sold last year. You see there, we put in the export price in euro terms, we've seen on average our euro pricing move up by almost 8% across the board. So a very commendable performance from the hake business this year. Just wanted to show you some catch rates because catch rates drive the three main components of a fishing vessel, maintenance, labor cost and fuel, all underpinned by catch rates. Those three make up 85% of the running cost of a vessel. But when you have higher catch rates, the division is just exponential in terms of dropping the daily per kilo catch cost. And we saw catch rates drop over the last 5 years up until the early part of 2025. And then suddenly, in the second half of this year, we've -- as an industry, just experienced a massive upturn in catch cost and catch rates, 42% up. And generally, what I've seen, and it's -- again, it's -- I've been in this business for 40 years, there's definitely an upward trend in the Southern Hemisphere catch rates of most of the species. And you'll see when I go through all the species, there's with us moving into a neutral zone from an El Nino zone, we're seeing a lot more positive coming from most of the species within the Southern Hemisphere. And that certainly is indicative of what we've seen in hake. Fuel costs, big component of the running cost of vessels has come down quite nicely and will continue to go down. We have a hedging policy, and we've hedged a large percentage of our future fuel costs going into the balance of this year. So fuel cost is certainly likely to hold at the similar levels for the balance of this -- the next financial year. Our horse mackerel business, better than last year, but to say a little bit disappointing. I obviously know this business extremely well. And I'm used to catch rates that are far better than this. Given that we've spent substantial money on those vessels, we are certainly a little disappointing with the catch rates in Namibia and South Africa. Desert Diamond had an abysmal year last year and has certainly had a turnaround. We've started to see the resource coming back. It recorded a breakeven result this year compared to a substantial loss last year. And catch rates, although they have improved, have been very sporadic. So not in a wide area in a very isolated, very condensed area, but certainly an improvement. And in Namibia, very in line with the previous year. The market remains strong, again, exactly the same as Lucky Star, customers looking for affordable protein. And this is where horse mackerel plays in. So our African demand, remember, we sell to many countries in Southern Africa up to DRC, Mozambique, cross-border countries. The demand for horse mackerel is extremely strong. We just need the resource to start recovering as we've seen other resources recovering. I'm used to catch rates of 110, 120 tons from those vessels, a catch rate of 68 is half of what I'm used to. It's still positive, but certainly not at the levels that we used to in the past. Still a good business, and we'll continue to drive that. So looking for better things in the new year. Two smaller parts of the business, squid and lobster. I'm going to start with lobster because they are the smallest component of our business. On the West Coast, traditional West Coast lobster that you know that is served in many of the restaurants here, a species that has been under threat for a long time because of the levels of poaching. Interesting now, the scientists are saying over the last 2 years, the resource has rebounded nicely. And in fact, we've got a 58% increase in TAC for the 2026 year, very positive. Small part of our business, but very profitable and very variable. We don't have high fixed costs. On the South Coast, that's a deepwater lobster, no poaching, but again, responding very nicely to the climatic conditions improving. We catch that mainly on the East Coast of Africa, and we're expecting an increase in both TAC and catch rate. So both those businesses have performed well, again, indicative of what's happening To most of the species, both South Coast and lobster seeing increases in TAC. On squid, we had a poor season. Remember, in Squid, you have two seasons. One, your dominant season is November through to February. So the early -- at the beginning of this calendar year, our season was fairly poor. The signs are certainly more productive. We have a mid-season, a fairly small season in the middle of this year, not great. But certainly, the signs are very positive. Again, squid is a short-lived species. And depending on the environmental conditions on the South Coast, that promotes egg laying and the growth of the species. We've seen some positive signs over here. We will go back to see, in fact, at the end of this week, our season starts on the 28th of November. We go to see it on Saturday, and we're certainly looking for positive signs there. But why I want to talk a bit about squid is because it's certainly an industry that I believe in. I think we have invested. We bought additional rights, and we introduced a new vessel. That photograph is of our new vessel. It was launched about 2 months ago. That is a catamaran, more effective at catching squid because you've got a wider area. It's more stable. If you see the front of that vessel, it's got three anchors. It allows you to anchor your position on a school of squid and allow the fishmen who are fishing by hand to maximize catch as opposed to the monoholes, which tend to swing around and move off the fish. So what we've done, we acquired an additional 5 vessels and additional 77 permits. We've rationalized those 11 vessels into 7 most effective vessels and maximize the permits on those vessels and then certainly looking at some goods going forward for the opening of the season for that this industry to actually perform nicely. And the reason I like this industry is because it's fairly variable. It is not a high fixed cost business. The vessels are -- don't require massive CapEx or massive maintenance. And when the season doesn't perform, you can minimize cost. When the season does perform, it translates very quickly into profitable business. So excited about the squid business going forward. Right. Let's move on to fishmeal and oil. And again, and I've got a number of slides that I want to talk about context slides that talk to the future and the reason that we invested in this industry. So the first one I want to talk about is the Peruvian landings. And you remember, one of the reasons we had record performance was when Peru had a very poor season in 2023 caused by the El Nino effect of warming of the waters, and they had a very low season. And it meant there was a shortage of supply and that supply -- and that translated into record prices for, in particular, fish oil. This season -- and the Peruvian season is split into two. You have a first season, which has happened already. The second season has just started. We had 3 million tons allocated in the first season. There was an expectation of a further 2.5 million tons as was done in 2024. On average, they produce about 5 million tonnes, and they produce about 35% of the world's fishmeal and fish oil requirements. The second season this year was announced about 2 weeks ago. And based on the research, it has been dropped quite significantly to 1.6 million tons. So obviously, that translates into a potential shortage. And right now, the market is sitting on the fence trying to ascertain how good catches were going to be and how good the oil yield is. But it's certainly pointing to a more favorable pricing for the fishmeal and fish oil business. On the right-hand side is a graph just showing the biomass. That's the overall biomass for Peru. And you can see it's fairly static in terms of its flat, but bounces up and down quite dramatically every year, affected by climate conditions. And I want to just show you. So this graph on the top right-hand side is the anomalies in sea temperature. So that middle line is the average sea temperature over many years going back to 2000. And then the effect of El Nino and La Nina on the different differential in temperature from the norm. And you can see over the years, because of the frequency of El Nino and La Nina effects and climate change, the warming or cooling of the waters is exacerbated and got closer together. And why I say that is because this is what affects Peruvian catch. So we can expect going forward with climate change to see greater effects on not only Peru on world fishing, but certainly, it has a major effect on the Peruvian anchovy season. On the left-hand side, I just wanted to again highlight the fact of the growth in aquaculture expansion. Remember, aquaculture is the single largest consumer of fishmeal and fish oil, and that growth continues to grow, similar to the graph I showed you on ground fish. If you look at -- and I've broken this into two components, fishmeal and the outlook for fishmeal and then in the next graph, outlook for fish oil. And it's a very interesting graph. So 91% of fishmeal supply goes to the aquaculture market. Very different from a couple of years ago. 10 years ago, it was only 80% and a large went to the poultry and the pig industry. They've downscaled their requirements and they're using alternate proteins for their feed supply, but aquaculture doesn't have an alternative. It is a lot harder to substitute fish meal fishmeal in the diet of aquaculture species. So strong demand from the aquaculture industry for fishmeal. The graph on the right-hand side is -- and this was done by a bank called which is Rabobank which is one of the leading agricultural banks in Europe, and they have done studies over the last 10 years, and they track the supply and demand dynamics of fishmeal and the demand for fishmeal and oil and the aquaculture industry. And what this is showing, and obviously, they don't always get the timing right. But what this is showing is by 2028, their view is there's going to be a shortage of fishmeal. The demand will outstrip supply. Now whether they get that number right, that timing right, the long-term trend is there. But the other interesting point, and I'll talk about it just now later, is that fishmeal and fish oil, the elasticity of the pricing is very different. When there's a shortage of fishmeal, pricing does move, but it's not -- doesn't move as strongly as fish oil does. And the reason being there are some alternatives. You can get alternative protein sources from soya, from another other sources. So they can substitute a portion of the fishmeal requirements into their diet. So the pricing, we've seen pricing move up when there's a shortage, but not as much as fish oil. If I look at the same graph and the same stats that Rabobank put out on fish oil, 64% of it is used in aquaculture. A large portion of it goes into pharmaceutical use. That's the tablets that get processed out of fish oil. [ Higher omega ], very strong market, and it's grown substantially. And their view is that we are already at a point where supply and demand dynamics are equal. And in fact, they believe that there's going to be a shortage of oil going forward. It does depend on what the level of omegas in. If the omegas are very high, then there's a shortage in the aquaculture industry. If the omegas are low, then it's not suitable for pharmaceutical use and it will go into it. So again, what all I want to point out is this is one of the reasons that Oceania invested in this industry. The dynamics show that as an industry, pricing and demand for fish meal and oil will continue to grow and supply will be relatively static. So very positive for us and whether that translate into this year or next year, certainly, over the next 4 to 5 years, we're going to see continuous growth in demand and continuous growth in pricing, in particular for oil. Oil and that elasticity that I spoke about on fishmeal is dramatic in oil. There aren't -- in terms of aquaculture requirements, when you're producing feed for fish, you need a certain component of higher omega oil in the feed. It's good for the health of the fish and good for the growth of the fish, and there isn't any affordable alternatives to fish oil. So they find it very difficult to find and there are developments, and I'm sure they will come. But certainly, in the short to medium term, fish oil is a prime requirement for aquaculture feed. So then let's look at our business and again, one area of decline is our two fishmeal businesses, and that was driven primarily because of price. Both businesses are in a -- and I'll go through the stats now, but both businesses are on a very positive position in terms of the factory performance and the vessel performance. Operating profit on the SA side, our two fishmeal and oil businesses here, operating profit dropped by almost 70% down to ZAR 26 million, obviously, a very low margin, driven by the oil price. And remember, this fishmeal and fish oil businesses, there's two major components to it. One is obviously price, which is important. The other is volume. It's a high fixed cost business. Both factories have a high fixed cost, both SA and U.S. And the requirement is to get the volume through those factories. And we believe that, that certainly is possible going forward. So when I spoke about in that initial graph about how our factories have been -- have been invested in, and we're seeing strong operational performance of those factories. These graphs are really showing -- is trying to depict that. So 25% increase in production volumes. Top left-hand corner there, 106,000 tons of industrial fish was processed through our two factories here, up on 91,000 tons. What is a little bit disconcerting is that, that was all South Atlantic herring, Red Eye, not Anchovy. We had a record season. I'll show the graph just now, record season for South Atlantic herring, very poor catches on anchovy. So strong performance from the factory affected by the price. As you can see, a drop in oil price of almost 53% and a drop in fishmeal price of almost 9%, which obviously goes straight through to the bottom line. One of the things we did this in our two factories here is we enhanced the ability to track fishmeal and fish oil production through the production line to understand the makeup of that fishmeal. And maybe just a little quick lesson on what makes up fishmeal. You have four components in fishmeal, protein, moisture, ash and fat. Protein is what the feed manufacturers want that promotes growth in the species they're feeding. Moisture is water, ash comes from the bones of the fish and fat is in the body of the fish and all of that makes up 100%. What you try and do is maximize the protein and have a reasonable component of fat. And you can do that if you have the right components in your production line so that you can manage as you're producing the fishmeal, you can start drying a little longer, increase the heat, take a little bit more water out. And we've done that in our new production line. And I didn't realize the stats until I saw this month, and it was quite an eye open to me. So in 2023, only 30% of our finished product was high quality, high protein levels, above 67%. In this year, because of this new technology that we put into the two plants, we achieved almost 70% of the fishmeal, the output of fishmeal at that top end of spectrum. And remember, customers pay per percentage of protein. So if you're a 60% or a 67%, that has a massive difference on price. So it is a major component for the improvement in output and an improvement in price from these two factories. This is the biomass of industrial fish that goes into our two fishmeal plants in South Africa. On e very positive, one very negative this year. Top graph is showing our red eye landings. That is controlled by what is called a [ puckle ], which is an industry allocation. It's on our Olympic system. So they issue a quota for the full industry and the industry can go and catch out there. First come, first serve, whoever catches more. But what was positive is that there was -- the initial allocation was around 120,000 tons. And as the season progressed, because of our phenomenal catches, the government and DAF issued additional quota. So we issued almost 200,000 tons of red eye. What was also positive, you see those graphs there, 73% in 2024. That is the catch of the allocated puckle. This year, we caught almost 96% of what was allocated. And that was drove the 100,000 tons that went through our two factories. On the negative side, and generally, these species swim and live together. But on the negative side, quite unusual is there's almost been zero anchovy landings. So we caught almost nothing this year. Interesting that if you remember my presentation last year, and I was fairly certain that this would bounce back this year and it was based on history, and you see the graph on the top right there, that is what -- that's the biomass. And you can see, again, a shortlist species when it has a downturn, it bounced back very strongly depending on climatic conditions. We know that there's probably going to be a very low quota for anchovy next year given what has happened this year. But again, I'm positive with the climatic conditions changing in the Southern Hemisphere, and we're seeing the other species starting to rebound, hake, the two lobster species, squid, Red Eye. It's only a matter of time before anchovy bounces back as well. So good and bad. We need the volume through our factories to deliver. And obviously, we need the price. I think that certainly we're going to see some upward trend in pricing given Peru's catch, but it needs a combination of both. But long term, this business is in a very good position from a structural point of view to take advantage of when the resource rebounds. I certainly believe price is going to go is going to -- the trajectory is going to be continued to upward. So I certainly believe these businesses are in a very good position to take advantage of when those conditions improve. On the U.S. side, very similar story. Operating profit down 50%, both in dollar terms and in rand terms, driven by particularly the fish oil price, fish oil price going from approximately $6,000 to $2,500. But this factory, again, has performed very well, both from a catching point of view and from a production point of view. We obviously have a partnership with Westbank. We are a shareholder in the Westbank, the fishing operation. And there on the top left, you see the total catch of 630 million, that is in million fish, 632 million fish were caught this year, well up on last year, 526 million. The oil yield, which is an important component of our profitability and the oil yield comes from the fattiness of the fish held at a very respectable level of just below 12%, which is -- if you look at the long-term average of oil yields in that species is around 10%. So very positive in terms of oil yield. Again, bottom -- good sales volumes, but the negative was the price, price down 48% and 9%. There's a difference between the price in SA and U.S. is generally just the quality of the oil and the quality of the meal, lower protein in the U.S., higher protein in SA and then the omegas are slightly different between the two species. So very good factory performance, but negative because of the pricing. And again, this is just -- I wanted to show you the performance of this factory. So production stats and that figure there, plant downtime. These factories run at, as you can see, 116 tons per hour, phenomenal factory. And yet in the full season from April to November, they only had 0.2% downtime, a phenomenal performance of maintenance and the team there that is running that factory almost 24/7, 7 days a week flat out. So very good performance from a factory point of view. And then just in terms of closing stock, obviously, as we have done over the last couple of years, we hold stock for our customers, and particularly our pet food customers in the U.S. They buy consistently from us on a monthly basis, and we hold stock to keep them supplied. Because of the good catch and the good yield that we've achieved, we're carrying forward 34,000 tons of raw material of fishmeal and around 30,000 tons of oil. A large portion of that fishmeal has been forward contracted, but a large portion of the oil hasn't been forward contracted. And we're holding now and there's a bit of a roulette being played between buyers and sellers to see where the pricing ends up. So we're holding back, and we'll see where that pricing ends, but certainly, that certainly will be a lot positive -- more positive than this year. So I've covered the stats. I'm going to hand over to Zaf now, who will take us through the financials, and then I will talk a little bit at the end about strategy and handle some questions. Over to you, Zaf. Zafar Mahomed: Thank you, Neville. The group's strong operating performance was underpinned by a 58% increase in operating profit in our Africa businesses, coupled with improvements across most key performance indicators. Revenue decreased marginally to ZAR 10 billion. The positive impact of increased sales volumes across all segments and firm pricing for Wild Caught seafood was offset by the decline in U.S. dollar fish oil prices, which halved from the record levels achieved in the previous year. Operating profit decreased by 23.2% to ZAR 1.3 billion compared to the ZAR 1.6 billion achieved in the prior year. Headline earnings per share decreased by 38.4% to ZAR 5.648 per share, primarily due to the lower earnings, increased net interest expense and higher effective tax rate. The group declared a final dividend of ZAR 1.75 per share, bringing the total dividend for the year to ZAR 2.85 per share, which is a decrease of 42.4%, which is slightly higher than the decline in headline earnings per share. The group's net debt-to-EBITDA ratio increased to 1.7x compared to 1.3x at the end of September 2024, primarily due to the decrease in U.S. earnings. Operating profit for the second half of the year at ZAR 577 million was only 6.2% lower than the comparative period, which partially mitigated the significant decrease reported for the first half of 2025. The benefits of being a diversified business are reflected in the operating profit contribution by segment with the Africa businesses growing operating profit by 58%. Both the fishmeal and fish oil business in South Africa and the United States achieved higher catches, resulting in increased sales volumes. This was, however, not sufficient to offset lower global fish oil sales prices following the recovery in Peruvian anchovy resource and production levels. Daybrook contribution reduced from 72% of total operating profit in 2024 to 43% in 2025. Lucky Star Foods delivered a solid performance despite ongoing pressure on consumer discretionary spending and its contribution to operating profit increased from 26% to 37%. The Wild Caught seafood segment delivered a significant turnaround driven by record-breaking performance from the hake business and an improvement in the horse mackerel business, resulting in a contribution of 18% compared to the loss in the previous year. Fish oil price moves have had a significant impact on Daybrook's performance over the past 4 years. Calculating the fish oil price variance by applying the average realized U.S. dollar prices to the previous year's volumes, the cumulative positive impact on our operating profit has been approximately ZAR 95 million over that 4-year period. The impact of the steady increase of the fish oil price from 2022, followed by the subsequent cancellation of the Peruvian anchovy season in early 2023, generated a cumulative positive profit contribution of approximately ZAR 820 million over the 3 financial years from 2022 to 2024. The subsequent recovery in the Peruvian anchovy biomass in 2024 led to a significant price correction with a corresponding negative profit impact of approximately ZAR 725 million in 2025. This was despite sales volumes of 23,000 tons in 2025, which was significantly higher than each of the previous 3 years. Revenue remained steady compared to the prior year. Operating profit decreased by 23.2% to ZAR 1.3 billion, and gross profit margin decreased to 27.8% compared to the 31.8% achieved in 2024, attributable mainly to lower margins in the fishmeal and fish oil segment. The Lucky Star foods margin improved due to increased local production volumes, supported by higher local pilchard landings, a consistent frozen fish supply and operational efficiency gains. Strong market prices and improved catch rates for hake and horse mackerel contributed to good margin growth in Wild Caught seafood. Overhead and expenditure decreased by 12.3% to ZAR 899 million, mainly due to lower employment costs, combined with cost savings from reduced insurance premiums. The higher net interest expense of ZAR 288 million was primarily due to increased borrowings in SA to fund the recent capital expenditure program, as well as increased working capital investment during the year. Higher imports of frozen fish in the first half of 2025 led to increased Lucky Star food inventory levels for most of the year. The renewal of the U.S. interest rate swap in February 2024 at higher rates covering 50% of the U.S. debt further contributed to the increased interest expense. The effective tax rate increased to 25% compared to 20.8% in 2024 due to the Africa businesses contributing a higher proportion of the group earnings compared to the U.S. with South African and Namibian earnings attracting higher tax rates. Profit after tax decreased by 35% to ZAR 724 million and headline earnings per share decreased by 38.4% to ZAR 5.648 per share. Detailed financial statements are included in the appendix to this presentation and the results booklet, which is available on our website. Net working capital across the group increased 7.6% to ZAR 2.5 billion with Lucky Star Foods and Daybrook comprising 48% and 43% of the total, respectively. The increase in net working capital was primarily driven by higher levels in the Lucky Star foods segment compared to the previous 2 years. Lower frozen fish inventory levels in Lucky Star was partially offset by higher finished truck inventory levels in Lucky Star, Daybrook and hake. Capital expenditure returned to more normalized levels at ZAR 327 million compared to ZAR 645 million in the prior year. The main projects included the ongoing maintenance of the group's processing facilities and vessels, upgrades to the Wild Caught seafood fleet and the addition of a new squid catamaran vessel. The group is planning to invest ZAR 307 million in replacement CapEx and ZAR 21 million in expansion CapEx for 2026. The primary focus over the past 5 years has been to reduce U.S. dollar debt. We repaid a further $15 million from surplus cash during the 2025 financial year, bringing the total debt prepayments to $54 million since 2021. At the end of FY 2025, we reached net debt of $31 million and a net debt-to-EBITDA ratio of 0.8x. This has enabled us to target refinancing and replacement of our term debt with a revolving credit facility and thereby mitigate the negative interest carry effect. Discussions with our lenders in the U.S. are currently being finalized in this regard. In South Africa, debt increased by ZAR 1 billion to ZAR 2.1 billion since 2021 to fund the capital expenditure program and working capital investment. Net debt to EBITDA in South Africa reduced from 2.7x to 2.2x, primarily due to the 58% increase in earnings in the Africa businesses and the significant improvement in free cash conversion. The group's total net debt increased marginally to ZAR 2.6 billion, with a decrease in the U.S. debt being offset by an increase in SA debt. U.S. net debt as a proportion of total net debt has reduced from 54% in 2021 to 20% in 2025, while SA debt now comprises 80% of the total. As mentioned, the U.S. debt reduction included a once-off prepayment of $15 million from surplus cash, adding to the $17.5 million prepayments paid in prior years. As a result of the decrease in net debt, the U.S. net debt-to-EBITDA ratio increased slightly to 0.8x despite the reduction in EBITDA from ZAR 1.3 billion achieved in the prior year to ZAR 635 million in the current year. SA debt rose due to a ZAR 348 million increase in short-term facilities to fund working capital needs. As a result of EBITDA increasing from ZAR 636 million to ZAR 939 million in the current year, the SA net debt-to-EBITDA ratio reduced to 2.2x from 2.7x in the prior year. On a combined basis, the group's net debt-to-EBITDA ratio increased to 1.7x from 1.3x, mainly due to the reduction in total EBITDA. The group compliant with all lender covenant requirements relating to both its South African and U.S. debt. The net cash balance reduced slightly from ZAR 760 million in 2024 to ZAR 603 million in 2025. Cash operating profit declined to ZAR 1.7 billion from ZAR 2 billion in the previous year. This was partially offset by a reduction in working capital investment of ZAR 245 million, down from ZAR 517 million in the previous year. Cash generated during the year was allocated to capital expenditure, settling debt and tax obligations and dividends with short-term borrowings from existing facilities covering the cash shortfall in South Africa. The significant improvement in free cash conversion to 103% compared to 34% in the prior year was driven by higher cash flow from operating activities and lower replacement capital expenditure. Operating profit plus interest income reduced from ZAR 1.7 billion to ZAR 1.3 billion in FY 2025, which resulted in the group's return on net assets decreasing from 14% to 10.6%. Average net assets remained steady at ZAR 12.2 billion and has increased 37% from ZAR 8.9 billion in 2021. Given the higher SA debt levels at this time, it is prudent to increase the dividend cover from 1.85 to 1.98x. The group declared a final dividend of ZAR 1.75 per share compared to ZAR 3.00 per share, which together with the interim dividend brings the total dividend for the year to ZAR 2.85 per share compared to ZAR 4.95 per share, which is a decrease of 42.8%, which is slightly higher than the 38.4% decrease in headline earnings per share. Over the past 3 years, significant progress has been made on capital allocation with substantial debt reduction in the U.S., reinvestment in our asset base and strategic bolt-on acquisitions that complement our existing business. Having invested in our vessels, we are currently evaluating our Wild Caught seafood fleet to ensure it remains fit for purpose, including options for operating a dual-purpose vessel. The group will maintain a disciplined approach to capital allocation, prioritizing shareholder returns and reducing debt through efficient capital expenditure and building capacity to capitalize on opportunities. Thank you, and I hand you back to Neville, who will cover our outlook. Neville Brink: Thank you, Zaf. And it's always disappointing when we see a drop in earnings. Obviously, it's the focus is to grow earnings consistently. But what I've said to the management team and to the staff here is we have to focus on what we can control, control what you can well. And I think that is what been the focus of the last couple of years is invest in our assets and our assets are in good shape. They certainly are in a position to deliver. And on the Lucky Star side really is to continue to make available affordable protein at a competitive price to the consumer. We are -- we will focus on cross-border countries, which we've seen strong demand for our product. There are a number of opportunities in adjacent food categories, which we think is -- which lends itself to the Lucky Star brand, and we certainly are looking at expanding into that, both from outside of just noodles. There are some adjacent categories which we are looking at. Across the board, we are focusing on efficiencies to reduce costs and enhance our margins. And then obviously, supply is a key component of this business, the raw material supply without sufficient raw material business, we wouldn't have sufficient stock to supply our customers. So that is a key focus for us under the Lucky Star brand. And then obviously, this is a less volatile business than fishing. It has an element of fishing in because we buy fish from all over the world. But it's to try and grow this component as a larger percent of our total operating profit to minimize -- to try and reduce the volatility of Oceania earnings. So this is certainly a focus for us, and we believe there's lots of room to grow this part of our business. On the Wild Caught seafood side, as I explained, I think Wild Caught demand and pricing consistently will grow because of the static supply of Wild Caught seafood in the world. So from a top line point of view, we'll see increasing prices. What the focus here has to be is minimizing costs, making sure that the vessels are as efficient as possible, knowing that we've only got a finite quota, we can't grow our supply. So we have to grow our ability to take cost out of the business. On the hake side, and we -- hake and stroke horse mackerel, we're looking at changing our horse mackerel vessel to a more versatile vessel. That is not a dedicated horse mackerel vessel. It has the ability -- it will have the ability to catch multiple species so that when horse mackerel is not performing and not delivering the catch rates that we require, the vessel can switch to other species. So it allows us to be more -- again, more pricing, so we can manage our pricing a lot better in terms of costs. I spoke about the squid fleet. We've rationalized the squid fleet. We're optimizing licenses, and I'm looking forward to this new season, which starts next week to see how those seven vessels are going to perform with the maximum permits on board. Namibia always is an issue for us, a different management regime there, in particularly the politics there in terms of how they allocate quotas. We are a major operator there. I've had a lot of dialogue with the regulators there to understand their foreign investment policy. To understand that in order for us to continue investing in that country, we have to have certainty and sustainability in terms of allocation of quotas. I certainly will continue to drive that part of our business because I certainly believe that Namibia offers us an opportunity as partnerships and as guests in that country to grow that business. We are strong operators, both in the canned pilchard and the horse mackerel business. And as long as we are welcome there, we are going to invest in that country. So looking forward to some good discussions with the regulators there in the next couple of years. On the fishmeal and oil side, as I said, our factories are in good stead. We are looking at in the U.S., some new technologies, fishing technologies with our partner, Westbank. And certainly, as those develop, I will share those with the market, but ways to enhance our ability to catch fish in the Gulf of Mexico because we are -- we still operate under TAE, so we have unlimited available -- unlimited ability to catch fish in a fixed season, and that will drive volume through those factories. On the SA side, I certainly believe that the Red Eye resource is strong. We'll have to work through this low-end anchovy season. The factories are -- and the focus will be on taking costs out of the business to try and increase the variability of cost in those two businesses. So when the season starts does fire when anchovy comes back that we're in a better position to take advantage of and increase pricing, as I showed in those graphs, we believe pricing is going to continue to grow, in particular on the oil side. So a tough year, but a year that I'm still very proud of the management team and what we've done in this business. We've created a structure that will allow us to take advantage of those uncontrollables. And I know those uncontrollables will turn. And hopefully, at some stage, they all operate in our favor and this business is in a good stead. So I'm very optimistic about the coming years. And with that, I'm going to close and happy to take some questions from people in the audience. Operator: Thanks, Neville. First question is from [ Jan Mes ] at Holberg. On the quality of the fish oil inventory in the U.S., is this on a high-end quality to the omega-3 market? Neville Brink: So generally, our -- the quality of the meal -- the oil that we produce in the U.S. is not of farmer level. It's in the aquaculture spectrum. Just interesting, and I'm going to digress a bit, but the production that's coming out of Peru, the latest stats that we're seeing coming out of Peru, the catch rates in the north have been very positive in the center and the south have been less positive. But the oil yield has been very high, but it's been mainly on the omega-3 side. So very strong high omegas in that oil, which is positive for us in the sense that less goes into aqua and more goes into farmer. There is a shortage of farmer oil at the moment, but our oil plays in the aqua space, both in SA and U.S. Operator: Neville, that appears to be our loan question. So Zaf, obviously done a good job explaining the results. Neville Brink: Well, thank you very much for everybody for joining us, and I look forward to a positive 2026 within a volatile industry, but we certainly believe that this company is well positioned. Thank you, everybody.
