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Operator: [Audio Gap] 2025 Results Call. [Operator Instructions] I will now hand over the call to the presenters, Ms. Namfon Aungsutornrungsi, ThaiBev's Head of Investor Relations and members of ThaiBev's senior management team. Thank you. Namfon Aungsutornrungsi: Good evening, ladies and gentlemen, and welcome to the ThaiBev's Financial Results Conference Call for the year ended 30th of September 2025. I am Namfon Aungsutornrungsi, Head of Investor Relations. For the conference call tonight, I will begin with a summary of our full year 2025 results, then we will open the line for a Q&A session with our management team. For the summary of our results, the total sales revenue of the group for the fiscal year ended 30th of September 2025 was THB 333,286 million, a decrease of 2.1% compared to the same period last year. This was due to a decrease in sales revenue across all businesses. Net profit included associated companies was THB 31,153 million, a decrease of 11.7% compared to the same period last year. This was due to a decrease in net profit of spirits business, nonalcoholic beverage business, food business and other businesses, partly offset by an increase in net profit of the beer business. The Board of Directors has proposed a total dividend of THB 15,581 million or THB 0.62 per share, representing a 61.4% payout ratio. This includes an interim dividend of THB 0.15 per share that paid in June 2024 -- sorry, in June 2025 and a proposed final dividend of THB 0.47 per share. For the highlight of our operation, in 2025, the spirits business recorded a 1.8% year-on-year decline in sales revenue to THB 118,604 million. Sales volume decreased by 3.2%, primarily due to the weaker domestic consumption, while the international business, including Myanmar delivered a strong performance. Nevertheless, an increase in brand investment and marketing activities and a foreign exchange loss led to a decrease in net profit of 7% year-on-year to THB 19,880 million. The beer business recorded a decline of 2.5% year-on-year in sales revenue to THB 123,222 million in fiscal year 2025. Even as total sales volume rose 3.1%. The performance was affected by continued challenges in Vietnam market. offset partly by a steady recovery in Thailand. However, with lower key raw material costs and improved production efficiencies, the business delivered an impressive 24.6% jump in net profit year-on-year to THB 6,503 million. The nonalcoholic beverage business recorded a 1.6% year-on-year decline in sales revenue to THB 64,774 million in 2025, mainly due to a softer domestic consumer sentiment as well as the appreciation of Thai baht against the Singapore dollar. Despite lower packaging costs and improved production efficiency, higher brand investment and marketing activities to engage consumers across our channels together with increase in income tax expenses following the expiration of tax incentive in Thailand resulted in 13.4% year-on-year decrease in net profit to THB 5,141 million. In 2025, the food business reported sales revenue of THB 21,899 million, representing a 1.7% decrease year-on-year, primarily due to softening consumer sentiment, which affected spending. Increased labor costs and marketing expenses, along with higher depreciation from the restaurant expansion contributed to a net loss of THB 128 million in the food business. In 2025, the others business comprising publishing and printing registered a decline in sales revenue of 7.4% year-on-year to THB 4,999 million. This was mainly due to the absence of one-off contributions, including title sales and nonrecurring license income. As a result, the business reported a net loss of THB 243 million. Please note that in fiscal year 2024, the others business included a share of profit from the investment in FPL of THB 2,517 million. This contribution did not recur in 2025 and onwards. Now it comes to the Q&A session, and we will now open the call to any questions on our results. Ray, please open the line for Q&A. Operator: [Operator Instructions] The first question is from Xuan Tan from Goldman Sachs. Xuan Tan: First question is on spirits. So first question is on Spirits. Can you give some color on what happened to fourth quarter revenue in terms of the magnitude of decline specifically? Sopon Racharaksa: Yes, this is from Sopon from Spirit Group. Okay. Let me again paint you the picture also from the whole year. We started with not so good in first quarter, as you know, and then we're climbing up, it was climbing up. From the second quarter and third quarter, I think these 2 quarters, I think we were doing so good, matching the expected. But then the fourth quarter that you just mentioned, actually, if you look at in Thailand because Thailand is our major market, if you look at the fourth quarter, there are several incidences that happened in Thailand as well. We look at first from actually the border conflict I think you might already well aware of this already that this happened in that area that actually in that region, our sales is -- most of the sales are in that area. So we -- our agent has had to stop from selling. And so we -- in the fourth quarter, almost the whole quarter that we have to actually be -- so taking the safety first, we try to actually avoid selling into that area because also no one's actually be living in that area. And also those Cambodian workers who were working in Thailand, they left the country and went back to Cambodia. So I must say that it's over 600,000 people that they were our customer before taking the white spirit. So that's quite the unfortunate incident for the border conflict. And then also in the -- almost to the -- during the fourth quarter, there were a flood in the North and also in the Central of Thailand. Now you might heard the news about the flood in the southern but there were flood in the North, Northern and the Central of Thailand during the fourth quarter as well. And then we were waiting also in the fourth quarter for the new policy from the Thai government looking to the new government coming and then waiting to see what will be the new policies in terms of the promoting. And they just launched that policy this quarter, which is the first quarter. So the fourth quarter, I would say there will be some stagnant and waiting period of what will be going on for this new government and also for the natural disaster coming and also the conflict between the 2 countries. So that caused us that we were almost to be good after the third quarter and then have -- unfortunately, we had to drop in the fourth quarter. So that will be the impact of what's going on in the fourth quarter. Ueychai Tantha-Obhas: Xuan Tan, this is Ueychai. Another reason because fourth quarter last year, we sell in quite a bit because expected to have a sellout during the new year. And it doesn't come out because during the time, the economy is not as good as we thought. So it's kind of loaded too much on the fourth quarter. That's why when you compare the fourth quarter last year and this year, it's not a fair comparison. The impact of this year is also what Khun Sopon mentioned on the Cambodia border and everything but it's not that great because the other big reason is we're selling quite a bit on the fourth quarter last year. Expect a good new year, but it's not come out as we expected. Xuan Tan: That's helpful. If I were to take a step back and look at spirits volume, it has been declining for the past 3 years. So do you think there is a structural issue going on? And if that's the case, does it make sense to actually scale back on brand investment and marketing activities? Sopon Racharaksa: So we still don't see any structural change in Thailand or even in our international just yet. I think it's just only that in Thailand, particularly on the economy, if you look at the economy after the COVID time a couple of years ago, and then we are out of the COVID but the economy is still not so good. The grassroots, household debt are still around. So the purchasing power of the economy, so they're still impacting the consumption of the alcoholic beverages. So I think we still see as a typical impact from the general economy at this moment, still haven't seen the structural change, particularly in the Thai market as well. Operator: Our next question is from Zheng Feng Chee from DBS. Zheng Feng Chee: Okay. So a couple of questions. The first one, maybe touch on the marketing spend, right? So it seems a bit elevated as a percentage of sales. So do you foresee that level of spending going forward? Or is this higher level of sales is because of lower sales, the percentage is a bit higher? And how should we see that marketing spend going forward to FY '26? That's the first question. And maybe a second question would be, are you able to share some color in terms of potential corporate actions and time line for corporate actions maybe in your beer business or nonalcoholic beverage business? Maybe these 2 questions. Namfon Aungsutornrungsi: When you talk about the marketing spend, you talk about across the group, right? Zheng Feng Chee: No, more for spirit segment because it's quite high as a percentage of sales. But is this more like because sales is lower or... Sopon Racharaksa: This is from Sopon from Spirit Group. Thank you for your question. On the marketing expenses and A&P, I think we are cautious about this spending. So we are trying to utilize our trading network better because that's our strength in Thailand. And we'll try to only do necessarily promotion for our products, even though that next year, we're going to launch new product more and more. But then again, we only try to do through the trade marketing networks that we have already in place in the country. So again, we are cautious about the spending, and we'll do our best to keep it as normal. Unknown Executive: This is [ Tip ], based on the competition... Namfon Aungsutornrungsi: Sorry, you want to ask anything more for the spirits side? Zheng Feng Chee: No, no. That's very helpful. Namfon Aungsutornrungsi: Okay. Then we update on the competition in the beer side. Unknown Executive: This is Teck. The competition in beer in Thailand, we say that the competitive in the beer market is always like that. And it's only between only the 2 local companies, okay? But we do not see a big or any major change in the competition in Thailand as yet. Thank you. Zheng Feng Chee: Okay. Got it. So maybe follow-up in terms of how is the beer performance doing? Because I think there is this Japan, China tension, right? Is it diverting more tourists to Thailand? Are you seeing some improved performance in beer or in the last couple of weeks? Teck Tan: In Thailand, our performance is quite impressive, and we continue the good momentum. Thank you. You can see that our profit also grew by double digit. So still continue the momentum. Ueychai Tantha-Obhas: Lester, maybe you comment on the Vietnam. Teck Tan: Yes, I guess you may have said to our call a couple of weeks ago, I think local market conditions have been tough. So while we picked up market share, if you look at total volumes and total revenue, they are down slightly, and that's an indication of the total market, not just ourselves. But because it's an open market, so competition remains very, very fierce. And we've got all the international players that we compete against. But it's good to see that Bia Saigon continues to be the #1 brand in Vietnam, and we will have to keep it there at a very adequate level of spend. Back to your question about A&P. Because it is a competitive market, we will have to do it very efficiently to make sure we remain #1 at an adequate level of spend to meet competition. Zheng Feng Chee: Okay. That's very helpful. So I mean, given that beer performance seems to be improving, is it any potential that IPO will be happening in FY '26? Or do you think that to be delayed further? Unknown Executive: This is a repeat question. I asked this question at least. And I think the answer remains the same as before. As you well know, the market conditions now are not conducive to a listing of the company. So we will continue to drive performance in the company and improve in many other ways to get it ready so that when the market is ready, we will be ready to go for IPO. Operator: Our next question is from Meghana Kande from CGS International. Meghana Kande: So I have a couple of questions. Maybe first, just following up a little bit on the spirits side. So you've launched a few new products this year already, and you just mentioned that you plan to launch a few more next year. So just wondering when do you expect to see that scale up in your volumes where you start to achieve the economies of scale given the high A&P spend that you have planned -- you've already done this year and have planned for next year? Basically, just wondering your expected time line on the scale-up for your new products. That's my first question. Second is regarding your nonalcoholic beverage side in Thailand. So I think we're seeing F&N do quite well with the Malaysia dairy side. But I think on Thailand, the domestic market was a little bit weak, as mentioned, because of the domestic consumer headwinds. But we're also simultaneously hearing some competitors gaining market share on the NAB side. So maybe can you just help explain your strategy a little bit in terms of pricing action, marketing, any product development for your NAB specifically in Thailand? And my third question is regarding your beer segment. So I'm kind of looking at your other markets, international markets like Myanmar and Cambodia. So can you give any color on the volume trends for your beer and spirits as well in Myanmar? How has your market share trended this year? And also lastly, any progress update on your Cambodia brewery? Songwit Sritham: This is Songwit, Chief of Spirits in Thailand. So regarding your question about the NPD. So let's say that for the last year, we launched 2 major brands that the first one was the new single malt that we call PRAKAAN that mainly we sell domestic and also export for some country, for example, in the Europe and Japan. And then the second brand that we launched with the new category we call the ready-to-drink or RTD. And if you asks about our expectation. I would say that for the new whiskey single malt, we still need time to get the breakeven but that's not a huge investment. But for the ready-to-drink category, we see the breakeven just only within the 1 year after the launch. So that in the last year. And then for this year, that Khun Sopon mentioned that for the series of our NPD, actually, we are cautious about our spending. So we launched the same brand mainly but we extend the SKU. For example, we launched the brown spirit in the affordable size, meaning the 200 ml and which is -- which are the current brands, meaning HongThong, Makro, Meridian and SangSom. And we see the trend that due to the phasing of the challenging of the economy. So we said the target price is more affordable. However, we still maintain our gross margin on that particular group. And then second one, we just launched a new product last week that is called HongThong ready-to-drink as well. And HongThong is the #1 brand in Thailand. So we don't need to invest any more A&P to build brand that put more of the distribution, especially for the off-trade and the modern trade channel. So I think that's all for our strategy in NPD. Sopon Racharaksa: This is Sopon again. For the Myanmar market for spirit group, I must say that last year was a very good year for us, even though we was hit by the earthquake in March. but we came out quite solid after that, the sales revenue went up more than 20%. And then the result was so good. And then the only difficulty that we are facing in the market would be internal logistics that we will not be able to go into some area. Those are conflict area in the border of Myanmar and also difficult to find a hard currency, particularly the U.S. dollars. That's we have to slowly try to think along how to get the U.S. dollar for our importation. But in general, with our market share over 70%, and we strongly introduced quite a new products in the market as well. So I'm quite confident with this market. Unknown Executive: Excuse me for NAB, actually, the information that you just mentioned about the market share, I think, is not the right information because, in fact, in the very high aggressive competition, we are able to secure and grow our market share in the core categories, and we are the only brand that grows both in drinking water and also in CSD categories, which are the biggest -- 2 biggest categories in NAB in Thailand. So we are still maintain -- secure our leadership in all core categories and also grow the volume offtake and also market share. Sopon Racharaksa: In Cambodia, all the 3 facilities being built. It's completed -- going to be completed in the next few months within the end of the year. And I think commercial productions will probably sometime toward December into January. So that's the status. Ueychai Tantha-Obhas: I think with the breweries and also the factories of NAB, we'll be able to claim that we are local production. So that will help, and we will start next year again in January. So we will come out with the product with all the packaging and everything Cambodian and made in Cambodia, which is now quite acceptable with the people in Cambodia. Meghana Kande: Got it. It's very helpful. Just 2 small follow-up questions. So one on Myanmar. Did I hear correctly that the market share was over 20%? Just want to confirm if I heard that correctly. And second, on the NAB side, thank you again for clarifying regarding the market share trend there. But just wondering on your strategy for next year in terms of marketing or pricing action for next year for NAB? Ueychai Tantha-Obhas: In Myanmar Spirit, I think we gained share. Right now, we're in the region of 72% of whiskey market increased from last year's 70%. So in NAB, I think we still have -- I mean, for Oishi still quite a small business there, but growing. But for F&N, it's doing quite well there. But I can't -- we don't have the information on market share actually for that market. Namfon Aungsutornrungsi: Meg, I think the second question you asked about the marketing spend for NAB going forward. Is it? Meghana Kande: Yes, that's right. Yes. Market share -- sorry, marketing spend and also your ASP pricing, any action on that? Namfon Aungsutornrungsi: Actually, in terms of ASP, normally, we do not disclose because this one, we're quite careful because we also don't want our competitor to know what is the plan for us. Yes. In terms of the marketing spend for NAB as you know, it's not just spirits. I think it's all across the segment that we carefully spend our marketing. We try to do it more efficiently as well as in order to make the bottom line improve in 2026. Yes. So we all control it across category. Operator: [Operator Instructions] Our next question is from Selviana Aripin from HSBC. Selviana Aripin: I have a question with regards to commentary, if you could provide some comments around raw materials input costs, particularly going into 2026. What should we expect? I know there was -- I guess we have enjoyed quite favorable raw material costs, particularly in the beer in this financial year. Should we expect that to continue into next year? Probably if you could help us with that comment for beer as well as spirits division, that would be helpful as well packaging in general. Ueychai Tantha-Obhas: Selviana, thanks for the questions. I think in terms of all that is quite favorable next year. Start with molasses, right now, the current trading is about 30% to 35% lower than last year. They start the trading already. In terms of malt, Dr. Pisanu will comment later on. But on NAB, there are 2 big cost of goods ingredients, which is packaging. We bought a resin, which is main for the packaging at about 60% price of last year, which means that we will have a very favorable cost in terms of resin. And this year, in Thailand, the sugar business -- the sugar is very good. That's why it's quite a lot of product sugar produced. So we expect the sugar price to come down. So all these 3 category, we believe to have a very favorable sort of cost of good, okay? That's the overall. In terms of malt, Dr. Pisanu, will give you more color. Pisanu Vichiensanth: I think I can give you the short answer. The price of the malt declined heavily last year. And for next year, the price of the malt is still declining another 2 digits. So you can be rest assured that the cost of goods sold is going to be good. And the other part of the raw material is about the broken rice. The price come down more than 20%, another 20% further down from last year. So Khun Ueychai, kindly explained it to you. The rest, aluminum, carton, corrugated paper, labels are coming down in price. And I think the cost of goods sold is going to be good for next year. I mean, overall, for -- in the future, the market is very challenged for us, but we are lucky to have a very favorable cost of goods. So we should be able to really sort of protect our profitability this coming year. Operator: Our next question is from Hussaini Saifee from Maybank. Hussaini Saifee: Just a couple of questions. First is that maybe if you can help me with your expectations for broad level expectations on the growth side and margins outlook for various businesses in FY '26? And the second question is also at the macro level, how does the -- how do you see the impact of high and regional macro environment on the demand outlook? And what steps are being taken to mitigate the overall consumer softness? Namfon Aungsutornrungsi: Saifee, can I recap your question? The first one, you asked about the growth outlook and the margin improvement in 2026. Is it right? Hussaini Saifee: Yes, that's correct. Namfon Aungsutornrungsi: Yes. For that first question, I think we cannot give you in terms of the forward-looking for -- in terms of the growth as well as the margin for next year. Normally, we don't give the forward-looking. Sorry about that. For the second question, you asked about demand and customer sentiment in the region as well as Thailand. Is it the question that you asked? Hussaini Saifee: Yes. That's right. That's correct. Ueychai Tantha-Obhas: Well, this coming year, the sentiment -- okay, we have to -- for Thailand, the government has tried so hard to really sort of promote the economy. I mean, like you probably heard about the half-half has worked very well for our products, all categories. And then we believe we heard the government that they will have a Phase 2 in January. That's also plus for us. It's probably positive for the consumer sentiment. They also try to promote local tourism by offer 50% of the cost, you can claim and all that. All that are positive because the government is trying hard to really push the economy for next year for this. So we believe that we will gain traction from those also. And next year, in Thailand, as I mentioned before, there will be elections. In the past history, every time we have election, the consumption of beverage alcohol is increasing during the elections. That also another plus for our alcoholic beverage in Thailand. So in conclusion, in Thailand, we believe that it will be a bit favorable, better than the current or last year. Operator: Our next question is from Xuan Tan from Goldman Sachs. Xuan Tan: Can I check on net gearing? Could you explain why the net gearing increased year-on-year? What is the CapEx plans and whether there's room to raise dividend payout ratio? Kosit Suksingha: Tan, Kosit speaking. I think for the net gearing increasing, actually, the -- if you look at the interest-bearing debt by itself, actually, we -- as an absolute amount, we are lower. However, when we look at the gearing or some of the debt to EBITDA because of this year, some of the impact on EBITDA. So that's why the ratio looks to be high. Regarding to the CapEx, right, as we already informed during the -- even the last month on press conference, the majority of the investment in Malaysia and Cambodia is almost spending in terms of the operating. So we not expect the same level that will happen in 2026. So that's why I think we think it will be going back to the normal level probably mid of next year. Xuan Tan: And how about dividend payout ratio? Any room to increase? Prapakon Thongtheppairot: This is Prapakon. I think we'll maintain that our dividend will be at least half of the profit we made, and we maintain that. And subject to our cash flow availability, I think we maintain our dividend per share this year and although despite our earnings a bit softened. So in a way, the payout have increased slightly. Xuan Tan: Second question, can I clarify on NAB business? First is why is minority interest so high relative to the reported net profit? And second, dairies volumes seem to have been restated. Is that the case? And what was the reason behind this? Kosit Suksingha: Maybe I yes. I think the -- so the interest expense in the NAB segment because you know that actually, we have the CapEx investment on the cow farm AgriValley in F&N, then we fully consolidation of F&N the whole group into the ThaiBev consolidation. So part of the interest expense during the CapEx investment in the Malaysia also include in the ThaiBev this year fully. So that's why when we see the year-on-year, the ramp-up of the CapEx and interest in Malaysia will happen year-on-year increase this year. Can I get the questions again on your dairy? Are you asking about the volume of dairy? Xuan Tan: Yes. The first half, I think dairy volume was about 300 over and then full year, we are still at 300. So I assume there was a restatement or what changed for dairies volume? Kosit Suksingha: Sorry, Kosit, again. So I think actually, when the first half is -- when we look at the details, as we released the half year review, right, we probably will not like go into a deep dive in terms of how we categorize the dairy and nondairy. So then when we audit the full year, we try to reshuffle in the more comparable. The dairy right now, we focus on the key brand that like Carnation, Teapot and Magnolia. So that is both justify the dairy. Some part of that one like nutrisoy or other soy milk, we classify to be the soft drink. So that's why this dairy will be comparison wise to wise in terms of year-on-year on the key dairy product of the group. Xuan Tan: Okay. Sorry. So the volume, which other segment did it go to? Namfon Aungsutornrungsi: Sorry, Xuan, can you repeat your question, sorry? Xuan Tan: Yes. So there was a restatement, right, in terms of where the certain volumes are. Unknown Executive: Correct. Namfon Aungsutornrungsi: Yes, yes. It's reticulaize. Xuan Tan: Okay. Okay. Got it. Lastly, just a comment. I guess we have seen companies listed in both Thailand and Singapore giving forward-looking statements. So it will be really helpful if you can reconsider that for future earnings. Operator: [Operator Instructions] As there are no further questions, we will now begin the closing comments. Please go ahead, Ms. Namfon Aungsutornrungsi. Namfon Aungsutornrungsi: Thank you, everyone, for joining our conference call tonight. And if you have any more questions, please contact IR at ir@thaibev.com. Thank you, and have a good night.
Barati Mahloele: Good morning, ladies and gentlemen, those of you here with us at the JSE in person as well as those joining us online. My name is Barati Mahloele, Investor Relations at Tiger Brands, and I have the pleasure of welcoming you to the Tiger Brands FY '25 Results Presentation. I'd like to acknowledge the presence of the Chairman of our Board, Mrs. Geraldine Fraser-Moleketi, members of our Board as well as our Executive Committee members who are with us today. Later on, joining me on stage will be the CEO of Tiger Brands, Mr. Tjaart Kruger; as well as the CFO, Mr. Thushen Govender, and they will be taking us through the presentation this morning. Before I hand over to Tjaart, I'd like to bring your attention to our forward-looking statement. And with that, I hand over to the CEO of Tiger Brands, Mr. Tjaart Kruger. Tjaart Kruger: Good morning, everyone. And Barati, that was very formal. Anyway, I'll leave the chirping on the new dress code to Thushen. He'll talk about it later. We really believe in Tiger that we've turned the corner and we -- on a new planet almost. We really do think we've reset the organization, and we believe that our visuals, our logos and stuff must present that. And therefore, you've probably seen in the press announcement this morning, there is a few changes, but we officially want to do it now to expose you to the new Tiger. [Presentation] Tjaart Kruger: So we're very excited about this. If I can make a few comments on this new logo that we presented here. I think my first comment, which is not on the list there, is that it's only 2 colors. And what does that mean? All your printing is much cheaper. And that's real. It's a joke now, but that's real. The fewer colors you have and everything, the less your costs. And that's very important for us because to live to those promises that you've just seen in that video, we must get our costs right down to get our products at an affordable price and make the margins we're looking for. And we think we've achieved that in the last while, but we'll talk about that in the next hour or so. But a few comments around this brand. It's bold. It's our Tiger. The previous picture was probably [ 8 Tiger ]. This is our Tiger. Nobody can copy this. It brings focus out. It draws on the legacy of the past. I mean we've had 100 years of greatness in this organization. It brings that out, but it also takes us into the future. The geometric shapes inspires our value chain. And that's very, very important and a very nice way of designing this is -- if you look at those bottom pictures, you'll see all the ear of the Tiger comes off the Black Cat Peanut Butter bottle. The chin of the Tiger comes off the Chutney, Mrs Balls' bottle. One of the side things here comes off a plow that's a farmer busy working in the land. So this brand logo represents our whole value chain. And that's very important to us because we know to deliver on our promise to our consumer, we have to manage that whole value chain, whether we own it or whether we partner with it, we have to manage that whole value chain to the end degree to make sure we get our proposition and we get our values right. So very excited about this new brand. And we obviously, lots of internal stuff that we're going to do with the brand with our people in Tiger, but also external with our stakeholders driving this forward. So I hope you like it. This is what you're going to see going forward. I can now for the real job this morning, the results presentation. Thanks, Barati. So as normal, I'm going to do the highlights, the strategic execution. Thushen will take us through the operational performance, and then I'll conclude with the outlook going forward. We certainly have had a good year. If you look at our cash conversion, 90%, and you'll see we've reduced our dividend cover and paid special dividends. The work we've done on portfolio optimization is going very well. The Carozzi disposal is done, Baby Wellbeing is done. The LAF disposal is done. The SKU rationalization is far ahead of the target that we've set 2 years ago. And the Randfontein site is at the competition tribunal, I think, today. And if you look at those volume growth of 3.5%, if you take out these SKUs that we've discontinued that volume growth, it's actually 5.8%. So very chuffed to say. The guys have really done a great job of driving value in the business. And if you look at the volume growth and the revenue growth, you can see we've got deflation in our turnover, which is great because we brought value to our consumers, and we brought value to our customers. With that, we delivered the right margins as well. So we're very, very comfortable with that. And capital allocation, returning ZAR 10 billion to shareholders over this period. Special dividend, share buybacks and ordinary dividends, and Thushen will get into the detail of that. So we're very pleased with the results that we've seen over the last year compared to last year. And you can see we're clearly into the double-digit margins here. The year number is 11.1%, I think. And it's really a great performance by the organization. And that's why you would also see that I've asked the whole executive to attend. Normally, I say to them, if you've got important factory visits to do, go and do that rather. But today, I said, make an exception. Please attend this presentation because I do think we've got to showcase stuff here that we're really proud of. So good performance for the year. But also on the sustainability commitments that we've made, and I want to make the point upfront. If you look at these achievements, they all merge with the business on a commercial proposition. They're not separate stuff that we do to get points for CSI or BEE scorecards. We get that anyway. We know that. But they're done in a commercial basis integrated with the organization. And those top 3, the Langeberg & Ashton deal we've done, we were very conscious not to lose those jobs in the community that we can save the jobs, and that was a great deal that was done. The small white bean farmers and the tomato farmers is our whole promise that we started 18 months ago to really get back into agriculture and make sure we secure our supply chains, in a sustainable way and in a commercial viable way. And we're very proud of all those farmers. And I visited all of them myself. It's really going quite well. On the electricity side and emissions and waste to landfill, making good progress on the glide path where we want to get to our targets. And all those activities will save us money. It will save us money to have panels on the roof rather than pay Eskom for power. It will save us money to have less landfill stuff because it costs you money to take that to landfill. So great progress in that area. Our general trade progression, as you know, we've got 2 big drives in the general trade. The one is in bakeries. And lots of technology that's going in there to drive our volumes in the general trade. And then the other project we started about 3 years ago is to get into this par of general trade directly through also putting some technology in there, and that's going well. We're over 100,000 stores where we started with, I think, 60,000 stores 2 years ago. On our people side, fill 60% of leadership vacancies internally. That's a big number. And we've got some great people at Tiger, and we are able to promote them into these leadership positions, having had the right programs to develop them over the last number of years. And then we've had a few winners of some competitions. Please don't give those names to headhunters. That's a flippant remark. But we -- people at Tiger, work at Tiger, not because we pay them a lot, it's because it's a great place to work. That's why people are here. We also pay them a lot because that goes with a great place to work. But you can't just work for money. You work because it's a great place to work. And that's the culture we're building in the organization, and we're making very good progress on that. We shared these guidance numbers with you over the last 2 years and just a measurement on how we fared against those. And you can see that these medium-term guidance targets, we've actually exceeded them. We exceeded some of them last year already. And the great performance, volume growth, revenue growth, operating margin. Revenue growth is probably slightly short of inflation, but we're very comfortable with that because we've restated our price points, and we took a lot of cost out of the value chain in many of the businesses. Operating margin over 10% ROIC, well on its way to 20%. Working capital, that 52 is probably not a sustainable number, but we're very comfortable with a target of 67 and that we will beat that going forward, but we'll talk to you about new targets later on. And then on the simplification of the organization, real great progress. We've only really got the King Foods site, Randfontein site is busy happening and then the chocolate stuff we spoke about last time as well that needs to be resolved. So great progress in all of those areas. And I do think the short- to medium-term guidance is irrelevant. Now we'll have to restate those numbers, and I will do that at the closure of the session. If you look at our strategy execution, and we shared this with you before. If you look at our strategic thrusts, I really think the organization has done extremely well and the cost leadership, a bit of that, the way we took costs out over the last 2, 3 years of the business, make it more efficient, and it's everywhere. It's overhead, it's recipes, it's factory efficiencies, it is distribution efficiency. It's everywhere in the business where the business has really performed extremely well in that. Our portfolio, we just spoke about that, great progress in that. Rejuvenating a brand. I think if you look at the numbers this year, you'll see the spend coming back into marketing. And remember, last year, I think I stood here and I said, if you haven't fixed the business, you haven't got your price points right, you're probably wasting every cent you spend on marketing. That's not the case anymore. You'll see our spend and our investment behind our brands is on its way coming back, and you'll see big spending in that going forward. Growth platforms, we spoke about those growth platforms, health, nutrition, affordability. Affordability, I think we've done well. Health, nutrition, we've probably got a lot of work that we're going to do. I'll talk about that just now. And superior challenges is the GT trade we're talking about and looking at all our channels, the wholesalers, the retailers, great relationships with all of them, great work we're doing with all of them. So great work doing in that. On our enablers, I just want to make a comment on 2 of those. The one is competitive manufacturing. We haven't got a business if we haven't got efficient factories. We are driving scale. We big in all the categories we play. We need to have highly efficient factories to deliver safe products that's of the right quality and that's in time. And that doesn't happen by itself. That happens with a huge effort and huge investment. And the progress in that area has been phenomenal over the last year, and that will continue. And the second one I want to talk about is sustainable agricultural sourcing. We cannot, as Tiger, sit here and say there's been a bad crop of small white beans, we haven't got baked beans. That's not an option for us. We must make sure we understand the value chain and the supply chain, and we must be able to predict the crop, which we can. And then we must have alternative plans, whether it is different areas of growing small white beans, maybe importing it, which is plan 5 because the quality is not right. But the thing we're doing is to get small white beans to be grown Malelane area in the north, in the south, in the east so that you get the climatic conditions that impacts on this, you get that a little bit more balanced or better balanced. As an example, we cannot sit here and say we haven't got caps for closures for our mayonnaise because the supplier dropped us. It's not an option for us. This has happened in the past. So we must manage our supply chain. Agriculture, in particular, and the caps is a supply chain issue. Eggs is another issue in mayonnaise 2 years ago. So that's a lot of work we're doing. And if we talk about sustainable agricultural sourcing, that's the type of stuff we're talking about. Our consumers need the products on the shelf all the time, not when the weather is good. If you look at our strategic ambitions, maybe same to the guidance we've given you, these are probably not ambitions anymore because we've reached most of those or achieved most of those, and we will probably restate them as we go forward. But certainly, very proud of the organization. And these ambitions were probably stated for 2028 and it's 2025, and we've probably reached most of them. So well done to the organization, and we will work on that. Because as an organization, we want to be ambitious. And if we do state targets for ourselves, we want to be ambitious on that and we want to really reach for the staff. So we will restate those. Just Tiger at a glance. And if you look at this slide, you can actually see why Tiger is such a great organization. In these businesses or categories that we play, we're really the #1. And in most of them by far. In bread, we're probably not by far. Our competitors is probably a close #2 from a brand equity point of view. Their volumes is higher than ours. We know that. You know that, too. In grains, we are on those 3 brands, by far the biggest and by far the best and by far, the most preferred. Now yes, our challenge, we must keep it like that. And you can only keep it like that if you stay relevant. And that's the whole strategy that we've spoken about so often. If you look at our culinary business, look at those brands. 6 brands, Crosse & Blackwell is #2 from an equity point of view, but we took back our market leadership in the last 6 months. So we'll be #1 soon again. And in Snacks and Treats, those brands are to die for. Home Care, #1 in Doom, big brand; Ingram's, we've spoken about, we're #6 or 7, but it's got a niche position, and it's got good margins. So if you look at this slide, it really -- it's not difficult to sell Tiger. It's really -- it's got brands that you cannot -- you can only buy these brands. You can't develop them. It takes 100 years to develop brands like this. And we've got them, and we're making them better, and we're making them more relevant to our consumers. The new strategy that we started communicating with you about 2 years ago was to be Southern African focused, South Africa bricks and mortar and a very focused distributor model going into Southern Africa. And that's the countries where we play. We haven't got distributors in all of them. Some distributors look after 2 or 3 countries. So I've also said to you before, Southern Africa, don't try and draw a line just above Angola. We're happy to go into those countries into Africa. We're also exporting into other countries, but that's more in an opportunistic way. This is a strategy that's focused. We've got focused distributors in these countries, and it's really going well. On the left side of the slide, you can see where our factories are more or less all over the country, very focused in Gauteng or in the center, but we're in Cape Town and we pick in Durban as well. That's where all the confectionery businesses are. So great business, good footprint, good factories all over the country and well positioned. So going forward, we always talk about the affordability and the focus on value for the consumer. We've got a consumer under stress. And I think I've said before that all these presentations normally started in a very stressed economy or with the consumer under huge pressure, and that's normally making excuses. I don't think I've started like that this morning. I think my message here is that we are much better positioned to serve the consumer under these conditions at the moment. So the consumer is under pressure. 4.5% inflation, if you look at labor and wage negotiation and rates where they've settled this year, the consumer is under pressure. There's no doubt about that. We can see it in promotion activity. Lots of our products sold only on promotion, about half of it. So what does that mean for us, that first block? It means we must be relevant. We must be affordable, and we must know how to operate on promotions. We must know how to operate with combos. And that is the one thing we've got right, particularly in a business like Grains. We've got that right. We know how to do promotions, and we know how to play the combo game because we've got the brands to put in the combos to make the combo attractive to the consumer. And some of our retailers and wholesalers know that. We're not arrogant about it. We're strategic about it, and we work with our customers to make that work. And that is one thing we got right this past year. The retail landscape, we know it's blurring. We know all the retailers are opening in townships. We know all the wholesalers have got retail outlets. We know the whole thing is blurring. We understand that. We've got lots of activity into the general trade. We know the e-commerce thing is developing. You know the home deliveries, we're in that. We're growing big in that. So we understand that whole landscape around what our customers do and how they want to do things, and we support them. And we work with all of them strategically to make things work better. And then the supply chain risk, I've spoken about quite a bit already. We don't have enough water in South Africa. We also don't have services in -- our service is not always as good as it should be to get water to our factories. We understand that. We understand that from a climate position, from agriculture, from water in agriculture, we must go to areas where there's enough water, maybe irrigation water and not rainwater, and we drive that in our agricultural activities. Global and local suppliers. I think we're all aware that, that block, the Baltic block with Russia and Ukraine probably exports most of the world's sunflower and most of the world's wheat. And when that war started, there was a big problem with that. That again, for us, we can't go and say the person, the shopper at the shop, we haven't got flower for you because the Russians invaded Ukraine. That's not an option for us. We must find flower. We must find wheat. So to understand that whole global value chain and where we procure from, how do we mitigate, and I think we're getting much better at that. And then leveraging digital tools. And the best example we probably have in our logistics setup. We've got digital tools in our logistics setup where we've probably taken out quite a couple of hundred million rand of costs to improve that. And our service levels has probably improved a good 5 to 10 percentage points over the last year. So reacting to all these things is what we do. We don't stand and complain about them. Key milestones that we've achieved. We've started February last year. It feels like 20 years ago, but it's not even 2 years ago that we've restructured the organization into the federated model. We took a couple of months to find our feet. September, we spoke about the continuous improvement and the SKU rationalization. We improved on that. We changed structures again in the December, but Culinary and Davita under Culinary. In March, Baby Wellbeing was sold. Carozzi was sold. Randfontein was agreement signed. Randfontein now is hopefully sold in the next day or so. In May, we made considerable progress with the Listeriosis case, and we can talk about that later. We've made some more progress. And then in September, the LAF agreement, which took 5 years to conclude was concluded, and we actually went down on the 1st or 2nd of October to have dinner with the Premier and the new team in LA and they're very excited about their future. Let me conclude this first bit with just reminding you of our capital allocation