Neville Brink: Good morning, everybody, and thank you for joining us on this fine Monday morning in Cape Town, our annual results presentation for 2025. And let me just take you through the format. So we've got about 1.5 hours. I will take you through an overview and I'll cover our three pillars, and then I'll hand over to Zaf, who will take us through the financial results, and then I'll go back to our outlook and give you an indication of what we're facing for the next year and then happy to answer some questions. So let's kick off. Just when -- and I just want to take you back a step, what I've done is slightly different this presentation. I put four context slides in the presentation, one for group and one for each of the divisions. And the purpose of that is to give you a view not only of the numbers of the environment that it currently exists both from a group point of view and each of the divisions and what they're facing and some of the issues that affect their business. And I want to start off with the group because we put out a trading statement about 2 months ago. And obviously, you've all seen the trading statement and it showed our figures, our results were going to be somewhere between 38% and 42% down. And immediately, I started getting questions from the market and from friends and everybody about Oceana. Was Oceana in trouble, what was happening. And it made me think a bit about where Oceania is quite right now. And the more I thought about it, the more I wanted to put this slide up in here because Oceana is, in fact, in a very, very good position at the moment. Numbers and performance are annual, but structure, strategy and position is far more important in terms of taking this business forward. So this opening slide, I just really wanted to cover where we believe we are. So Lucky Star, once again, a great business, iconic brand that is in strong demand and loved by the SA consumer and remains that brand and has lots of potential going forward. We've invested heavily in over the last 3 years in our Wild Caught business. And enhance both the vessels from a maintenance point of view and a reliability point of view, but also from a productivity point of view, upgrade the factories, made the vessels much more reliable and productive. And that's starting to pay dividends going forward and we'll pay dividends going forward, and I'll go through some of the details later on. And then as you know, in both U.S. and in the SA, we've invested quite heavily in the fishmeal and fish oil plants. We -- and we underinvested and deliberately over the last couple of years because we didn't have certainty around rights. And once the frac process was over and we had some certainty in terms of rights, we invested quite heavily in both SA plants and in our U.S. plant. And those are starting to pay dividends. So despite the figures, I think, Oceana and in covering all of that, we have a great team that is running Oceana. I think that the management team and the people who work for Oceana are settled. It's a fantastic culture. And I think we are very well positioned to take advantage of issues that change. And I can't control climate, I can't control catching. I can't control the weather, but those are cyclical. And when those turn, I think Oceana and I know Oceana is in a fantastic position to take advantage of that. So figures aside, I think this group is in a very, very good position. So let's now look at the actual performance for the year, and I'll start off with just giving you some of the highlights in the various parts of our business, Lucky Star, very good performance, very solid performance here. Once again, in a very tough environment, and I'll talk a little bit about that later. Our Wild Caught had a significant turnaround in performance obviously, off a low base last year, but notwithstanding that low base, a very, very good performance coming through, particularly from our hake business. In our two fishmeal and oil businesses, despite the price of oil dropping significantly, the factories in both the U.S. and the SA performed extremely well, and I'll take you through some of the stats there that showed how the investments that we put in those states have started to deliver and will deliver going forward. And then I've put a point there about Africa, African businesses, our collective African business have done extremely well, 58%. And the reason I put it up is just to show the diversity of our group. We are multi-species, multi-geographies, multicurrencies. And when one doesn't do well like the oil prices declined, our African businesses have done extremely well. So again, it just shows the strength of this business and being our continued diversity. I'm going to go through the three pillars now, and there are a lot of stats in here. And I want to -- and I won't cover all of the stats, but I'll talk about the business. So again, a context slide. And this slide and a lot has been spoken about the SA consumer. And what I've tried to focus here is not the broad SA consumer. This is Lucky Stars consumer. [ SA 125 ]. And what are the things that are affecting them. As you can see, the minimum wage has gone up by 38% over the last 5 years. The food basket has increased by 68%. So they're under pressure to keep their families fed, and buy affordable protein. Our sale costs, as you say, 30% of their disposable income is spent on food. Everybody has spoken about the gambling spend that has become a problem in this country. And I know I read a comment from the ghost writers saying that everyone FMCG companies were blaming, drop in volumes on the spend on gambling. And in fact, that's despite the spend in gambling. Lucky Star has done extremely well. We've seen volume growth in Lucky Star. And what is -- and shopping habits have changed. Those shoppers that are really needing to make that rand go longer are looking at different ways of spending. So they are shopping largely on deals. They cross shop. They don't shop at one particular store. They will look at what the deals are on [ Pamphlet ] and they'll move between them. And then they're leaning on spaza convenience. And spazas are becoming much more effective in terms of being cost competitive versus the major retailers. They've got buying groups now. They've become very, very organized in their structure and their pricing is relatively priced considering that the consumer doesn't have to travel by taxi to one of the major centers. So the spaza stores have become a major factor in the spending habits of our consumers. And then what we've seen is the retailers and wholesalers are also trying to amend their structure in terms of taking advantage of it. The retailers are going and expanding their footprint into the townships in various formats, container store formats. And even the wholesalers are now starting to open their stores on a periodic basis to invite consumers -- household consumers into their stores to take advantage of wholesale prices. So the market is a tough market out there. And within that tough market, Lucky Star has done extremely well. Revenue up 6%, operating profit up almost 10% and our OP margin increasing slightly by 0.3% to just below 10%. And I always get asked this question about OP margin and the correlation between volume, value and margin. And this -- we play a very careful game and Lourens and Zafar and his team are always looking at managing price, price points and volume growth in Lucky Star. Certainly, we could put an additional price increase through, and we've been very prudent in terms of our price increases. But we want to maintain our market share and the volume growth. This year, we sold just over 9.5 million cartons, up slightly 2% volume growth with -- given what's happened in the consumer, a very commendable performance. People are looking for affordable and available protein. What is interesting, our export, what we call our cross-border countries, Botswana, Zambia, Zimbabwe, Mozambique, we've seen strong growth in Lucky Star in those categories. We -- last year, you remember, we closed both factories for a period of time to do major upgrades. So our production volume that went through the factories this year substantially up, 24% up on last year, produced 5 million cartons through the two factories here. Our canned meat production, we've expanded our lines. We've added additional lines and canned meat production is up almost double on last year. And we've taken a conscious decision to increase the pricing on canned vegetables. Our canned vegetables is all our contract pack basis, so we have no fixed costs, and it's a highly competitive market, and we produce a quality product -- products in the canned vegetables. We've decided to reduce the volume targets, increase the margin to assist the overall margin of Lucky Star. So that is a deliberate strategy in canned vegetables. The factory performance, once again, as I said, the investment that we put into these factories have done extremely well. Look at the damage rate that has dropped from 1.5% down to 1% in the full year. Our throughput substantially up on a ship basis. And then what has improved is the yields that we have achieved. That 73 relates to 73 cartons per ton of fish that they process. So moving from 69 cartons to 73 cartons per ton. And obviously, production costs have come down. On a closing stock, which is an important issue for us, remember, 80%, 85% of our production and sales is from imported raw material and the lead time to buy a pilchard somewhere in Mexico or Japan or Morocco and get it processed and delivered to South Africa in a can and cleared by the NRCS takes anywhere between 3.5 to 4 months. So stockholding and the managing of that stock holding is a key component to keeping Lucky Star on shelf all the time. So we closed with a reasonable amount of stock. That's about 5 months stock, 3.94 million cartons, a little bit of frozen, most of it in finished goods. So a good position to going into the new year on our raw material supply, our finished goods supply. On the resource point of view, from a supply of fresh fish from our own factories and from Namibia, a little disappointing in the fact that what we're seeing from our vessels, what are we seeing from our vessels catching and what the scientists are telling very different. So you saw last year, we had a 65,000 ton quota going up quite nicely on the previous year. This year, they initially gave us 35,000 tons of quota. And the reason being the research that was commissioned by the department was late and their findings were disappointing. And yet when we went to see and our vessels went to see, our catches were phenomenal. We -- remember, half the quota is issued on the East Coast and half is on the West Coast. And our vessels went out and caught that 35,000 tons in record time. So anecdotally, our findings of the availability of pilchard is far better than what the science is saying. They've recently given us an additional allocation of 9,000 tons up to 4,000 tons, and our vessels are fishing right now. We've seen some signs, which is quite positive because generally pilchard are not -- this time of the year, generally have started to disappear, but we're still seeing pilchards. Unfortunately, those of you living in Cape Town at the moment will have experienced the high wind that we've experienced for the last 3 weeks, and that has prevented our vessels getting to sea. But they are -- they have been able and they've seen good signs of pilchards. What is very positive is the allocation of a quota for the first time. It's an experimental quota in Namibia. As you know, Namibia scientists and government put a moratorium on pouches for the last 5 years. In the latest research, the biomass has rebounded strongly, just below 1 million tons, and they did an experimental issue of 10,000 tons of pilchard to our factory in No. We're a shareholder in the last factory in [ Walvis Bay ]. We own 45% of that factory, and they issue a quote of 10,000 tons. I can tell you that the catch has been really, really good, both from a daily catch point of view and from a quality of fish. The sizes and the quality of the pouch that we're catching has been very positive. And we're hoping it was a very late allocation, so we haven't had the time that we would like to, but we're hoping that we're going to land that full 10,000 tons through that factory, which is positive. And then obviously, Lucky Star being one of their major customers will acquire that product into South Africa and Namibia because Lucky Star is in Namibia as well. So very positive from a resource recovery. And why that is important, both from a South African and a Namibian point of view, own catch of fresh pouches is far more marginal enhancing than frozen product we buy from somewhere in the world. So certainly, the higher that percentage of input, the better for us as a company. The other issue that has changed quite dramatically over the last couple of years is where we buy pouches. As I said, 85% is bought from somewhere in the world. Traditionally, over the last 10 years, we buy a bulk of that comes from Morocco and Mauritania. This year and the latter part of 2024, we see Morocco and Mauritania resource not performing well, but the Pacific has performed extremely well. So we've switched our purchase pattern, and we bought almost 93% in the first half of the year because the Pacific season runs from about November -- late October, early November through to January, February. So we have to buy a large portion of our raw material in a very short period of time. Obviously, it puts pressure on our balance sheet because we're spending that money upfront and carrying that stock for almost a full year. But the quality of the fish that's coming out of Pacific is very, very positive, and it certainly has -- so in terms of Zaf and the way he manages our balance sheet, it is -- it means a way of thinking, but it's certainly positive from a quality of fish. So going forward, where are we? As I said, canned meat, we now have acquired the final 25% of the plant that we bought in [ Kraftonett ]. So we now own 100% of that. We've introduced two further lines in our factory on the West Coast. We've seen strong demand from our customers, and we've almost doubled our production out of those two factories. We are looking at some new developments in terms of ranges out of that factory. And then as with any factory, we are focusing on input costs. A large portion of that -- of the input is Brazilian, chicken that comes in from Brazil that forms the basis of the raw material. So we are focusing because we have a very strong procurement team that sources product, both pouches and chicken [ MDM ] from Brazil to focus on reducing costs. 2-minute noodles, a new category for us, a category in excess of ZAR 5 billion in South Africa. We started last year with contract packing under the Lucky Star brand. We've seen some very positive signs for the product, in particular, one of the major retailers. Very interesting market. It is a combination of price and quality from a range of high quality to low price. We have positioned Lucky Star more or less in the middle. We have strong demand for the brand. We certainly won't be doing anything that will damage the brand. Lucky Star is too important a brand, so we would never compromise on quality. So it's been an interesting development. We are certainly -- have learned a lot over this year. And we believe that this has some very positive outlook for us to invest through the full value chain in 2-minute noodles. And then on the pilchards side, strategy remains the same. affordability, availability and making sure that we -- our service levels to our customers as close to 100% as possible. We want to be in every store across the country all the time at affordable price, and that remains the same. So we are very structured in terms of how we get that product out. Our market share remains very high and remains at a very competitive basis. Remember, we don't only compete in the poultry market. We compete in the broader protein market. And in fact, we compete against starches as well. So price is key. And that ratio between margin, value and volume is a key component that we're looking at on a constant basis to manage our price and retain our customers. We have introduced a new flavor this year, peri-peri flavor. And certainly, it has made some nice inroads into the market and is helping with the volume growth. And then just recently, I visited Ghana about 2 months ago. We entered this market with a partner. So we're not just selling into the wholesalers. We've gone in properly with a local partner who has established a sales team and a marketing team that is supported by our South African team. Ghana is a country that has very similar eating habits to South Africa. They eat and they recognize a tall can with canned pouches and canned fish. So it's not changing the eating habits. It's basically introducing the Lucky Star brand into that market, both in Accra and Kumasi, which is a big -- a big canned fish eating area. And we've seen some very nice progress in that market. So certainly watch the space, and we will -- and I'll certainly report back in the half year of how that business is going. So the strategy remains there, grow Lucky Star, keep our customers supplied with affordable protein. Just on the right-hand side, just those two graphs there. It's interesting that our export market is growing substantially. So the cross-border markets that we see, all of the SADC countries have shown strong growth in volume. And then that top graph is the foods allocation, the non-fish allocation of our total basket, 10% and growing. So very positive. It gives us some nice road to develop this business. On the Wild Caught seafood, and again, I want to put a context slide. I attend a conference annually and which is called the groundfish conference. It's all of the major species and companies that catch and produce ground fish, fish that is caught close to the bottom. And hake, our product is in that sector. And this was a graph that was presented at that conference 2 months ago, stats supplied by the FIA fishery stats showing the world fisheries production. And you can see the bottom blue line on that, I think that is total Wild Caught, wild capture seafood. And it's been approximately the same around 90 million tons for the last 20 years. It's fairly static. One species goes up, one species go down. What is interesting is the aquaculture growth. And you can see in 2023, this is the last update that FIA gave us. In 2023, aquaculture accounted for 100 million tons of fish of farmed fish per annum, which is now in excess of the wild capture species. Within the wild capture, we have ground fish, the species that we compete in, and that is cod, pollock, hake, ling, a number of ground fish printing. And that has been fairly -- also fairly static at around 7 million cartons -- 7 million tons, as you can see on the top right there. And what is projected for 2026 is a drop -- a slight drop in that down to 6.6 million tons. But what is more important is the global cod supply. Cod is the #1 white fish supplied and demanded by consumers worldwide, in particular, European customers. And over the last 5 years, the biomasses and the hake -- the TAC allocation has dropped from about 1.5 million tons to about 950 tons, a massive drop in the supply of cod, both in the Atlantic and the Pacific. That is the species that is -- that hake generally competes with from a pricing point of view. They're more expensive to us, and we sit just below them. With the massive shortage, there is a switch from cod and the availability of white fish into hake. And hence, our market has been very, very strong in terms of demand. But what -- the point that I want to make on this slide is that wild capture seafood is finite and will be going forward. Most of the species are well managed by governments. So you do have some -- obviously, some poaching and some small areas, but generally, they're well managed. But the key is that wild capture species is finite and will continue to grow in demand. Consumers, as much as they don't mind and eating aquaculture or farm fish, their preference is for a Wild Caught sustainable seafood. And with static supply, demand will continue to grow and pricing will continue to grow. Important component -- and remember, this is what we compete in all of the Wild Caught seafood division. All of the species are in this global fisheries production. So let's look at the overall performance of this division. Obviously off a low base operating loss last year of ZAR 53 million, but a nice turnaround, ZAR 222 million, revenue up almost 20% and margin up to 12%, a little bit disappointing. And I'll go through the various species. Certainly, I would like to see that improve. But the business is based on the investment we put in this business is certainly right to start delivering on future upturns in biomass and catch. Started with the hake business and really an exceptional performance and driven by the investments that we've put into this business unit over the last couple of years. We've spent on all of the hake vessels and the horse mackerel vessels in upgrading both the level of reliability and maintenance and upgrade the production. So you see that top left-hand for sea days. That's an important component of how we measure this business. A fishing vessel alongside doesn't make any money. A fishing vessel at sea is when we really make. So we've moved our sea days from 859 days at sea to 1,027. That's a collective hake vessels at sea. Catch costs have come down almost 12.5% because of a combination of less maintenance, more sea days and better catch rates, and I'll talk about catch rates just now. And that's resulted in improved volume going through to the market, 12,000 tons relative to 10,000 tons sold last year. You see there, we put in the export price in euro terms, we've seen on average our euro pricing move up by almost 8% across the board. So a very commendable performance from the hake business this year. Just wanted to show you some catch rates because catch rates drive the three main components of a fishing vessel, maintenance, labor cost and fuel, all underpinned by catch rates. Those three make up 85% of the running cost of a vessel. But when you have higher catch rates, the division is just exponential in terms of dropping the daily per kilo catch cost. And we saw catch rates drop over the last 5 years up until the early part of 2025. And then suddenly, in the second half of this year, we've -- as an industry, just experienced a massive upturn in catch cost and catch rates, 42% up. And generally, what I've seen, and it's -- again, it's -- I've been in this business for 40 years, there's definitely an upward trend in the Southern Hemisphere catch rates of most of the species. And you'll see when I go through all the species, there's with us moving into a neutral zone from an El Nino zone, we're seeing a lot more positive coming from most of the species within the Southern Hemisphere. And that certainly is indicative of what we've seen in hake. Fuel costs, big component of the running cost of vessels has come down quite nicely and will continue to go down. We have a hedging policy, and we've hedged a large percentage of our future fuel costs going into the balance of this year. So fuel cost is certainly likely to hold at the similar levels for the balance of this -- the next financial year. Our horse mackerel business, better than last year, but to say a little bit disappointing. I obviously know this business extremely well. And I'm used to catch rates that are far better than this. Given that we've spent substantial money on those vessels, we are certainly a little disappointing with the catch rates in Namibia and South Africa. Desert Diamond had an abysmal year last year and has certainly had a turnaround. We've started to see the resource coming back. It recorded a breakeven result this year compared to a substantial loss last year. And catch rates, although they have improved, have been very sporadic. So not in a wide area in a very isolated, very condensed area, but certainly an improvement. And in Namibia, very in line with the previous year. The market remains strong, again, exactly the same as Lucky Star, customers looking for affordable protein. And this is where horse mackerel plays in. So our African demand, remember, we sell to many countries in Southern Africa up to DRC, Mozambique, cross-border countries. The demand for horse mackerel is extremely strong. We just need the resource to start recovering as we've seen other resources recovering. I'm used to catch rates of 110, 120 tons from those vessels, a catch rate of 68 is half of what I'm used to. It's still positive, but certainly not at the levels that we used to in the past. Still a good business, and we'll continue to drive that. So looking for better things in the new year. Two smaller parts of the business, squid and lobster. I'm going to start with lobster because they are the smallest component of our business. On the West Coast, traditional West Coast lobster that you know that is served in many of the restaurants here, a species that has been under threat for a long time because of the levels of poaching. Interesting now, the scientists are saying over the last 2 years, the resource has rebounded nicely. And in fact, we've got a 58% increase in TAC for the 2026 year, very positive. Small part of our business, but very profitable and very variable. We don't have high fixed costs. On the South Coast, that's a deepwater lobster, no poaching, but again, responding very nicely to the climatic conditions improving. We catch that mainly on the East Coast of Africa, and we're expecting an increase in both TAC and catch rate. So both those businesses have performed well, again, indicative of what's happening To most of the species, both South Coast and lobster seeing increases in TAC. On squid, we had a poor season. Remember, in Squid, you have two seasons. One, your dominant season is November through to February. So the early -- at the beginning of this calendar year, our season was fairly poor. The signs are certainly more productive. We have a mid-season, a fairly small season in the middle of this year, not great. But certainly, the signs are very positive. Again, squid is a short-lived species. And depending on the environmental conditions on the South Coast, that promotes egg laying and the growth of the species. We've seen some positive signs over here. We will go back to see, in fact, at the end of this week, our season starts on the 28th of November. We go to see it on Saturday, and we're certainly looking for positive signs there. But why I want to talk a bit about squid is because it's certainly an industry that I believe in. I think we have invested. We bought additional rights, and we introduced a new vessel. That photograph is of our new vessel. It was launched about 2 months ago. That is a catamaran, more effective at catching squid because you've got a wider area. It's more stable. If you see the front of that vessel, it's got three anchors. It allows you to anchor your position on a school of squid and allow the fishmen who are fishing by hand to maximize catch as opposed to the monoholes, which tend to swing around and move off the fish. So what we've done, we acquired an additional 5 vessels and additional 77 permits. We've rationalized those 11 vessels into 7 most effective vessels and maximize the permits on those vessels and then certainly looking at some goods going forward for the opening of the season for that this industry to actually perform nicely. And the reason I like this industry is because it's fairly variable. It is not a high fixed cost business. The vessels are -- don't require massive CapEx or massive maintenance. And when the season doesn't perform, you can minimize cost. When the season does perform, it translates very quickly into profitable business. So excited about the squid business going forward. Right. Let's move on to fishmeal and oil. And again, and I've got a number of slides that I want to talk about context slides that talk to the future and the reason that we invested in this industry. So the first one I want to talk about is the Peruvian landings. And you remember, one of the reasons we had record performance was when Peru had a very poor season in 2023 caused by the El Nino effect of warming of the waters, and they had a very low season. And it meant there was a shortage of supply and that supply -- and that translated into record prices for, in particular, fish oil. This season -- and the Peruvian season is split into two. You have a first season, which has happened already. The second season has just started. We had 3 million tons allocated in the first season. There was an expectation of a further 2.5 million tons as was done in 2024. On average, they produce about 5 million tonnes, and they produce about 35% of the world's fishmeal and fish oil requirements. The second season this year was announced about 2 weeks ago. And based on the research, it has been dropped quite significantly to 1.6 million tons. So obviously, that translates into a potential shortage. And right now, the market is sitting on the fence trying to ascertain how good catches were going to be and how good the oil yield is. But it's certainly pointing to a more favorable pricing for the fishmeal and fish oil business. On the right-hand side is a graph just showing the biomass. That's the overall biomass for Peru. And you can see it's fairly static in terms of its flat, but bounces up and down quite dramatically every year, affected by climate conditions. And I want to just show you. So this graph on the top right-hand side is the anomalies in sea temperature. So that middle line is the average sea temperature over many years going back to 2000. And then the effect of El Nino and La Nina on the different differential in temperature from the norm. And you can see over the years, because of the frequency of El Nino and La Nina effects and climate change, the warming or cooling of the waters is exacerbated and got closer together. And why I say that is because this is what affects Peruvian catch. So we can expect going forward with climate change to see greater effects on not only Peru on world fishing, but certainly, it has a major effect on the Peruvian anchovy season. On the left-hand side, I just wanted to again highlight the fact of the growth in aquaculture expansion. Remember, aquaculture is the single largest consumer of fishmeal and fish oil, and that growth continues to grow, similar to the graph I showed you on ground fish. If you look at -- and I've broken this into two components, fishmeal and the outlook for fishmeal and then in the next graph, outlook for fish oil. And it's a very interesting graph. So 91% of fishmeal supply goes to the aquaculture market. Very different from a couple of years ago. 10 years ago, it was only 80% and a large went to the poultry and the pig industry. They've downscaled their requirements and they're using alternate proteins for their feed supply, but aquaculture doesn't have an alternative. It is a lot harder to substitute fish meal fishmeal in the diet of aquaculture species. So strong demand from the aquaculture industry for fishmeal. The graph on the right-hand side is -- and this was done by a bank called which is Rabobank which is one of the leading agricultural banks in Europe, and they have done studies over the last 10 years, and they track the supply and demand dynamics of fishmeal and the demand for fishmeal and oil and the aquaculture industry. And what this is showing, and obviously, they don't always get the timing right. But what this is showing is by 2028, their view is there's going to be a shortage of fishmeal. The demand will outstrip supply. Now whether they get that number right, that timing right, the long-term trend is there. But the other interesting point, and I'll talk about it just now later, is that fishmeal and fish oil, the elasticity of the pricing is very different. When there's a shortage of fishmeal, pricing does move, but it's not -- doesn't move as strongly as fish oil does. And the reason being there are some alternatives. You can get alternative protein sources from soya, from another other sources. So they can substitute a portion of the fishmeal requirements into their diet. So the pricing, we've seen pricing move up when there's a shortage, but not as much as fish oil. If I look at the same graph and the same stats that Rabobank put out on fish oil, 64% of it is used in aquaculture. A large portion of it goes into pharmaceutical use. That's the tablets that get processed out of fish oil. [ Higher omega ], very strong market, and it's grown substantially. And their view is that we are already at a point where supply and demand dynamics are equal. And in fact, they believe that there's going to be a shortage of oil going forward. It does depend on what the level of omegas in. If the omegas are very high, then there's a shortage in the aquaculture industry. If the omegas are low, then it's not suitable for pharmaceutical use and it will go into it. So again, what all I want to point out is this is one of the reasons that Oceania invested in this industry. The dynamics show that as an industry, pricing and demand for fish meal and oil will continue to grow and supply will be relatively static. So very positive for us and whether that translate into this year or next year, certainly, over the next 4 to 5 years, we're going to see continuous growth in demand and continuous growth in pricing, in particular for oil. Oil and that elasticity that I spoke about on fishmeal is dramatic in oil. There aren't -- in terms of aquaculture requirements, when you're producing feed for fish, you need a certain component of higher omega oil in the feed. It's good for the health of the fish and good for the growth of the fish, and there isn't any affordable alternatives to fish oil. So they find it very difficult to find and there are developments, and I'm sure they will come. But certainly, in the short to medium term, fish oil is a prime requirement for aquaculture feed. So then let's look at our business and again, one area of decline is our two fishmeal businesses, and that was driven primarily because of price. Both businesses are in a -- and I'll go through the stats now, but both businesses are on a very positive position in terms of the factory performance and the vessel performance. Operating profit on the SA side, our two fishmeal and oil businesses here, operating profit dropped by almost 70% down to ZAR 26 million, obviously, a very low margin, driven by the oil price. And remember, this fishmeal and fish oil businesses, there's two major components to it. One is obviously price, which is important. The other is volume. It's a high fixed cost business. Both factories have a high fixed cost, both SA and U.S. And the requirement is to get the volume through those factories. And we believe that, that certainly is possible going forward. So when I spoke about in that initial graph about how our factories have been -- have been invested in, and we're seeing strong operational performance of those factories. These graphs are really showing -- is trying to depict that. So 25% increase in production volumes. Top left-hand corner there, 106,000 tons of industrial fish was processed through our two factories here, up on 91,000 tons. What is a little bit disconcerting is that, that was all South Atlantic herring, Red Eye, not Anchovy. We had a record season. I'll show the graph just now, record season for South Atlantic herring, very poor catches on anchovy. So strong performance from the factory affected by the price. As you can see, a drop in oil price of almost 53% and a drop in fishmeal price of almost 9%, which obviously goes straight through to the bottom line. One of the things we did this in our two factories here is we enhanced the ability to track fishmeal and fish oil production through the production line to understand the makeup of that fishmeal. And maybe just a little quick lesson on what makes up fishmeal. You have four components in fishmeal, protein, moisture, ash and fat. Protein is what the feed manufacturers want that promotes growth in the species they're feeding. Moisture is water, ash comes from the bones of the fish and fat is in the body of the fish and all of that makes up 100%. What you try and do is maximize the protein and have a reasonable component of fat. And you can do that if you have the right components in your production line so that you can manage as you're producing the fishmeal, you can start drying a little longer, increase the heat, take a little bit more water out. And we've done that in our new production line. And I didn't realize the stats until I saw this month, and it was quite an eye open to me. So in 2023, only 30% of our finished product was high quality, high protein levels, above 67%. In this year, because of this new technology that we put into the two plants, we achieved almost 70% of the fishmeal, the output of fishmeal at that top end of spectrum. And remember, customers pay per percentage of protein. So if you're a 60% or a 67%, that has a massive difference on price. So it is a major component for the improvement in output and an improvement in price from these two factories. This is the biomass of industrial fish that goes into our two fishmeal plants in South Africa. On e very positive, one very negative this year. Top graph is showing our red eye landings. That is controlled by what is called a [ puckle ], which is an industry allocation. It's on our Olympic system. So they issue a quota for the full industry and the industry can go and catch out there. First come, first serve, whoever catches more. But what was positive is that there was -- the initial allocation was around 120,000 tons. And as the season progressed, because of our phenomenal catches, the government and DAF issued additional quota. So we issued almost 200,000 tons of red eye. What was also positive, you see those graphs there, 73% in 2024. That is the catch of the allocated puckle. This year, we caught almost 96% of what was allocated. And that was drove the 100,000 tons that went through our two factories. On the negative side, and generally, these species swim and live together. But on the negative side, quite unusual is there's almost been zero anchovy landings. So we caught almost nothing this year. Interesting that if you remember my presentation last year, and I was fairly certain that this would bounce back this year and it was based on history, and you see the graph on the top right there, that is what -- that's the biomass. And you can see, again, a shortlist species when it has a downturn, it bounced back very strongly depending on climatic conditions. We know that there's probably going to be a very low quota for anchovy next year given what has happened this year. But again, I'm positive with the climatic conditions changing in the Southern Hemisphere, and we're seeing the other species starting to rebound, hake, the two lobster species, squid, Red Eye. It's only a matter of time before anchovy bounces back as well. So good and bad. We need the volume through our factories to deliver. And obviously, we need the price. I think that certainly we're going to see some upward trend in pricing given Peru's catch, but it needs a combination of both. But long term, this business is in a very good position from a structural point of view to take advantage of when the resource rebounds. I certainly believe price is going to go is going to -- the trajectory is going to be continued to upward. So I certainly believe these businesses are in a very good position to take advantage of when those conditions improve. On the U.S. side, very similar story. Operating profit down 50%, both in dollar terms and in rand terms, driven by particularly the fish oil price, fish oil price going from approximately $6,000 to $2,500. But this factory, again, has performed very well, both from a catching point of view and from a production point of view. We obviously have a partnership with Westbank. We are a shareholder in the Westbank, the fishing operation. And there on the top left, you see the total catch of 630 million, that is in million fish, 632 million fish were caught this year, well up on last year, 526 million. The oil yield, which is an important component of our profitability and the oil yield comes from the fattiness of the fish held at a very respectable level of just below 12%, which is -- if you look at the long-term average of oil yields in that species is around 10%. So very positive in terms of oil yield. Again, bottom -- good sales volumes, but the negative was the price, price down 48% and 9%. There's a difference between the price in SA and U.S. is generally just the quality of the oil and the quality of the meal, lower protein in the U.S., higher protein in SA and then the omegas are slightly different between the two species. So very good factory performance, but negative because of the pricing. And again, this is just -- I wanted to show you the performance of this factory. So production stats and that figure there, plant downtime. These factories run at, as you can see, 116 tons per hour, phenomenal factory. And yet in the full season from April to November, they only had 0.2% downtime, a phenomenal performance of maintenance and the team there that is running that factory almost 24/7, 7 days a week flat out. So very good performance from a factory point of view. And then just in terms of closing stock, obviously, as we have done over the last couple of years, we hold stock for our customers, and particularly our pet food customers in the U.S. They buy consistently from us on a monthly basis, and we hold stock to keep them supplied. Because of the good catch and the good yield that we've achieved, we're carrying forward 34,000 tons of raw material of fishmeal and around 30,000 tons of oil. A large portion of that fishmeal has been forward contracted, but a large portion of the oil hasn't been forward contracted. And we're holding now and there's a bit of a roulette being played between buyers and sellers to see where the pricing ends up. So we're holding back, and we'll see where that pricing ends, but certainly, that certainly will be a lot positive -- more positive than this year. So I've covered the stats. I'm going to hand over to Zaf now, who will take us through the financials, and then I will talk a little bit at the end about strategy and handle some questions. Over to you, Zaf. Zafar Mahomed: Thank you, Neville. The group's strong operating performance was underpinned by a 58% increase in operating profit in our Africa businesses, coupled with improvements across most key performance indicators. Revenue decreased marginally to ZAR 10 billion. The positive impact of increased sales volumes across all segments and firm pricing for Wild Caught seafood was offset by the decline in U.S. dollar fish oil prices, which halved from the record levels achieved in the previous year. Operating profit decreased by 23.2% to ZAR 1.3 billion compared to the ZAR 1.6 billion achieved in the prior year. Headline earnings per share decreased by 38.4% to ZAR 5.648 per share, primarily due to the lower earnings, increased net interest expense and higher effective tax rate. The group declared a final dividend of ZAR 1.75 per share, bringing the total dividend for the year to ZAR 2.85 per share, which is a decrease of 42.4%, which is slightly higher than the decline in headline earnings per share. The group's net debt-to-EBITDA ratio increased to 1.7x compared to 1.3x at the end of September 2024, primarily due to the decrease in U.S. earnings. Operating profit for the second half of the year at ZAR 577 million was only 6.2% lower than the comparative period, which partially mitigated the significant decrease reported for the first half of 2025. The benefits of being a diversified business are reflected in the operating profit contribution by segment with the Africa businesses growing operating profit by 58%. Both the fishmeal and fish oil business in South Africa and the United States achieved higher catches, resulting in increased sales volumes. This was, however, not sufficient to offset lower global fish oil sales prices following the recovery in Peruvian anchovy resource and production levels. Daybrook contribution reduced from 72% of total operating profit in 2024 to 43% in 2025. Lucky Star Foods delivered a solid performance despite ongoing pressure on consumer discretionary spending and its contribution to operating profit increased from 26% to 37%. The Wild Caught seafood segment delivered a significant turnaround driven by record-breaking performance from the hake business and an improvement in the horse mackerel business, resulting in a contribution of 18% compared to the loss in the previous year. Fish oil price moves have had a significant impact on Daybrook's performance over the past 4 years. Calculating the fish oil price variance by applying the average realized U.S. dollar prices to the previous year's volumes, the cumulative positive impact on our operating profit has been approximately ZAR 95 million over that 4-year period. The impact of the steady increase of the fish oil price from 2022, followed by the subsequent cancellation of the Peruvian anchovy season in early 2023, generated a cumulative positive profit contribution of approximately ZAR 820 million over the 3 financial years from 2022 to 2024. The subsequent recovery in the Peruvian anchovy biomass in 2024 led to a significant price correction with a corresponding negative profit impact of approximately ZAR 725 million in 2025. This was despite sales volumes of 23,000 tons in 2025, which was significantly higher than each of the previous 3 years. Revenue remained steady compared to the prior year. Operating profit decreased by 23.2% to ZAR 1.3 billion, and gross profit margin decreased to 27.8% compared to the 31.8% achieved in 2024, attributable mainly to lower margins in the fishmeal and fish oil segment. The Lucky Star foods margin improved due to increased local production volumes, supported by higher local pilchard landings, a consistent frozen fish supply and operational efficiency gains. Strong market prices and improved catch rates for hake and horse mackerel contributed to good margin growth in Wild Caught seafood. Overhead and expenditure decreased by 12.3% to ZAR 899 million, mainly due to lower employment costs, combined with cost savings from reduced insurance premiums. The higher net interest expense of ZAR 288 million was primarily due to increased borrowings in SA to fund the recent capital expenditure program, as well as increased working capital investment during the year. Higher imports of frozen fish in the first half of 2025 led to increased Lucky Star food inventory levels for most of the year. The renewal of the U.S. interest rate swap in February 2024 at higher rates covering 50% of the U.S. debt further contributed to the increased interest expense. The effective tax rate increased to 25% compared to 20.8% in 2024 due to the Africa businesses contributing a higher proportion of the group earnings compared to the U.S. with South African and Namibian earnings attracting higher tax rates. Profit after tax decreased by 35% to ZAR 724 million and headline earnings per share decreased by 38.4% to ZAR 5.648 per share. Detailed financial statements are included in the appendix to this presentation and the results booklet, which is available on our website. Net working capital across the group increased 7.6% to ZAR 2.5 billion with Lucky Star Foods and Daybrook comprising 48% and 43% of the total, respectively. The increase in net working capital was primarily driven by higher levels in the Lucky Star foods segment compared to the previous 2 years. Lower frozen fish inventory levels in Lucky Star was partially offset by higher finished truck inventory levels in Lucky Star, Daybrook and hake. Capital expenditure returned to more normalized levels at ZAR 327 million compared to ZAR 645 million in the prior year. The main projects included the ongoing maintenance of the group's processing facilities and vessels, upgrades to the Wild Caught seafood fleet and the addition of a new squid catamaran vessel. The group is planning to invest ZAR 307 million in replacement CapEx and ZAR 21 million in expansion CapEx for 2026. The primary focus over the past 5 years has been to reduce U.S. dollar debt. We repaid a further $15 million from surplus cash during the 2025 financial year, bringing the total debt prepayments to $54 million since 2021. At the end of FY 2025, we reached net debt of $31 million and a net debt-to-EBITDA ratio of 0.8x. This has enabled us to target refinancing and replacement of our term debt with a revolving credit facility and thereby mitigate the negative interest carry effect. Discussions with our lenders in the U.S. are currently being finalized in this regard. In South Africa, debt increased by ZAR 1 billion to ZAR 2.1 billion since 2021 to fund the capital expenditure program and working capital investment. Net debt to EBITDA in South Africa reduced from 2.7x to 2.2x, primarily due to the 58% increase in earnings in the Africa businesses and the significant improvement in free cash conversion. The group's total net debt increased marginally to ZAR 2.6 billion, with a decrease in the U.S. debt being offset by an increase in SA debt. U.S. net debt as a proportion of total net debt has reduced from 54% in 2021 to 20% in 2025, while SA debt now comprises 80% of the total. As mentioned, the U.S. debt reduction included a once-off prepayment of $15 million from surplus cash, adding to the $17.5 million prepayments paid in prior years. As a result of the decrease in net debt, the U.S. net debt-to-EBITDA ratio increased slightly to 0.8x despite the reduction in EBITDA from ZAR 1.3 billion achieved in the prior year to ZAR 635 million in the current year. SA debt rose due to a ZAR 348 million increase in short-term facilities to fund working capital needs. As a result of EBITDA increasing from ZAR 636 million to ZAR 939 million in the current year, the SA net debt-to-EBITDA ratio reduced to 2.2x from 2.7x in the prior year. On a combined basis, the group's net debt-to-EBITDA ratio increased to 1.7x from 1.3x, mainly due to the reduction in total EBITDA. The group compliant with all lender covenant requirements relating to both its South African and U.S. debt. The net cash balance reduced slightly from ZAR 760 million in 2024 to ZAR 603 million in 2025. Cash operating profit declined to ZAR 1.7 billion from ZAR 2 billion in the previous year. This was partially offset by a reduction in working capital investment of ZAR 245 million, down from ZAR 517 million in the previous year. Cash generated during the year was allocated to capital expenditure, settling debt and tax obligations and dividends with short-term borrowings from existing facilities covering the cash shortfall in South Africa. The significant improvement in free cash conversion to 103% compared to 34% in the prior year was driven by higher cash flow from operating activities and lower replacement capital expenditure. Operating profit plus interest income reduced from ZAR 1.7 billion to ZAR 1.3 billion in FY 2025, which resulted in the group's return on net assets decreasing from 14% to 10.6%. Average net assets remained steady at ZAR 12.2 billion and has increased 37% from ZAR 8.9 billion in 2021. Given the higher SA debt levels at this time, it is prudent to increase the dividend cover from 1.85 to 1.98x. The group declared a final dividend of ZAR 1.75 per share compared to ZAR 3.00 per share, which together with the interim dividend brings the total dividend for the year to ZAR 2.85 per share compared to ZAR 4.95 per share, which is a decrease of 42.8%, which is slightly higher than the 38.4% decrease in headline earnings per share. Over the past 3 years, significant progress has been made on capital allocation with substantial debt reduction in the U.S., reinvestment in our asset base and strategic bolt-on acquisitions that complement our existing business. Having invested in our vessels, we are currently evaluating our Wild Caught seafood fleet to ensure it remains fit for purpose, including options for operating a dual-purpose vessel. The group will maintain a disciplined approach to capital allocation, prioritizing shareholder returns and reducing debt through efficient capital expenditure and building capacity to capitalize on opportunities. Thank you, and I hand you back to Neville, who will cover our outlook. Neville Brink: Thank you, Zaf. And it's always disappointing when we see a drop in earnings. Obviously, it's the focus is to grow earnings consistently. But what I've said to the management team and to the staff here is we have to focus on what we can control, control what you can well. And I think that is what been the focus of the last couple of years is invest in our assets and our assets are in good shape. They certainly are in a position to deliver. And on the Lucky Star side really is to continue to make available affordable protein at a competitive price to the consumer. We are -- we will focus on cross-border countries, which we've seen strong demand for our product. There are a number of opportunities in adjacent food categories, which we think is -- which lends itself to the Lucky Star brand, and we certainly are looking at expanding into that, both from outside of just noodles. There are some adjacent categories which we are looking at. Across the board, we are focusing on efficiencies to reduce costs and enhance our margins. And then obviously, supply is a key component of this business, the raw material supply without sufficient raw material business, we wouldn't have sufficient stock to supply our customers. So that is a key focus for us under the Lucky Star brand. And then obviously, this is a less volatile business than fishing. It has an element of fishing in because we buy fish from all over the world. But it's to try and grow this component as a larger percent of our total operating profit to minimize -- to try and reduce the volatility of Oceania earnings. So this is certainly a focus for us, and we believe there's lots of room to grow this part of our business. On the Wild Caught seafood side, as I explained, I think Wild Caught demand and pricing consistently will grow because of the static supply of Wild Caught seafood in the world. So from a top line point of view, we'll see increasing prices. What the focus here has to be is minimizing costs, making sure that the vessels are as efficient as possible, knowing that we've only got a finite quota, we can't grow our supply. So we have to grow our ability to take cost out of the business. On the hake side, and we -- hake and stroke horse mackerel, we're looking at changing our horse mackerel vessel to a more versatile vessel. That is not a dedicated horse mackerel vessel. It has the ability -- it will have the ability to catch multiple species so that when horse mackerel is not performing and not delivering the catch rates that we require, the vessel can switch to other species. So it allows us to be more -- again, more pricing, so we can manage our pricing a lot better in terms of costs. I spoke about the squid fleet. We've rationalized the squid fleet. We're optimizing licenses, and I'm looking forward to this new season, which starts next week to see how those seven vessels are going to perform with the maximum permits on board. Namibia always is an issue for us, a different management regime there, in particularly the politics there in terms of how they allocate quotas. We are a major operator there. I've had a lot of dialogue with the regulators there to understand their foreign investment policy. To understand that in order for us to continue investing in that country, we have to have certainty and sustainability in terms of allocation of quotas. I certainly will continue to drive that part of our business because I certainly believe that Namibia offers us an opportunity as partnerships and as guests in that country to grow that business. We are strong operators, both in the canned pilchard and the horse mackerel business. And as long as we are welcome there, we are going to invest in that country. So looking forward to some good discussions with the regulators there in the next couple of years. On the fishmeal and oil side, as I said, our factories are in good stead. We are looking at in the U.S., some new technologies, fishing technologies with our partner, Westbank. And certainly, as those develop, I will share those with the market, but ways to enhance our ability to catch fish in the Gulf of Mexico because we are -- we still operate under TAE, so we have unlimited available -- unlimited ability to catch fish in a fixed season, and that will drive volume through those factories. On the SA side, I certainly believe that the Red Eye resource is strong. We'll have to work through this low-end anchovy season. The factories are -- and the focus will be on taking costs out of the business to try and increase the variability of cost in those two businesses. So when the season starts does fire when anchovy comes back that we're in a better position to take advantage of and increase pricing, as I showed in those graphs, we believe pricing is going to continue to grow, in particular on the oil side. So a tough year, but a year that I'm still very proud of the management team and what we've done in this business. We've created a structure that will allow us to take advantage of those uncontrollables. And I know those uncontrollables will turn. And hopefully, at some stage, they all operate in our favor and this business is in a good stead. So I'm very optimistic about the coming years. And with that, I'm going to close and happy to take some questions from people in the audience. Operator: Thanks, Neville. First question is from [ Jan Mes ] at Holberg. On the quality of the fish oil inventory in the U.S., is this on a high-end quality to the omega-3 market? Neville Brink: So generally, our -- the quality of the meal -- the oil that we produce in the U.S. is not of farmer level. It's in the aquaculture spectrum. Just interesting, and I'm going to digress a bit, but the production that's coming out of Peru, the latest stats that we're seeing coming out of Peru, the catch rates in the north have been very positive in the center and the south have been less positive. But the oil yield has been very high, but it's been mainly on the omega-3 side. So very strong high omegas in that oil, which is positive for us in the sense that less goes into aqua and more goes into farmer. There is a shortage of farmer oil at the moment, but our oil plays in the aqua space, both in SA and U.S. Operator: Neville, that appears to be our loan question. So Zaf, obviously done a good job explaining the results. Neville Brink: Well, thank you very much for everybody for joining us, and I look forward to a positive 2026 within a volatile industry, but we certainly believe that this company is well positioned. Thank you, everybody.
Operator: Ladies and gentlemen, thank you for standing by. I am Mena, your Chorus Call operator. Welcome, and thank you for joining the Intralot conference call and live webcast to present and discuss the third quarter 2025 financial results. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Robeson Reeves, CEO of Intralot. Mr. Reeves, you may now proceed. Robeson Reeves: Thank you, operator, and thank you all for joining us today for the Q3 results of Intralot. The transaction completed in October 2025 to bring together Bally's International Interactive and Intralot. As you will have seen, Intralot has delivered strong third quarter results despite FX headwinds. Bally's International Interactive has delivered around EUR 548 million in revenue with a hefty 43% adjusted EBITDA margin for Q3, which is on track with our stated guidance. Full year 2025 pro forma of the 2 entities annualized is more than EUR 1 billion in revenues and EUR 435 million in adjusted EBITDA with a combined margin of 40.65%, which is in line with previously stated full year guidance. As you are aware, yesterday, the U.K. government revised gaming taxes by increasing remote gaming duty from 21% to 40% beginning in April '26. This was higher than anticipated, but we are going to follow the aggressive mitigation scenarios. We still intend to deliver growth in wages accepted, which combined with generosity reductions, marketing reductions and accelerated synergies will limit the tax impact. However, this will delay our growth plan by 1 year and impact our total EBITDA by 4% versus 2025 guidance. I'll ask you all to refer to Page 4 of the presentation as I want to walk you through the bridge. So if you look at 2025 EBITDA, I will highlight our mitigations for '26. So I start with EUR 435 million as we've provided that already in our guidance. 