model and what we've done with it and how we've applied it and how we stuck to the discipline of our capital allocation model. So the first thing is probably looking at our capital allocation model and our business and how we generate returns and what returns we need and how we can get businesses to those returns. And if they can't get there, then we must dispose of them, which we've done. So I think we made great progress on that, get the portfolio right. And then we've -- as we say through the capital allocation model, we first look at internal requirements. We must obviously pay tax. We must put money in working capital when required. We've got maintenance CapEx. We've got growth CapEx. And then with the cash after that, we decide what we do. And you've seen we've bought back a lot of shares. We've reduced our dividend cover, and we've paid 2 special dividends interim and we paid a big special dividend, paying a big special dividend now. So we are driving through this capital allocation model to get our balance sheet to be optimal and to really be the foundation of future growth in the organization. So I think the one thing we've done is we stuck to the discipline of this over the last 2 years and really applied our mind what to do with the cash. And you'll see that -- I mean we're returning about ZAR 10 billion of cash to our shareholders. So that was my introduction. Let Thushen take you through the operational performance, and then I will conclude a bit later. Thushen Govender: Good morning, everyone. It's nice to welcome you today on which is a very momentous day for us with the launch of our new purpose as well as our refreshed logo. I'm sure as you've seen, our rebranded CEO with his new suit. Sorry, Tjaart, you left the door open there. So I'm going to touch on a few key initiatives first that we've managed to make great progress on and then move into the segmental analysis. I'm sure those of you who have read the earnings announcements have seen we're certainly ahead of targets when it comes to continuous improvement. We committed that amount to you over a 2-year period, and we've delivered it in a year. And it's a testament to the great work done by the team, and you've seen it come through in the operating margin improvement that we've delivered in the current year as well. We're confident that there's more fuel in the tank. There's more opportunity in Tiger Brands, as Tjaart referred to earlier, and we're committing to another ZAR 500 million over the next 2-year period, and that will also drive further margin accretion. I'll touch on working capital a little later on, but ultimately, you'll see it's a job well done with some focus from management as well as some tailwinds from soft commodities. Capital investments. When I stood in front of you in H1, we spoke about the Mega DC. I'm proud to say that we've now appointed a developer. We signed off on the designs, and we've identified a plot. This will probably be commissioned in October 2027 or just before then. And the reason why we're delaying this slightly is, as I mentioned to you, we're consolidating about 4 warehouses and we want to align the commissioning of the DC with the expiry of the leases. So there isn't any duplication in costs. The super bakery, well on track to be delivered late next year. No pressure, Quinton. And I'm going to talk to you more about the mega site philosophy that we're bringing to the 4 across our business units and how that drives manufacturing footprint optimization. Digitalization is a key theme, not only for us and for the rest of the world, as you all know, with AI being the new buzzword or the buzzword for some time. We spoke to you about the logistics control tower, the software we put in place and how that's managed to improve our efficiencies, turnaround times of our trucks, monitoring how long they wait at customers or outside our facilities. And it certainly delivered a big part of those savings that you see in continuous improvement. So that's been well managed, and there's still room to go improve. The bakeries team have implemented software that we've spoken about previously. It's now implemented across all our bakeries that optimizes our route to market in the general trade that drives efficiencies, and that's well on track as well. The AI journey within Tiger, I'm proud to say, has commenced. We've started our first AI committee. We've identified some use cases, which are currently in progress, and we're starting to see the results. A big part of AI and the technology journey for Tiger is the culture. So I'm partnering with our Chief HR Officer, S'ne on this as well, driving training programs to create a more digital savvy, digitally savvy Tiger Brands and also create that culture that embraces technology. In the past, we invested quite a bit in software solutions, but we didn't manage the change management aspect of it well and monitor the adoption, and that points to a culture. So that's what we're trying to change within Tiger, have a culture that embraces new technology. On international markets, the key distributor model is well embedded. We're moving away from that trading mindset, in particular, in our neighboring markets, where we're looking at category management principles. We're working on brand development and establishing our brands in these neighboring markets as really household names as well. Moving on to the numbers. I think that was exceptional revenue growth, considering the soft commodity deflation and obviously underpinned by good volume performance and some deflation in other categories as well as we managed our price index to improve our competitiveness. Operating income and operating margin, you're seeing the benefit of CI come through, the continuous improvement I referred to and at the same time, the volume leverage driving that margin improvement. It's also nice to see that across all of our business units, conversion cost per unit has reduced. And to Tjaart's point earlier, marketing investment is up double digits with -- now that we understand where we want to invest and we've got our price points right, we're speeding up that investment. The evolution between EPS and HEPS is really the profit on sale of Wellbeing and the Carozzi business, and that's the movement that you see there. And I'll touch on working capital in the coming slides. I think this is quite an important slide, and we're wondering whether we should put it up. But given the questions we've had in the past 2 years around we're going on this portfolio optimization drive. Is it going to create a HEPS gap? Carozzi was a big contributor in the past. Chococam was a big contributor. And what is Tiger going to do to fill the gap? I'm proud to say we've actually done exceptionally well to fill the gap in the current year. And obviously, in the coming year, with the organic growth, we plan to exceed off this base. So what you see on the left was our reported earnings of ZAR 18.10, and that includes Chococam and Carozzi, as you see to the left of that graph. And what we did for the F '25 graph, we've taken out the impact of Carozzi that's in continuing operations. Remember, for the first half of the year, we consolidated those -- I mean we accounted for those equity earnings. And then there's also some benefit there from interest rates on the proceeds and ForEx. So we've been very transparent about that. And we said, if we take out that full benefit, what does the adjusted continued HEPS look like? And then we've then taken into account the shares that we've purchased to date. There was about 5.5 million shares in 2025 on an unweighted basis. And as of last Friday, about 4.4 million shares on an unweighted basis. And when you apply that to the headline earnings and consider the HEPS versus FY '24, that gap has largely been filled or reduced to 1.8%. So to those questions around whether we're going to leave a gap with the portfolio honing, I think the discipline that Tjaart talks to with regards to our capital allocation and the focus on the core results has certainly lifted our headline earnings from continuing operations. And here is testimony to the fact that the Tiger can change its stripes. Let's hope a few other stripe animals follow suit soon. So moving on to the next slide. This is the volume on an adjusted basis where we take out discontinued SKUs, discontinued operations, and we show you what that normalized base growth looks like. And as you can see, it was an exceptional performance from the business, volume growth across the board. On STB, we did see some challenges come through with the competitive pricing in the CSD market and consumers shifted to that category. But we've rectified that. We're already seeing some green shoots. But all in all, as I mentioned, managing the price point, the volumes have come through quite nicely. And on Grains, you've seen that commodity deflation in rice, sorghum and oats in particular. On bread as well, the drag there on pricing is due to the wheat milling operations. On the cash movement for the period, as you can see, exceptional performance from cash operating profit. And on working capital, it was well managed. And there's probably 2 or 3 reasons supporting this working capital benefit. One, that federated model and the decentralization of procurement brings a lot more focus to procurement. We can manage our procured positions better. Decisions are made closer to the close -- I mean the cold front of business, and it's more effective with regards to stockholding management. The other point is, I mentioned to you in H1, we've implemented SAP IBP. Just to reiterate, that's not a ERP implementation. I had a few panicky messages on that. That's just a business supply and demand business planning tool. And it's quite a sophisticated tool looks at regression analysis, it looks at historic trends and helps us predict the stock levels that we should have. And it certainly helped us in managing the complexity that we have much better. And the third probably benefit to acknowledge is the tailwinds we had in our commodity business. And as Tjaart mentioned, it's been a record year for Tiger, ZAR 8.3 billion worth of dividends, a reduction in our dividend cover from 1.75 to 1.25 shows our confidence in the fact that this cash generation is repeatable, and we've optimized the business platform. The ZAR 1.8 billion in the end there relates to the Carozzi proceeds. You won't see that in your cash flow analysis. We've had to re-categorize that in the balance sheet due to IFRS purposes, and it sits under an investment account. The reason why it's there is to optimize our return on those proceeds as we anticipate the dividend payout. On CapEx, as you can see, we're making great progress. And besides the super bakery and the Culinary mega site investment, there's efficiency CapEx and capacity CapEx across all business units. And as I said to you, the Mega DC is on track. We're now applying that philosophy that we've applied in Gauteng to consolidate and streamline our warehousing facilities. We're applying that philosophy to KZN and Cape Town, where we have multiple facilities and there's opportunities to consolidate that warehouse facility and generate the similar synergies that we anticipate from the Gauteng Mega DC. An exceptional performance from the bakeries team on track with their turnaround strategy. You can see the margin expansion coming through, the operating income growth and there were a few things driving this. Besides the supply chain optimization, the reduction of waste, the improvement on conversion cost per loaf as a consequence of labor optimization, there's also diligent price point management. The team look at price discounting per route all the way down to that level to ensure we're not putting too much on the table, discounting too deep, and it's quite critical to manage those price points in what remains a competitive category. The other thing to point out on this slide is you will see that, that operating margin was delivered off the existing platform. The super bakery has not been commissioned yet. We have optimized our existing operating platform, and we will see that operating margin move closer to double digits even before the commissioning of the super bakery. So we're well on track here. Maybe just 2 call-outs here. The route-to-market software is now implemented in -- across all the bakeries. It's driving not just efficiency, but it's aiding the team in penetrating the general trade channel using geolocators to lay down what is the route to market, identify those in-store locations and make sure they service it effectively. So that software solution is certainly a step change in our demand management. Price volume, as I mentioned, that mix remains quite crucial as well as making sure it's relevant for each of the channels we participate in. Operational excellence goes without saying, and I think the other call out here is the great work done on our recipes over this past year to retain that #1 spot in bread. We worked with partners, technology partners, reformulated our recipes, and you're starting to see that come through in the reduced consumer complaints. It's quite a sophisticated process. The recipe can vary from region to region as well given climatic conditions. So that was well executed and consumers are embracing the new recipes and the quality that comes with it. On Grains, you see that deflation coming through in the revenue, but there was a spectacular turnaround from Liezel and the team with regards to that performance. And there's 2 or 3 things driving it. The first one is important to acknowledge is that base isn't really where this business should be. With the brands that Tjaart referred to earlier, we've had some challenges as well in the past with this business. So there is an element of this that's really the rectification of the historic margin. The other element is the better management of business across the supply chain, whether it's conversion cost per unit, whether it's waste management, whether it's extraction from our mills, and that's driving that margin improvement. And the third one is what Tjaart referred to earlier around better trading, better understanding our procured position relative to global commodity pricing, making sure when we foresee a drop in this commodity pricing, we trade out very quickly in order to remain competitive throughout the year in the various channels that we participate in. So that price point management in store relative to the commodity position is a critical aspect to manage. And I think it's also worth mentioning in this business, a little bit of luck also helps when it comes to commodities. With the commodity deflation, we saw quite a few consumers come back into the category. The Indian borders had opened once more and rice prices had normalized. And it also helps when your competitor is out of stock for a little bit and you take full opportunity of that. And moving on to some of the key factors that looking -- when we look ahead at the Grains category. Cost leadership, absolutely crucial. The value engineering opportunity and the automation opportunity in these facilities are phenomenal. There's still some fuel in the tank here. Yet again, as I mentioned earlier. In fact, just recently, we've approved end-of-line automation in one of the facilities that will deal with the pelletization. And even lightweighting of packaging, processing, as I mentioned, there's a huge opportunity to drop the costs even further. The other important aspect is portfolio optimization. We -- as you know, we've exited the maize category. That category had changed structurally with regional millers dropping prices and impacting our margin, and that was part of our noncore businesses that we exited. And here's another business that holds potential from a mega site development perspective. Our pasta site in Isando, we're revisiting the opportunities to expand that facility and look at increasing our breakfast offerings to the market. As you know, we're big in the oats category. That's predominantly a winter product. There's opportunity to expand our breakfast repertoire, and these are various things we're considering. On Culinary, it's nice to do to see your business firmly in the double-digit territory now. At 9.7%, the market said to us, well, you're not quite there, but we're firmly over the 10% hump, and we're in that double-digit territory. So that's nice to see that those value engineering initiatives that we've been talking about around packaging lightweighting, around recipe formulations is coming through quite nicely and assisting that turnaround. And as you know, in this business, the affordable -- the affordability of our products is quite critical. We've managed the price points quite well. We're launching the tiered products and brands that we referred to. Black Cat, creamier, in PET, which is a reduced peanut content -- peanut butter should be in your grocery stores pretty soon. It's an amazing product. Please go out and try it. Some of the key highlights on Culinary as you look ahead. Cost leadership, absolutely crucial to remain relevant to our consumers, as Tjaart mentioned upfront. And here again, across the value chain, there's significant opportunity for further value engineering. And the other concept that we -- as I mentioned, we spoke about the mega site upfront. And in this business, that will also aid us in step changing our cost profile. In Paarl, we're establishing a vinegar site. We've had some challenges with supply there, and we've also established -- we're establishing a vinegar line in Boksburg that allows us to reduce our dependency on suppliers for critical products such as All Gold, Mrs Balls and mayonnaise. And by in-sourcing that vinegar production, it helps us reduce our cost per liter on that particular raw material. And at the same time, we're in-sourcing the Mrs Balls product. That will be manufactured in Paarl as well, and that's going to become a mega site for the Western Cape region to service our markets nationally. And that mega site concept and manufacturing footprint optimization is key to unlocking further margin expansion. The investment behind our brands has just started. There's significant opportunity with our value tiering to drive further penetration in the market, go after those Tier 2 brands and establish ourselves as a relevant offering across the LSM profile consumers. On Snacks, Treats and Beverages, as you can see, it's been an exceptional year. Margin improvement, operating income improvement. We spoke to you about the degrammage in our candies and sweets portfolio. It's particularly important to be at the right price point in a discretionary category. And with that degrammage and maintaining competitive price points, we're seeing nice volume growth and nice upliftment in our margins. So it's really been a great year for the Snacks and Treats portfolio. On Beverages, we did see some headwinds. As I said, the carbonated software category, there was some huge price war, shall I say, highly -- became highly competitive in that category. And as a consequence, you've seen consumers shift their preference or their choices from squashes, which is the Oros stronghold into carbonated soft drinks. So we did lose some traction there. However, as I said, there's big investment going behind this and the reduction in the input costs with the orange squash prices coming off globally is also aiding us into recovering those price points on shelf. So we've seen some nice turnaround now in the Beverage category. This business has also focused a lot on the time and motion study within the various facilities, and that's delivered labor cost optimization, which has improved our conversion cost per unit. Looking ahead, there's 2 or 3 important factors that will help us remain -- continue to remain competitive on shelf and drive further margin expansion. One is the consolidation of our various snacks and treats facilities. There's 3 in Durban. We're busy exploring the consolidation thereof. And I think we did mention that to you in H1. And the other big margin unlock is the investment into a primary DC at our Roodekop beverage facility. Right now, the product gets on to a truck because there's no space -- storage space on site, goes to Yaldwyn, which is in Boksburg, gets double handled there. We get a customer order, gets back onto a truck and goes to our customer. So there's huge inefficiencies. So we're now investing in a primary DC, which will allow us to unlock further savings. On Home and Personal Care, I think it's important to point out that in the prior year number of ZAR 559 million, we do have ZAR 45 million from the Wellbeing business, and that's still in prior year continuing operations. So Thabani will give you a pass there. There has been growth on prior year. If you back out that ZAR 45 million. And on a like-for-like basis, you are seeing growth. Having said that, you would recall from H1, we did experience some challenges with can supplies for the pesticide business. And it happened during the worst time ever. It was during the pest season. We have managed to mitigate that by finding an offshore supplier at a much better price point. However, with that comes the working capital implications. But all in all, we believe we're in a better position, sustainability of supply at a lower price point. The other challenge that we faced in the current year was in our Personal Care business. Good volume growth, yet highly competitive prices in the skin category. And it's something that we really need to turn around and focus on with regards to the Ingram's brand in particular. So the turnaround focus in this business is the relaunch of Ingram's. We've got some value engineering around the packaging. But most importantly, we're trying to reduce that dependency on the Camphor range, which is a winter-specific product. And with the relaunch, we will position ourselves as a skin solution for all seasons. So that should deal with some of the seasonality challenges in this business. The other good opportunity that we're busy leveraging is the penetration into neighboring markets, our pesticide business, the Ingram's Camphor cream product itself is doing exceptionally well in those markets, and the team is really driving market penetration and consumer acceptance of these products. And I think the other thing to focus on here is rightsizing the cost base. We've rightsized the portfolio. We've taken out the tail brands and SKUs, and now we're going to rightsize the cost base to further enhance those margin and make sure we're competitive on shelf. I'll close on that note, and I'll hand back to Tjaart. Thank you. Tjaart Kruger: Thank you, Thushen. If I can -- 2 or 3 slides to conclude with. This slide is just talking about our priorities for the year ahead. And if you look at the stuff I'll just talk about in this slide, as you can see how much runway we still have for the next 2 or 3 years to deliver value improvement in Tiger. We've started the journey. We've done quite well, but we're by far not finished with it. So if you look at a couple of points in Milling and Baking, embedding the basics, getting those 700 trucks every morning out of every bakery before 6, managing that supply chain, optimizing product quality. That's stuff that they're busy with every single day, and we've got lots of opportunities still in that area. General trade recovery, doing great work. We dropped below 50% 2 years ago. We're above 50% now. We must get that above 60%. That is hard work. It's very competitive. And it's difficult. That's why the technology that the guys have put in there is so important and driving it day after day after day, and that's in progress. The super bakery will