315 million of EBITDA is from the Bally's International Interactive segment. The U.K. online EBITDA contributes GBP 275 million with revenue of GBP 660 million. The remote gaming duty increase from 21% to 40% has a direct impact of GBP 95 million when applied to 2025. That gives us a starting point of GBP 180 million of EBITDA from the U.K. before mitigation. I want to break down the mitigations. As I said, we will look at generosity reductions, marketing reductions such as advertising and cost cutting, which amounts to GBP 35 million. In addition, there will be GBP 15 million from the transaction synergies, which will deliver a total of GBP 50 million. Our forecast organic growth is expected to be GBP 34 million from all markets, including Intralot. In summary, mitigations are GBP 35 million, which is 28% of full year tax impact, plus the GBP 15 million of transaction synergies and growth of GBP 34 million. We end up with GBP 435 million, minus GBP 95 million for tax, which equals GBP 340 million. We have GBP 34 million for growth and GBP 35 million in mitigations, plus GBP 15 million for the transaction synergies, leaving GBP 424 million, which is a 4% impact versus 2025. Another way to look at it is GBP 810 million of turnover from Bally's International Interactive with an EBITDA margin of circa 30% is GBP 245 million, plus GBP 35 million of mitigation, GBP 15 million of synergies and GBP 125 million from Intralot gives GBP 420 million. We believe these estimates are conservative. A significant market consolidation is possible. The full year tax impact will be higher by GBP 30 million as this GBP 90 million is a 9-month impact. We will also realize GBP 25 million more in '27 in committed intra-lot synergies, and we believe that generosity and marketing will have further flex. Our growth in sports, expansion into new markets and the full realization of synergies will alleviate tax rate pressures in the U.K. from a full year of tax increase in '27. In 2027, increased tax for online sports betting will be introduced and drive further consolidation. Such tax increases have happened periodically in our markets and historically have highlighted vulnerability for others, leading to market consolidation and market share growth for companies like Bally's, who have higher margins than other peers. We achieved in Q3 a 43% EBITDA margin, whilst most others are below 25%. Hence, there will be other operators that cannot adapt to this change due to lower margins and lack of scale. This will result in fewer players, and I welcome a less competitive environment. The point of the combined Bally's International Interactive and Intralot was to create a platform for both organic opportunities and accretive acquisitions. We believe this improves our prospects. I do understand that the U.K. government has a need for revenue. My message is I will continue to embrace public-private partnership and regulations, but that the UKGC will have to be extra vigilant to police offshore gambling given that the incentive to do so has increased. The UKGC has been progressive with consideration to grow into areas such as crypto and prediction markets to lead and expand the market rather than zero-sum reallocation. I love our business, and we have been through such experiences over the years and will continue to adapt. I know that we will be very strong in the medium term. I intend to make a recommendation to the EGM, obviously, subject to Board approval to allow the company to make share buybacks. Now I'll hand over to Andreas to walk you through Q3. Andreas Chrysos: Thank you, Robeson. Good afternoon, ladies and gentlemen. On October 8, Intralot completed the acquisition of the Interactive International segment of Bally's for a total transaction value of EUR 2.7 billion, EUR 1.53 billion in cash and EUR 1.136 billion in newly issued shares of Intralot. With this transaction, Bally's Corporation became the largest shareholder of Intralot with a 58% participation. The closing followed the successful completion of Intralot's comprehensive acquisition financing and satisfaction of required shareholder, regulatory and other customary closing conditions. Moving on to the Slide #5 of the presentation. On the left-hand side, we see the pro forma capitalization table post closing, including Intralot's financing package comprising of EUR 900 million aggregate principal amount of senior secured notes due 2031, EUR 600 million fixed rate notes and EUR 300 million floating rate notes. Secondly, a GBP 400 million, EUR 460 equivalent, a 6-year senior secured term loan with institutional lenders and a EUR 200 million 4-year amortizing term loan provided by a consortium of Greek banks. To finance the transaction, Intralot also raised EUR 429 million through the issuance of 390 million new ordinary shares at a price per share of EUR 1.1. Total funds raised were used to pay the consideration to repay all the outstanding debt of Intralot, except for the retail bond of EUR 130 million, which survived the transaction plus the transaction fees. Following all these financing activities, the pro forma net debt -- funded net debt stands at around EUR 1.5 billion and the total enterprise value at around EUR 3.2 billion. The new combined entity on the right side of the slide, on a pro forma basis for the 9-month period would have a total revenue of EUR 790 million, an adjusted EBITDA of EUR 320 million and a robust EBITDA margin of around 41% and a healthy EBITDA minus CapEx metric of around EUR 280 million. Now moving to the 9 months of 2025 financial results of Intralot and turning to Page #6. We see the revenue analysis. Highlights here is the contribution of the Americas of around 60% and the B2B, B2G having the majority of the Intralot business with more than 95%. Turning to the next page, #7, where we focus more on the revenue line. The key takeaway is that the group showed a stable underlying performance in constant currency terms with FX headwinds, however, in all markets, which is functional currency is different than the euro, leading to an overall reported deficit of 2.9x or EUR 7.3 million, with the majority of the impact coming from the markets of the United States and Turkey. If we move on to Page #8, we have the overall P&L performance for the first 9 months of 2025 compared to the previous year and for the third quarter. Revenue is lower by 2.9% for the year-to-date period and 11.8% for the third quarter, with negative FX being the major contributor for this variance, accompanied by a slower growth in Turkey and Argentina in the third quarter. Same picture for the gross profit line. However, through efficient cost management, the group has managed to present an almost stable EBITDA performance for the 9-month period by maintaining the EBITDA margin at around 37%. Net interest was substantially lower this year due to the scheduled repayments of the bank loans in Greece, the United States and Turkey of around EUR 25 million and lower interest rates due to both Euribor and SOFR lower levels compared to the 2024 respective period. Net income variance is attributed entirely to an accounting treatment in relation to the hyperinflation adjustments in Turkey, which had a positive effect in 2024 and a negative in 2025. Turning to Page #9. The upper 2 graphs have been analyzed in the previous slide. And on the bottom left graph, we see the operating cash flow, which was higher by EUR 4 million as a result of favorable working capital movement and the lower tax payments. CapEx in the 9 months of 2025 was lower by EUR 4.3 million compared to the respective period of last year, mostly due to the nonrecurring license renewal payment in Turkey back in 2024, partially offset by higher U.S. investment needs in the current period. On the bottom right, we see that the net debt and leverage ratio adjusted for the restricted cash referring to debt servicing and repayments was EUR 299 million and 2.3x, respectively, for the third quarter of 2025, better by EUR 57 million and 0.4x compared to 2024 year-end. Turning to Page #10 and focusing on the adjusted net debt movement bridge from December 2024 through September 2025, we see that the contributors to the EUR 57 million reduction have been the solid financial performance in the 9-month period as evidenced by the generation of EUR 48.1 million in free cash flow, accompanied by a positive movement in debt, primarily due to favorable foreign exchange effect in our U.S.-denominated debt, while the net interest payments stood at EUR 21.9 million. Lastly, on Page #11, we see the contributions per region and to our revenues and EBITDA. Revenue was almost stable in all jurisdictions, apart from Turkey presented in the rest of the world. performing, however, better in terms of EBITDA in this region as well due to efficient cost management, counterbalancing the top line deficit. EBITDA in all other jurisdictions at almost equal levels year-over-year with North America performing better. And at this stage, the presentation of the results for the 9 months of 2025 is finished, and I hand over to Robeson for his closing statement. Robeson Reeves: So thank you all for joining us today. This tax change is higher than anticipated, but we will aggressively deliver our mitigation scenarios, as I've already described to you. And I've said that these changes lead to opportunities. The way I look at it is the strong don't only survive this. They get much stronger. So I'd like to hand back to the operator so we can open the line for Q&A. Operator: [Operator Instructions] First question is from the line of Tzioukalia Fani with Euroxx Securities. Fani Tzioukalia: Just 2 questions on our end. First of all, you mentioned the launch of the share buyback program. I was wondering, is there any indication that the major shareholder would be looking to increase their stake in the company? And the second question is, you provided the outlook for 2026 and 2027, how you would be looking for the medium term? Would you expect that at some point in 2028, we would see the numbers that we were initially expecting as an EBITDA outlook? Robeson Reeves: I'll take that. Thank you very much for your question. With respect to share buyback, your question relates to, do you expect the majority shareholder to increase their stake in Intralot? Fani Tzioukalia: Yes. I mean separate [indiscernible]. Yes. Robeson Reeves: As I've said, I believe in this company and Bally's Corporation will no doubt be looking to increase its stake in the company. If we see it as value, which we do. I've already described that today, we will be increasing our stake in the company. With respect to your next question, as I said, this essentially delays our plan by a year, so I still expect the same growth prospects for us. We just have to play catch up against what has happened to us with the U.K. tax changes. I do think this means that in the long term, you end up with a much more consolidated market in the U.K. So that is protected. You make these mitigations, you're protected, but our growth pathway is still there. So yes, it just changes the year by 1. So it's just the latest slightly. So thank you for your question. Operator: The next question is from the line of Raman Narula with Principal Asset Management. Unknown Analyst: Just a couple from my side. On the mitigations, just wondering, I mean, if you could touch a bit more, I mean, how much you're looking to flex sort of marketing and generosity spend? I mean, is it your expectation that your competitors, given they're at lower margin, will sort of be forced to flex a lot more than you and do you expect to be able to acquire a lot more customers by way of that? How are you guys thinking about that? Robeson Reeves: The way I look at it, so as we've already said, we've got synergies, which we had already been planning for and already starting to execute for '26 anyway. So that leaves us with the remaining EUR 35 million. I view it as the generosity piece being essentially half and then marketing being half again. We have already, and it tells you that this is a significant shock to the industry, seen people pull back from marketing. So we will judge it if we're going to chase more growth, which would always be my preference if we're getting the right returns, but we can see already that there is substantial flex that we won't have to spend the same amount of marketing money to get the same growth. If we see greater opportunity there, we'll make sure we accelerate the growth and increase our EBITDA margins once again. But just understand that the majority of operators have an EBITDA margin in the U.K. sub-25% and many are sub-20% and in the teens. So this change wipes out all profitability and makes some loss-making. Unknown Analyst: That makes sense. And just as a segue into that, I mean, you've said that consolidation will be a direct consequence of this. I mean, other than the share buyback, will you be looking to opportunistically do any bolt-on acquisitions to further consolidate your share? Or is the sort of focus solely on deleveraging in the medium to near term and delivering synergies as planned? Robeson Reeves: I think we'll have to be opportunistic and see what opportunities arise in the market. This is obviously day 1. We do want to delever in the medium term and continue that delevering pathway. But if there are great opportunities, which in itself are delevering by an operator essentially is loss-making and we can absorb that revenue. It depends what price we would have to pay. So we're looking at everything. I do already sense that consolidation is here and growth will be driven by a few operators rather than many on the go forward. Unknown Analyst: Perfect. My next one, just on sports betting. Just would be helpful to get a sense on how that's performing relative to the core sort of iCasino. And if you could give sort of growth rate at which that's been growing and what your assumption is going forward, that would be helpful. Robeson Reeves: Sports betting is a small percentage of our revenue in the U.K., very, very small. So we actually have most of our revenue is in iGaming. We are seeing acceleration there due to our sponsorship of Notting & Forest. We expect our sports revenue to triple in the next year. That was prior to these changes. So we may be reviewing our product mix further anyway, obviously, because of the tax differential between iGaming and sports in the year of 2026. So I think there's quite a few levers to pull, but we are small in sports. We can -- I guess the narrative is we're small in sports today, we'll grow it. We can mitigate this tax rate even though we are heavily concentrated to the highest tax burden, but that's -- we can mitigate it better than others because our EBITDA margins are sitting already in excess of 10 to 15 percentage points higher than others. Unknown Analyst: Understood. And just as a last one for me, maybe on -- just to help on modeling. I mean, is there some sort of scale-up assumption that you can disclose in order to get from NGR to sort of GGR? And if you're unable to disclose, maybe it would be helpful if you can comment on like how the intensity of sort of bonuses and free spins that you guys give out to your consumers relative to sort of other competitors in the market, that would be helpful. Robeson Reeves: I guess you can do the proxy based on our revenue sitting at EUR 660 million in '25 and understand the tax impact over 9 months would be EUR 95 million. So you can use that as a reverse proxy if you want to do it that way. Operator: The next question is from the line of [indiscernible] with LGT. Unknown Analyst: I have 3 questions. I'll ask them in order. The first one, just going off my colleague's question on Slide 4. So $229 million is the new EBITDA you present for fiscal year '26, and this is prior to any growth. But my question is, what gives you confidence that volumes will remain stable, let alone grow? And correct me if I'm wrong, but in the Netherlands, we saw similar increases and the impact there was volume pressure. So the first question is why will volumes remain stable and not decline given the move to the black market potentially? Robeson Reeves: Good question. The key things which drive growth in the black market, yes, one of the key factors is tax. The other factor is regulation. Now if you roll back and say, before yesterday, we had our existing tax rate and displacement to the black market wasn't happening. We can see that there's such a large long tail of operators in the U.K. market, there's approximately 1,000, right, who have substantially lower margins. We believe that our current numbers and everything still points to the fact that we will continue our marketing spend. There is a reduction there, but we're seeing people already pulling back from auctions and advertising that we believe our growth will continue. The regulatory balance with tax is on the edge. I won't deny that. And as you heard in my comments, I want to ensure that the UKGC focus on preventing the black market. Having said that, in all of the numbers we're seeing already, our growth comes from, yes, new player acquisition, but also our existing players becoming more loyal. In historic presentations, you would have seen that over time, our player spends grow. Now if you think there's fewer players in the market and people spread their spend across multiple operators, this will accelerate as well. So we think that we'll gain more players because fewer people are bidding for the same traffic, but also we see further upside, which I haven't accounted for here in increased player spend because their spend is more concentrated amongst fewer operators than would have been previous. Unknown Analyst: But just to confirm -- very helpful. But just to confirm, in the Netherlands, what was the impact on volumes there on the legal market? Because my understanding is we did see volume pressure and quite significant margin -- volume pressure, excuse me. Robeson Reeves: Yes. So in the Netherlands, if you look at the data, you'll see that the majority of players, the counter players are within the regulated market. The pressures that came, and we've already had these pressures, by the way, on limiting spend of individuals. So individual player spend, so VIP spend, call it, gets displaced. That has already occurred in the U.K., very limited VIP spend. It's much more about the regular recreational player, which is exactly what we're built on. We have a high-volume, lower spend audience. So black market in Netherlands, over 50% of revenue. 90-plus percent are playing in the regulated market. It's about the VIP displacement. This has already occurred in the U.K. And we are actually -- when you look at the regulated market in the U.K., we don't see further displacement from recreationals. And our business model is based on recreationals. We already hold a stake limit of maximum GBP 5 on a slot machine, GBP 2 for under 25 on slots. So our spending profile is much, much lower with an average stake of 63p a spin on a slot machine. Unknown Analyst: Very clear. And if I can just ask the other 2 questions together. In terms of CapEx guidance, you've given that to be low to mid-double digits for fiscal year '26 and 2027. But is it possible to provide a bit more disclosure on the exact level, which leads me to the last question, which is you renewed Arkansas, so congratulations. And then on Illinois, Ohio, Australia, when do you expect decisions on those expectations still to renew and importantly, at similar or perhaps lower margins given competitive intensity in the U.S. Robeson Reeves: I'm going to hand over to Nikolaos to address. Nikolaos Nikolakopoulos: Andreas, let me take the second part and you talk about the numbers of CapEx. So we do have a pipeline that for -- which is going to materialize, I mean the customers are going to take decisions rather soon. It has to do with the Ontario lottery, the Maryland that still is an active process, and we are waiting to see how the next step -- the next step is going to be. Minnesota and also the VLT monitoring in OPAP that we are expecting a decision really soon, plus the VLT monitoring in Illinois that the submission date has moved to January 5. There is still also Texas that is going to issue an RFP in the first quarter. most probably of next year and some other smaller projects in Latin America and the rest of the world. On the 3 projects that you mentioned, first of all, Ohio, it is something that we have announced a year before that Scientific Games won. So this is something that is going to run until 2027, mid-'27 for us. On Australia and Victoria, we are in a bidding process, in the middle of the bidding process for the licensing. And on Illinois, both the PMA and the technology contract that we do have expires in -- both expire in 2027. Still, there is no movement on issuing any RFP either for one or for the other. I understand based on what I hear from the legislation and what we read in the news that there is a debate what is going to happen with the PMA, if the PMA is going to be continuous as it is, if legislation is going to change. Still, we are waiting to see what will happen there. And my view is that according to what the decision the state is going to take for the PMA, then we're going to decide when they are going to issue the RFP for the technology provider. Andreas, can you please take the numbers for the CapEx numbers for next year? Andreas Chrysos: Yes. Let me take this one. It's Chrys here. As we've mentioned, we have on average, both companies combined, we estimate about EUR 60 million of CapEx per annum average for renewals and normal course of business. On top of that, there may be spike years and '26, '27 is one of those spike years because our projects, especially in the United States, as you know, they spread over 10 years. They have the CapEx in the beginning and then the revenue share model. So there's a first cycle of the project where you don't -- where you're trying to recover your investment in 3, 4 years. And then in the second half, of the project, you are generating all the cash. And if you have an extension, which is typically the case because these contracts extend to 15 years, that's even more cash generative. Now '26 and '27 are years where we expect big spending in certain projects, as Nico was mentioning. So the additional spending will be between EUR 50 million and EUR 80 million because we are spreading these investments over time. Of course, this will depend on the overall situation because these contracts may delay, the time line may slide a little bit. But the '26 and '27 will be exceptional years. But we think we are in a very good situation to cover whatever CapEx we need. Unknown Analyst: And just to make sure I heard the number, so it's EUR 60 million for maintenance, normal course of business CapEx on top of... Andreas Chrysos: Maintenance [indiscernible] on average. Like, for example, the extension in Arkansas is part of the renewals, which is a much lighter CapEx case than if you win a tender from scratch. So on average, that's a EUR 60 million. And then you have the spike years. Operator: The next question comes from the line of Osman Memisoglu with Ambrosia Capital. Osman Memisoglu: Just going back to the top line for U.K. from '25, EUR 660 million to EUR 720 million, that does include market share gain, but the upside is from higher spend per customer. Did I understand that correctly? And also coming back to the black market, is it fair to say BII will be less impacted by leakage to the black market given the profile of the customers? That's my first question. And then coming back to the share buyback comment, when -- what is the time line on that? When will the AGM could be held? When could the share buybacks, if approved, could start? And finally, related to that, the dividend consideration, the 35% out of 2026 results, is that still the case? Or are there any potential changes there? Robeson Reeves: Okay. I'll take... Andreas Chrysos: Robeson, let me take the [indiscernible]. There are a couple of issues post transaction that we were planning to hold the AGM. So the intention is to hold an AGM within the month of December, which may include the issue of the share buybacks. And the dividend forecast, the percentage we have quoted is still the intention. Robeson Reeves: Okay. And I will pick up the other questions. So part of the growth that we're expecting is in ARPU increase, but we're still expecting natural growth that we see from our marketing acquisition because we'll still be spending in the marketplace. I don't think our reduction in marketing will be as substantial as our peers. Also, as I was trying to emphasize before, player spends grow over time. So growth comes from actually your retained audience, not only adding new players on top. And you -- and we get that because our players are lower spending. So they actually spend very little at the beginning, and they continue to build over time. That means for a more sustainable business. But also, to your exact point, we're less exposed to the black market because we don't have high-end customers. We haven't got those big VIPs who get displaced by regulation and they go over to the black market, so they can still get their big bets away. Operator: The next question is from the line of [indiscernible] with Optima Bank. Unknown Analyst: So coming back to Slide #4 and your projections on EBITDA for 2026 and 2027, I can see that there's almost flat assumption for Intralot. I guess you haven't taken into account any potential new contracts. Is that correct? Robeson Reeves: Nikolaos, do you want to take it? Nikolaos Nikolakopoulos: Yes, can you please repeat the year, 2026, you mean? Unknown Analyst: Yes. And 2027. I can see almost flattish EBITDA for Intralot. So... Nikolaos Nikolakopoulos: I think the slight increase in 2026. If I'm not mistaken, significant EUR 5 million, if I'm mistaken. Andreas Chrysos: In the table, we have published, we have not taken into account new projects like the one. Nikolaos Nikolakopoulos: This is probably -- let me tell you something. First of all, this is mainly on Robeson 's comment that this buildup and the bridge that we have here is really conservative. What I can tell you for next year is that we are going to start 2 new projects in British Columbia. The first is going to be the iLottery, which it's going to start either on April or May. And I'm not talking about contract wins because this is already there. I'm talking about implementation. So this is the first one. And the second one, we have not announced yet, but we're going to announce a contract with Managed Services, which is going to we're going to sign in the next weeks. It is already approved by British Columbia Board. And we are going practical to outsource a significant part of the operation of the system to us. We are also going to have growth in markets that we're going to deploy the Vitruvian platform, as we have said repeatedly. And the main one is in Croatia, where we are going to start the UAT in January, and we believe that by the end of the first quarter, we are going to be live and operational. We are expecting, obviously, the organic growth that we have every year, but especially in the U.S., give or take, follows the inflation. And last but not least, we do believe that we are going to have growth by adding some significant states that I cannot disclose guessing what we are saying. So this game is going to really take off. So all in all, there are prospects that some of those we have already secured. We are cautious because of the situation, especially in the States, if there's going to be any recession, if there's going to be still a flat line, especially with the scrap card, the instance that represents, give or take, 65% of the market. But as I said in the beginning and Robeson in his initial statement, this is a conservative forecast. And it is not incorporate any new contract. Keep in mind that apart from the renewals, the contract that we are going to win, even if we win contract today a new contract, we're not going to realize any revenue in 2026. So we are not projecting any revenue there because the experience that we have in the U.S. is in the last couple of years that there is significant delays both in legislation in iLottery, but also in the evaluation and in the awarding of contracts. Andreas Chrysos: If I may add something to this, the table that we presented on Slide 4 was intending to just explain the mitigation part on the U.K. tax, and that's why these estimates are conservative. As you may have noticed, the general range given by Robeson's court is between EUR 420 million and EUR 440 million. So in the optimistic scenario, it may include Intralot incremental revenue and EBITDA, which is not on this table. That's why we end up in the lower side of the spectrum that we said in our renewed guidance. And of course, this is even more for 2027. That's further out. We have not calculated any of that incremental potential here. This was just the exercise to present the mitigation plan, and that's why the numbers that we come in the end are on the lower end of the spectrum. Unknown Analyst: Okay. And because I missed the previous question, you said about the dividend, you are sticking to your intention to distribute from the next year. Andreas Chrysos: 35% of net profits, yes. Operator: The next question is from the line of Pointon Russell with Edison Group. Russell Pointon: Two questions. First one, I suspect is for Robeson. On Slide 4, the generosity marketing savings are broadly equally split. I note your answer earlier about you will be flexible. Does that mean the revenue elasticity of cutting marketing versus Generosity is on a like-for-like basis, very similar? Robeson Reeves: I deliberately broadened the definition of saying generosity. Generosity means a few different things. It's however you can give returns to your customer. So it can be across the space of odds, can be across the space of reward and so on. I think we have to be flexible there. We can easily cut more marketing, to be clear, but I don't intend to. So there's much more flex. We chose a balance because we have to watch what happens in the marketplace. And that's why we've said 50-50. In reality, I suspect that there is potentially more revenue elasticity, which comes from concentration of wallet share of existing players because of the pressures that are coming to other operators who, as I've said, this entire tax rate removes all profitability. But we have flex in our marketing. That's for sure. We are already observing and as I've said, I was a little bit shocked that I saw this on day 1, that we don't have to spend the marketing in the same places to have the same volume of traffic. So people have already -- and it isn't like you might assume everyone will reduce. Many operators have removed fully, right? So you could easily make assumptions on what it means for the overall required marketing spend to capture the entire marketplace. But we believe it's sensible that it's 50% -- call it, we've put it into buckets of maybe $15 million for generosity and $15 million for marketing, but I'm not going to hold myself to that. We have to adapt in times of change, and that's what we've shown we're good at doing over the last 20 years. Russell Pointon: Great. And my second question, I think the answer is I already know to this, but I just want to make sure with the now lower profitability expected for the group in the coming year or so, that doesn't frustrate any aspirations the group might have had in terms of new contract wins elsewhere across the globe. Nikolaos Nikolakopoulos: On the contrary, as Chrys, I think, mentioned before, we are not shy of the necessary CapEx, either on the lottery side or on launching B2C operations. The plan remains the same. And as I mentioned before, especially on the lottery stuff, we are moving on going after the contracts that we have in our pipeline. And the same goes also on the launches that we have planned on the B2C space. Operator: The next question is from the line of [indiscernible] with Arini Capital Management. Unknown Analyst: I understand on a year-to-date basis, your performance is stable with some impact of FX. But if we look at just the quarterly performance, the decline is part announced at double digit. Would you be able to just explain this? Andreas Chrysos: Okay. Let me take this one. The variance in the third quarter compared to last year, again, is attributed to the FX, but also accompanied, as I said during my analysis on a slower pace in relation to the growth of markets in Argentina and Turkey. So the market had a slower growth compared to last year. And this is why the FX hit was higher, although normally, the market catches up with the devaluation. In this case, in this quarter, this was at a slower pace. So this is the variance compared to the full year effect. And of course, it's not only the Argentina and Turkey. I mean we saw the same effect even in the U.S. So overall, the FX was negative. Unknown Analyst: Sorry, just to clarify. So in use the year-on-year set within the Americas. There's around EUR 10 million decline in the revenue. Is it driven by 1 particular region? Or is it across the different geographies within the U.S? Andreas Chrysos: It is across different geographies. Unknown Analyst: And can you confirm that there wasn't anything different last year, perhaps higher marketing spend or any project behind this? This one. Andreas Chrysos: No, no. It was just the FX. Operator: Next question is a follow-up question from Raman Narula with Principal Asset Management. Unknown Analyst: A quick follow-up for me. Sorry, I didn't quite catch what you said earlier about the share buyback. So is that going to be from Bally's Corp. in the U.S. increasing their stake? Or will the combined sort of Intralot Bally's Group look to buy back shares from the exchange? Robeson Reeves: I can take that. So with respect to Bally's Corporation, Bally's Corporation will purchase shares and not buybacks, but purchase shares and increase its stake. Taking a recommendation though, they're obviously dependent on approvals to -- as Bally's Ir-lot to make share buybacks as well because this company is strong for the medium and long term. Unknown Analyst: And for Bally's Intralot, is there any sort of -- are you able to give any sort of quantum like Max Quantum, which you'll be looking to buy back assuming your approvals are given or... Robeson Reeves: I think we will just review that as a Board plus. We still have a focus on delevering. We want to make sure that we grow appropriately since leasing together. We want to do all of these things in... Operator: Ladies and gentlemen, there are no further questions at this time. I will now hand over the conference to management for any closing comments. Robeson Reeves: Thank you for joining us today. This company is very strong for the medium term, and I'm very proud of being part of it and delighted that we have the combined Bally's International Interactive and Intralot together. I look forward to speaking to you again very soon, and all the best for the festive season. Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.