reposition this business from a cost base point of view. That's not in this current financial year, that will be in the following financial year, the benefit of that. That bakery is on track, very exciting. It's something that hasn't been built in this country yet. And we would like to show it to you when it's commissioned, which will be towards the end of next calendar year. In Grains, huge opportunities in expanding the Jungle repertoire. The Jungle brand, I think, has got so much legs to go outside of oats. And we've seen it before. We must just sort our supply chains out. So lots of opportunity and lots of work being done in that area. Defending and growing our main meal carbohydrate. So great work done this past year with Tastic and with Fatti's & Moni's. I mean Fatti's & Moni's came from a loss 2 years ago to being a good operating business now. And that is main meal stuff. It's the biggest brand. It's the only brand to find in those categories. And we must make sure that we stay as tough as we can, no space for competitors to come in and no space for competitors to get any space anywhere. Pasta is out of capacity. We need to look at that. We're busy looking at that. We must put in -- probably put in a new plant. And then snacking, this is one area, and it's probably the Jungle brand, but we're open-minded to use any of our mega brands. And it's probably savory snacking that we're talking about here, big opportunity. The one thing that we've changed a bit in Tiger is we're not -- maybe I should speak for myself. I'm not that keen on outsourcing production. You can't control your quality and you can't control the safety of your products, or you can, but it's more difficult. So whatever we do here must have proper scale. We don't necessarily -- we're not necessarily very good at niche positions. Must have proper scale, and therefore, we must have our own supply chain and our own factories, and we're busy doing that, and we can do that. In Culinary, great work over the last while. Still lots of opportunity in product tiering. Thushen spoke about the creamier Black Cat that will probably be launched in March, April somewhere. We've got opportunities in mayonnaise for product tiering, probably got opportunities in tomato sauce product tiering, just to get an alternative to the consumer at a much better price point. That work is happening in the business. And in the next year or 2, we'll see lots of these things happening. Value engineering, they've done so much work in the Culinary business to take cost out of the supply chain. And it's recipes, it's packaging, it's more efficient factories. And there's lots of opportunities still to come. We've still got quite a bit of products in glass, and we've spoken about moving to PET for a while now. And we will do that in a sensible way. It will be consumer-driven. We won't do stuff our consumers don't like, but that work and those opportunities are still there. The manufacturing footprint optimization in the Paarl site is quite big. The Paarl site was a small little factory, a big facility, but a small little factory making jams quite manually. We're commissioning 3 plants in that facility over the next couple of months. In fact, they have been commissioned. The products will probably hit the market early next year sometime. It's a new jam line, chutney line and the vinegar line. And there's space for more and there's more stuff going to happen on that side. So very exciting for that business. And the export recovery, we probably -- when we had the nice problems in this business, in particular, we short the export markets to satisfy local markets. And that recovery is in progress. That problem also helps us with very, very efficient factories now because you can imagine those factories are running flat out and the throughput and the overhead recovery is phenomenal. Snacks and Treats, discretionary category in Snacks and Treats. We must get our offerings right. We must get in the face of our consumers. We must get our marketing spend right. We must get our distribution right or we must get it better, it's not wrong. And we must get our innovation right in launching new products in that category. Yet the risk is that we don't get to where we were 3 years ago with having to take out 20% of SKUs again. So what we're developing in the business is this innovation culture of new stuff the whole time, but take the old stuff out and keep the place efficient. That's the big thing, is we must keep the place efficient. Thushen covered a little bit Oros and Energade, where we've got some nice campaigns in place now to address the loss of volumes with the CSD war going on. We've seen some nice recoveries in that business over the last couple of months. So it's going well. A big driver in this organization is the S&T site optimization in Durban. We've got 3 sites and we will end up with 1 site in 2 years' time. And that's a big project. It's on the go. It's got the right resources behind it. It's probably about ZAR 200 million, ZAR 300 million CapEx, and it's very exciting. It will reposition this organization if that's completed. And Thushen spoke about the DC at the beverage site. Home and Personal Care, we must recover the pest volumes. Last year, we were very short because we didn't have cans, and we must penetrate other markets. The further north you go from South Africa, they don't really have a winter. They only have a summer. So there's mosquitoes all the time. And I think we know that, and we drive these products into those areas. The body care volumes, I think Thushen covered that. We've got the plans in place, get our cost down, different packaging, more relevant, cheaper and going to the right channels to get the right marketing campaigns behind the products. And then continuously look at our costs in this business. The one -- we've sold quite a few brands out of the Personal Care business, and that obviously impacts on your factory, your throughput and your volumes through the factory is not as it was a couple of years ago, and we must fix that, and we're busy with that. So that's quite exciting. So I did ask all the MDs to come and listen to this because now this must be done. But they're pretty good at doing these things. My last slide, and I spoke to you earlier about restating our guidance on these numbers. And I think that is what we said previously and what we're saying now really is looking at the volumes, medium, short term, 1% to 3%, longer term, 4% to 6% inflation, just beat inflation. And I think if you've got the deflation in commodities, that number is a little bit different, but we understand that. If you look at our operating margin, probably get towards 12% in the medium term and 15% longer term. ROIC, we're close to 20%. So we probably want to get into the very shorter term over 20% and then aim towards 25%. Working capital, we stick to the 65 days. I think the guys are pretty efficient in working capital. And then the gearing, I spoke to you about that on the first slide as well that our gearing is probably around 33% or 1x EBITDA. We're very far from there. That's why we've got all these special dividends and reducing the cover. And we're trying to get to that number, and we'll probably get there in a couple of years' time, but the company is very cash generative, but that's the ambition. And then the portfolio optimization is, we're very close to actually have the portfolio optimization as a key issue because the stuff has been done. The 1 or 2 things may be left. It's not such big issues. And then obviously, the longer-term guidance is where do we look at inorganic growth in the organization. And what do we do about that? I think internally in the current businesses, we've got huge growth opportunities in all of them. And then on top of that, from a capital allocation model point of view as well as to look at what opportunities do we have outside of that. And that's probably longer-term thinking that need to start. With that, I say thank you very much for attending and listening. And I think Barati will go on to questions being dialed in and taking questions from the floor. Thushen, I think you must come and sit here. Barati Mahloele: Thank you very much, Tjaart and Thushen. Online, please do continue to submit your questions. But I think it's best to start in the room. Shaun, go ahead. Please introduce yourself, even though you need no introduction. Shaun Chauke: Okay. Shaun Chauke from JPMorgan. Two questions -- no, before I start, I think it's safe to say the Tiger is out of the cage. It's ready to go hunting. So just 2 questions on my side. So well done on that. Results on the Milling and Baking were achieved purely on the back of fixing your existing bakeries. So then my question is, how long from commission, so i.e., the start of FY '27, do you expect to realize the full benefits of the super bakeries? And what capacity utilization assumptions are you using for that scenario? And outside of -- that's the first part on that. The second part of it is outside the pure economies of scale benefits that you do get from the mega bakery, what are some of the upside opportunities that we could be missing because we're not operators. I'll ask the second one after... Barati Mahloele: Super bakery. Shaun Chauke: Yes, the super bakery. Sorry, super bakery, yes. Tjaart Kruger: Remember, the super bakery, whole investment case has been based on cost and not on volume growth. So the whole justification is based on replacing existing capacity with capacity that's much more efficient and much lower cost. So that's the premise of the new bakery. We can see we're not going to be able to close all the old bakeries because our volume growth is there, which is a lovely problem to have. It will probably put us into our second super bakery pretty -- quite a few years sooner than what we thought as well. So the benefits of the super bakery from a utilization and automation point of view is huge. We obviously don't disclose the real numbers, but it step changes the organization's cost base. It improves quality hugely because we use much better technology. And the obvious challenge we have is you've got -- you centralized manufacturing, so your distribution becomes more complicated. But we're very confident that we know how to deal with this. So this bakery will deliver nothing directly to a customer. It will go straight to depots. So with this bakery, we'll have a network of depots. We haven't done those numbers yet, and we don't know yet which exact bakeries is impacted in what way because we will make the decision when we get much closer to commissioning to look at the volume demand and the volume requirement. But it's step changes to organization. The second question, I think, was what opportunities do we miss from an efficiency point of view without having a mega bakery or super bakery? Shaun Chauke: So beyond your economies of scale efficiency benefits that you get from the super bakery, is there anything else we're not thinking about that you see that you think you will get as part of those benefits? Tjaart Kruger: Yes. The way we go to market is always a big opportunity. We talk about the general trade, but we also talk about how do we get bread to consumers in innovative ways that get them to prefer our product ahead of our competitors. And the bakeries have started a couple of months ago with a project where they get the hawkers on the street corners with trolleys that takes about 20 loads of bread. And they buy them from a local vendor in the area, which we set up and then they go and sell and they make about ZAR 200, ZAR 300. These are unemployed people. They make about ZAR 200, ZAR 30 a day on selling that 1 trolley, they sell 2 if they want to. But that's a very innovative way to look at, and we need 1,000 of those ideas daily to get our product to our consumers in a cost-efficient way where the consumer can choose it ahead of the rest. That type of stuff doesn't stop. It doesn't wait. We don't -- we're not waiting for this new bakery to save us. It won't save us if we wait for that. We have to do everything we do. And our coastal bakeries are not impacted by that. Our coastal bakeries are not that old anyway. Maybe Durban is quite old, but it's a very efficient bakery. And we've got some work to do in Pietermaritzburg. We've got one new line, one older line. But the coastal bakeries, it's a different issue that we have there. It's the biggest -- your biggest challenge in the bakeries after those -- that truck leaves the bakery is how do you get to the consumer before your competitor. And it is -- there's all sorts of challenges. People shoot at you in the trade, and I'm not joking, it's true. They shoot at you. We -- every year in the industry, it's an industry issue. We talk about it in the industry. Every year in the industry, more than a couple of people get shot. So how do you deal with that? A bakery driver, the average bakery driver starts working 3:00 in the morning. How do you deal with that? Do they sleep properly? So there's lots of challenges. That's why if you get that stuff right in the bakery business, people can't compete with you. Shaun Chauke: And then my second question is, can you please speak about the mega site in Paarl? I know you said it's chutney, vinegar and jam. Maybe speak about the -- because it's very much coastal base and you've got a very strong presence in land, can you speak about the incremental distribution costs relative to the benefits you expect from a manufacturing perspective? So i.e., is the site in Paarl beneficial because it's close to the sourcing of your raw materials? And what else can be brought into the mix of that factory, given that it feels like there's opportunity to still do beyond the 3 categories? Tjaart Kruger: I think you've answered your own question there. You must come and do the presentation next time. No, that's exactly the answer. The first philosophy of building a factory is you build it at where the raw materials are. Because if you build it anywhere else, you've got byproduct that you must truck around, which has got no value. So if you build a mill, if you build a maize mill, the best place to build a maize mill in South Africa is just north of Germiston because that's where your inbound logistics is the best, and there's feedlots very close by that can take the byproduct. And then you can have 70% of the maize pulp that becomes maize mill, you can truck that around the country, and that's pretty much in the center of the country, too. So that's the philosophy of manufacturing. All -- most of the raw materials for those products come out of the Western Cape, fruit and stuff. So that's the reason that business was started there 100 years ago by [ Acoa ]. Paarl is also a very good location because there's labor nearby, but it's not a big city with the labor cost that you've got in big cities. It's a small town, but it's not that small. So -- and people -- to get management, there's also easy. We would all love to go and live in Paarl. But if you build the factory in Upington, you start struggling a bit -- or maybe in the small town, let me say that. So Paarl is very well located. It's on the highway. It's in the area where the raw materials are. We've got management there. The facility is quite big. There's lots of space. And you're dead right, there's opportunity there for -- I think if you look at just square meter utilization, we've probably got more than 50% of it left for more opportunities. It's a great opportunity. It's a great site. Barati Mahloele: I think I'll take a question from online before coming back into the room. Tjaart and Thushen, so there's firstly, a congratulatory message. Congratulations on a great set of results and returning so much cash to shareholders. Well done. With regards to Grains, the half 2 operating margin at 14.6%, what would you say is a range for a sustainable margin for this business going forward? Thushen Govender: You want me to take it? So maybe it's worth recapping on the points I've made as well for the current year performance. One is the soft commodity cycle, and we don't expect that going away in the medium term. So the category pricing still remains relevant, and we think those margins over the short to medium term will continue. The second point I made was around the efficiency being brought to that business. The operating platform was fairly inefficient in the past, as you've seen from the past results. And we've invested in this business as well around value engineering, packaging lightweighting, automation, which is still to come. So that will help sustain those margins. And I think if you were to look at this over the medium to longer term, commodity business, just under 10% or hitting 10% is probably a good operating margin. But these tailwinds, we anticipate to continue over the short to medium term. Barati Mahloele: Thank you. Are there any questions in the room? None at the moment. No problem. I've got another one coming online. And the question is, looking at the operating margin between the different halves, can you talk a little bit about what drives future seasonality in the group? Thushen Govender: So if you consider our business, there's a few types of seasonality impacting it. One is generally the festive season. So Christmas, Black Friday, what everyone experiences as a retail surge, we obviously benefit from that. Easter, another opportunity. So as you look at those holiday seasons, there is some seasonality. And then within each category, that seasonality also differs. Bread, you'll find the bakery business seeing a bit of a volume impact during school holidays because kids aren't going to school with sandwiches. On Personal Care, we mentioned the Camphor cream, which is typically a winter product, and we're trying to deseasonalize that. Very similar with the pesticide business, that's a summer product. And as Tjaart mentioned, it's going north of our borders where the winter season isn't as prevalent or focusing on the coastal areas of SA, we can try and mitigate the impact of seasonality. So -- and then just broadly, generally speaking, during the winter months, starches are much preferred to salads, for example. Most of us stay away from salads during winter. So each category has a different type of seasonal SKU. But ultimately, if you look at the Tiger portfolio holistically, each of those seasonalities offset each other to deliver a consistent set of results. Barati Mahloele: Any questions? I'll take the last round in the room. Okay. Then I'll close with one last question that comes from online. And it's with regards to the value engineering that was mentioned earlier in terms of moving from glass to PET, reduction in peanut content in Black Cat. Can you talk a little bit more on value engineering across the business and what we can build in going forward from an uplift perspective? Tjaart Kruger: I think we've got a challenge as business people to run our business on a daily basis better than the previous day. So it's, I guess, a generic thing that your business must be run better and better and better all the time. Your utilization of your factories, improving, put technology in your factory that makes it more efficient, get your yields up. So let me give a good example. If you -- 40, 50 years ago, we could have get more than about 42% super maize meal out of a mill. Today, they run at 72%. And that's technology that's allowed there. I think that goes for most of our other categories in terms of what we -- so that's an ongoing thing, and that won't stop. And we've got lots of opportunity. We've got in the Snacks and Treats business, lots of opportunity for better technology making gums and jellies and all the stuff we do. Now obviously, not -- we can't throw ZAR 10 billion of CapEx in 1 year. We do this over time as we try and improve. I think the journey we started in Tiger, in particular, a couple of years ago on reducing our cost base, which we realized was too high. There were particular things that we needed to do is packaging has moved from glass to PET, but that's the big example. There's also [ lease ] -- a lot of stuff, fantastic in getting the packaging to be cheaper. You can do what thickness of packaging do you need and how many colors do you put on the bag? It's a lot of money. So that value engineering is also never stopping. How do you improve on that all the time. I think the tiering of products that we talk about is there's a particular thing that Tiger probably missed in the past that we've had competitors. Certainly, if you take peanut butter, for example, our peanut butter has got 91% peanuts in it and the sugar, no sugar, no salt and has got 99% peanuts in it. Some of our competitors run at 40% peanuts. Now that gives them a cost advantage that we can't really match. Now our response to that is let's get the PET sorted out, ask the consumer what they think they actually prefer PET to glass because kids walk around with peanut butter jars and its glass is dangerous. So that's the case. But then if you look at the recipe, we're very, very cautious and jealous of our brands. The one thing we're not going to do is mess up our brands. So we do proper consumer research in terms of what we can do with the recipes. And in all these categories, we can probably get a secondary product or an alternative product. And we've spoken about the Black Cat one a few times. It's -- we probably call it creamier, that's a cheaper, but we make sure the recipe that the taste profile is good and it's acceptable to the consumer. We can get that to a price point, and we'll have both on the shelf. And if it does cannibalize it, that's fine because it's at the right margin. So that's one example. We've got that example in all our products. Liezel is working in Grains. It's a bit more difficult to get a cheaper rice on the market because that's a different grain or shorter grain than its stock parboiled rice or long grain parboiled rice anymore. But there are opportunities. He's done a lot of work in pasta around what mixture of flour and stuff do we use. And that, again, is -- that's what our R&D people do on a daily basis. That's what keeps them busy to do those things. So continuously working on how do we improve these recipes to get the taste profile from a consumer point of view more acceptable at a better price. And you get substitute raw materials you can use. There's so many opportunities, but you need -- we need proper R&D people that doesn't sit at head office, sit in the factories where we can look at our technologies, look at our capabilities and actually design the future doing with what we have. Barati Mahloele: Thank you so much to all of you who have joined us online. For those of you in the room with us, that Tiger shop that you saw outside was not just for show. As you exit this room, you will find Tiger branded Tiger Brands shoppers. Please feel free to take one and fill it up with all our wonderful products across our business units. Thank you so much once again for joining us this morning.
Operator: Good day, and thank you for standing by. Welcome to Azrieli Group's Third Quarter 2025 Conference Call for Global Investors. [Operator Instructions]. With us today are Ms. Danna Azrieli, Chairwoman and Interim CEO; and Ariel Goldstein, CFO. [Operator Instructions]. This conference call will be accompanied by a slide presentation. It can be found on Azrieli's site, www.azrieligroup.com on the Investor Relations page and the media room presentations, and the financial reports can be found on the website as well. I would like to remind everyone that forward-looking statements for the respective company's business, financial condition and results of its operations are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated. Please note that today's conference call is being recorded. I would now like to hand the conference over to your speaker, Ms. Danna Azrieli, Interim CEO. Please go ahead. Danna Azrieli: Thank you. Good afternoon, and thank you for joining the Azrieli Group's earnings call for the third quarter of 2025. I am very happy to be here today leading this call as Chair of the Azrieli Group and Interim CEO. In the third quarter, we delivered strong results with another record NOI, presenting a double-digit increase of 12% year-over-year, mainly from our data center segment, where our new projects have been completed over the past year, so we are now generating full income. Our mall segment also contributed to our growth. This is driven primarily by a strong performance over the summer. The FFO has shown relative stability, but you will note a slight decrease of about 3%, excluding senior housing operations. This decrease is attributed to an increase in our financing expenses as well as expenses related to our data center operations, including onetime items. The FFO, funds from operations, included in the senior housing sector showed a decline of 7%, but this stems from a decrease in the inventory of apartments that we have available for sale, because we have a 99% occupancy in our existing senior homes. We anticipate a significant increase in our FFO from the senior housing segment upon the opening of our fifth senior home in Rishon LeZion expected this December in 2025. Ariel will, of course, discuss this in further detail and what has affected our FFO. It's important for me to note that we continue to invest and improve our asset portfolio at all times. We do this in order to maintain the high standards of our portfolio. In this last quarter, for example, we invested approximately NIS 650 million in the third quarter, and we invested NIS 2.5 billion in the first 9 months of 2025. And these investments were both in properties in Israel and in our data center segment in the U.K., in Germany and in Norway. All of our investments are made grounded in the belief that developing and preserving our assets is an essential part of our growth and our strategy that drives future growth. Our investments this year have included, among others, the purchase of land in Sde Dov for a senior housing project and investments made in development projects under construction, for example, our flagship project of the Spiral Tower, which I see from my window, where we're already at the 67th floor and which is rising every day until we'll reach the 91st floor, and the continued upgrade and development of our income-producing properties in all segments. In every investment and every project, we uphold the standard of design, construction and quality that defines one of the important principles of the Azrieli Group, the goal of ensuring that our properties remain top tier and that they are maintaining the highest standards and retain their long-term appeal. An example of this is where I'm sitting today, in the Azrieli Towers in Tel Aviv, where this strategy has proven successful since we are here for almost 3 decades after its inauguration, which was in 1998, and this complex continues to be one of the leading assets in the city operating with virtually 0 vacancy and continues to be in great condition. Now let's take a look for a moment at our key operating segments. In offices, the same-property NOI remained stable, and the results for the quarter were largely influenced by the departure of a large tenant. We're talking about Meta. When compared to the prior quarter, please note that these results included a onetime compensation payment related to the tenant's departure, which was recorded in the second quarter. But I want to stress that we have seen a resurgence of interest and a super strong demand over the past few months, mainly concentrated in Tel Aviv. To date, we have leased around 80% of the space vacated in Sarona at higher prices, mainly by leading high-tech companies and start-ups here in Tel Aviv. I was delighted to see that according to LinkedIn ranking, 4 of Israel's top 10 start-ups are our tenants in the Sarona Tower, where it's considered one of the best commercial addresses to be in, in the city. The balance of vacant space is currently under negotiation with several potential tenants, and we are quite confident that the favorable leasing trend will persist. Regarding SolarEdge, I am quite pleased to report that last week, as we reported, we reached an understanding with SolarEdge, where they will lease 60% of the area of the building, and we'll take back and lease to multi-tenants the remaining 40% in exchange for agreed-upon payments. This agreed-upon payment supplements the previous payment that we also received when the lease commencement date was postponed. Our expected NOI for this project will be approximately NIS 80 million, similar to our original estimations for this project. What I like about this deal is that I think it's more suited to the DNA of the Azrieli Group. We can now anticipate multi-tenants in the project, and we will be responsible for the management of the campus to ensure that it will be managed in the best and most professional manner. We do what we do best and SolarEdge can do what they do best. We view this as a positive development and a win-win outcome for both SolarEdge and for us in the Azrieli Group. The area in Ramat HaSharon, where the building is located, is going through an amazing transformation and development. The Ramat HaSharon municipality is highly committed to promoting its growth, and there's a lot of development and construction work in the area. New roads are being built, and we are continuing full speed ahead with our beautiful building, and we're very excited about the way this is developed for all involved. In our mall segment, occupancy rates have remained extremely high, currently at 99%, with an increase in same-property NOI this quarter. Following the disruption in the Israeli retail market that we experienced last quarter due to Operation Rising Lion and the closure of shopping centers in June, we're seeing an impressive recovery in store sales this quarter. Sales rose 4% in July through September compared to 2024, and 2024 was a very strong year for Israeli retail. As always, we continue to enhance our properties and to optimize our tenant mix. We're always thinking about ways to keep our malls current and interesting, so that when we renew our contracts and bring in new deals, we're creating new and fresh experiences for our customers. In our senior housing sector, where we're operating in Tel Aviv, in Ra'anana, in Lehavim, and in Modi'in, we're in a situation where our available inventory of new units is running low because of the success of our sales team. This is reflected in our FFO, since FFO figures are primarily a function of new resident intake or resident turnover. But of course, we have our new project in Rishon LeZion coming online at the end of this year in December, and we expect this to have a positive impact on our FFO next year. At the same time, we see an improvement in NOI in senior housing as a result of higher occupancy rates in our current projects with double-digit increase in same properties. I'm also happy to tell you that we've renovated our properties in Tel Aviv and in Ra'anana, the pool and the kitchen areas, and we're always working to create the best experiences for our clients. Our new project in East Rishon, which we call Rakafot, will include 274 apartments, a medical unit and 3,000 square meters of retail. Apartment sales are progressing at a good pace, and the opening of this home is expected to drive significant FFO growth in 2026. Data center. Similar to our last quarter, our data center operations comprised 17% of our operations in terms of NOI and have made a significant contribution to our results. We're seeing impressive year-over-year growth driven by the TikTok deal, which has been generating full income in recent quarters. You will also note that there is an almost 100% increase in the NOI from the previous quarter from last year. There is a slight decline quarter-over-quarter, which is attributable to foreign currency exchange rates. In August, we reported that our project in Germany, which we call KMW, and where we are equal partners with the German electricity company, engaged in a contract to build 36 megawatts of capacity for an international customer. Since our share in the venture is 50%, that's 18 megawatts for us. The customer has also been given the option to increase their capacity by an additional 18 megawatts for a total amount of 54 megawatts in the entire project. The project, as it currently stands, is expected to begin producing income within about a year from now during the fourth quarter of 2026, and upon reaching its full capacity, without the option, will generate around EUR 51 million in total with our share being around EUR 25.5 million. We're making very good progress in this development. In the data center segment in general, we have great confidence, and we see numerous opportunities that we're working tirelessly to pursue. A few updates on some other activities. For the Mount Zion Hotel in Jerusalem, we're very excited, because we recently signed a management agreement with the Kempinski chain. Kempinski is one of the world's leading luxury hotel chains and the hotel in Tel Aviv is, of course, one of the most successful in the country. The project is expected to be one of the most beautiful hotels in Israel in an incredible location, and it is a true honor to be able to build in Jerusalem. This is a very exciting development, and I believe it will be a big success and a magnet for both domestic and international tourism. Regarding our recent merger with ZMH Hammerman, we have recently successfully closed the very important transaction that we are working diligently to do to integrate the company into the Azrieli Group in the best possible way. I take the subject of this merger very seriously, and we have started a robust process of a post-merger integration, PMI, in order to integrate our 2 companies, which both have strong, high-caliber management teams and cultures, in the best possible way. I'm confident that combining our capabilities will create meaningful value for our shareholders and where we'll soon share more about our strategy in the residential area in the coming quarters. And now it is my pleasure to give the floor to Ariel Goldstein, the CFO of the Azrieli Group, who will review the financial parameters in more detail. Ariel Goldstein: Thank you, Danna. We will now review the key financial parameters of the financial statements. The results of the third quarter indicate continued growth in the group operating segment. NOI totaled NIS 657 million this quarter, up 12% from the same quarter last year. The increase in NOI totaled NIS 71 million. Of this figure, the data center segment contribution was NIS 55 million, resulting mainly from the inclusion of the entire income from the TikTok project. In the same quarter last year, partial income was included from 1 out of 3 of the project buildings. NIS 10 million derived from the increase in the retail segment. The increase results from a raise in rent and occupancy of the Check Post project in Haifa. NIS 1 million derived from the increase in the office segment, mainly resulting from the rise in rent, net of impact of Facebook or Meta vacating their offices in Sarona. As Danna noted, we have already marketed over 80% of the space vacated by Facebook/Meta, but the actual occupancy is being carried out gradually. Therefore, the full impact of the rent income has not yet been expressed in the report. Senior housing and rental housing each contributed NIS 3 million to this increase. Same-property NOI in the third quarter totaled NIS 588 million, up 2% year-over-year. Same-property NOI excludes a sum of around NIS 69 million, which includes the Check Post project in Haifa and the TikTok project. The increase in the company's same-property NOI results mainly from an NIS 8 million increase in NOI in the retail segment, an increase of NIS 1 million in the offices, and an increase in senior housing and rental housing of NIS 3 million each. The increase was offset by a decrease in the NOI in the data center segment, excluding TikTok in the sum of NIS 4 million, mainly due to a change in the exchange rate and decrease in utilized capacity of 1.8 megawatts, which was offset by the start of income generation in September from a customer totaled 4.8 megawatts. FFO, excluding senior housing, totaled NIS 395 million this quarter, down 3% year-over-year. FFO, including senior housing, totaled NIS 424 million, down 7%. The decrease in FFO in the quarter, including senior housing, derived from an increase of NIS 60 million in financing expenses, mostly due to an increase in interest expenses, a NIS 20 million increase in G&A expenses, deriving, among other things, from the expansion of the company's data center operations, and the onetime costs involved in the restructuring of GMG and related costs totaling some NIS 12 million. A decrease in the FFO of NIS 60 million from the senior housing, which was impacted by a decrease in the inventory of apartments available for sale, and an increase of around NIS 2 million in the other expenses, mainly taxes. The decrease in the FFO was offset by increase in the NOI of NIS 68 million. Moving to the balance sheet. Before we discuss the balance sheet figures, I wanted to remind you that on September 9 of this year, we closed the transaction for acquisition of ZMH Hammerman and converted it into a private company. The holding structure after the acquisition is 66.7%, is held by the Azrieli Group, while the minority of 33.3% is held by founding families. The full valuation of the company was set at a total of NIS 869 million after deducting transaction costs and dividend. The Azrieli Group investment is NIS 579 million. After the closing of the acquisition, ZMH Hammerman prepaid the 2 bond series in circulation totaled NIS 260 million. Accordingly, we included the balance sheet data of ZMH Hammerman as of the date of the report, including excess purchase price allocation to various assets in the Azrieli Group balance sheet. However, ZMH Hammerman results for the third quarter were not included since the acquisition was completed close to the end of the quarter. Starting from next quarter, the profit and loss reports of the Azrieli Group will also reflect the results of ZMH Hammerman. As of the end of the quarter, investment property and investment property under construction totaled NIS 51.4 billion, up nearly NIS 3.4 billion in the report period. This increase comes from investments, revaluations and exchange rate impact. On the investment side, we have invested this year to date, NIS 761 million in income-producing property under construction in Israel, mostly the Spiral Tower, SolarEdge Campus, Modi'in Lot 10, and the continuing construction of Palace Rakafot Senior Home in Rishon LeZion, which is expected to open this year. We have continued improving our existing income-producing property, investing NIS 290 million. We completed the purchase of a land in Tel Aviv Sde Dov for a total cost of around NIS 630 million designed for development of a senior home project to include around 350 apartments as well as retail space. In the data center segment, we invested NIS 793 million through Green Mountain Global, mostly in the continued expansion of Romford project in England, adding 14 megawatts to the 7 megawatts that are already producing income, and the continuing construction of some 7 megawatts in Norway, of which around 5 megawatts were completed in early September. The investment in the data center project in Frankfurt is structured as a joint venture. The company share is 50%, in which the investment is registered under the item of loans and receivables in the balance sheet and not under the item of investment property and under construction. During the report period, we invested around NIS 148 million in this project. In addition, we included ZMH Hammerman investment property totaled NIS 85 million, which includes the company's share mainly in [indiscernible] project in Tel Aviv, retail plus a car park, and a car park in West Tel Aviv. In the report period, we recorded a revaluation of NIS 805 million, resulting mostly from the change in the CPI and the decrease in the cap rate in the TikTok project in Norway in view of its completion and full operation. The weighted IRR of the retail and office income-producing property is 7%. The weighted IRR of the income-producing data center is about 7.3%. The gross financial debt is NIS 29.2 billion. The company's net financial debt is NIS 23.6 billion, comprising around NIS 37% of the total assets. The NIS 3.3 billion increase in the gross financial debt results from the closing of a nonrecourse loan in February of around EUR 371 million, which is around NIS 1.3 billion against the TikTok project in Norway. The receipt of NIS 280 million loan from development and expansion of data center campus in England, the expansion of Series I and raising of Series J bonds in the sum of NIS 2.5 billion, ZMH Hammerman loans total sum of NIS 773 million, and the impact of the increase in CPI linkage on the linked debt in the sum of NIS 687 million. This growth was offset mainly by repayment of bond, commercial paper and loans in the sum of NIS 2.2 billion in the period. The company's average effective interest rate in the report period is 2.8% with an average duration of 6 years. The average interest rate in debt in Israel in the period is 2.12% only. Note that we maintained a significant gap of more than 4% between company weighted cap rate and average cost of interest. To conclude, we will briefly review the financial statement results. Net profit in the quarter totaled NIS 396 million versus NIS 383 million year-over-year. The increase in the profit in the report period is mainly due to an increase in the company NOI, an increase in fair value adjustments and an increase in other revenues, net of the increase in G&A expenses and financing expenses. The increase in G&A expenses include onetime costs involved in restructuring of GMG and related costs totaled NIS 12 million. Comprehensive profit totaled NIS 361 million this quarter versus NIS 523 million in the same quarter last year. Comprehensive profit this quarter was impacted by profit net of tax deriving from the holding of Bank Leumi shares in a sum of NIS 73 million and a loss from translation of differences of NIS 101 million, resulting mostly from the appreciation of shekel against foreign currencies during the period between 1% to 2%. During the same quarter last year, we recorded a profit of NIS 146 million net of tax from the holding of Bank Leumi and NIS 4 million profit from translation differences. We will now hold a Q&A session. Operator: [Operator Instructions] And now we will take our first question. The question comes from the line of Charles Boissier from UBS. Charles Boissier: Congratulations on the lease-up at Sarona Tower. I have 2 questions on data centers and then one question on offices. So on data center, you mentioned that the customer in Germany had the option to increase the capacity by 18 megawatts. And I was wondering when would you know if the customer is taking that option or not? And then still on data center, you also mentioned that you're working on a number of opportunities. So I was just wondering if you could perhaps mention a few of those opportunities on which you're currently working in data center. And second on offices, so you clearly mentioned that there is very strong demand from the tech sector, especially for Sarona Tower, which is a very prime location. So my question was, to what extent is the demand strong also from the non-tech sector and the overall office market condition? And what's your view on the job displacement from AI, which is currently a big topic in the office market today? Danna Azrieli: Well, you covered so many topics in some questions, Charles. Nice to hear you. I'll try to answer if I remember all the questions. About KMW in Germany, when we have an update about it, I'll be very happy to update. And we're doing very well in that project. We're building the buildings, and we're looking forward to the first phase. And as soon as we hear something, we'll be very happy to update. With regard to the second question, which is future projects, we're checking all the time projects and opportunities that come across our desks. We have a team of people constantly looking into things. And I'm sorry, I can't be more specific. But once again, I definitely look forward to be able to giving an update as soon as we have one that we're able to share. And with regard to Sarona, I can tell you that we've been incredibly happy with the kind of demand that we're seeing. First of all, the rental rates are very good. And it's not only from the high-tech sector. I'd say that the building is around 40% in high-tech. Of course, it's a very strong demand, and it's a nice demand and the people are young and cool and it's nice to see them there. But there's also demand from other sectors as well. There's been a lot of investment in Israel in the last 2 quarters, although primarily interested in our high-tech and other industries having to do with Israel's technology sectors. There's all of the adjacent industries that are related to that, so other offices are also taking space. And with regard to AI, I mean, I'd be curious to hear your thoughts as well. There's a lot of talk, but as far as we can tell, there's still tremendous interest. And I think the world is still heading in that direction. AI is one of the hottest topics today. Maybe Ariel wants to add something about it. We're constantly looking into it. As far as we can tell, even if people are wondering where the money is going to be in the future, they're still very much investing, because this is really where most of the industries are going in all sectors. From the low-tech to the high-tech, everybody is using AI. And so I think it's very much here to stay. And those are my thoughts. I think I hit all of your questions, but maybe Ariel Goldstein wants to add? Charles Boissier: Yes. Yes. Perfect. Thank you. Danna Azrieli: It's okay. And nice to hear you. Charles Boissier: No, it would be nice to hear Ariel's views as well. Sorry, I didn't mean to interrupt. Ariel Goldstein: No, I think Danna covered -- AI is going to stay. We are heading the AI. Maybe the AI is getting very high pricing in the market, but at the end of the day, all of us will enjoy and enjoy AI today. We are enjoying from the AI development on the data center side, yes. We enjoy from the AI on the offices in Israel as well, because the industry and the high-tech companies are investing into this market. And we just saw this week figures from Bank of Israel of the numbers that were invested in the high-tech industry in the last few quarters as they are very high, yes, compared to the previous quarter. So it's very encouraging from our point of view that our economy is going back to the situation before the war. We feel it on the shopping centers, we feel it on the economy figures in Israel, and we are very optimistic in that respect. So the AI, yes, all of us are going to enjoy from this, and we will have to do some adjustments as well, yes, because probably companies, software companies will have to adjust the numbers of their employees to the fact that many of their operations will be done by AI. But it doesn't mean that at the end of the day, they will not grow very fast in other parts of their business, and they will require more office space. So we don't think this will impact over our business. Oppositely, we think that this will give us a push ahead into the economy and all of us will enjoy from this new era of AI. Operator: Dear speakers, there are no further questions for today. And I would like to hand the conference over to Ms. Danna Azrieli for any closing remarks. Danna Azrieli: Okay. First of all, thank you all for being here today. We had a solid third quarter, and the Azrieli Group is strong, diversified and is focused on ongoing development, which we'll continue to do so in a thoughtful and balanced manner. I remain optimistic about the future and the growth and prosperity of our dear country. And I thank you all for being here today, and I look forward to seeing you and hearing you at the earnings call for the fourth quarter and annual summary of 2025. Thank you very much. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