Operator: Ladies and gentlemen, welcome to the Adler Group Q3 2025 Results Investor Conference Call. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Julian Mahlert, Head of Investor Relations and Communications at Adler Group. Please go ahead. Julian Mahlert: Thank you, Valentina. Good morning, everyone, and thank you for joining us for the Adler Group Q3 2025 Results Call. Speakers today, as usual, are our CEO, Dr. Karl Reinitzhuber; and our CFO, Thorsten Arsan. Both will lead through today's presentation and then answer your questions. Also, please note that this call is being recorded and will be made available on our website, where you can also find today's presentation. For me, today will be my last results call with you as I am leaving Adler Group by the end of November after 6 eventful years. I have always appreciated working with you, and it has been an honor to be part of this great team. As such and with great confidence, I will hand over my responsibilities to my successor, Sven Doebeling, our Head of Finance, whom some of you already know. You will find his contact details on the last slide of the presentation. And with that, I'll hand it over to Karl. Karl Reinitzhuber: Good morning, everyone, and thank you, Julian. Thanks, Julian, for your knowledgeable and effective handling of your role as Head of Investor Relations. It has been instrumental in securing a smooth and dependable communication for Adler Group. Now before we start with the Q3 numbers, let me give you an overview of our recent asset disposals on Page 4. As communicated before, in the third quarter, we fully completed the disposal of our North Rhine-Westphalia portfolio holding entities. We exercised the put option in order to transfer the remaining 10.1% stake in the respective propcos to the buyers, Orange Capital Partners and One Investment Management. The closing occurred in August and the net proceeds of EUR 21 million were fully returned to the investors of our first lien. We also continue to make good progress on the disposals of our development projects. In the third quarter, we executed and completed the transactions of Cologneo III and The Wilhelm in Berlin. The net proceeds were also returned to the first lien holders. We have made further significant progress with additional disposals post the Q3 balance sheet date. First, we notarized the sale of the Holsten Quartier to a Hamburg consortium consisting of Quantum and HanseMerkur Grundvermögen in cooperation with the Hamburg-based housing provider, SAGA, at Q2 2025 book value. We expect the transaction to be completed in the first quarter of '26. We are very pleased with the sale of this project, which with its exceptional size and location in Hamburg is obviously one of the most prominent projects in our portfolio. Second, we sold the Kaiserlei development project in Offenbach to the Frankfurt housing association, ABG. Closing of this transaction is expected for early '26, if not earlier. And third, we have signed the sale of the Düsseldorf-based development project, Benrather Gärten, to Instone Real Estate at Q2 2025 book value. We expect the closing of this transaction by the end of this year. And we expect more signings before year-end or in Q2 2026. We'll then inform and alert you on this. Now as we experienced good momentum in the disposal of our developments, let me elaborate a bit on the market environment for residential development and new building in Germany. My perception is that the framework for resi developers has somewhat stabilized over the recent months and a higher degree of certainty and less fear of adverse changes in the market prevails. The average price for new residential units in Germany is up around 3% compared to last year. The time to market for sale of condo units is slowly but steadily decreasing. I could witness in some of our development sales processes that the municipalities are increasingly supportive to enable residential developments and acknowledge the more challenging environment for financially successful projects compared to 4 or 5 years ago. Construction costs seem to flatten and bank financing has come through for the buyers of our projects. All buyers of Adler developments will now engage in zoning and permitting processes and will then execute construction themselves. There is no buyer with speculative intent behind the acquisition of the project or land plot. Now all of this is not to say that we expect significant uplift in the pricing of our remaining developments over the coming year, but we have proven that we can sell even complex assets like Wilhelm in Berlin or Kaiserlei in Offenbach to experienced and well-financed buyers in what continues to be a challenging market. Now I attribute our ability to do all these transactions also very much to the excellence and tenacity of our sales team, which works closely with the best local brokers. We run very focused and competitive sales processes and execute on transactions once we have reached the best possible outcome. Now in terms of smaller yielding asset sales, we continued the disposal of our noncore assets in Eastern Germany, thereby reducing the remaining units from 162 down to 117. Further disposals of these noncore assets are in the pipeline. We also took the opportunity to dispose 32 condominium units in Berlin for a total sales price of EUR 9 million. With EUR 245 million, our disposal holdback basket remains almost fully filled, unchanged versus 3 months ago. Now moving on to Page 6. On the financials, our net rental income came in at EUR 101 million for the first 9 months. Compared to the prior year period, net rental income decreased as a result of the disposals of BCP and the North Rhine-Westphalia portfolio. The decrease was partly compensated by rent increases realized on the remaining assets. We are well on track to reach our 2025 net rental income guidance in the range of EUR 127 million to EUR 135 million. The adjusted EBITDA from rental activities amounted to EUR 58 million with a margin slightly improved compared to last year. The adjusted EBITDA total was negative as the development segment did not contribute positive earnings. As more and more development projects are being sold and the organization is becoming smaller, the negative financial impact from the development business will become smaller as well. Our group's equity position stands at EUR 0.9 billion. The LTV increased slightly to 73.5%, in line with our expectations. Our cash position amounts to EUR 241 million. Thorsten will provide more color on financials later in the presentation. Our portfolio, overall, our Berlin anchored assets continued its strong operational performance, fully in line with what we have seen throughout the year. We achieved 3.2% like-for-like rental growth on a year-to-year basis. This was supported by an increase on current rental contracts and ongoing reletting activities. We have a closer look at all KPIs on the following slides. Then let's proceed to portfolio and operational performance on Page 8. At the end of September 2025, we had 17,695 rental units. It's a marginal decrease of 77 units compared to June, driven by the disposals in Q3, which I mentioned before. As a reminder, our portfolio is fully Berlin anchored with more than 99% Berlin assets. Only 117 units are located outside of Berlin, and we expect to sell these units within the coming quarters. In terms of value, the GAV of our yielding portfolio remained stable at EUR 3.5 billion. This reflects no change from the prior period as there were no revaluation and only limited disposals during the third quarter. The GAV per square meter increased slightly to EUR 2,847, up from EUR 2,843 in Q2. Let's now move on to Page 9 to further discuss our operational KPIs. We achieved 3.2% like-for-like rental growth year-on-year. This is lower than the 4.1% we reported last year, which is explained by the timing of Mietspiegel-related adjustments in 2023 and 2024. As expected, we realized like-for-like rental growth well in our target zone of around 3% per year. Rent increases for almost 3,000 rental units became effective in the third quarter. Over the last 12 months, we have increased the rents of 50% of our residential units, therefore -- thereof half CPI indexed and half Mietspiegel-based leases. The rental growth of 3.2% is a healthy and sustainable level that reflects increases on our current rental contracts as well as ongoing reletting activities. We are confident to report a rental growth number north of 3% at the year-end 2025. Our average rent increased from EUR 7.71 per square meter per month reported a year ago to EUR 8.52 in September 2025. This growth is largely driven by the disposal of the North Rhine-Westphalia portfolio, which had structurally lower rents compared to our Berlin assets. These units were still included in the prior year figures. On a like-for-like comparable basis, the average rent grew from EUR 8.24 to EUR 8.52 per square meter per month. Turning to vacancy. Our operational vacancy rate remains at a very low level of 1.6%, slightly down from 1.7% a year earlier. This confirms the continuous demand for rental apartments in Berlin, driven by continued population growth and the very limited new housing supply. Now I would like to hand it over to Thorsten, who will talk -- walk you through the financials, starting on Page 11. Thorsten Arsan: Thank you, Karl, and also a warm welcome from my side. At the end of September 2025, our yielding portfolio was valued at EUR 3.5 billion and our development portfolio at around EUR 700 million based on externally appraised values. This brings our total GAV to EUR 4.2 billion, slightly down from EUR 4.3 billion at the end of June 2025. This change was primarily driven by the disposal of the 2 development projects, Cologneo III and The Wilhelm, both of which were signed and transferred to the respective buyers during Q3 as stated earlier. In yielding assets, there was a slight decrease in value resulting from disposals of 45 of the remaining rental units based in Eastern Germany and 32 condominium units in Berlin. These disposals reduced the GAV only marginally. Also in the GAV overview, we marked the value of the Offenbach Kaiserlei project down to the notarized sales price level. With that, all development projects, which were sold post the Q3 balance sheet date are reflected with the agreed price within our Q3 financials. Let's now move on to the financing section on Page 12. Let me briefly walk you through the debt repayments update. As you know, we continue to use the ongoing inflow of disposal proceeds to deleverage our capital structure. Over the last -- over the past quarter, we made further partial redemptions under the first lien New Money Facility, returning a total of EUR 87 million to investors of the first lien notes. These repayments were fully funded by asset sales, both smaller yielding asset disposals in Berlin and completed development project sales. And there is more in the pipeline in terms of expected net proceeds when looking at the recently signed more sizable project disposals such as Holsten Quartier, Offenbach Kaiserlei and Benrather Gärten, which we expect to close in the coming months, if not weeks. Turning to the 2026 maturities. The remaining EUR 50 million Adler Real Estate bond falling due in April 2026 is expected to be repaid from additional disposal proceeds in line with the New Money Facility. We also successfully completed the extension of a EUR 9 million secured bank loan, extending the maturity from March 2026 to Q4 2028. This is another good example of constructive discussions with our lending banks, especially where assets in Berlin provide strong collateral. For the remaining EUR 19 million of 2026 bank maturities, discussions are ongoing. These are standard bilateral talks with the respective lenders. And based on the tone so far, we expect to reach prolongation agreements well ahead of maturity. Overall, the picture remains unchanged. With the continuous inflow of disposal proceeds and the supportive dialogue with the banks, the 2026 maturity profile is largely addressed, and we remain focused on reducing the first lien facility with further disposal proceeds. Let's now move on to Page 13 and take a look at our current debt KPIs. Following the further partial redemption of the first lien New Money Facility in Q3, our total nominal interest-bearing debt decreased to EUR 3.7 billion, down from EUR 3.8 billion in June. Our LTV increased slightly to 73.5% as we had expected. The weighted average cost of debt remains unchanged at 7.1% at the end of September, and our average debt maturity is around 3.6 years with the vast majority of our financing maturing only in 2028 or later. Let me add one minor update on the ratings. Based on our request, S&P withdrew its rating on the remaining Adler Real Estate 2026 notes. There is no obligation to maintain this rating. And given the very small outstanding nominal amount, we decided to discontinue it for reasons of cost efficiency and structural simplification. All other ratings, including the issuer rating of B- with stable outlook remain unchanged. Let's turn to the debt maturity schedule on Page 14. The debt maturity picture looks largely unchanged compared to 3 months ago. As told in the last quarter, there is no outstanding financial debt maturity this year. Looking ahead, our next significant maturity is in 2026, where we have a total of EUR 42 million due, comprising EUR 15 million of the remaining Adler Real estate bond maturing in April '26, which is expected to be repaid using disposal proceeds. EUR 9 million of the remaining EUR 27 million of bank debt were already extended after the end of Q3, leaving EUR 19 million with maturity not before October 2026. Discussions with the lenders of the 2026 bank maturities are ongoing, and we are confident that these will be addressed well ahead of maturity. As you can see on this slide, 97% of our financial debt matures only in 2028 or beyond. Let's turn to the LTV on the next page, Page 15. As anticipated, the LTV increased this quarter by 140 bps points, mainly due to the usual impact from interest expenses, both paid and accrued. Other movements such as CapEx expenses for our yielding and development asset portfolio can be out with various smaller effects. As always, as a reminder, kindly notice that our bond covenant LTV with a threshold of 90% is calculated differently, leading to a lower figure than stated here. Let's continue with cash on the next page, Page 16. At the end of the third quarter, our cash position stood at EUR 241 million, in line with our expectations. As you might know, we invest our cash holdings usually in money market funds and call money in order to generate interest income. You see the development of the cash position in the usual format on this slide. On the cash inflow side, we realized proceeds from various disposals as discussed earlier. Yielding asset disposals include proceeds from the second closing of the Cosmopolitan transaction as well as from condominium and smaller asset sales. Development asset disposals include proceeds from completed sales of the Cologneo III and The Wilhelm development projects. These proceeds were largely returned to the investors of the first lien notes. The net decrease in our cash position resulted primarily from capital expenditures spent on our development assets, particularly construction activities around our forward sales projects, Ostforum in Leipzig and LEA in Frankfurt. And with that, back to you, Karl. Karl Reinitzhuber: Thank you, Thorsten. Let me now conclude this presentation with some final remarks. We confirm our guidance of a net rental income between EUR 127 million to EUR 135 million for the full year 2025. Experts see a moderate improvement in the residential real estate market. Last quarter, standing assets were perceived moving ahead, driven by strong rental growth. As I mentioned earlier, we now see a stabilization and soft improvement in the activities around developments in new building. We are able to capture rental growth with our strong 3.2% like-for-like growth, in line with our expectations, and we confirm our net rental income guidance for 2025. On the back of recent guidance provided by our peers, we expect a stable revaluation result for our Berlin portfolio for the full year 2025. When it comes to the disposal of our development projects, we are making good progress as a credible and trustable partner, for example, with our successful disposals in Hamburg, Offenbach and Düsseldorf. We do not face any material maturities of capital market indebtedness before the end of 2028. Just as Thorsten said, 97% of our financial debt matures only in 2028 or beyond. It goes without saying that we remain focused on our comprehensive cost-cutting programs and budget discipline to ultimately preserve our liquidity position. And with that, I'd like to thank you for dialing in. We are now looking forward to your questions. Julian, back to you for the Q&A. Julian Mahlert: Thank you, Karl and Thorsten. And I hand it over to our operator, Valentina, to open the Q&A, please. Operator: [Operator Instructions] The first question comes from Emmanuel Arnoldi from Barclays. Emanuele Arnoldi: A quick question. I couldn't hear the comment that you made on the Holsten development asset in relation to the price. And if you didn't do any comment, please just say so, in relation to the book value. And I wanted to ask, and it's the same question really, if we should take the -- I think it's EUR 289 million value for current -- noncurrent assets held for sale as a proxy of the sum of the prices for all these assets where you signed a document, but you haven't -- or a purchase agreement, but you haven't yet closed the disposal. Karl Reinitzhuber: Okay. Well, we do not publish the pricing for individual assets, but we can -- what we can say on Holsten is that we sell it at book value. And well, yes, with the EUR 289 million comprising the assets that have been sold, but where the process is not closed, you're quite right on that. Emanuele Arnoldi: So it would be the Holsten, the Kaiserlei, the other one that I was -- forgot how it's called... Karl Reinitzhuber: Holsten, Kaiserlei, Düsseldorf and we still have, yes, Schwabenland Tower, [ Cologneo III. ] Yes. That's what it is. Thorsten Arsan: Emanuele, you are right. I mean the EUR 289 million are mainly the developments that we've signed and not closed yet. Offenbach is not included because that's something we basically signed after Q3, but all other developments are mainly comprising the EUR 289 million. Karl Reinitzhuber: Okay. Yes. So to be -- let's say, to be complete, right, we also have Grand Central, Eurohaus and UpperNord Tower within the EUR 289 million. Operator: [Operator Instructions] The next question comes from Antonio Casari from Northlight Investment Services. Antonio Casari: First of all, thank you very much to Julian and best of luck for your next endeavor. It was really helpful, the dialogue with you. And then my question is regarding the regulation. A few of your peers talked about this Bau-Turbo that is going to be put in place and clearly has been in line with what you mentioned at the beginning of the presentation, but it would be interesting to have your perspective around that. Karl Reinitzhuber: Okay. It was a bit difficult hearing you, but I understand your question is around the Bau-Turbo, right? Antonio Casari: Yes. Yes, sorry. Karl Reinitzhuber: Yes. What I can say from my observation in the disposal processes of our developments and the interaction with municipalities is that a number of municipalities are thinking about using the Bau-Turbo on some of our disposal projects, at least for a part of the intended buildings within the project. I have not seen Bau-Turbo yet, but I would expect that over the course of the coming year, we would see the first examples, particularly there where, let's say, the expected zoning for residential buildings is very clear and undisputed and where the municipalities do not have to expect any, let's say, criticism from within the political environment in the city or from neighbors or other stakeholders around these projects. Antonio Casari: Great. And then the second question relating to your forward sale and condominium, you mentioned a book value of EUR 0.2 billion. I assume the list is only the 3 projects that are listed in Slide 31, which has expected completion in 2026. So my question is, do we expect monetization of all of them in 2026? And how much would be the cash proceeds from the disposal since with forward sale and condominiums, there's a portion, I understand that is paid as the project advances. Karl Reinitzhuber: Yes. Well, I cannot tell you, let's say, the individual expected cash-ins or the pricing. But what I can say is that on Ostforum, this will be disposed over the course of '26. and we will then eventually receive the full proceeds at closing. Now it is slightly different with the 2 other projects with Hoym in Dresden, there have been -- this one has been presold, and we have received progress payments from the buyer so that there would be still a rather small cash value coming in going forward. And in the LEA at Frankfurt, there out of 165 apartments, a bit less than 150 apartments have been sold. And progress payments have been received. There are further progress payments to be received from these 150 owners over the course until completion, and we will sell the remaining around 15 apartments once the construction and the building is fully completed. Antonio Casari: Perfect. Very clear. But just to be clear, the EUR 0.2 billion book value reflects the expectation of what in total you should cash in from forward sale and condominiums? Karl Reinitzhuber: Yes. This is, let's say, the gross value of these assets at this point in time. The cash from the received progress payments has not been netted at this point or in this number. Operator: The next question comes from Niki Kouzmanov from Jefferies. Niki Kouzmanov: Can you guys hear me? Karl Reinitzhuber: Hear you well. Niki Kouzmanov: Great. Just on -- I think I wanted to ask more on the cost savings and G&A optimization and CapEx optimization and the cash balance that we have at September, which is quite elevated and the upcoming, as you mentioned, the additional disposal on the development side, which is going to further pay down the first lien. I think the 1.5 lien has a noncore until February. Are there any sort of plans or thinking about refinancing and further optimizing the capital structure, especially if some of the CapEx for these developments, specifically the condominiums is going to disappear once the projects are completed? And then probably in relation to that, I think you referred to some early signs of warming up of the yielding transaction market in Berlin. But how are you thinking about your -- I think last -- at the last call, you mentioned you're doing sort of a soft marketing exercise to look at the value of the units in Berlin and how they could be disposed of. Kind of these 2 things hand in hand together, is there any progress or update you can provide us on? Karl Reinitzhuber: Yes. Well, first on your question, what we are doing with regard to our Berlin portfolio. As I said, we are assessing our options and no decisions are taken at this point in time, but we are working on it, but there is not more I can say with regard to your first question. Thorsten? Thorsten Arsan: Thank you. Niki, I can basically touch or answer your question regarding the potential refinancing. I mean, with EUR 3.7 billion of total debt and a weighted average cost of debt slightly above 7%, I mean, it's our utmost duty to always assess whether there are opportunities to refinance more attractively than currently. There are no specific plans right now. I mean you know we refinanced the 1L and the 1.5L in the first half of this year. As said, we are assessing all kind of opportunities, but there are no specific plans right now. Operator: [Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Karl Reinitzhuber for any closing remarks. Karl Reinitzhuber: Yes. Thanks, everyone, for joining today. We will publish our 2025 annual report on April 30, 2026, and the respective results presentation will take place on the same day. Thorsten and I look forward to speaking to you then. All the best for everyone. We close the call. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Operator: Ladies and gentlemen, welcome to the Adler Group Q3 2025 Results Investor Conference Call. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Julian Mahlert, Head of Investor Relations and Communications at Adler Group. Please go ahead. Julian Mahlert: Thank you, Valentina. Good morning, everyone, and thank you for joining us for the Adler Group Q3 2025 Results Call. Speakers today, as usual, are our CEO, Dr. Karl Reinitzhuber; and our CFO, Thorsten Arsan. Both will lead through today's presentation and then answer your questions. Also, please note that this call is being recorded and will be made available on our website, where you can also find today's presentation. For me, today will be my last results call with you as I am leaving Adler Group by the end of November after 6 eventful years. I have always appreciated working with you, and it has been an honor to be part of this great team. As such and with great confidence, I will hand over my responsibilities to my successor, Sven Doebeling, our Head of Finance, whom some of you already know. You will find his contact details on the last slide of the presentation. And with that, I'll hand it over to Karl. Karl Reinitzhuber: Good morning, everyone, and thank you, Julian. Thanks, Julian, for your knowledgeable and effective handling of your role as Head of Investor Relations. It has been instrumental in securing a smooth and dependable communication for Adler Group. Now before we start with the Q3 numbers, let me give you an overview of our recent asset disposals on Page 4. As communicated before, in the third quarter, we fully completed the disposal of our North Rhine-Westphalia portfolio holding entities. We exercised the put option in order to transfer the remaining 10.1% stake in the respective propcos to the buyers, Orange Capital Partners and One Investment Management. The closing occurred in August and the net proceeds of EUR 21 million were fully returned to the investors of our first lien. We also continue to make good progress on the disposals of our development projects. In the third quarter, we executed and completed the transactions of Cologneo III and The Wilhelm in Berlin. The net proceeds were also returned to the first lien holders. We have made further significant progress with additional disposals post the Q3 balance sheet date. First, we notarized the sale of the Holsten Quartier to a Hamburg consortium consisting of Quantum and HanseMerkur Grundvermögen in cooperation with the Hamburg-based housing provider, SAGA, at Q2 2025 book value. We expect the transaction to be completed in the first quarter of '26. We are very pleased with the sale of this project, which with its exceptional size and location in Hamburg is obviously one of the most prominent projects in our portfolio. Second, we sold the Kaiserlei development project in Offenbach to the Frankfurt housing association, ABG. Closing of this transaction is expected for early '26, if not earlier. And third, we have signed the sale of the Düsseldorf-based development project, Benrather Gärten, to Instone Real Estate at Q2 2025 book value. We expect the closing of this transaction by the end of this year. And we expect more signings before year-end or in Q2 2026. We'll then inform and alert you on this. Now as we experienced good momentum in the disposal of our developments, let me elaborate a bit on the market environment for residential development and new building in Germany. My perception is that the framework for resi developers has somewhat stabilized over the recent months and a higher degree of certainty and less fear of adverse changes in the market prevails. The average price for new residential units in Germany is up around 3% compared to last year. The time to market for sale of condo units is slowly but steadily decreasing. I could witness in some of our development sales processes that the municipalities are increasingly supportive to enable residential developments and acknowledge the more challenging environment for financially successful projects compared to 4 or 5 years ago. Construction costs seem to flatten and bank financing has come through for the buyers of our projects. All buyers of Adler developments will now engage in zoning and permitting processes and will then execute construction themselves. There is no buyer with speculative intent behind the acquisition of the project or land plot. Now all of this is not to say that we expect significant uplift in the pricing of our remaining developments over the coming year, but we have proven that we can sell even complex assets like Wilhelm in Berlin or Kaiserlei in Offenbach to experienced and well-financed buyers in what continues to be a challenging market. Now I attribute our ability to do all these transactions also very much to the excellence and tenacity of our sales team, which works closely with the best local brokers. We run very focused and competitive sales processes and execute on transactions once we have reached the best possible outcome. Now in terms of smaller yielding asset sales, we continued the disposal of our noncore assets in Eastern Germany, thereby reducing the remaining units from 162 down to 117. Further disposals of these noncore assets are in the pipeline. We also took the opportunity to dispose 32 condominium units in Berlin for a total sales price of EUR 9 million. With EUR 245 million, our disposal holdback basket remains almost fully filled, unchanged versus 3 months ago. Now moving on to Page 6. On the financials, our net rental income came in at EUR 101 million for the first 9 months. Compared to the prior year period, net rental income decreased as a result of the disposals of BCP and the North Rhine-Westphalia portfolio. The decrease was partly compensated by rent increases realized on the remaining assets. We are well on track to reach our 2025 net rental income guidance in the range of EUR 127 million to EUR 135 million. The adjusted EBITDA from rental activities amounted to EUR 58 million with a margin slightly improved compared to last year. The adjusted EBITDA total was negative as the development segment did not contribute positive earnings. As more and more development projects are being sold and the organization is becoming smaller, the negative financial impact from the development business will become smaller as well. Our group's equity position stands at EUR 0.9 billion. The LTV increased slightly to 73.5%, in line with our expectations. Our cash position amounts to EUR 241 million. Thorsten will provide more color on financials later in the presentation. Our portfolio, overall, our Berlin anchored assets continued its strong operational performance, fully in line with what we have seen throughout the year. We achieved 3.2% like-for-like rental growth on a year-to-year basis. This was supported by an increase on current rental contracts and ongoing reletting activities. We have a closer look at all KPIs on the following slides. Then let's proceed to portfolio and operational performance on Page 8. At the end of September 2025, we had 17,695 rental units. It's a marginal decrease of 77 units compared to June, driven by the disposals in Q3, which I mentioned before. As a reminder, our portfolio is fully Berlin anchored with more than 99% Berlin assets. Only 117 units are located outside of Berlin, and we expect to sell these units within the coming quarters. In terms of value, the GAV of our yielding portfolio remained stable at EUR 3.5 billion. This reflects no change from the prior period as there were no revaluation and only limited disposals during the third quarter. The GAV per square meter increased slightly to EUR 2,847, up from EUR 2,843 in Q2. Let's now move on to Page 9 to further discuss our operational KPIs. We achieved 3.2% like-for-like rental growth year-on-year. This is lower than the 4.1% we reported last year, which is explained by the timing of Mietspiegel-related adjustments in 2023 and 2024. As expected, we realized like-for-like rental growth well in our target zone of around 3% per year. Rent increases for almost 3,000 rental units became effective in the third quarter. Over the last 12 months, we have increased the rents of 50% of our residential units, therefore -- thereof half CPI indexed and half Mietspiegel-based leases. The rental growth of 3.2% is a healthy and sustainable level that reflects increases on our current rental contracts as well as ongoing reletting activities. We are confident to report a rental growth number north of 3% at the year-end 2025. Our average rent increased from EUR 7.71 per square meter per month reported a year ago to EUR 8.52 in September 2025. This growth is largely driven by the disposal of the North Rhine-Westphalia portfolio, which had structurally lower rents compared to our Berlin assets. These units were still included in the prior year figures. On a like-for-like comparable basis, the average rent grew from EUR 8.24 to EUR 8.52 per square meter per month. Turning to vacancy. Our operational vacancy rate remains at a very low level of 1.6%, slightly down from 1.7% a year earlier. This confirms the continuous demand for rental apartments in Berlin, driven by continued population growth and the very limited new housing supply. Now I would like to hand it over to Thorsten, who will talk -- walk you through the financials, starting on Page 11. Thorsten Arsan: Thank you, Karl, and also a warm welcome from my side. At the end of September 2025, our yielding portfolio was valued at EUR 3.5 billion and our development portfolio at around EUR 700 million based on externally appraised values. This brings our total GAV to EUR 4.2 billion, slightly down from EUR 4.3 billion at the end of June 2025. This change was primarily driven by the disposal of the 2 development projects, Cologneo III and The Wilhelm, both of which were signed and transferred to the respective buyers during Q3 as stated earlier. In yielding assets, there was a slight decrease in value resulting from disposals of 45 of the remaining rental units based in Eastern Germany and 32 condominium units in Berlin. These disposals reduced the GAV only marginally. Also in the GAV overview, we marked the value of the Offenbach Kaiserlei project down to the notarized sales price level. With that, all development projects, which were sold post the Q3 balance sheet date are reflected with the agreed price within our Q3 financials. Let's now move on to the financing section on Page 12. Let me briefly walk you through the debt repayments update. As you know, we continue to use the ongoing inflow of disposal proceeds to deleverage our capital structure. Over the last -- over the past quarter, we made further partial redemptions under the first lien New Money Facility, returning a total of EUR 87 million to investors of the first lien notes. These repayments were fully funded by asset sales, both smaller yielding asset disposals in Berlin and completed development project sales. And there is more in the pipeline in terms of expected net proceeds when looking at the recently signed more sizable project disposals such as Holsten Quartier, Offenbach Kaiserlei and Benrather Gärten, which we expect to close in the coming months, if not weeks. Turning to the 2026 maturities. The remaining EUR 50 million Adler Real Estate bond falling due in April 2026 is expected to be repaid from additional disposal proceeds in line with the New Money Facility. We also successfully completed the extension of a EUR 9 million secured bank loan, extending the maturity from March 2026 to Q4 2028. This is another good example of constructive discussions with our lending banks, especially where assets in Berlin provide strong collateral. For the remaining EUR 19 million of 2026 bank maturities, discussions are ongoing. These are standard bilateral talks with the respective lenders. And based on the tone so far, we expect to reach prolongation agreements well ahead of maturity. Overall, the picture remains unchanged. With the continuous inflow of disposal proceeds and the supportive dialogue with the banks, the 2026 maturity profile is largely addressed, and we remain focused on reducing the first lien facility with further disposal