David Surveyor: Well, good morning from me as well. And as Andrew said, welcome to the Select Harvests 2025 Half Year Results Presentation. So my name is David Surveyor, and I'm the Managing Director and CEO of Select Harvests. Joining me delivering this presentation is our Chief Financial Officer, Liam Nolan. Next slide, please. The 2025 full year results presentation will be delivered by webcast on the link displayed as advised to the ASX. After Liam and I have delivered the presentation, there will be time for questions before we commence our investor road show. [Operator Instructions] In the event, we have outstanding questions at the end of the allotted time, please contact Andrew Angus via the e-mail on the screen, and we'll deal with them subsequently. Next slide, please. This slide simply outlines the disclaimer and basis of preparation of the information contained in the presentation. Next slide again. And so in terms of the agenda, I'll start by providing a business update before handing over to Liam, who will discuss the financial results in detail. And then following Liam, I'll discuss strategy and the forward outlook before we both take questions. Next slide, please, and again. To set the scene on today's presentation, there are 3 observations we would [indiscernible]. The first is that over the last couple of years, we have consistently spoken about the almond macro heading into positive space and this supporting price. We think this is now increasingly apparent to everyone and remains our forward prognosis. Secondly, the company's self-help activities delivered through our PMO are making a difference. It's evident in the results we are seeing record safety, tight cost management, better farming practice, step change in processing and increasing price capture. And thirdly, in terms of financial discipline, our focus has been on driving the base business. Profit is increasing and despite a lower crop, it's a turnaround approaching $150 million over the last 3 years of results. We have a drive on cash and net debt reduced by half and no big capital spends that stretch the balance sheet. Rather our spends are smaller continual increments for [indiscernible]. Next slide, please. So if we move to talk about safety. People are critical to Select Harvests. We continue our focus on safety improvement. Our TRIFR as at the full year was a record 5.5. Now I think it's reasonable to say that the 3 years of high performance, we have demonstrated a step change in safety. We're driving a clear sense of deep and felt safety leadership to our people. We're training our people. We're raising the visibility of safety across the organization. We're reducing workplace incidents and hazards and ensuring compliance. Now just as with running a business, you never get to perfection on safety. And so we're not satisfied. We still have much to do to achieve our sustainability goal of zero harm. The branding curve shown on the right-hand side is a framework to measure the maturity of an organization's safety culture, and we still have a long way to go. Our position on the curve evaluates how deeply safety is embedded in behaviors and attitudes across the workforce. As our safety culture matures, injuries and accidents decline dramatically and operational efficiencies increase. We're now starting to see safety become self-sustaining with energy from the shop floor and farm hands. If we go to the next slide, please. In terms of the almond macro, the global demand and supply dynamic is in great shape. And this slide provides a sense of key data and key drivers. On the demand side, prices have been increasing as the long-term global almond economic macro has improved, noting there was a midyear dip when talk of a 3 billion pound California crop surfaced, and we'll talk about that more later in the presentation. Total global demand continues to grow with CAGR of 5% to 7%. Food megatrends continue to favor healthy foods and convenience foods, both of which are almond positive. As a further comment, we are seeing positive global sentiment towards Australian supply and Select is recognized by customers as being more connected to the market and more physically present than others. We also note that ultra-processed foods are getting negative press, especially around snack eating. This makes almonds even more attractive. In terms of unit production costs shown on the bottom left of the slide, Australia has a significant relative competitive advantage to the U.S. This being a function of operational costs and yield performance. We've used data from UC Davis in this analysis, but we've taken a conservative approach to the size of the differential and not others have assigned higher unit cost disadvantage to U.S. growers. On the supply side, California represents approximately 80% of global supply and almond acres appear to have peaked at 1.4 million bearing acres, of which approximately 20,000 acres may be abandoned and plantings have reduced over time. The 2025 planting number is not yet released, but anecdotally, it's being reported as continuing to reduce with an estimate of only perhaps 3,000 new acres being planted. Australia is about 10% of global supply and forward volumes are also reasonably flat. The time to maturity for trees is 6 to 7 years, so the supply side cannot quickly respond to an uptick in demand. So we have a very positive almond macro that is sustainable over at least a 7-year horizon and relative competitive advantage where Select Harvests is well placed to benefit with very good medium-term pricing. We can go to the next slide, and we'll talk about our financial results. The company has delivered a meaningful improvement in net profit after tax to $31.8 million with a return on capital of 6.8%. Now this number includes a profit of $5.8 million on our water rebalancing strategy. The Board has determined there is no dividend to be paid this year, and this reflects the company's focus on continuing to reduce its debt levels. The company is conscious of the need to balance debt reduction with paying dividends. And once we get debt down, then dividends will resume. It's worth noting that the company has made $31.8 million in a year when the Australian crop size was smaller. And so the results reflect the broad improvements being made in Select Harvests. The average price for the 2025 crop was $10.18 per kilogram. And we recovered a couple of extra tonnes in the final few weeks to finish at 24,903 metric tons. It was a year that included some price volatility, and we saw this when the U.S. objective forecast was released in July and prices dropped by 20% and then recovered as the real crop size has become apparent. Operating cash flow was $118.6 million as we accelerated sales and bedded down our logistics capability. This is the price we struggled to deliver in our first attempt at logistics and the obviousness of the opportunity should now be apparent to all. We think there is further opportunity in this space to drive on a lower working capital position and increase cash generation. Net debt has halved and sits at $79.1 million. This year also saw the company refinance banking facilities with new terms moving to 3- and 5-year money to reduce our risk and also lower our costs. Now what I'd like to do next is provide some more detail on each of our key results drivers, the volume, price and cost. And if we could go to the next slide, please. I think it's difficult to escape the fact that 2025 crop is disappointing for the entire Australian almond industry. A lower cracker rate from thicker holes and some frost damage did not help. This year, we once again operated an earlier harvest, 10 to 14 days varying by far to optimize hygiene and reduce insect damage. We've continued our work on shaker oscillation frequencies and trial new shakers for increased efficacy of removing nuts from trees. This was successful, and we have ordered 24 new machines. I think the company did an exceptional job in getting harvest complete and looking after the quality of the crop. Now the positive, however, of a small crop is that it helps drive innovation in approach. Operationally, we ran a pilot program to see if we could extract further kernel yield from our [indiscernible]. The answer is we can, and I will talk about this more fully later in the presentation. Next slide, please. As I've already noted, the company delivered an average price over its full crop of $10.18 per kilogram. Now earlier in the year, we started to give the first sense of Select's work in getting a price premium for our products. We have continued to refine our work and measurement in this space. The top chart shows our performance against Stratamarkets based on price at the time of signing a contract, the FX rate of the day and an adjustment for tariffs. Now the math for this requires some assumptions. So to the extent it's inaccurate, however, it's consistently inaccurate and so it does not give variation by individual transaction. And the work says that over the year, Select Harvests has taken a global commodity and delivered a price premium over the global markets of some $8 million or 2% to 2.4% with some of this value benefit going to external growth. Now I caution, this is 1 year of data only and it's happening in an up cycle, although we also saw the premium gain remain true in the midyear price correction. Now I'm keen to continue building our data because as we prove the sustainability of our approach, it means we now bring extra profit leverage to every horticulture and processing improvement that we make. The bottom chart shows global almond pricing increasing from the start of the season and peaking in May, June 2025. As I previously noted, we experienced a July price correction of 20% following the USDA objective forecast of 3 billion pound prices have since recovered. Now the most recent October 2025 California almond position report shows a reduction in receipts of 7.97% compared to 2024. A direct extrapolation would imply a 2.5 billion pound U.S. crop, which we think does not capture some delayed receipts as the wet weather likely slowed delivery to processing plants. So therefore, we think a 2.6 billion to 2.7 billion pound U.S. crop is likely, and the next California crop report will give further insight. The net result in our view is a further solidifying and increasing of price. And I'll give a sense of Select Harvests' outlook position later in the presentation. If we move to the next slide, please. Total production costs, which is the cost of growing, harvesting and processing was successfully held flat in 2025 on a normalized 29,000 tonne basis at $6.71. Now I specifically note comments by Dr. Brittney Goodrich on work done for UC Davis saying that between 2019 and 2024, grower costs in the U.S. have increased by between 47% to 53%. Now whilst the time periods are not perfectly compatible, it's a stark contrast to Select Harvests' ability to control its cost base over the last 3 years. This year, there were some notable improvements in the cost of labor efficiency, fertilizer costs, harvest costs and processing costs with some offsetting cost increases in water sprays and electricity. Now let me hand over to Liam for a detailed discussion on our financials. Liam Nolan: Next slide. Thank you, David. Select Harvests' net profit after tax is $31.8 million, up from $900,000 in 2024. The key drivers of the result are $10.18 Select Harvests achieved almond price, up 32.4% from 2024. This is offset by a lower crop size, as David previously mentioned, down 15.7% to 24,903 metric tons. Despite the rising costs in areas such as water, bees and electricity, the company has managed to keep the cost per kilogram consistent with 2024, normalized to a 29,000 tonne crop. Our lower finance costs are due largely as a result of lower debt and the part year benefit of lower costs from the refinance of the company debt facilities. As announced at the half year, the company has refinanced our debt facility in 2025. We refinanced the syndicated debt facility to 3 and 5 years and were very well supported by our banks, NAB, Rabo and welcoming Commonwealth Bank to the syndicate. By extending the tenure and adding a third bank, we've reduced our future refinancing risk. Our total committed facility of $240 million has $150 million limit for 3 years and $90 million for 5 years. This structure provides flexibility for both short-term liquidity and longer-term funding needs. We've also been able to lower our financing costs, which include a 61 basis point reduction compared to 2024 and an over 200 basis reduction on our overdraft facility. We currently have $170 million in undrawn committed facilities, providing strong liquidity to support operations and any future growth. Next slide. 2025 EBITDA growth of $37 million or 81% is essentially driven by the impact of the crop profit, up $26.4 million from $27 million in 2024. And in the current year, we benefit from $5.8 million from the water rebalancing, which completed in 2024. The company balance sheet has improved significantly during 2025. Through a combination of improved earnings and strong cash flows, the gearing ratio has reduced from 34% in 2024 to 15.1% in 2025. The strength of our balance sheet can be seen through lower working capital, lower lease liabilities and most pleasingly, lower debt. Next slide. 2025 operating cash flows are up $109.1 million to $118.6 million. The cash flow generation included the carryover of 2024 working capital of around $21 million, meaning the underlying operating cash flow generation was up -- was almost $100 million before lease payments. The strong cash conversion from the $82.4 million EBITDA is attributable to strong earnings, excellent sales velocity and a step change in our logistics performance in 2024. We also had a very strong focus on our cash collections as we ended the financial year. Our investing cash flows were impacted by investments in the pre-cleaner and dryer, new shakers, Optimus and the water rebalancing. Our financing cash flows benefit from the $17.4 million relating to the 2024 equity retail raise. All these strong cash flows and management of the audited cash are the key drivers to improve net debt to $79.1 million. Next slide. Throughout 2025, management and the Board have developed a capital allocation model. Today, we wanted to introduce a framework on how we deploy capital. In doing so, we have developed a framework that aligns with our strategic goals and objectives, and the model is designed to be attractive for existing and future -- and investors. The first element of our capital allocation is around strengthening our core. With our first priority, as David mentioned earlier, is on gearing and our intent to see our gearing continue to lower. It's very much the first priority, and it enables the company to operate freely. Our base capital expenditure is targeted to be around 80% of depreciation, and this is very much focused on replacement CapEx. However, we are eager to invest in the business and specifically growth CapEx, which we broadly define as CapEx in higher returning initiatives. And this could include -- or this includes investments like our new Harvests Shakers and Project Optimus. A future action, which is not in any immediate plans, involves how we look to fund major investments. And in this instance, we would look to fund these through a combination of debt and equity. Our allocation model is also focused on returning excess cash to our shareholders through a combination of dividends and buybacks based on their intrinsic value relative to the market. As a company, we are focused on deploying capital in a disciplined and structured manner to ensure the best outcome. Next slide. This slide, it was brought up at the first half results, and I don't propose going through this in detail, but I'm happy to answer any questions later on. David? David Surveyor: Thank you. Next slide, please. All right. Thanks, Liam. And next slide again. Okay. So this slide shows our strategy coming to fruition. The historic view of Select Harvests has been based on profit and growing. This is the first time the company has decided to show profitability along our value chain. The company's strategy is generating returns by broadening value creation beyond horticulture to encompass processing and sales. The investments we have made are low cost and high returning. This slide gives you more of a segmented view of where Select Harvests makes money. Our strategy is about firstly having substantially greater almond volume; secondly, leadership in process and scale and efficiency; and thirdly, maximizing the return from the crop. And you can see value is created through not only almond horticulture and in fact, in a year where we've had lesser almond supply, the profit results have been supported by our ability to process with excellence and maximize the value from the market. Most importantly, the 3 streams, when leveraged collectively, create the opportunity for superior returns. We continue to innovate and have new opportunities, which we will run through our project management office, and they position the company well to take advantage of the almond macro. Now I'll talk about progress on strategy execution over the next slides and then connect it to the PMO and the value created. Next slide, please. The traffic light shows performance. The first strategic priority is substantially greater almond volumes. And whilst there is less green in 2025 than 2024, it's the result of the lower crop. The 2026 crop will be the first full year of our improved horticulture approach. As we benchmark our farms against others, we are confident we'll get more yield over time as we optimize fertilizer, bee density for reduced flight distances and water. There's a meaningful price for improvement, an extra 1,000 tonnes comes with limited incremental cost. Controllable costs are being kept tight as we improve on-farm efficiency for sprays, seasonal labor and organizational design. However, we are seeing increases in water, bee and fertilizer costs going forward. A smaller Australian crops are a lower external grower. So we have added an external grower Liaison Resource and expect to see some incremental supply growth in 2026. We have this year continued our investment at Piangil to improve water drainage with Phase 1 complete, and we will likely undertake a Phase 2 drainage project and start to plan for the replant of some of the [indiscernible] trees at Piangil. We've also invested in Mountview drainage dam improvements, along with a 12-hectare replant of an area previously lost to the 2022 floods. We're restoring productive land capacity. In effect, what you're seeing us doing is improving the defensive capacity of the farms to weather events. The second priority is leadership in processing. And as with the farms, processing cost down initiatives continue with less line stops, packaging line efficiencies and labor, et cetera. Having increased the capacity of Carina West to 40,000 tonnes, the investment in Optimus Phase 2 is nearing completion, and I'll talk about this project and some new initiatives on the following slides. The third priority is maximizing returns from the crop. We have on the earlier slide seen the results of our price optimization stream at $8 million. Customer optimization has seen an increase in direct supply, which is now approximately 50% of our business. From a selling perspective, it has also allowed us to build new quality grades specific to customer needs. So by way of example, historically, mixed variety almonds were sold as manufacturing or standard 5 grade. But by dealing directly with customers that use mixed nut and fruit combinations in bars and packages, we can sell mixed variety almonds at a lower price Supreme grade -- as a lower price Supreme grade almond. So instead of selling at, say, $10 a kg, we're achieving $10.90 a kg. And for the customer, they win with a discount on their sourcing of Supremes because they are a mixed variety almond. To enabling pillar -- logistics has been turned to its strength. We have data and analytics starting to roll out. And I think worthy of quick comment is our culture with our employee alignment and engagement scores sitting in the top quartile of all Australian businesses. Now I mentioned continuing innovation being run through our project management office. So the next 3 slides will give you a flavor of those activities. Next slide, please. So let's start with Project Optimus. So if you'll recall, we announced Project Optimus Phase 2, which is a 10,000 tonne capacity expansion at the end of last year. And there are 2 stages to this piece of work. Stage 1 is complete. We've automated the roller speed of our shear rollers to match their rate of wear and then balance each of these shear rollers across decks to get the optimal throughput and not overload any one deck. We've also upgraded our hulling and shelling color sorter so we take out lower quality product earlier, and in the process, ensure we do not overload the decks when ran at faster speeds. The second stage is being installed as we speak, increasing the capacity of what was deck 7 through 9, so we can further balance flow volumes and get optimal throughput. And then finally, increasing the conveyancing capacity to utilize our downstream sorting assets. This 10,000 tonnes will be operational for 2026, and we will have a total capacity of 50,000 tonnes. Next slide, please. Let's talk about kernel recovery. During the year, we started to consider the possibility of extracting further kernel from our hull piles. In the picture, you can see us pilot testing a new approach to reprocess hull and recover any salable product. No other processor in Australia is doing this, and we have proven it's possible and expect to see a yield gain of approximately 3%. This will immediately drive increased profitability for our own crop and that of our external growers. It delivers an outstanding payback and again, will be operational in 2026. Next slide, please. We trialed 6 new harvest shakers in 2025 and have decided to back this up with another 24 shakers for the coming harvest. The new technology has improved efficacy for getting nuts off trees and may lead to lower cost if we can reduce the number of blocks of land that require reshapes. The new machines will increase our ability to capture in-shell and ensure higher quality nuts as they are more quickly collected and removed from farms to minimize the risk of insect damage and mold. This investment also has a quick payback with the money recovered in less than 2 years. A number of the new shakers are already on water and they are steaming towards us. Next slide, please. The project management office. We continue to use the PMO to drive outcomes within the business. It's becoming part of our DNA. The PMO in 2025 as net of inflation delivered $16.7 million of value. And 2026, we'll see a continuation of PMO with each initiative individually tracked and monthly reported. Next slide, please, as we talk about the outlook, and one more again. Now I have in previous presentations made comment that crop forecasting is a full [indiscernible]. And so I'm not intending to repeat this approach. And we note the U.S. based on this year's crop forecast accuracy is as equally challenged as Australia in this regard. This year's bloom was good, but it was relatively quick. We've not experienced the frost damage that we saw in the prior year. The single biggest challenge this year was bees, particularly in South Australia. The company mobilized and secured sufficient bees across all farms to allow a successful [indiscernible], including sourcing bees from Western Australia. Based on the slow start to summer and cooler weather, we expect this year's harvest to commence approximately 2 weeks later than normal. Now our view on the California crop remains consistent. We think they've reached peak acres. And ultimately, we will see the crop size reducing given the limited replanting. California crop receipts at the end of October, as I noted, are 7.97% behind prior year. There may be some catch-up to this number, but a 2.6 billion to 2.7 billion pound crop seems likely. Quality is expected to be affected by insect damage and rain during harvest, and we see an implied carryout of 300-something million pounds at the end of the California crop year. Let's move to talk about margins. We're seeing strong demand in India and China in the segments that we play. This combined with a lower-than-expected U.S. crop is positive for prices. In fact, prices are increasing now on our prognosis is supply and demand dynamics will see prices continue an upward trajectory. To provide some price direction, if you had a normal crop profile and the entire crop available to sell today, we would expect to see an average price of about $10.30 per kilogram. I note this is higher than the current market consensus of $10.07. Our long-term view remains there's continued global growth in demand at 5% to 7% CAGR. Going forward, however, we do see some headwinds in our uncontrollable costs for bees, water, fertilizer and energy. We'll endeavor to offset these through the investments in capacity, yield recovery, shakers and our PMO. Select Harvests has already commenced selling its 2026 crop as we continue our approach to price optimization and sales velocity and expect to continue to outperform the pricing benchmark with approximately 55% of the 2026 crop hedged at $0.6485. Next slide, please. So I think to bring it all together, the company profitability is increasing with an almost $150 million recovery from 2023 and our business model has evolved. The balance sheet is strong and the company is looking to further reduce debt. The gains from our PMO are coming through, and we have more to deliver. The macro environment for almonds is positive, and we expect it to remain this way for future years. The company remains focused on maximizing yields, processing and expanding our midstream capabilities, capturing as much price as we can and staying tight on costs. So thank you. And I'll now hand back to Andrew Angus to manage just through the questions. Andrew Angus: Thank you, David. We've got Josh Kannourakis from Barrenjoey. Josh Kannourakis: Can you hear me okay? David Surveyor: Yes, we can, Josh. Josh Kannourakis: Just first question, just around into next year. So you mentioned on the cost side, obviously, a little bit of a step-up across a few of those things, but also some of the PMO activities. How much of that do you think you'll be able to offset of the sort of cost structure into next year? And can you just run us through maybe a little bit of a breakdown or a waterfall of how you're thinking about the sort of cost profile into next year? David Surveyor: You want to take that one? Liam Nolan: Yes. So in terms of costs, we've highlighted there are some pressures, particularly relating to water, bees and electricity. And so roughly at a high level, we're seeing water specifically being quite a big number in 2026 as an increase. The total -- those total costs are sort of roughly around $20 million that will go into the cost base in terms of just the hard inflationary increases. And in terms of offsetting those, we've got initiatives that really are driven around improving yield as an example through kernel recovery and the Shakers project, just to name a few, to really offset those. We would be targeting to offset as much as possible, but probably a large portion of those will be offset. Josh Kannourakis: Okay. Great. And then second question, just in terms of the value-added and third-party processing side of the business. I know you guys don't split it out separately, but can we just talk a little bit about maybe the delta from '25 into '26, how you're thinking about that? Because it feels like that also could be a tailwind into next year. David Surveyor: Yes. I think correct. We think there will be some tailwinds on that as we -- there will be a couple of things that drive it. One of them is that, as I mentioned, we expect to get a little bit more volume in terms of third-party volumes through the business. So that will translate and will come through. And we previously said it comes through at about $1 a kilo. We would imagine that number will continue. So as we grow those volumes, so there will be some profit tailwinds. And then the other thing that's really changed is that with -- in our value-added part of the business, we have had some fairly meaningful price increases in the last couple of months. And in some respects, that, as much as anything, is reflecting the fact that we often sign contracts, particularly things like [ pace, ] which might run for a full year period and the acceleration that we've seen in almond prices, that's now starting to flow through into those contracts for some of our value-added products. So we'd expect to see some upside in that as well. Andrew Angus: All right. David, we've got Mark Topy from Select Equities. Mark, can you hear us? Mark Topy: Yes. Just a question firstly around the global trading. China, you've talked previously about the third-party relationships and the direct you're building there. Can you talk us through just how you're seeing the China market and also the India sort of global trading and just the background to the compound growth that you're seeing in the market on demand side? David Surveyor: So I think -- yes, absolutely. So if I sort of refer to my comment, we're seeing both China and India being strong for us in terms of the way we run the business. We have actually increased -- I'm slightly guessing at the number here going from memory, Mark, but I think we increased our volume in China by about 3% to 5% actually year-on-year. So we remain very positive about China. We're certainly conscious of the fact that people do sometimes talk about the China economy softening. But as I think I've noted in other conversations, we just haven't seen that in the way that we operate. And we think that's because we've increased our customer base and that we've increased the amount of direct supply that we've got. So we've got a much better insight into the marketplace and better connection, I think, with customers than we've ever had before. So I think those things really help support our pricing position in China. And I gave an example during the presentation around one of the ways, but we have several that we're using to ensure that we maximize the price position that we're getting out of that market. In India, we, again, are seeing good strong demand, noting, of course, that India is more of an in-shell market. But again, we've got a lot of inquiry and demand coming through, and we've made sales to both India and China as it relates to our preselling of the 2026 crop. Mark Topy: Great. And as a follow-on, just on the tariffs. I know the flux around the tariff sort of position changes all time, but can you give us a read on that U.S. tariff sort of position at the moment in the China market? David Surveyor: So look, the U.S. tariff at the moment sort of operating about 45%. We're not acting on any basis that says that we think it's ever going to increase or decrease. If it did -- let's just go to the positive. If it did increase, I think the practical reality is that there is a certain price that the Chinese consumer is prepared to pay. And almost no matter what happens to that tariff, it becomes academic because we've sort of reached the point where people aren't going to pay more. And equally, if the tariff went down a little bit, I think there's still a bit of room before we start to see any impact in pricing. The other thing that's, I think, key to ponder about the U.S. tariff position or the retaliatory tariffs more so as it relates to China's response is that whilst direct U.S. supply into China has greatly reduced, you've essentially seen the fact that China always, if you like, always finds a way. And you've seen volumes going to China via Vietnam and via Malaysia and they greatly offset the direct supply that was going in, which is an alternative channel that's become the route to market for U.S. supply. Mark Topy: Great. So just your pricing around that, so I suppose we sort of factor some tariff benefit in our future pricing, I guess that's where I was getting to. David Surveyor: Sorry, say that again, Mark. Mark Topy: Yes. Just factor in some future benefit on the tariff pricing in the current year, how we just see that? David Surveyor: I think I'd say -- definitely, Mark. I think I'd say we're not forecasting any further benefit from tariffs. We're operating on the basis that they'll probably continue as they are, but we will capture value by virtue of our sales and marketing processes. And that's what I was trying to describe with that $8 million of gain because we've backed out effectively in those calculations any of the advantage that you might get from tariffs. Mark Topy: Great. And just secondly, just on that crop, I know you're being conservative on not giving an estimate, but I guess, do you foresee that you might give us a bit more feel about how it was progressing at the AGM? And is there anything sort of negative at all that you're seeing in the crop at the moment? David Surveyor: So you're quite right, it's way too early to start thinking about forecasts for the crop. We may well give an update. In fact, undoubtedly, we'll give a market update and outlook update when we get to the AGM. So that will certainly occur. Specific to your question, there are no negatives that I've got to report around the crop that we've seen so far. Andrew Angus: All right, David, we got James Ferrier from Canaccord Genuity. James Ferrier: Can I start on the transformation items that you ran through and third-party volumes in particular, because there's probably a sort of a cyclical recovery element to FY '26 if you assume the industry crop size is going to go back to normal levels, plus you've got that extra capacity to chase more volume as well. So if that eventuates, is 7,000 to 8,000 tonnes extra volume a realistic outcome for you? David Surveyor: So it's a very good question. I think if you did a sort of -- if you like bounce back to normal on crop size, you'd probably end up with an external grower volume of somewhere around the 10,000 tonne level. And then, of course, we're aiming to see that number go up a little bit as we attract additional growers to the company. James Ferrier: Yes. Okay. That's helpful. And then that kernel recovery line investment less than a year payback. So you're basically looking at $5 million extra EBITDA in FY '26. And I'd assume that would come through in the form of a higher crack out rate. David Surveyor: No, because what we're doing is -- so if you -- for anyone that's been to one of our plants and if you think -- if you can think about going outside the factory and you can see a pile of hull and shell, which we typically are either using to fire our CoGen plant or it's going to Compost or some of it is going to be sold as [indiscernible] input for cattle, what we've realized is in that pile, there is some kernel that actually remains in it. And so we have devised a process that allows us to, in line, extract that before it gets to the hull and shell pile. So it's not a [ crack ] issue as such. We're taking it out of that stream. James Ferrier: Okay. Understood. That's helpful. On the outlook, probably a couple of follow-ups here to Josh's question. So Liam, you talked about water, bees and electricity as the 3 main drivers of the uplift in production costs in FY '26. Where does fertilizer sit given you didn't mention it there? Liam Nolan: In terms of cost on fertilizer in 2026, marginally up on 2025, but we are planning to use some more as well from what we've previously used. So subject to the crop being able to take it, our plans are through our horticultural program to invest more in our fertilizer from a quantity perspective where it makes sense and where the crop is able to respond to it. James Ferrier: Yes. Understood. And you mentioned on the value-add items, David, you mentioned that -- apologies, yes, I just muted myself somehow. You mentioned that there were some recent price increases implemented across the value-add product lines. Can you quantify the earnings benefit you're expecting in FY '26 from that? David Surveyor: Probably not, James. Probably not given that we don't do that sort of segment level of reporting, I probably -- I wouldn't do that. But it's certainly some catch-up that is, if you like, reflective of the rate of increases that you've seen in in-shell and kernel prices over the last 12 months. James Ferrier: Okay. Lastly, just in the context of that capital allocation framework, why didn't the Board decide to return excess capital in the form of a dividend or a buyback given where the gearing is and the significant improvement in earnings? What am I missing on that framework that would have prevented that outcome of eventuating? David Surveyor: We might both have a go at this. I think that essentially what you're seeing in the dividend for this year is -- so we've got our gearing down and we've got it down to sort of 15.1%. But we'd like to get it a little bit lower still. And so what you're really seeing is the company trying to get to a lower level of gearing. And once we get to sort of an internal target number that we might have in mind, then we go to resuming dividend payments. And we just want to make sure that the business is robust for any cyclical shifts that may happen through the cycle. The company had been through a period where it could survive 1 year, but if you go back over recent history, when you get 2 or 3 challenging years in a row, it really put the balance sheet under pressure. And so it's really a decision around making sure that we are as robust as we can be. But absolutely, there is recognition from the company and a desire from the company to actually return to paying dividends back to shareholders. Liam, do you want to talk about the capital? Liam Nolan: Yes, sure. And I think just the one thing to add in 15.1% is a [indiscernible] number. It is the lowest point of the year. And so we do have a big fluctuation as we go through in our working capital throughout the course of the year as well. So the desire is to see it lower and see it a bit lower for longer. Andrew Angus: We've got another question from Mark Topy at Select Equities. Mark, are you there? Mark Topy: Sorry, can you hear me now? Andrew Angus: Perfectly. Mark Topy: The cash flow you achieved this year was a real step-up. So I'm just wondering how do you see that going forward? Can you repeat the sort of cash collecting you achieved in the current year and maintain that really strong cash flow trend? David Surveyor: Yes, good question. So the answer is absolutely yes, we think. In fact, we think there's still more to be taken out of our working capital. But I think we've sort of proven to ourselves the value of sales velocity, getting our logistics [ teams ] right, and we've got the next crank of the wheel to do over this coming year to try and shift our working capital position. That's -- and again, it kind of goes to -- a couple of years ago, we started that presales process. We're underway this year. In fact, we're a little bit further ahead this year than we were last year, and we're very keen to see more cash generation from the business. Obviously, it will be helped by higher prices as well. Mark Topy: Great. And just as a follow-up, then just to clarify that debt level. So what is the target debt level across, I suppose, the year allowing for that, obviously, that increase in working capital in the first half? Liam Nolan: Yes. So we're not publicizing what the target is at the moment, Mark. Suffice to say we want to get it lower than 15.1%, which is where it is at the moment. And in terms of -- yes, it does -- as I said, it does fluctuate quite a lot during the year. And I think we've seen even in 2025 in the half year results, you can see that the debt level remains stubborn all throughout the year, and it really only drops down in sort of August and even September each year before it ramps up because of the cycle that we're in. Mark Topy: Great. And maybe again, you might give us a bit more detail around that at the AGM perhaps in terms of where you see that target debt level being in terms of dividend payments and so forth? David Surveyor: Well, I think, Mark, you're right, there'll certainly be another -- at that time of year, there's certainly -- midyear, there's another moment for the Board to consider the company's debt position and its view on paying dividends. I think that's exactly right, and we'll respond at that time. Andrew Angus: David, we have one last question from Chris [indiscernible], who's a retail holder. Chris, are you there? Unknown Attendee: Hello? Andrew Angus: Chris, are you there? Unknown Attendee: Can you hear me now? David Surveyor: Yes. We got you. Unknown Attendee: It seems you're on the right track sort of moving forward. I guess just a few questions. Just on the presentation on Page 14, when you talk about the EBITDA, the source of the changes, I guess the biggest contribution is in relation to pricing. So where you've got $62 million there. So this EBITDA, is this in relation to obviously, the prior year, this being the AGM? Is this the contribution in relation to the increase in prices, for example, and then the other -- the lower volumes, the change in relation to the volume change, it's not in relation to the latest forecast, for example. Liam Nolan: Yes. So the year-on-year changes, Chris, in the increment, yes, you're right. Unknown Attendee: Yes. So really, the biggest contribution to the results this time has been the relationship with the prices, which is sort of out of your control to a large degree. And then the second question is just in relation to bees. I'm just wondering with the Varroa mite and whether it was possible to have more control over the situation with bees on the property. I guess they need to be shifted around. They're always looking for pollen. But I'm just wondering if there's any initiatives there to increase the pollination from bees and whether -- what effect that would have had on your production if you didn't have the issue with the bees and the Varroa mite, what increase in production there would have been or pollination and consequently, the almonds, I guess, if you can give some color in relation to that. David Surveyor: Sure. Yes, we'll do. So to your first point, I mean the 2 -- as the chart points out, you're quite right, the 2 big things that really start to drive the number relate to the crop size, and you see that in the volume, orange bar, and you're quite right, the almond price. And of course, the almond price is -- the actual price that you get, you've got a piece -- there's a chunk of that, which 100% is the movements in the commodity price of almonds. But then you've got the things which Select Harvests does above that. And so particularly that there are 2 things that are critical for that. One is obviously our sell price, and I spoke about $8 million, but that bar would be made up of the premium that we've got over the global market position. And then another chunk of it, which we haven't broken out, is our ability to sort and pack product for the highest possible value. So you've got a couple of things that are sitting in that price bar, which are beyond the impact of the commodity price changes, but you're 100% correct that commodity price change is a very significant determinant of how the numbers flow through in terms of the profitability of the business. To your second point about bees, that is a super question. The biggest challenge around bees relates to South Australia, if I was to put a geographic boundary on it. So with Varroa mite, the Australian government has moved to treating Varroa mite as something that's in place and it's got a managed response to it. South Australia is slightly unique because in some respects -- and by managed response, what that means is they're accepting that Varroa mites in the Australian geography and it's about how is it best managed. And so there's some protocols around that. But South Australia has, if you like, been of the view that it is Varroa mite-free and therefore, is trying to structure itself to stay that way. And as a result, it has effectively put up a border between South Australia and the rest of Australia to prevent bees being able to travel from, say, New South Wales or Victoria into South Australia as they undergo a very significant evaluation and testing regime. The result of that is, I think not only for almonds, but more broadly across South Australian, there's an issue where there is not enough bees locally within South Australia relative to the demand requirement, and that's certainly true for almonds. So the Select Harvests response to that has been that for the bloom that we've just been through, we did some scrambling where we -- and I spoke about mobilizing. But in effect, what we did was we took some bees out of Queensland, went through a very rigorous process to get those bees authorized to move into South Australia. And the other thing that we did, which no other player did, we sourced bees out of Western Australia. And Western Australia is Varroa mite free. So actually bees can effectively transfer from WA to South Australia reasonably comfortably. And so we've got this mechanism that has us trying to work with our existing bees suppliers for the way that we would normally source bees. And then we've extended out of that to find ways to try and bring them out of Queensland, but also Western Australia and more importantly, Western Australia as a go-forward position. So we're now doing some work for the next bloom period where we're trying to make sure that we have got more security around these. And particularly, we are in the process of looking to purchase bees. We historically have not been a bee owner, but we are trying to source bees out of Western Australia as the majority of those bees so that we can bring them to South Australia and ensure that we're protected for the coming season. So there's a lot of activity going on around bee management to ensure that because the effect of not having bees is a major event for Select Harvests and in fact, any almond growers because it means you won't be able to pollinate across your various varieties. So it's a big deal event. And so we have put some really significant energy and activity solving for it. Andrew Angus: Thanks, David. Look, we're going to have to wind up. We've got a couple of outstanding questions, which I'll follow up separately, but we are due somewhere in 5 minutes. So I think it's probably time to end. David Surveyor: Okay. Well, perhaps I might conclude simply by thanking everyone for attending and participating. We appreciate getting the questions, and we hope you found our 2025 results presentation useful. Thank you. Bye-bye.