proceeds. Let's now move on to Page 13 and take a look at our current debt KPIs. Following the further partial redemption of the first lien New Money Facility in Q3, our total nominal interest-bearing debt decreased to EUR 3.7 billion, down from EUR 3.8 billion in June. Our LTV increased slightly to 73.5% as we had expected. The weighted average cost of debt remains unchanged at 7.1% at the end of September, and our average debt maturity is around 3.6 years with the vast majority of our financing maturing only in 2028 or later. Let me add one minor update on the ratings. Based on our request, S&P withdrew its rating on the remaining Adler Real Estate 2026 notes. There is no obligation to maintain this rating. And given the very small outstanding nominal amount, we decided to discontinue it for reasons of cost efficiency and structural simplification. All other ratings, including the issuer rating of B- with stable outlook remain unchanged. Let's turn to the debt maturity schedule on Page 14. The debt maturity picture looks largely unchanged compared to 3 months ago. As told in the last quarter, there is no outstanding financial debt maturity this year. Looking ahead, our next significant maturity is in 2026, where we have a total of EUR 42 million due, comprising EUR 15 million of the remaining Adler Real estate bond maturing in April '26, which is expected to be repaid using disposal proceeds. EUR 9 million of the remaining EUR 27 million of bank debt were already extended after the end of Q3, leaving EUR 19 million with maturity not before October 2026. Discussions with the lenders of the 2026 bank maturities are ongoing, and we are confident that these will be addressed well ahead of maturity. As you can see on this slide, 97% of our financial debt matures only in 2028 or beyond. Let's turn to the LTV on the next page, Page 15. As anticipated, the LTV increased this quarter by 140 bps points, mainly due to the usual impact from interest expenses, both paid and accrued. Other movements such as CapEx expenses for our yielding and development asset portfolio can be out with various smaller effects. As always, as a reminder, kindly notice that our bond covenant LTV with a threshold of 90% is calculated differently, leading to a lower figure than stated here. Let's continue with cash on the next page, Page 16. At the end of the third quarter, our cash position stood at EUR 241 million, in line with our expectations. As you might know, we invest our cash holdings usually in money market funds and call money in order to generate interest income. You see the development of the cash position in the usual format on this slide. On the cash inflow side, we realized proceeds from various disposals as discussed earlier. Yielding asset disposals include proceeds from the second closing of the Cosmopolitan transaction as well as from condominium and smaller asset sales. Development asset disposals include proceeds from completed sales of the Cologneo III and The Wilhelm development projects. These proceeds were largely returned to the investors of the first lien notes. The net decrease in our cash position resulted primarily from capital expenditures spent on our development assets, particularly construction activities around our forward sales projects, Ostforum in Leipzig and LEA in Frankfurt. And with that, back to you, Karl. Karl Reinitzhuber: Thank you, Thorsten. Let me now conclude this presentation with some final remarks. We confirm our guidance of a net rental income between EUR 127 million to EUR 135 million for the full year 2025. Experts see a moderate improvement in the residential real estate market. Last quarter, standing assets were perceived moving ahead, driven by strong rental growth. As I mentioned earlier, we now see a stabilization and soft improvement in the activities around developments in new building. We are able to capture rental growth with our strong 3.2% like-for-like growth, in line with our expectations, and we confirm our net rental income guidance for 2025. On the back of recent guidance provided by our peers, we expect a stable revaluation result for our Berlin portfolio for the full year 2025. When it comes to the disposal of our development projects, we are making good progress as a credible and trustable partner, for example, with our successful disposals in Hamburg, Offenbach and Düsseldorf. We do not face any material maturities of capital market indebtedness before the end of 2028. Just as Thorsten said, 97% of our financial debt matures only in 2028 or beyond. It goes without saying that we remain focused on our comprehensive cost-cutting programs and budget discipline to ultimately preserve our liquidity position. And with that, I'd like to thank you for dialing in. We are now looking forward to your questions. Julian, back to you for the Q&A. Julian Mahlert: Thank you, Karl and Thorsten. And I hand it over to our operator, Valentina, to open the Q&A, please. Operator: [Operator Instructions] The first question comes from Emmanuel Arnoldi from Barclays. Emanuele Arnoldi: A quick question. I couldn't hear the comment that you made on the Holsten development asset in relation to the price. And if you didn't do any comment, please just say so, in relation to the book value. And I wanted to ask, and it's the same question really, if we should take the -- I think it's EUR 289 million value for current -- noncurrent assets held for sale as a proxy of the sum of the prices for all these assets where you signed a document, but you haven't -- or a purchase agreement, but you haven't yet closed the disposal. Karl Reinitzhuber: Okay. Well, we do not publish the pricing for individual assets, but we can -- what we can say on Holsten is that we sell it at book value. And well, yes, with the EUR 289 million comprising the assets that have been sold, but where the process is not closed, you're quite right on that. Emanuele Arnoldi: So it would be the Holsten, the Kaiserlei, the other one that I was -- forgot how it's called... Karl Reinitzhuber: Holsten, Kaiserlei, Düsseldorf and we still have, yes, Schwabenland Tower, [ Cologneo III. ] Yes. That's what it is. Thorsten Arsan: Emanuele, you are right. I mean the EUR 289 million are mainly the developments that we've signed and not closed yet. Offenbach is not included because that's something we basically signed after Q3, but all other developments are mainly comprising the EUR 289 million. Karl Reinitzhuber: Okay. Yes. So to be -- let's say, to be complete, right, we also have Grand Central, Eurohaus and UpperNord Tower within the EUR 289 million. Operator: [Operator Instructions] The next question comes from Antonio Casari from Northlight Investment Services. Antonio Casari: First of all, thank you very much to Julian and best of luck for your next endeavor. It was really helpful, the dialogue with you. And then my question is regarding the regulation. A few of your peers talked about this Bau-Turbo that is going to be put in place and clearly has been in line with what you mentioned at the beginning of the presentation, but it would be interesting to have your perspective around that. Karl Reinitzhuber: Okay. It was a bit difficult hearing you, but I understand your question is around the Bau-Turbo, right? Antonio Casari: Yes. Yes, sorry. Karl Reinitzhuber: Yes. What I can say from my observation in the disposal processes of our developments and the interaction with municipalities is that a number of municipalities are thinking about using the Bau-Turbo on some of our disposal projects, at least for a part of the intended buildings within the project. I have not seen Bau-Turbo yet, but I would expect that over the course of the coming year, we would see the first examples, particularly there where, let's say, the expected zoning for residential buildings is very clear and undisputed and where the municipalities do not have to expect any, let's say, criticism from within the political environment in the city or from neighbors or other stakeholders around these projects. Antonio Casari: Great. And then the second question relating to your forward sale and condominium, you mentioned a book value of EUR 0.2 billion. I assume the list is only the 3 projects that are listed in Slide 31, which has expected completion in 2026. So my question is, do we expect monetization of all of them in 2026? And how much would be the cash proceeds from the disposal since with forward sale and condominiums, there's a portion, I understand that is paid as the project advances. Karl Reinitzhuber: Yes. Well, I cannot tell you, let's say, the individual expected cash-ins or the pricing. But what I can say is that on Ostforum, this will be disposed over the course of '26. and we will then eventually receive the full proceeds at closing. Now it is slightly different with the 2 other projects with Hoym in Dresden, there have been -- this one has been presold, and we have received progress payments from the buyer so that there would be still a rather small cash value coming in going forward. And in the LEA at Frankfurt, there out of 165 apartments, a bit less than 150 apartments have been sold. And progress payments have been received. There are further progress payments to be received from these 150 owners over the course until completion, and we will sell the remaining around 15 apartments once the construction and the building is fully completed. Antonio Casari: Perfect. Very clear. But just to be clear, the EUR 0.2 billion book value reflects the expectation of what in total you should cash in from forward sale and condominiums? Karl Reinitzhuber: Yes. This is, let's say, the gross value of these assets at this point in time. The cash from the received progress payments has not been netted at this point or in this number. Operator: The next question comes from Niki Kouzmanov from Jefferies. Niki Kouzmanov: Can you guys hear me? Karl Reinitzhuber: Hear you well. Niki Kouzmanov: Great. Just on -- I think I wanted to ask more on the cost savings and G&A optimization and CapEx optimization and the cash balance that we have at September, which is quite elevated and the upcoming, as you mentioned, the additional disposal on the development side, which is going to further pay down the first lien. I think the 1.5 lien has a noncore until February. Are there any sort of plans or thinking about refinancing and further optimizing the capital structure, especially if some of the CapEx for these developments, specifically the condominiums is going to disappear once the projects are completed? And then probably in relation to that, I think you referred to some early signs of warming up of the yielding transaction market in Berlin. But how are you thinking about your -- I think last -- at the last call, you mentioned you're doing sort of a soft marketing exercise to look at the value of the units in Berlin and how they could be disposed of. Kind of these 2 things hand in hand together, is there any progress or update you can provide us on? Karl Reinitzhuber: Yes. Well, first on your question, what we are doing with regard to our Berlin portfolio. As I said, we are assessing our options and no decisions are taken at this point in time, but we are working on it, but there is not more I can say with regard to your first question. Thorsten? Thorsten Arsan: Thank you. Niki, I can basically touch or answer your question regarding the potential refinancing. I mean, with EUR 3.7 billion of total debt and a weighted average cost of debt slightly above 7%, I mean, it's our utmost duty to always assess whether there are opportunities to refinance more attractively than currently. There are no specific plans right now. I mean you know we refinanced the 1L and the 1.5L in the first half of this year. As said, we are assessing all kind of opportunities, but there are no specific plans right now. Operator: [Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Karl Reinitzhuber for any closing remarks. Karl Reinitzhuber: Yes. Thanks, everyone, for joining today. We will publish our 2025 annual report on April 30, 2026, and the respective results presentation will take place on the same day. Thorsten and I look forward to speaking to you then. All the best for everyone. We close the call. Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.
Susan Davy: Good morning, everyone. I'm Susan Davy, CEO of Pennon Group. I'm pleased to share the group's half year results speaking to you from Dawlish in Devon, where we are making progress on our investment to reduce the use of storm overflow. I'm here today to see firsthand what it means for customers and communities and say thank you to my brilliant team here from South West Water and our Amplify supply chain delivery partners. If you're one of the millions of visitors that ever caught the train down to Cornwall, you'll recognize Dawlish. The track runs directly parallel along the sea line and the cliff, giving you a fantastic view for the visible coastline. You might also remember the rail track here being washed into the sea, cutting off Cornwall from rest of UK, a result of climate change and the changing weather patterns. Those weather patterns have also meant that the wastewater network here in Dawlish is under pressure as more homes are being built and more visitors arrive to this fantastic town with a population of 12,000, more than doubling in the summer months. In response, we're doing 3 things. First, engaging with the community to explain the work we need to do here on a time scale; second, applying a tailor-made solution for Dawlish with a nature-first approach by removing as much flow from the system as we can. And third, installing 2 new underground tanks to store stormwater before it's been treated. When combined with existing storage, it will hold up to 4.5 million liters of stormwater, the equivalent of 2 Olympics sized swimming pools, which combined will reduce the use of storm overflows by nearly 70%. This investment is just one of our wider multibillion pound regional program to reduce storm overflows and enhance bathing water quality all year around. There will be hundreds of similar projects going on in towns and villages like Dawlish right across the Southwest. Of course, undertaking this work needs the support of local community, and we're here to do that. From supporting the annual Carnival to Dawlish Cycle Grand Prix, we're here on the ground working together with the council and community groups playing our part. As Dawlish shows, what we do matters and what better place to talk about our half year results for 2025, '26 and here in the heart of the community. I am pleased to report that we've had a robust start to the U.K. regulatory period. We've had a strong return to profitability and notable operational successes and a step change in [ waste ] water performance. Having had record investment into our asset base over the last 2 years of K7 with early mobilization of our supply chain through Amplifying, the momentum we started then has been maintained at the start of K8, delivering on projects like the one here in Dawlish. As the only water company to have received an outstanding rating for our business plans for the third consecutive time, our focus is to make sure we deliver on our agreed plans for communities. Of course, alongside that, following the recommendation of the Cunliffe review, we are fully engaged in how the sector is evolving for the future. We are confident that the new regulatory framework will work for customers, for water companies and investors. In summary, the group is well positioned as the sector evolves. As anticipated, we've seen a good set of financial results for 2025, '26 in the first with a step change in EBITDA with operating profit more than doubling. Revenues have increased period-on-period as the business grows organically, but we have rightsized the cost base and continue to drive efficiencies, which meant wholesale water business operating costs are only rising fully in line with inflation. We're on track to deliver our targeted return on regulated equity for water group at 7% on a real notional water share basis with our effective efficient financing underpinning the performance in 2025, '26. Supporting our investment program is a robust funding position, having raised GBP 500 million in the first half of this year. Earnings per share more than covers the dividend share supporting the equity providers of finance this year. With a strong balance sheet and good liquidity and with the Water Group gearing at circa 60%, we maintain the agility to deliver on our strategy in U.K. water well positioned for a sustainable future. We've seen operational successes in the first half of the year across the 4 strategic priorities for our customers. The first priority always is safe, clean drinking water. And in K7, we invested to bolster water resources with Devon and Cornwall, repurposing disused quarries and mines as many reservoirs, new treatment capacity and building more resilience into the network as we target network upgrades where it was needed most. In September, the Met office confirmed that the summer of 2025 was the hottest on record with the 5 warmer summers all occurring since 2000 and following the hottest spring in over 50 years. Thanks to our investments, innovative approaches, improved monitoring, network rezoning, and operational focus right across the group, we have not needed to impose water restrictions for our customers across the 5 geographies we serve. The changing weather fronts have, however, tested our network, increasing the number of failures. And whilst the customer impacts have been mitigated on 70% of these, it has been challenging for the operational team. Despite the 15% increase in activity, we've held leakage at the '24, '25 levels and are targeting improvements in the second half of the year. If as a customer you need supply, you realize that the average GBP 1.85 a day you pay for your water and wastewater services is worth so much more in terms of value. We rely on water for everything from the morning cup of tea to the manufacturing process that makes [indiscernible], to the transport that takes you to the work and still on everything in between. We are therefore focused on repairing and upgrading our networks with our network investment plans on track in 2025, '26. We're never complacent about water quality as Sutton and East Surrey remains the top performer in the industry and South West Water is upper quartile across the water and sewage companies. Bristol is above average, and we are confident that we can do even more as we share best practice across the group. We continue to roll out a successful quality-first culture and training program in Bristol with plans to replicate in Sutton and East Surrey. Our second priority, tackling storm overflows and pollutions. Whilst we have had a hotter weather front in the first half of the year to '25, '26 across all the regions we serve, in Devon and Cornwall, the rainfall has been in line with long-term averages. We're therefore pleased our operational investment interventions are delivering a step change in wastewater performance. This improved position has meant we are targeting net neutral for wastewater ODIs for '25, '26. And our pollution incident reduction plan with its 5 key pillars has been a key focus of our operational teams, achieving a 50% reduction in Category 1-3 pollutions year-to-date, underpinned by a 75% reduction in repeat pollutions. Using the EA's EPA metric of total pollution incident per kilometer of main, we're on track to have improved our position for 2025 by 2/3. We've maintained our sector-leading internal sewer flooding performance, having reduced incidents by over 7% since 2020 with 12,000 smart network sensors helping to detect potential issues earlier, shifting from reactive to preventative interventions. At the same time, storm overflow spills have reduced by 45% so far this calendar year. As part of our 15-year investment program and operational activities, we have avoided around about 6,000 spills in the first half of '25, '26, bringing a total of 20,000 spills avoided over the last 18 months. With spill durations down by 1/4, we are on track to protect our 100% bathing water quality for a fifth consecutive year, whilst working to improve the 6 newly designated bathing water in 2024. Our third priority is driving environmental gains, how we work with the natural environment and lessen any impact we have. As you can see here in Dawlish, we rely on the natural environment for all that we do, and we have always focused on a priority that improves our position. This is not new for us. In fact, we've just celebrated our 15th year of upstream thinking and are on track for our biodiversity gains in 2025, '26, one of the new common incentives in place for K8 as pioneers in the sector and enhancing biodiversity, we have always held the fundamental belief that the role of water companies needed to be more than just simply treating water to achieve world's quality standards. We also have a responsibilities to focus on protecting and improving its source. When [ raw ] water is clean, with less sediment, nutrients undepleted, rivers get healthier, biodiversity thrives and environment is protected. By working through long established partnerships to improve thousands of hectares of catchments to increase water retention and water quality in the natural environment, we are now working in over 95% of our catchments. In the first half of this year, we have restored 300 hectares involving 15 stakeholders, as well as contributing of a 350 volunteer hours and hosting 50 stakeholder events. As a significant user of electricity across our assets, derisking the energy requirements in the water business and building a portfolio that can both power Pennon and produce returns higher than the regulated water business with capital allocated is part of a balanced plan to deliver on our net zero targets. We've continued to make good progress on our 4 sites with 1 now operational and 1 in final commissioning, and we are on track to deliver 40% of the group's energy requirements by 2030 with internal rate of return expected to be between 11% and 15%. Our GBP 20 million investment in CREWW continues to lead the way with our state-of-the-art lab, researching some of the most important challenges facing the sector and society from microplastics in sewage sludge to future fibers and plastics in clothes. And as we look to support the removal of 8,000 lead pipes in 2025, '26, supporting the commitment to be lead-free by 2050. We have continued to support our customers. Whilst spills have had to increase across the sector and for us, customers pay on average GBP 1.85 a day, we recognize that for some, GBP 1.85 is too much. Our successful water demand customer initiatives, smart metering, financial incentives, customer campaigns and efficiency support continue to help customers to use less and save more. As a result, we've seen a 20% increase in the number of customers on one or more of our support packages as we work harder than ever before to support customers who need it most. And as part of the GBP 200 million package in place for K8, we've also launched our GBP 5 million Better Futures Fund, working closely with community groups across physical activity, education, health, well-being and positive environmental impact as well as those who work to alleviate hardship. In the first 6 months, we supported over 55,000 customers with that set to double over the year. Responsible businesses also need to do more than just deliver services. Today, vulnerability can mean many things, and we are focused on increasing the number of customers in our priority services register with 1 in 7 of our households now registered and for which we have been recognized as a leader. Some of my most enjoyable days are when I get the opportunity to meet customers and talk about what my brilliant colleagues do day to day. And this year, we've held nearly 300 drop-in sessions as well as our WaterShare customer AGM in Bournemouth. WaterShare+ continues to be the sector's most innovative customer engagement scheme, giving customers both a stake in the business and a say in their water company. We continue to invest in our new billing system and customer platforms using AI to improve the customer and contact experience. Growing the RCV by over 1/3 over K8 ultimately means that everyone will benefit from the investments we're making as we drive efficiency and innovative solutions from the building of new reservoirs to the fixing of storm overflows as we power our net zero ambitions and deliver improved services to customers. Our capital delivery supply chain partnership, Amplify has a strong pipeline of programs. Having ramped up expenditure during K7, we have made a fast start to hit the ground running at the required K8 run rate with over 60% of the K8 price control delivery program in progress. At the same time, efficiencies are being secured as projects progress from design into delivery. As someone with a well-furnished copy of the prospectus of South West Water from the time of privatization and as a group who has grown organically in the sector, we have a long history of responding positively. We are engaged in the transition planning and support the direction for customers, the environment and investors. And with that, I'll hand over to Laura to take you through the financial performance in more detail. Laura Flowerdew: Thank you, Susan. Let me provide some more detail on our financial performance in the first half of the year. As Susan has talked about, we've seen a strong return to profitability, benefiting from the commencement of the K8 regulatory period and the inflection point that, that represents. As a result, we've seen a step change in profitability with both underlying and statutory operating profit more than doubling year-on-year, resulting in a profit before tax, again, on both a statutory and an underlying basis, moving from a loss in the prior year to a profit in the current year of GBP 65.9 million. This means our adjusted earnings per share has increased to 14p from a loss in the prior year of 5.5p, more than covering our dividend per share of 9.26p per share. Our interim dividend reflects our dividend policy of increasing in line with CPIH of 4.1% in the first half of the year. Delivering on our K8 commitments has been the focus of our teams across the business, and we've made a strong start with GBP 305 million of CapEx in the first half compared with GBP 332 million in H1 2024-'25, a strong start to our program, and we're driving efficiency across that program whilst being on track to deliver all our year 1 price control deliverables. This capital investment is supported by our strong and robust balance sheet with gearing at 60% following the rights issue and given RCV growth of around 8% projected for this year. This places us in a strong position to deliver the around 34% growth in the Water Group RCV across the 5 years as we continue to invest in our assets and to deliver on our customer priorities. Turning to the income statement for the half year. You will see revenue increased by 25% across the group and by 26% in the regulated water business as a result of the increase in allowed revenues for K8. I will cover that in more detail in a moment. With a strong focus on costs and benefiting from our efficiency in integration programs, costs in the Water Group have increased by 6%, including one-off impacts of around GBP 9 million. We've worked hard to mitigate underlying inflationary and operational cost pressures through our ongoing focus on efficiency and driving the benefits of the integration of SES into the group as well as benefiting from lower commodity prices for power through our hedging strategy. This has meant that EBITDA and operating profit have shown strong improvement year-on-year, whilst financing costs have benefited from our diversified and efficient approach to financing with lower interest and inflation rates mitigating the impact on interest of the higher net debt year-on-year. These movements mean we've seen underlying and statutory profit before tax move to GBP 65.9 million from an underlying loss of GBP 18.6 million and a statutory loss of GBP 38.8 million in the prior year. We've incurred no non-underlying charges in the current period. Consequently, adjusted basic earnings per share have increased to 14p per share. We've declared a dividend per share of 9.26p, increasing in line with 4% CPIH to September and rebased as a result of the rights issue in January 2025. Our revenues have increased by 25% year-on-year to GBP 658 million as our financial performance benefits from the commencement of our K8 plans. GBP 88 million of the increase reflects higher tariffs from the regulatory reset, whilst year-on-year, we see GBP 22 million increase from customer consumption, reflecting both low customer demand in '24, '25 due to the water efficiency programs ongoing at that point, whilst the current half year has seen higher-than-normal customer consumption given the hot dry periods we experienced over the summer. Despite this higher year-on-year consumption, our deferral of current year revenue through tariff mechanisms will benefit future periods. Revenue in our national water retailers has also increased by 24%, given the sector-wide tariff increases passed on to businesses through the market mechanisms. Our water retailers continue to focus on ensuring building a high-quality customer base to deliver a solid financial performance, coupled with strong customer service. EBITDA over the period has increased by around 55% to GBP 254 million in the current year from GBP 164 million on an underlying basis in the prior year. This resulted from the step-up in revenue, whilst a strong focus on cost discipline has resulted in a 6% increase in the Water Group. Our costs have been impacted by one-off items relating to the hot summer, together with GBP 4 million of customer compensation incurred in the water business in respect of the supply interruption earlier in the year. Underlying these one-off impacts, we've seen cost pressures from regulatory, supply chain and operational costs as we enter the new regulatory cycle as well as continued investment in our cloud-based customer platform. Our focus on efficiency through our operational and integration programs has stabilized the cost base as we have more than offset these additional cost pressures with GBP 19 million of savings throughout the business. Susan has already spoken about our ongoing investment program and CapEx in H1 of GBP 305 million reflected GBP 279 million of Water Group CapEx as well as GBP 25 million of ongoing investment in our renewables program through Pennon Power. We have also focused on ensuring we deliver on the price control deliverables and see some strong efficiencies being identified and delivered throughout our enhancement program. We continue to fund our capital investment program through our diversified debt portfolio with strong outperformance against the regulatory allowances being delivered both through our ongoing financing costs and new issuances. We've raised over GBP 500 million in new debt during the first 6 months of the year. Our GBP 300 million bond issued in September 2025 under our EMTN program provided 109 basis points outperformance against the iBoxx, ensuring ongoing benefits through our financing cost efficiencies. Overall, our 5.6% effective interest rate for our Water Group, 5.5% for South West Water compared with allowed returns on a nominal basis using H1 CPIH, providing over 160 basis points of outperformance in H1. K8 is a transformative period for Pennon with investment focused on the delivery of the priorities of our customers and our stakeholders, whilst the growth this investment brings, coupled with strong returns on regulatory equity, will also ensure delivery for our shareholders. We remain focused on delivering financial performance in line with market expectations for the full year, with revenue anticipated to reflect normalized demand over the winter period, whilst our continued focus on cost management will help mitigate the impact of inflationary pressures. Our EBITDA is, therefore, anticipated to increase by around 60% year-on-year, whilst our profit will continue to benefit from our efficient financing costs despite the ongoing impact of our capital program. We anticipate that strong efficiencies being delivered through our capital program will offset the impact of ODI penalties in the water business, and we anticipate that ODIs will be net neutral in our wastewater business. Strong financing outperformance in the current year will support delivery of our 7% RORE target for K8. Susan, back to you. Susan Davy: In summary, a robust start to K8. We're on track financially with a strong return to profitability with operational improvements in train. We have had notable successes and have delivered a step change in wastewater and environmental performance, [ halving ] pollutions and reducing storm overflow spills. The momentum we started in K7 with the early mobilization of our supply chain Amplify is being maintained in the start of K8. We are confident that the new regulatory framework will work for customers, water companies and investors. Finally, everyone who works at Pennon is fiercely proud of our heritage in the water sector, and I'm extremely proud of our brilliant team. I'd like to thank them for everything they have done and will continue to do. Thank you. Operator: Thank you for your patience. A Q&A session will begin shortly. [Operator Instructions] I'll now hand it over to Susan Davy for some introductory remarks. Please go ahead. Susan Davy: Thanks, Alex, and good morning, everybody, and welcome this morning to the Pennon Half Year 2025-'26 Results Q&A. So I hope you enjoyed the video from Dawlish, where we're looking at the investments we're making to alleviate and reduce the storm overflows. To recap from the presentation, we have had a robust start to '25, '26 and the new K8 regulatory delivery period. We've had a strong return to profitability and some notable operational successes, including a step change in wastewater performance. The momentum of record investment over the last 2 years through early mobilization of our supply chain has continued into H1 '25, '26. And we've got a strong balance sheet and good liquidity. So in short, we are well positioned for the future and well done to all my brilliant colleagues for the performance this half year. So with that, I'm going to hand back to you, Alex, and over to everyone else for taking your questions. Operator: [Operator Instructions] Our first question for today comes from Sarah Lester of Morgan Stanley. Sarah Lester: So a couple of questions, please, from me on reopeners. So firstly, just wondering how much Pennon is planning to lean in to this reopener opportunity? I guess the ultimate question I'm asking is, do you anticipate the RCV growth could meaningfully surpass the current guidance to 2030 once we consider those opportunities? And then just quickly, curious what your understanding is at this stage of what the assessment process will look like for winning any reopener spending? Susan Davy: Okay. Sarah, thank you for that question. So in terms of increased opportunity for K8, obviously, we've got a program to deliver that we've got in our enhanced business plan. But in terms of what else and what's emerging, let's be clear with the new cost change process that came as part of the determination, and if that kicks in from Feb '26. We've had previous form in doing other investments through a price review period. So we had pre-recovery and accelerated investment, which we did in K7. And of course, there are new mechanisms for aspects like [ cyber, PFAS ] and changes to planning. Now if you look at all regions, and we've been looking at this and submitting some of our information through to DEFRA and government housing targets and housing expectations have changed since we put in our business plan. And there's something like a 40% increase projected in terms of new homes in our regions. And we've had an assessment of that. And on our wastewater assets, it's around about 10% of our wastewater work that we would have to think about in terms of supply-demand capacity and what we would do with those to support that new growth. So we can see that there is the potential to accelerate more investment on the horizon. Obviously, there are new change processes in play, and we will look to work through those. But we've been through this process before. We submitted our business plans, and we've had those fast tracks in the past. So we certainly can work around the fact that there are needs, and we will obviously work to support those for the community. Operator: Our next question comes from Julius Nickelsen of Bank of America. Julius Nickelsen: Two from me. Maybe the first one, just a clarification on the guidance. So on the net interest, you no longer mentioned the GBP 25 million to GBP 35 million. The wording has changed a little bit. Just wanted to understand if this is worse or better. And then on the EPA rating, just wondering now with like the changes that are coming in a few years and you're getting 2 star again. Are you still confident to reach the 4-star rating that is needed for your outstanding business plan? Susan Davy: Both great questions. So in terms of guidance for net interest, I'll let Laura that one up. But you'll have seen in our presentation in terms of our efficient financing position and our outperformance for '25, '26 with our target 7% RORE being supported by financing outperformance, and I'll let Laura talk about the guidance. Laura Flowerdew: Yes. So the guidance, we're probably just a little bit lower than we were saying previously, but we're in a good place. As you can see, we have a strong outcome in terms of our financing position and continue to benefit from our diversified portfolio such that we are anticipating efficient financing costs over the full year. Susan Davy: Okay. Thanks, Laura. And then, your second question was around the EA environmental performance assessment. So let me reflect on this. The new EPA framework methodology has been issued. So we know what that is. And having studied that in detail, as you might expect that we would, we think there is a really good opportunity to rerate over the period to 2028, which is obviously when the assessment is taken for our enhanced business plan cost of capital uplift. And why do we think there's a good opportunity to rerate? Well, 2 aspects really. So if you look at the new metrics that are in the framework methodology, we're in a good position. One of those is around stormwater flow operability. And I think if you look at the stats for last year, then we were second in the sector for that one in terms of our position. Other aspects around climate conditions and water resources, [indiscernible] are all in a good place. And indeed, with some of the measurements for flow compliance post the FFT review, we've obviously ramped up our position on that. So I feel with the new metrics, we're in a very good place. And the Achilles heel for us, which has been the situation since the EPA was issued and used as a methodology to prevent that, we're also seeing total pollution incident numbers, and that is normalized using kilometerage. Now we've been working with the regulator, and we've been looking at our calculations for that and how that is positioned and that will be changing from 2025 onwards. And that will obviously impact in terms of that metric going forward. And also in terms of total pollution incidents, that will now be a shadow metric in the EPA star rating assessment until 2028. So it actually comes out of the assessment at this period and then goes back into it in 2028. So I think we're in a good position to rerate on the EPA. And we're very pleased where the methodologies have landed. And I think it will be very clear for customers and for those looking at the assessment, what the metrics are and how they're being assessed. Operator: Our next question comes from James Brand of Deutsche Bank. James Brand: Well done on the good results. Three questions from me, please. The first is on the RORE commentary. Obviously, you've reiterated the target of 7% real RORE based on regulatory gearing over the period. And you've also said you're on track for that level this year. Is that a bit -- not to complain, it's obviously a good overall target to have, but like is that a bit disappointing? Because this year, obviously, inflation is quite a lot higher, which is quite favorable to the obviously, the absolute RORE, but also the real RORE, financing costs are starting lower. That kind of feels like if you're going to be averaging 7% over the period, you should be doing a bit better this year. Is that harsh or not question? Secondly, on the balance sheet. So you people are generally pretty enthusiastic about the reopeners, but then obviously, the counterfactual is then kind of how do the companies finance additional spending. Could you remind us the gearing at the Water Company you said was 60% at the half year? It's obviously a bit higher at the group level. Like what do you see your thresholds at either in terms of net debt to RAB, where you'd want to be over the period or any other metric if there's a better metric to use, please? And then finally, Keith Haslett, I think the expectation is he'll join as CEO sometime next year. Is there any way you could kind of narrow that down for us? Is it kind of late next year, mid next year, early next year? Susan Davy: Great. Good questions, James. So thank you very much for those. Look, perhaps if I start with the return on regulated equity, we set a target for the whole payout period. We're just 6 months into the first year of that payout period. And we are saying that we would have a supportive position for '25, '26 that delivers that. And in our presentation, we talked about, yes, financing supporting that. We are seeing capital investment efficiencies coming through on our PCDs. And we have had a good position overall for ODIs to wastewater, but we have had a couple of incidents on water that has meant overall will be net penalty for ODIs for this year. But in the round, we're comfortable to pull that 7%. So I think that's a good performance positioning. And obviously, we've got the whole payout period to deliver. I think, obviously, yes, you're right, it's real returns on regulated gearing. Obviously, if you look at it on an actual regulated return based on actual equity, we're returning something closer to 11%, 12%. So I think we're in a good place in terms of our performance. And in terms of the balance sheet, I mean, obviously, we mentioned earlier with Sarah's question, what is it we see on the horizon? And yes, there may be investments to come in this period. Obviously, reopeners and interim determinations give you revenue in the period, but that would help with any balance sheet and gearing aspects. But I'll let Laura just talk about where we're positioned and how strong the balance sheet is and what that looks like going forward. Laura Flowerdew: Yes. I mean, obviously, we did the rights issue in order to strengthen the balance sheet for the plan that came through from the final determination. At that point, you'll recall that we talked about having a gearing policy that was between 55% to 65% with an expectation of being 60% to 65% in the period based on our plan. Any reopeners, we will obviously need to look at the size and scale of that, but our ambition would be to remain within that approach and policy. And there's some question obviously about timing, the revenue and some of those aspects that we've worked through to make sure that our balance sheet supported the investment that may need to happen. Susan Davy: Great. Thank you, Laura. And in terms of Keith, so obviously, I announced my intention to retire in July, and it's always been in my mind to make sure we have a smooth and orderly transition. And as you can see from today's results, it's very much business as usual. But the brilliant news is we have got Keith. He is coming in. He's got great industry experience and everyone is really looking forward to his arrival, and he's been meeting people and getting up to speed, which is great. Obviously, in the meantime, I'll continue to support the business and my colleagues and the in-train transition plan. And I've got a brilliant team and everyone is focused on the job at hand. There's nothing new to announce today in terms of timings. But as you can see from the results, it's very much business as usual, and we're all excited about Keith's arrival. Operator: Our next question comes from Mark Freshney of UBS. Mark Freshney: If I could ask Susan 3 questions. So Keith clearly starts in 2026. I'm sure there will be a very, very extensive handover. What 3 pieces of advice or 3 priorities would you give Keith when you hand the business over to him? Susan Davy: Okay. Mark, really good question. Now I did say with Keith, he is well experienced in this sector. So he's coming in with vast experience. He's going to hit the ground running. So he knows this sector inside and out. So of course, I'm there and on hand to talk to him about all things. I know then he will grow to love it as much as I do, I am sure. In terms of advice, actually, I think I only need to take a couple of seconds to say this. If you look at our priorities and what we're focused on, there are customers' priorities. And those priorities are really clear in our presentation. You ask customers to make sure that we are reflecting what they ask us to do every single day and walking in customer shoes is absolutely that. So he knows as he works in the sector. So definitely make sure you're focusing on customers' priorities, and that's what we've done with our plans. And our customers are really seeing the benefits from that. So you'll see one of our priorities -- one of our 4 priorities is absolutely storm overflows and pollutions and tackling those, and we're on it, and you saw that in the video today. And secondly, I know he is brilliant, got fantastic colleagues in the business, and he will see that in place when it comes. So supporting them to do what they do every day is the only thing you can ask somebody to do. So that's probably it actually, Mark. Operator: Our next question comes from Laura Marconi of Barclays. Laura Marconi: Two questions from my side, please. Do you have an update for us on the EA fines? I think last time you said that you're still talking to the EA. How is that going? And can we expect clarity still within this financial year? Or is that too ambitious? And then secondly, on the government white paper that I believe should come out by the end of this year, what will your main focus points be? And what would be the most positive thing that could come out of that for you? Susan Davy: A thank you for your questions. So in terms of the environment agency and the full flow's treatment investigation, we don't have any more news to give you today. Obviously, that investigation continues. I wish I could be clear about the time scales, but I can't. But we are obviously liaising with them and working with them openly and making sure they've got all the information that they need to assess that position. So obviously, that will come out in due course. Now in terms of the white paper and what we expect, I mean, obviously, we all saw the Cunliffe review and we saw the [indiscernible] recommendations. And we are fully supportive of the sector reform agenda. And we want to make sure that our voice is heard, and I've got Sarah Heald, who is our Strategy and Corporate Affairs Director here with us today, and I'm sure she'll want to comment on this. But we really want to make sure that in the white paper, we see all the things that we saw coming out of the Cunliffe review. We want to make sure that whatever is in that white paper, it's a package. And there's a really fair deal for investors and having sat around the table with the new Strategy Director for water, and she absolutely recognizes that and recognizes that providing fair stable returns on investment is absolutely key. As you know, we're looking at how we are structuring the business in terms of water and wastewater plans. And again, that's in line with the Cunliffe review, we'll probably see some more of that coming through in the white paper. But I'll get Sarah to comment because I know she's looking at all things [indiscernible] and liaising with them, if not on a daily basis, certainly on a weekly basis. So Sarah, would you like to comment on this one? Sarah Heald: Sure. Thanks, Susan. Hi Laura. So as Susan said, we're very engaged in the process as are our industry peers. One of the things that we've been really heartened by is the way that we've been involved in the process of the Cunliffe review all the way through to the final report. And that, that has been taken through into the transition planning with DEFRA. We're then really looking to co-create the transition plan and get industry views on how things can work in practice. So we're very positive on that. I think it's really important that the white paper does come out this year. It's been delayed a little bit, but it would be good to see it come out in December. Obviously, we know it's been decoupled from the transition plan just to give DEFRA a little bit more time on that. And we think that's a positive thing because then it's important that they work through all the industry feedback and that they get to the right place and that the transition plan when it comes out, gives real clarity for everybody, particularly for customers and for investors and for us as companies so we can plan and move forward into the next phase. As Susan said, we're really keen to see the government accept the independent water report as a package. So there are 88 recommendations. We might not take all of them. We've already seen the government has been very clear about the 5, but they definitely are taking forward. Keen to see the establishment of the single regulator as soon as possible. We're very keen on the establishment of the regional element, we think for us in the Southwest, that could be a really positive thing. Obviously, we've got over the nation's bathing water which has got very unique quality and geography and the tourist population that comes down in the summer, and it will be good to be able to move forward into a regulatory framework that allows us to take more account and for the regulator to understand the specificities of the business better. We're quite keen on the idea of moving to the separate water and wastewater plans, the 9 plans down to 2. We think that will be very positive. And then the 2 areas that we're really focused on, I think, are, as I said, supervisory regime, we'd like to make sure that, that comes through and it's forward-looking, it's proactive, and it's also manageable and transparent. And there's the right balance between the whole firm view and the ability to have some constrained discretion, but also that there's clear benchmarking that's retained and you can -- across thematics like financial resilience, et cetera. And then system planning, we're very keen to see the role of government set out in clear terms that the government is going to set the trade-offs in the long-term strategy and targets and that there'll be consultation with the involved body. And then on the regional planner, we think that's important that it leaves on some enhancement planning where there's cross-sector coordination that's needed. So things like flooding and storm overflow programs where we've got issues with surface water that could be really positive. And then obviously, we want to make sure that we retain responsibility for all the areas that are quite clearly the Water Company. So drinking water quality schemes, et cetera. But as I say, coming back to the key point, which we're really heartened with the way that DEFRA has taken forward the co-creation that we're involved, that we're in the room, we're giving our views and as is the rest of the industry, and that feels like a very positive collaborative process. And we're just keen to make sure that they keep up the pace and that we stick to the time line and we get the clarity on the single regulator as soon as possible. Operator: [Operator Instructions] Our next question comes from Jenny Ping of Citigroup. Jenny Ping: Three questions from me, please. Firstly, just on -- going back to the EA 4-star rating. Obviously, that's the commitment that you have put forward to receive the QAA. And it seems that you're still convinced 4 star is what you need to achieve in order to get that QAA award. But when I speak to Ofwat, it does seem to be a bit more blurry given the change of the methodology to a 5-star rating. So what sort of conversation are you having with Ofwat and whoever the super regulator may be on how to translate that 4-star into 5 star? So that's the first question. And then secondly, just going back to James' question in terms of Keith and the start date. Can you tell us why we don't have a further clarity at this stage because we've seen from one of your peers with handover being relatively short. And I know, Susan, you want to get full involvement in the handover, but I think also having that clarity as to when the new management starts is -- would be helpful. So any comments there? And then just related to that, I guess, is with regards to the sale of -- or potential sale of Pennon Power. Is this something that Keith will have to decide when he starts? Or is this something that you're sort of already in train starting the sales process and he just has to give the final nod as to when he starts. So just some commentary around that would be helpful. Susan Davy: Yes. Great questions. Jenny. In terms of EA 4-star rating, look, obviously, the methodology has just been finalized by the EA, and we're all working through what that means in terms of its assessment, which under the new framework starts in 2026. So obviously, we're working through those aspects. Now in terms of the QAA and that decision point, yes, we'll obviously have to have the conversation with Ofwat just to make sure we're all aligned on what this is. We signed up to a 4-star rating and the methodology has slightly changed. But let's be really clear, we're 4 star or 5 star, we're in a really good place. So obviously, we'll have those conversations with Ofwat. But as I said earlier, we've got all opportunity to get there with that metric on that trajectory to 2028. I think in terms of Keith and the start date, look, obviously, Keith coming in from the sector has got lots and lots of experience, but it is an external appointment. So there is obviously a process to walk through with that. We don't have an update today in terms of timing. But obviously, when we've got that, we will let the market know when that will be. And obviously, as the baton will be passed over to Keith, I'll continue to support the business and the in-train transition plan. So I've got a brilliant exec team and everyone is focused on the job in hand, which is what you can see from the results today. In terms of Pennon Power, obviously, we have been building out the 4 sites that we have got in terms of that portfolio. And as I said before, we want to make sure that we have built out those sites and the timing for that with the last site in Buckingham is 2026, '27 financial year. And we said we would obviously get those built out and they will be valuable assets in this market. As a result, the returns are good and in line with what we said in the business cases. And obviously, in terms of that capital allocation, the returns are comparably higher than the regulated business for what we are investing in as well as derisking our power requirements within the group. But you're right, Keith will come in, and it will be -- given the timing of the last investment is '26, '27, he will obviously be looking at the strategy for Pennon Power on an ongoing basis. Jenny Ping: Okay. So there's no plans to sell them individually. It's going to be a portfolio based once they're all reaching -- have reached COD. Susan Davy: Well, to be fair, Jenny, that's what I've always said that we would get these assets built out. And you can see from the timetable, '26, '27 is when that occurs. And obviously, Keith will come in and with the rest of the Board make an assessment around that. Operator: At this time, we currently have no further questions. So I'll hand back to Susan Davy for any further remarks. Susan Davy: Great. Well, thank you, everyone, for joining this morning, and thank you for your questions. As I said, it's a fantastic time to be in the water sector, and I have a fantastic time in it. I've always said I work in water because it's too important not to. And I know my brilliant colleagues across the business all feel the same, and I'm immensely proud of what they do day in, day out. So looking forward to keep arriving, looking forward to us continuing to deliver and you see a good set of results for this H1 2025, '26. So thank you for this morning, and that's it from us.
Susan Davy: Good morning, everyone. I'm Susan Davy, CEO of Pennon Group. I'm pleased to share the group's half year results speaking to you from Dawlish in Devon, where we are making progress on our investment to reduce the use of storm overflow. I'm here today to see firsthand what it means for customers and communities and say thank you to my brilliant team here from South West Water and our Amplify supply chain delivery partners. If you're one of the millions of visitors that ever caught the train down to Cornwall, you'll recognize Dawlish. The track runs directly parallel along the sea line and the cliff, giving you a fantastic view for the visible coastline. You might also remember the rail track here being washed into the sea, cutting off Cornwall from rest of UK, a result of climate change and the changing weather patterns. Those weather patterns have also meant that the wastewater network here in Dawlish is under pressure as more homes are being built and more visitors arrive to this fantastic town with a population of 12,000, more than doubling in the summer months. In response, we're doing 3 things. First, engaging with the community to explain the work we need to do here on a time scale; second, applying a tailor-made solution for Dawlish with a nature-first approach by removing as much flow from the system as we can. And third, installing 2 new underground tanks to store stormwater before it's been treated. When combined with existing storage, it will hold up to 4.5 million liters of stormwater, the equivalent of 2 Olympics sized swimming pools, which combined will reduce the use of storm overflows by nearly 70%. This investment is just one of our wider multibillion pound regional program to reduce storm overflows and enhance bathing water quality all year around. There will be hundreds of similar projects going on in towns and villages like Dawlish right across the Southwest. Of course, undertaking this work needs the support of local community, and we're here to do that. From supporting the annual Carnival to Dawlish Cycle Grand Prix, we're here on the ground working together with the council and community groups playing our part. As Dawlish shows, what we do matters and what better place to talk about our half year results for 2025, '26 and here in the heart of the community. I am pleased to report that we've had a robust start to the U.K. regulatory period. We've had a strong return to profitability and notable operational successes and a step change in [ waste ] water performance. Having had record investment into our asset base over the last 2 years of K7 with early mobilization of our supply chain through Amplifying, the momentum we started then has been maintained at the start of K8, delivering on projects like the one here in Dawlish. As the only water company to have received an outstanding rating for our business plans for the third consecutive time, our focus is to make sure we deliver on our agreed plans for communities. Of course, alongside that, following the recommendation of the Cunliffe review, we are fully engaged in how the sector is evolving for the future. We are confident that the new regulatory framework will work for customers, for water companies and investors. In summary, the group is well positioned as the sector evolves. As anticipated, we've seen a good set of financial results for 2025, '26 in the first with a step change in EBITDA with operating profit more than doubling. Revenues have increased period-on-period as the business grows organically, but we have rightsized the cost base and continue to drive efficiencies, which meant wholesale water business operating costs are only rising fully in line with inflation. We're on track to deliver our targeted return on regulated equity for water group at 7% on a real notional water share basis with our effective efficient financing underpinning the performance in 2025, '26. Supporting our investment program is a robust funding position, having raised GBP 500 million in the first half of this year. Earnings per share more than covers the dividend share supporting the equity providers of finance this year. With a strong balance sheet and good liquidity and with the Water Group gearing at circa 60%, we maintain the agility to deliver on our strategy in U.K. water well positioned for a sustainable future. We've seen operational successes in the first half of the year across the 4 strategic priorities for our customers. The first priority always is safe, clean drinking water. And in K7, we invested to bolster water resources with Devon and Cornwall, repurposing disused quarries and mines as many reservoirs, new treatment capacity and building more resilience into the network as we target network upgrades where it was needed most. In September, the Met office confirmed that the summer of 2025 was the hottest on record with the 5 warmer summers all occurring since 2000 and following the hottest spring in over 50 years. Thanks to our investments, innovative approaches, improved monitoring, network rezoning, and operational focus right across the group, we have not needed to impose water restrictions for our customers across the 5 geographies we serve. The changing weather fronts have, however, tested our network, increasing the number of failures. And whilst the customer impacts have been mitigated on 70% of these, it has been challenging for the operational team. Despite the 15% increase in activity, we've held leakage at the '24, '25 levels and are targeting improvements in the second half of the year. If as a customer you need supply, you realize that the average GBP 1.85 a day you pay for your water and wastewater services is worth so much more in terms of value. We rely on water for everything from the morning cup of tea to the manufacturing process that makes [indiscernible], to the transport that takes you to the work and still on everything in between. We are therefore focused on repairing and upgrading our networks with our network investment plans on track in 2025, '26. We're never complacent about water quality as Sutton and East Surrey remains the top performer in the industry and South West Water is upper quartile across the water and sewage companies. Bristol is above average, and we are confident that we can do even more as we share best practice across the group. We continue to roll out a successful quality-first culture and training program in Bristol with plans to replicate in Sutton and East Surrey. Our second priority, tackling storm overflows and pollutions. Whilst we have had a hotter weather front in the first half of the year to '25, '26 across all the regions we serve, in Devon and Cornwall, the rainfall has been in line with long-term averages. We're therefore pleased our operational investment interventions are delivering a step change in wastewater performance. This improved position has meant we are targeting net neutral for wastewater ODIs for '25, '26. And our pollution incident reduction plan with its 5 key pillars has been a key focus of our operational teams, achieving a 50% reduction in Category 1-3 pollutions year-to-date, underpinned by a 75% reduction in repeat pollutions. Using the EA's EPA metric of total pollution incident per kilometer of main, we're on track to have improved our position for 2025 by 2/3. We've maintained our sector-leading internal sewer flooding performance, having reduced incidents by over 7% since 2020 with 12,000 smart network sensors helping to detect potential issues earlier, shifting from reactive to preventative interventions. At the same time, storm overflow spills have reduced by 45% so far this calendar year. As part of our 15-year investment program and operational activities, we have avoided around about 6,000 spills in the first half of '25, '26, bringing a total of 20,000 spills avoided over the last 18 months. With spill durations down by 1/4, we are on track to protect our 100% bathing water quality for a fifth consecutive year, whilst working to improve the 6 newly designated bathing water in 2024. Our third priority is driving environmental gains, how we work with the natural environment and lessen any impact we have. As you can see here in Dawlish, we rely on the natural environment for all that we do, and we have always focused on a priority that improves our position. This is not new for us. In fact, we've just celebrated our 15th year of upstream thinking and are on track for our biodiversity gains in 2025, '26, one of the new common incentives in place for K8 as pioneers in the sector and enhancing biodiversity, we have always held the fundamental belief that the role of water companies needed to be more than just simply treating water to achieve world's quality standards. We also have a responsibilities to focus on protecting and improving its source. When [ raw ] water is clean, with less sediment, nutrients undepleted, rivers get healthier, biodiversity thrives and environment is protected. By working through long established partnerships to improve thousands of hectares of catchments to increase water retention and water quality in the natural environment, we are now working in over 95% of our catchments. In the first half of this year, we have restored 300 hectares involving 15 stakeholders, as well as contributing of a 350 volunteer hours and hosting 50 stakeholder events. As a significant user of electricity across our assets, derisking the energy requirements in the water business and building a portfolio that can both power Pennon and produce returns higher than the regulated water business with capital allocated is part of a balanced plan to deliver on our net zero targets. We've continued to make good progress on our 4 sites with 1 now operational and 1 in final commissioning, and we are on track to deliver 40% of the group's energy requirements by 2030 with internal rate of return expected to be between 11% and 15%. Our GBP 20 million investment in CREWW continues to lead the way with our state-of-the-art lab, researching some of the most important challenges facing the sector and society from microplastics in sewage sludge to future fibers and plastics in clothes. And as we look to support the removal of 8,000 lead pipes in 2025, '26, supporting the commitment to be lead-free by 2050. We have continued to support our customers. Whilst spills have had to increase across the sector and for us, customers pay on average GBP 1.85 a day, we recognize that for some, GBP 1.85 is too much. Our successful water demand customer initiatives, smart metering, financial incentives, customer campaigns and efficiency support continue to help customers to use less and save more. As a result, we've seen a 20% increase in the number of customers on one or more of our support packages as we work harder than ever before to support customers who need it most. And as part of the GBP 200 million package in place for K8, we've also launched our GBP 5 million Better Futures Fund, working closely with community groups across physical activity, education, health, well-being and positive environmental impact as well as those who work to alleviate hardship. In the first 6 months, we supported over 55,000 customers with that set to double over the year. Responsible businesses also need to do more than just deliver services. Today, vulnerability can mean many things, and we are focused on increasing the number of customers in our priority services register with 1 in 7 of our households now registered and for which we have been recognized as a leader. Some of my most enjoyable days are when I get the opportunity to meet customers and talk about what my brilliant colleagues do day to day. And this year, we've held nearly 300 drop-in sessions as well as our WaterShare customer AGM in Bournemouth. WaterShare+ continues to be the sector's most innovative customer engagement scheme, giving customers both a stake in the business and a say in their water company. We continue to invest in our new billing system and customer platforms using AI to improve the customer and contact experience. Growing the RCV by over 1/3 over K8 ultimately means that everyone will benefit from the investments we're making as we drive efficiency and innovative solutions from the building of new reservoirs to the fixing of storm overflows as we power our net zero ambitions and deliver improved services to customers. Our capital delivery supply chain partnership, Amplify has a strong pipeline of programs. Having ramped up expenditure during K7, we have made a fast start to hit the ground running at the required K8 run rate with over 60% of the K8 price control delivery program in progress. At the same time, efficiencies are being secured as projects progress from design into delivery. As someone with a well-furnished copy of the prospectus of South West Water from the time of privatization and as a group who has grown organically in the sector, we have a long history of responding positively. We are engaged in the transition planning and support the direction for customers, the environment and investors. And with that, I'll hand over to Laura to take you through the financial performance in more detail. Laura Flowerdew: Thank you, Susan. Let me provide some more detail on our financial performance in the first half of the year. As Susan has talked about, we've seen a strong return to profitability, benefiting from the commencement of the K8 regulatory period and the inflection point that, that represents. As a result, we've seen a step change in profitability with both underlying and statutory operating profit more than doubling year-on-year, resulting in a profit before tax, again, on both a statutory and an underlying basis, moving from a loss in the prior year to a profit in the current year of GBP 65.9 million. This means our adjusted earnings per share has increased to 14p from a loss in the prior year of 5.5p, more than covering our dividend per share of 9.26p per share. Our interim dividend reflects our dividend policy of increasing in line with CPIH of 4.1% in the first half of the year. Delivering on our K8 commitments has been the focus of our teams across the business, and we've made a strong start with GBP 305 million of CapEx in the first half compared with GBP 332 million in H1 2024-'25, a strong start to our program, and we're driving efficiency across that program whilst being on track to deliver all our year 1 price control deliverables. This capital investment is supported by our strong and robust balance sheet with gearing at 60% following the rights issue and given RCV growth of around 8% projected for this year. This places us in a strong position to deliver the around 34% growth in the Water Group RCV across the 5 years as we continue to invest in our assets and to deliver on our customer priorities. Turning to the income statement for the half year. You will see revenue increased by 25% across the group and by 26% in the regulated water business as a result of the increase in allowed revenues for K8. I will cover that in more detail in a moment. With a strong focus on costs and benefiting from our efficiency in integration programs, costs in the Water Group have increased by 6%, including one-off impacts of around GBP 9 million. We've worked hard to mitigate underlying inflationary and operational cost pressures through our ongoing focus on efficiency and driving the benefits of the integration of SES into the group as well as benefiting from lower commodity prices for power through our hedging strategy. This has meant that EBITDA and operating profit have shown strong improvement year-on-year, whilst financing costs have benefited from our diversified and efficient approach to financing with lower interest and inflation rates mitigating the impact on interest of the higher net debt year-on-year. These movements mean we've seen underlying and statutory profit before tax move to GBP 65.9 million from an underlying loss of GBP 18.6 million and a statutory loss of GBP 38.8 million in the prior year. We've incurred no non-underlying charges in the current period. Consequently, adjusted basic earnings per share have increased to 14p per share. We've declared a dividend per share of 9.26p, increasing in line with 4% CPIH to September and rebased as a result of the rights issue in January 2025. Our revenues have increased by 25% year-on-year to GBP 658 million as our financial performance benefits from the commencement of our K8 plans. GBP 88 million of the increase reflects higher tariffs from the regulatory reset, whilst year-on-year, we see GBP 22 million increase from customer consumption, reflecting both low customer demand in '24, '25 due to the water efficiency programs ongoing at that point, whilst the current half year has seen higher-than-normal customer consumption given the hot dry periods we experienced over the summer. Despite this higher year-on-year consumption, our deferral of current year revenue through tariff mechanisms will benefit future periods. Revenue in our national water retailers has also increased by 24%, given the sector-wide tariff increases passed on to businesses through the market mechanisms. Our water retailers continue to focus on ensuring building a high-quality customer base to deliver a solid financial performance, coupled with strong customer service. EBITDA over the period has increased by around 55% to GBP 254 million in the current year from GBP 164 million on an underlying basis in the prior year. This resulted from the step-up in revenue, whilst a strong focus on cost discipline has resulted in a 6% increase in the Water Group. Our costs have been impacted by one-off items relating to the hot summer, together with GBP 4 million of customer compensation incurred in the water business in respect of the supply interruption earlier in the year. Underlying these one-off impacts, we've seen cost pressures from regulatory, supply chain and operational costs as we enter the new regulatory cycle as well as continued investment in our cloud-based customer platform. Our focus on efficiency through our operational and integration programs has stabilized the cost base as we have more than offset these additional cost pressures with GBP 19 million of savings throughout the business. Susan has already spoken about our ongoing investment program and CapEx in H1 of GBP 305 million reflected GBP 279 million of Water Group CapEx as well as GBP 25 million of ongoing investment in our renewables program through Pennon Power. We have also focused on ensuring we deliver on the price control deliverables and see some strong efficiencies being identified and delivered throughout our enhancement program. We continue to fund our capital investment program through our diversified debt portfolio with strong outperformance against the regulatory allowances being delivered both through our ongoing financing costs and new issuances. We've raised over GBP 500 million in new debt during the first 6 months of the year. Our GBP 300 million bond issued in September 2025 under our EMTN program provided 109 basis points outperformance against the iBoxx, ensuring ongoing benefits through our financing cost efficiencies. Overall, our 5.6% effective interest rate for our Water Group, 5.5% for South West Water compared with allowed returns on a nominal basis using H1 CPIH, providing over 160 basis points of outperformance in H1. K8 is a transformative period for Pennon with investment focused on the delivery of the priorities of our customers and our stakeholders, whilst the growth this investment brings, coupled with strong returns on regulatory equity, will also ensure delivery for our shareholders. We remain focused on delivering financial performance in line with market expectations for the full year, with revenue anticipated to reflect normalized demand over the winter period, whilst our continued focus on cost management will help mitigate the impact of inflationary pressures. Our EBITDA is, therefore, anticipated to increase by around 60% year-on-year, whilst our profit will continue to benefit from our efficient financing costs despite the ongoing impact of our capital program. We anticipate that strong efficiencies being delivered through our capital program will offset the impact of ODI penalties in the water business, and we anticipate that ODIs will be net neutral in our wastewater business. Strong financing outperformance in the current year will support delivery of our 7% RORE target for K8. Susan, back to you. Susan Davy: In summary, a robust start to K8. We're on track financially with a strong return to profitability with operational improvements in train. We have had notable successes and have delivered a step change in wastewater and environmental performance, [ halving ] pollutions and reducing storm overflow spills. The momentum we started in K7 with the early mobilization of our supply chain Amplify is being maintained in the start of K8. We are confident that the new regulatory framework will work for customers, water companies and investors. Finally, everyone who works at Pennon is fiercely proud of our heritage in the water sector, and I'm extremely proud of our brilliant team. I'd like to thank them for everything they have done and will continue to do. Thank you. Operator: Thank you for your patience. A Q&A session will begin shortly. [Operator Instructions] I'll now hand it over to Susan Davy for some introductory remarks. Please go ahead. Susan Davy: Thanks, Alex, and good morning, everybody, and welcome this morning to the Pennon Half Year 2025-'26 Results Q&A. So I hope you enjoyed the video from Dawlish, where we're looking at the investments we're making to alleviate and reduce the storm overflows. To recap from the presentation, we have had a robust start to '25, '26 and the new K8 regulatory delivery period. We've had a strong return to profitability and some notable operational successes, including a step change in wastewater performance. The momentum of record investment over the last 2 years through early mobilization of our supply chain has continued into H1 '25, '26. And we've got a strong balance sheet and good liquidity. So in short, we are well positioned for the future and well done to all my brilliant colleagues for the performance this half year. So with that, I'm going to hand back to you, Alex, and over to everyone else for taking your questions. Operator: [Operator Instructions] Our first question for today comes from Sarah Lester of Morgan Stanley. Sarah Lester: So a couple of questions, please, from me on reopeners. So firstly, just wondering how much Pennon is planning to lean in to this reopener opportunity? I guess the ultimate question I'm asking is, do you anticipate the RCV growth could meaningfully surpass the current guidance to 2030 once we consider those opportunities? And then just quickly, curious what your understanding is at this stage of what the assessment process will look like for winning any reopener spending? Susan Davy: Okay. Sarah, thank you for that question. So in terms of increased opportunity for K8, obviously, we've got a program to deliver that we've got in our enhanced business plan. But in terms of what else and what's emerging, let's be clear with the new cost change process that came as part of the determination, and if that kicks in from Feb '26. We've had previous form in doing other investments through a price review period. So we had pre-recovery and accelerated investment, which we did in K7. And of course, there are new mechanisms for aspects like [ cyber, PFAS ] and changes to planning. Now if you look at all regions, and we've been looking at this and submitting some of our information through to DEFRA and government housing targets and housing expectations have changed since we put in our business plan. And there's something like a 40% increase projected in terms of new homes in our regions. And we've had an assessment of that. And on our wastewater assets, it's around about 10% of our wastewater work that we would have to think about in terms of supply-demand capacity and what we would do with those to support that new growth. So we can see that there is the potential to accelerate more investment on the horizon. Obviously, there are new change processes in play, and we will look to work through those. But we've been through this process before. We submitted our business plans, and we've had those fast tracks in the past. So we certainly can work around the fact that there are needs, and we will obviously work to support those for the community. Operator: Our next question comes from Julius Nickelsen of Bank of America. Julius Nickelsen: Two from me. Maybe the first one, just a clarification on the guidance. So on the net interest, you no longer mentioned the GBP 25 million to GBP 35 million. The wording has changed a little bit. Just wanted to understand if this is worse or better. And then on the EPA rating, just wondering now with like the changes that are coming in a few years and you're getting 2 star again. Are you still confident to reach the 4-star rating that is needed for your outstanding business plan? Susan Davy: Both great questions. So in terms of guidance for net interest, I'll let Laura that one up. But you'll have seen in our presentation in terms of our efficient financing position and our outperformance for '25, '26 with our target 7% RORE being supported by financing outperformance, and I'll let Laura talk about the guidance. Laura Flowerdew: Yes. So the guidance, we're probably just a little bit lower than we were saying previously, but we're in a good place. As you can see, we have a strong outcome in terms of our financing position and continue to benefit from our diversified portfolio such that we are anticipating efficient financing costs over the full year. Susan Davy: Okay. Thanks, Laura. And then, your second question was around the EA environmental performance assessment. So let me reflect on this. The new EPA framework methodology has been issued. So we know what that is. And having studied that in detail, as you might expect that we would, we think there is a really good opportunity to rerate over the period to 2028, which is obviously when the assessment is taken for our enhanced business plan cost of capital uplift. And why do we think there's a good opportunity to rerate? Well, 2 aspects really. So if you look at the new metrics that are in the framework methodology, we're in a good position. One of those is around stormwater flow operability. And I think if you look at the stats for last year, then we were second in the sector for that one in terms of our position. Other aspects around climate conditions and water resources, [indiscernible] are all in a good place. And indeed, with some of the measurements for flow compliance post the FFT review, we've obviously ramped up our position on that. So I feel with the new metrics, we're in a very good place. And the Achilles heel for us, which has been the situation since the EPA was issued and used as a methodology to prevent that, we're also seeing total pollution incident numbers, and that is normalized using kilometerage. Now we've been working with the regulator, and we've been looking at our calculations for that and how that is positioned and that will be changing from 2025 onwards. And that will obviously impact in terms of that metric going forward. And also in terms of total pollution incidents, that will now be a shadow metric in the EPA star rating assessment until 2028. So it actually comes out of the assessment at this period and then goes back into it in 2028. So I think we're in a good position to rerate on the EPA. And we're very pleased where the methodologies have landed. And I think it will be very clear for customers and for those looking at the assessment, what the metrics are and how they're being assessed. Operator: Our next question comes from James Brand of Deutsche Bank. James Brand: Well done on the good results. Three questions from me, please. The first is on the RORE commentary. Obviously, you've reiterated the target of 7% real RORE based on regulatory gearing over the period. And you've also said you're on track for that level this year. Is that a bit -- not to complain, it's obviously a good overall target to have, but like is that a bit disappointing? Because this year, obviously, inflation is quite a lot higher, which is quite favorable to the obviously, the absolute RORE, but also the real RORE, financing costs are starting lower. That kind of feels like if you're going to be averaging 7% over the period, you should be doing a bit better this year. Is that harsh or not question? Secondly, on the balance sheet. So you people are generally pretty enthusiastic about the reopeners, but then obviously, the counterfactual is then kind of how do the companies finance additional spending. Could you remind us the gearing at the Water Company you said was 60% at the half year? It's obviously a bit higher at the group level. Like what do you see your thresholds at either in terms of net debt to RAB, where you'd want to be over the period or any other metric if there's a better metric to use, please? And then finally, Keith Haslett, I think the expectation is he'll join as CEO sometime next year. Is there any way you could kind of narrow that down for us? Is it kind of late next year, mid next year, early next year? Susan Davy: Great. Good questions, James. So thank you very much for those. Look, perhaps if I start with the return on regulated equity, we set a target for the whole payout period. We're just 6 months into the first year of that payout period. And we are saying that we would have a supportive position for '25, '26 that delivers that. And in our presentation, we talked about, yes, financing supporting that. We are seeing capital investment efficiencies coming through on our PCDs. And we have had a good position overall for ODIs to wastewater, but we have had a couple of incidents on water that has meant overall will be net penalty for ODIs for this year. But in the round, we're comfortable to pull that 7%. So I think that's a good performance positioning. And obviously, we've got the whole payout period to deliver. I think, obviously, yes, you're right, it's real returns on regulated gearing. Obviously, if you look at it on an actual regulated return based on actual equity, we're returning something closer to 11%, 12%. So I think we're in a good place in terms of our performance. And in terms of the balance sheet, I mean, obviously, we mentioned earlier with Sarah's question, what is it we see on the horizon? And yes, there may be investments to come in this period. Obviously, reopeners and interim determinations give you revenue in the period, but that would help with any balance sheet and gearing aspects. But I'll let Laura just talk about where we're positioned and how strong the balance sheet is and what that looks like going forward. Laura Flowerdew: Yes. I mean, obviously, we did the rights issue in order to strengthen the balance sheet for the plan that came through from the final determination. At that point, you'll recall that we talked about having a gearing policy that was between 55% to 65% with an expectation of being 60% to 65% in the period based on our plan. Any reopeners, we will obviously need to look at the size and scale of that, but our ambition would be to remain within that approach and policy. And there's some question obviously about timing, the revenue and some of those aspects that we've worked through to make sure that our balance sheet supported the investment that may need to happen. Susan Davy: Great. Thank you, Laura. And in terms of Keith, so obviously, I announced my intention to retire in July, and it's always been in my mind to make sure we have a smooth and orderly transition. And as you can see from today's results, it's very much business as usual. But the brilliant news is we have got Keith. He is coming in. He's got great industry experience and everyone is really looking forward to his arrival, and he's been meeting people and getting up to speed, which is great. Obviously, in the meantime, I'll continue to support the business and my colleagues and the in-train transition plan. And I've got a brilliant team and everyone is focused on the job at hand. There's nothing new to announce today in terms of timings. But as you can see from the results, it's very much business as usual, and we're all excited about Keith's arrival. Operator: Our next question comes from Mark Freshney of UBS. Mark Freshney: If I could ask Susan 3 questions. So Keith clearly starts in 2026. I'm sure there will be a very, very extensive handover. What 3 pieces of advice or 3 priorities would you give Keith when you hand the business over to him? Susan Davy: Okay. Mark, really good question. Now I did say with Keith, he is well experienced in this sector. So he's coming in with vast experience. He's going to hit the ground running. So he knows this sector inside and out. So of course, I'm there and on hand to talk to him about all things. I know then he will grow to love it as much as I do, I am sure. In terms of advice, actually, I think I only need to take a couple of seconds to say this. If you look at our priorities and what we're focused on, there are customers' priorities. And those priorities are really clear in our presentation. You ask customers to make sure that we are reflecting what they ask us to do every single day and walking in customer shoes is absolutely that. So he knows as he works in the sector. So definitely make sure you're focusing on customers' priorities, and that's what we've done with our plans. And our customers are really seeing the benefits from that. So you'll see one of our priorities -- one of our 4 priorities is absolutely storm overflows and pollutions and tackling those, and we're on it, and you saw that in the video today. And secondly, I know he is brilliant, got fantastic colleagues in the business, and he will see that in place when it comes. So supporting them to do what they do every day is the only thing you can ask somebody to do. So that's probably it actually, Mark. Operator: Our next question comes from Laura Marconi of Barclays. Laura Marconi: Two questions from my side, please. Do you have an update for us on the EA fines? I think last time you said that you're still talking to the EA. How is that going? And can we expect clarity still within this financial year? Or is that too ambitious? And then secondly, on the government white paper that I believe should come out by the end of this year, what will your main focus points be? And what would be the most positive thing that could come out of that for you? Susan Davy: A thank you for your questions. So in terms of the environment agency and the full flow's treatment investigation, we don't have any more news to give you today. Obviously, that investigation continues. I wish I could be clear about the time scales, but I can't. But we are obviously liaising with them and working with them openly and making sure they've got all the information that they need to assess that position. So obviously, that will come out in due course. Now in terms of the white paper and what we expect, I mean, obviously, we all saw the Cunliffe review and we saw the [indiscernible] recommendations. And we are fully supportive of the sector reform agenda. And we want to make sure that our voice is heard, and I've got Sarah Heald, who is our Strategy and Corporate Affairs Director here with us today, and I'm sure she'll want to comment on this. But we really want to make sure that in the white paper, we see all the things that we saw coming out of the Cunliffe review. We want to make sure that whatever is in that white paper, it's a package. And there's a really fair deal for investors and having sat around the table with the new Strategy Director for water, and she absolutely recognizes that and recognizes that providing fair stable returns on investment is absolutely key. As you know, we're looking at how we are structuring the business in terms of water and wastewater plans. And again, that's in line with the Cunliffe review, we'll probably see some more of that coming through in the white paper. But I'll get Sarah to comment because I know she's looking at all things [indiscernible] and liaising with them, if not on a daily basis, certainly on a weekly basis. So Sarah, would you like to comment on this one? Sarah Heald: Sure. Thanks, Susan. Hi Laura. So as Susan said, we're very engaged in the process as are our industry peers. One of the things that we've been really heartened by is the way that we've been involved in the process of the Cunliffe review all the way through to the final report. And that, that has been taken through into the transition planning with DEFRA. We're then really looking to co-create the transition plan and get industry views on how things can work in practice. So we're very positive on that. I think it's really important that the white paper does come out this year. It's been delayed a little bit, but it would be good to see it come out in December. Obviously, we know it's been decoupled from the transition plan just to give DEFRA a little bit more time on that. And we think that's a positive thing because then it's important that they work through all the industry feedback and that they get to the right place and that the transition plan when it comes out, gives real clarity for everybody, particularly for customers and for investors and for us as companies so we can plan and move forward into the next phase. As Susan said, we're really keen to see the government accept the independent water report as a package. So there are 88 recommendations. We might not take all of them. We've already seen the government has been very clear about the 5, but they definitely are taking forward. Keen to see the establishment of the single regulator as soon as possible. We're very keen on the establishment of the regional element, we think for us in the Southwest, that could be a really positive thing. Obviously, we've got over the nation's bathing water which has got very unique quality and geography and the tourist population that comes down in the summer, and it will be good to be able to move forward into a regulatory framework that allows us to take more account and for the regulator to understand the specificities of the business better. We're quite keen on the idea of moving to the separate water and wastewater plans, the 9 plans down to 2. We think that will be very positive. And then the 2 areas that we're really focused on, I think, are, as I said, supervisory regime, we'd like to make sure that, that comes through and it's forward-looking, it's proactive, and it's also manageable and transparent. And there's the right balance between the whole firm view and the ability to have some constrained discretion, but also that there's clear benchmarking that's retained and you can -- across thematics like financial resilience, et cetera. And then system planning, we're very keen to see the role of government set out in clear terms that the government is going to set the trade-offs in the long-term strategy and targets and that there'll be consultation with the involved body. And then on the regional planner, we think that's important that it leaves on some enhancement planning where there's cross-sector coordination that's needed. So things like flooding and storm overflow programs where we've got issues with surface water that could be really positive. And then obviously, we want to make sure that we retain responsibility for all the areas that are quite clearly the Water Company. So drinking water quality schemes, et cetera. But as I say, coming back to the key point, which we're really heartened with the way that DEFRA has taken forward the co-creation that we're involved, that we're in the room, we're giving our views and as is the rest of the industry, and that feels like a very positive collaborative process. And we're just keen to make sure that they keep up the pace and that we stick to the time line and we get the clarity on the single regulator as soon as possible. Operator: [Operator Instructions] Our next question comes from Jenny Ping of Citigroup. Jenny Ping: Three questions from me, please. Firstly, just on -- going back to the EA 4-star rating. Obviously, that's the commitment that you have put forward to receive the QAA. And it seems that you're still convinced 4 star is what you need to achieve in order to get that QAA award. But when I speak to Ofwat, it does seem to be a bit more blurry given the change of the methodology to a 5-star rating. So what sort of conversation are you having with Ofwat and whoever the super regulator may be on how to translate that 4-star into 5 star? So that's the first question. And then secondly, just going back to James' question in terms of Keith and the start date. Can you tell us why we don't have a further clarity at this stage because we've seen from one of your peers with handover being relatively short. And I know, Susan, you want to get full involvement in the handover, but I think also having that clarity as to when the new management starts is -- would be helpful. So any comments there? And then just related to that, I guess, is with regards to the sale of -- or potential sale of Pennon Power. Is this something that Keith will have to decide when he starts? Or is this something that you're sort of already in train starting the sales process and he just has to give the final nod as to when he starts. So just some commentary around that would be helpful. Susan Davy: Yes. Great questions. Jenny. In terms of EA 4-star rating, look, obviously, the methodology has just been finalized by the EA, and we're all working through what that means in terms of its assessment, which under the new framework starts in 2026. So obviously, we're working through those aspects. Now in terms of the QAA and that decision point, yes, we'll obviously have to have the conversation with Ofwat just to make sure we're all aligned on what this is. We signed up to a 4-star rating and the methodology has slightly changed. But let's be really clear, we're 4 star or 5 star, we're in a really good place. So obviously, we'll have those conversations with Ofwat. But as I said earlier, we've got all opportunity to get there with that metric on that trajectory to 2028. I think in terms of Keith and the start date, look, obviously, Keith coming in from the sector has got lots and lots of experience, but it is an external appointment. So there is obviously a process to walk through with that. We don't have an update today in terms of timing. But obviously, when we've got that, we will let the market know when that will be. And obviously, as the baton will be passed over to Keith, I'll continue to support the business and the in-train transition plan. So I've got a brilliant exec team and everyone is focused on the job in hand, which is what you can see from the results today. In terms of Pennon Power, obviously, we have been building out the 4 sites that we have got in terms of that portfolio. And as I said before, we want to make sure that we have built out those sites and the timing for that with the last site in Buckingham is 2026, '27 financial year. And we said we would obviously get those built out and they will be valuable assets in this market. As a result, the returns are good and in line with what we said in the business cases. And obviously, in terms of that capital allocation, the returns are comparably higher than the regulated business for what we are investing in as well as derisking our power requirements within the group. But you're right, Keith will come in, and it will be -- given the timing of the last investment is '26, '27, he will obviously be looking at the strategy for Pennon Power on an ongoing basis. Jenny Ping: Okay. So there's no plans to sell them individually. It's going to be a portfolio based once they're all reaching -- have reached COD. Susan Davy: Well, to be fair, Jenny, that's what I've always said that we would get these assets built out. And you can see from the timetable, '26, '27 is when that occurs. And obviously, Keith will come in and with the rest of the Board make an assessment around that. Operator: At this time, we currently have no further questions. So I'll hand back to Susan Davy for any further remarks. Susan Davy: Great. Well, thank you, everyone, for joining this morning, and thank you for your questions. As I said, it's a fantastic time to be in the water sector, and I have a fantastic time in it. I've always said I work in water because it's too important not to. And I know my brilliant colleagues across the business all feel the same, and I'm immensely proud of what they do day in, day out. So looking forward to keep arriving, looking forward to us continuing to deliver and you see a good set of results for this H1 2025, '26. So thank you for this morning, and that's it from us.
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