Operator: Thank you for standing by, ladies and gentlemen. Welcome to Safe Bulkers Conference Call on the Third Quarter 2025 financial results. We have us with us today, Mr. Polys Hajioannou, Chairman and Chief Executive Officer; Dr. Loukas Barmparis, President; and Mr. Konstantinos Adamopoulos, Chief Financial Officer of the company. [Operator Instructions] Following the conference call, if you need any further information on the conference call or the presentation, please contact Capital Link at (212) 661-7566. I must advise you that this conference is being recorded today. The archived webcast of the conference call will soon be available on the Safe Bulkers website, www.safebulkers.com. Many of our remarks today contain forward-looking statements based on current expectations. Actual results may differ materially from the results projected from those forward-looking statements. Additional information concerning factors that can cause actual results to differ materially from those in the forward-looking statements is contained in the third quarter 2025 earnings release, which is available on the Safe Bulkers website, again, www.safebulkers.com. I would now like to turn the conference over to our speakers today, Chairman and CEO of the company; Mr. Polys Hajioannou. Please go ahead, sir. Dr. Loukas Barmparis: Good morning to all. I am Loukas Barmparis, President of Safe Bulkers, and I will do today the presentation, and I'm welcoming you at our quarterly results. Key developments of the previous period include the performance of the IMO Net-Zero framework and the expected gradual market fragmentation due to geopolitical reasons for fees and tariffs resulting in increased market volatility. The dry bulk market recovered compared to the previous quarter, and we sold 2 of our oldest vessels as part of the company's ongoing fleet renewal strategy. Our company maintains a strong capital structure providing flexibility in our capital allocation. Lastly, we have declared a dividend of $0.05 per share of common stock rewarding our shareholders. Following a comprehensive review of the forward-looking statements language presented in Slide 2, let us proceed to examine the supply side dynamics in Slide 4. The dry bulk fleet is projected to grow by about 3% on average in 2025 and in 2026 due to stable new deliveries. The order book now stands below 11% of the current fleet. Asset prices are projected to pick up in line with the current freight market. Recycling volumes are anticipated to rise through as market conditions prompted that into older vessels, especially in relation to the 25% of dry bulk fleet being older than 15 years and the overall average age of the dry bulk fleet. As a result, the ship recycling would be double over the next 10 years compared to previous decade as per Bimco projections. Currently, 15% of ship capacity in the dry bulk order book will be ready to use alternative fuels upon delivery. And out of those ships 52%, they may use methanol, 35% LNG and 13% ammonia or hydrogen. However, the dual fuel order book remains small on dry bulk segment. The postponement in adoption of the global fuel standard by IMO, may bring another path on decarbonization towards more pragmatic solutions. We do have 2 dual fuel new builds on order with delivery in first quarter of 2027. Safe Bulkers fleet now counts 12 Phase 2 vessels on the water, all delivered 2022 onwards. On top of that, 24 vessels have been environmentally upgraded and 11 are eco vessels having superior design efficiencies. 80% of our fleet comprises Japanese built vessels, double the global average of 40%, while our average fleet age of 10.1 years being 2.5 years younger compared to the global average of 12.6 years. Our commercial competitiveness will strengthen as we will be taking delivery of our remaining order book of 6 Phase 3 vessels. By first quarter of 2027, Safe Bulkers fleet will be comprised of 35% Phase 3 vessels, 18 out of 51, positioning us favorably to compete based on the fuel efficiency of our vessels, while the shipbuilding capacity will continue to be constrained, leading to longer lead times. Moving on to Slide 5, we present an overview of the demand and basic commodities trade. The combination of trade war as expected through tariffs, high debt, high interest rates, new fiscal demands and persisting geopolitical tensions, elevated policy uncertainty, straining public finances can pose a considerable down risk for global growth and disinflation. For our segment, we anticipate an improving freight market rate as a result on the trade truce resulted from the agreement between U.S. and China with an increasing focus on the existing fleet decarbonization and energy efficient new builds. The global GDP growth expectations for 2026 and 2027 as reflected in the IMF's October forecast call for a growth of about 3% in the coming years, accompanied by a gradual control of inflationary pressures. According to Bimco the forecasted global dry bulk demand growth will be 2% in 2026, followed by 1.5% in 2027, with grains and minor bulks being the best performing sectors. China and India are gradually boosting domestic coal production, reducing import demand. China has been rapidly phasing out fossil fuels from electricity generation, boosting renewables, reducing import dependence. China's economy is still being affected by property sector crisis and manufacturing overcapacity. Trade tensions between the U.S. and China, although truce has been reached, remain a key source of global economic uncertainty. On the good side, additional Chinese purchase of U.S. soya beans were reported with a total of about 1 million tons sold since the U.S.-China trade war truce while the U.S. has suggested that China could purchase up to 12 million tons of U.S. soybeans. India continues to perform and is projected to experience the fastest growth among emerging economies with a forecasted 6.2% GDP increase in 2026. Its expanding domestic market and manufacturing sectors may continue to contribute positively to the dry bulk demand with infrastructure investments playing a vital role. The Japanese government approved a $135 billion economic stimulus package, the country's largest package since the COVID period amidst slowing economic growth with measures also containing dedicated funding for the Japanese shipbuilding industry. Currently, in the spot rate market, multiple miners continue offering cargoes in both basins. Steady gains were made in the Atlantic with sentiment supported by expectation of further U.S. China grain sales and a tight forward tonnage list. Fresh U.S. grain cargoes also boosted the NOPAC rates. Looking forward in 2026 and 2027 an expected decline in coal cargoes and limited iron ore cargo growth will negatively impact demand growth. Instead, growth is expected to come from stronger grain and minor bulk shipments and from longer sailing distances. Summing up the supply-demand equilibrium on Slide 6. The supply growth is expected to continue to outpace demand. The freight market has rebounded recently during the start of the third quarter. All 8 of our Capes are presently period chartered with an average remaining charter duration of almost 1.7 years at an average daily charter rate of $24,800 providing us visibility of cash flows, topping $124 million in contracted revenue backlog from Capes alone. Moving to Slide 8, we present an overview of our quarterly highlights. We have declared our 16th consecutive quarterly dividend of $0.05, representing 4.1% dividend yield. At the same time, our free cash flows finances our newbuilding program. We maintained ample liquidity, profitability and capital resources of $390 million and a comfortable leverage of about 35%. We sold 2 of our oldest vessels in our fleet in line with our fleet renewal strategy and achieved 0 vessels in D & E carbon intensity CII rating of IMO for 2024 as described in our 2024 sustainability report. On Slide 9, we present our returns to shareholders of $83.9 million paid in common dividends and $74.9 million paid in the form of shares repurchases since 2022. We have been consistent in generating sustainable returns across market fluctuations because of our track record, hands-on management and our overall business model. Concluding the company update on Slide 10, we present our strong fundamentals. Safe Bulkers is a dry bulk company with $496 million market cap, 45 vessels in the water having $274 million scrap value. We maintain significant firepower with $124 million cash and $267 million in undrawn RCFs, revolving credit facilities and $176 million borrowing capacity against our significant order book of 6 newbuilds, mainly in Japanese shipyards. We focus on our majority Japanese build-fleet advantage, on fleet energy efficiency and lower CO2 taxation reflected in our CII rating of 0 vessels on the bottom ratings of D & E. We maintain a technologically advanced fleet, strong balance sheet, comfortable leverage and low net debt per vessel of $8.7 million for a 10.1-year old fleet. We have built a resilient business model with cash flow visibility of $164 million in revenue backlog, healthy expansion for a sizable fleet that achieves scale and a meaningful 4.1% annualized dividend yield positioned to leverage on its fuel efficiency. I now pass the floor to our CFO, Konstantinos Adamopoulos, for our quarterly financial review. Konstantinos, the floor is yours. Konstantinos Adamopoulos: Thank you, Loukas, and good morning to everyone. During the third quarter of 2025, we operated in a weaker charter market environment compared to the same period in 2024 with decreased revenue due to lower charter hires and decreased earnings from scrubber fitted vessels. Moving on to Slide 12 with our quarterly financial highlights for the third quarter of 2025 compared to the same period of 2024. Our adjusted EBITDA for the third quarter of 2025 stood at $36.1 million compared to $41.3 million for the same period in 2024. Our adjusted earnings per share for the third quarter of 2025 was $0.12. This is calculated on a weighted average number of 102.3 million shares compared to $0.16 during the same period last year, calculated on a weighted average number of 106.8 million shares. In the graph on the top, during the third quarter of 2025, we operated 46.51 vessels on average, earning an average time charter equivalent of $15,507 compared to 45.27 vessels on average, ending TCE of $17,108 during the same period in 2024. Our daily vessel earning expenses decreased by 4% to $5,104 for the third quarter of 2025 compared to $5,311 for the same period in 2024. This daily running expenses, excluding dry docking and predelivery expenses increased by 1% to $5,060 for the third quarter of 2025 compared to $4,999 for the same period last year. In Slide 13, we see a quick overview of our quarterly operational highlights for the third quarter of 2025 in comparison to the same period last year. Let's continue now to Slide 14, where we present our balance sheet analysis and noting that our assets are presented in the book value. The company maintains a healthy balance sheet supported by robust equity base at the concerned levels. Strong liquidity and ample cash reserves provide significant financial flexibility to navigate market volatility and take advantage of market opportunities. Our capital structure positions the company for sustainable long-term growth and resilience. Concluding our presentation in the last slide, #15, we present our daily free cash flow for the 9 months of 2025, illustrating the company's ability to generate free cash flows highlighting disciplined cost control and efficient vessel operations. I would like to highlight that based on our financial performance, the company's Board of Directors has declared $0.05 dividend per common share. The company has maintained a healthy cash flow position of $187 million as of November 21, 2025 and another $210 million in available undrawn revolving credit facilities, so a combined liquidity and capital resources just shy of $400 million plus a contracted revenue of $164 million. This underscores our capacity to support debt service, the investment and shareholder returns at the same time which enable us to expand the fleet, build a resilient company and create long-term prosperity for our shareholders. Thank you, and we are now ready for the Q&A session. Operator: [Operator Instructions] We reached end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments. With no more questions, I'll turn it back over to management. Dr. Loukas Barmparis: Okay. So thank you very much for attending this conference call, and we'll be in touch next quarter. Thank you very much. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.
Operator: Good day, and welcome to the Cheetah Mobile Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Helen, Investor Relations for Cheetah Mobile. Please go ahead, Helen. Jing Zhu: Thank you, operator. Welcome to Cheetah Mobile's Third Quarter 2025 Earnings Conference Call. With us today are our company's Chairman and CEO, Mr. Fu Sheng; and our company's Director and CFO, Mr. Thomas Ren. Following management's prepared remarks, we will conduct a Q&A section. Please note the management's script will be presented by an AI agent. Before we begin, I refer you to the safe harbor statement in our earnings release, which also applies to our conference call today. Management will make forward-looking statements. At this time, I will now turn the conference call over to our Chairman and CEO, Mr. Fu Sheng. Fu Sheng, please go ahead. Sheng Fu: Good day, everyone, and thank you for joining Cheetah Mobile's Third Quarter 2025 Earnings Call. I'm Fu Sheng, the CEO of Cheetah Mobile. I'm very happy to report that our turnaround efforts are paying off. We hit quarterly breakeven ahead of expectations. In Q3, we made an operating profit -- first time in 6 years. We believe we are well positioned to approach breakeven for the full year 2025. At the same time, our growth stayed strong in Q3, building on the momentum from the first half of the year. Q3 revenue rose 50% year-over-year, driven by both our Internet business and our AI and other businesses. Our AI and other segment grew even fast, up 151% year-over-year and 6% quarter-over-quarter and now presenting 50% of total revenues. So far, 2025 has been a solid year for Cheetah. Revenue in the first 9 months rose around 48%. We became profitable in Q3 and took important steps in our two AI focus areas, AI robots and AI tools. We believe this progress shows our investors were right to trust our vision and work. I want to thank our shareholders for their support. I know many of you invested in Cheetah because you believed in our ability to deliver a comeback. We are working hard every day to make that happen. I remain fully committed to leading the company forward and our results this year show that the turnaround is real. Looking ahead, we will focus on driving growth by building new growth engines through our AI initiatives, AI robots and AI tools. Today, I will talk about our vision and progress in these areas. Thomas will follow with more on how we are building a lean cost structure to support long-term profitability. Both AI robots and AI tools have enormous market potential, and Cheetah Mobile has strong advantages to build new growth engines in these areas. Additionally, we hold minority investments in several companies in this space, which could extend our organic growth in the future. In Q3, our AI robotic business contributed about 15% of total revenue, growing about 100% year-over-year and 40% quarter-over-quarter. We see two drivers of this growth. First, strong demand for our voice-enabled wheel robots in China. In Q3, for the second quarter in a row, revenue from these robots doubled year-over-year. They now make up around 5% of our total revenues, supported by both repeat orders and new wins. As of September 30, 2025, the contract backlog for these robots in China was up 32% from the previous quarter. Since then, the backlog has doubled again, reflecting sustained demand. These trends make us comfortable for a continued strong [ UA ] growth in our revenue from these robots in the fourth quarter. Why is demand rising? First, more customers are open to using robots. And today, wheel robots are the most reliable and cost-effective option for large-scale deployment. But more importantly, product experience is getting better. AgentOS, our voice system powered by AI agents, gives our robots a smarter brain to understand and respond more naturally to people. That improved experience allows us to charge a premium even in a competitive market, but most of our revenue growth came from higher shipment volume. We believe AgentOS not only enhances user experience but also strengthens our leadership in voice-enabled robots. Our voice-enabled wheel robot, which integrated with Google's Gemini 2.5 Flash was recently featured by Google Cloud at its AI Asia Conference. We believe this is a strong sign of endorsement. We are continuously upgrading our AI agent capability and applying it to our products. Looking forward, we think these robots can do even better overseas as we combine third-party genAI and multimodal models with our strength in voice AI and autonomous mobility to drive real-world applications. Second, our robotic... [Technical Difficulty] Operator: Sorry for the interruption, everybody. This is the conference operator. Looks like we've lost the main speaker connection. I will place hold music in the call, and we will get them connected again. Please standby. Thank you for holding, everyone. This is the operator. I've reconnected the main speaker line. Please proceed with your call. Jing Zhu: Hello, everybody, this is Helen from Cheetah Mobile. I think there are some tech issues then our call disconnected. I will just replay our CEO's prepared remarks. Very sorry for the inconvenience. Sheng Fu: Good day, everyone. And of this growth, first, strong demand for our voice-enabled wheel robots in China. In Q3, for the second quarter in a row, revenue from these robots doubled year-over-year. They now make up around 5% of our total revenues, supported by both repeat orders and new wins. As of September 30, 2025, the contract backlog for these robots in China was up 32% from the previous quarter. Since then, the backlog has doubled again, reflecting sustained demand. These trends make us comfortable for a continued strong [ UA ] growth in our revenue from these robots in the fourth quarter. Why is demand rising? First, more customers are open to using robots. And today, wheel robots are the most reliable and cost-effective option for large-scale deployment. But more importantly, product experience is getting better. AgentOS, our voice system powered by AI agents, gives our robots a smarter brain to understand and respond more naturally to people. That improved experience allows us to charge a premium even in a competitive market, but most of our revenue growth came from higher shipment volume. We believe AgentOS not only enhances user experience but also strengthens our leadership in voice-enabled robots. Our voice-enabled wheel robot, which integrated with Google's Gemini 2.5 Flash was recently featured by Google Cloud at its AI Asia Conference. We believe this is a strong sign of endorsement. We are continuously upgrading our AI agent capability and applying it to our products. Looking forward, we think these robots can do even better overseas as we combine third-party genAI and multimodal models with our strength in voice AI and autonomous mobility to drive real-world applications. Second, our robotic arm business is growing steadily supported by three key industry trends. Number one, in manufacturing, collaborative robotic arms are becoming more and more popular because they're smaller, easier to install and more affordable, they're also safer to work with. So they help fill many unmet needs in factories like doing tasks that need flexible movement, careful and precise work or real-time feedback. These tasks now rely on human workers today. Number two, in commercial spaces like coffee shops and smart retail, because of advances in lightweight design and easy programming and building vision of feedback, we are unlocking new use cases. Our team's ability to understand real-world needs and build practical products gives us an edge. Number three, robotic arms are a core part of embodied AI. As global demand for physical AI grows, we believe robotic arms will play a key role in bringing AI into the real world. We strengthened our robotic arm business through an acquisition, demonstrating our strategy of combining organic growth with M&A. This business is a great fit for us. It is already profitable with tens of millions of RMB in annual revenue, most of it from overseas customers. By bringing this company into our group, we've expanded our product line and strengthened our presence in global markets. More importantly, we started testing how to combine our wheel robots with robotic arms to create embodied AI that can handle more complex real-world tasks. It's still in early days, but our solid foundation in both technology and product development puts us in a strong position to grow in this space in the long run. Moving on to AI tools. This is another area where we see long-term potential. We're using AI agents to quickly build a variety of new tools for both PC and mobile, and we're also upgrading some of our existing products with AI features. For example, in one of our legacy products, Duba Antivirus users can now interact with their PCs through natural language to complete tasks like system settings. No need for complex manual steps. And small-scale testing of other tools like meeting summarizers, we've also seen strong user engagement and good willingness to pay. What makes this space exciting is that AI coding apps have greatly reduced the time and cost it takes to build and launch new products. This gives us the flexibility to test many ideas quickly and focus on what works. While we're still in the early stages, we believe our strength in building user-friendly tool-based apps, especially with the help of AI agents, puts us in a good position. And since subscriptions already make up more than 60% of our Internet revenue, we're confident in our ability to monetize future products through the same model. To close, I believe Cheetah has moved beyond the turnaround phase. Looking ahead, our focus is on building long-term value by scaling our AI robot business and capturing the upside of AI-native tools. While we're still early, both segments have real momentum and strong potential to drive growth in the years to come. Thomas Jintao Ren: Thank you, Fu Sheng. Hello, everyone, and thank you for joining the call. Unless otherwise stated, all financial figures are presented in RMB. In the third quarter of 2025, we are pleased to reach an important milestone. We reported our first quarterly operating profit in the past 6 years. This achievement reflects the disciplined execution of our teams and the continued improvement in our operational efficiency. Operating profit was RMB 4 million in the quarter. On a non-GAAP basis, operating profit reached RMB 15 million compared with an operating loss of RMB 60 million in the same period last year and an operating loss of RMB 2 million in the previous quarter. Let me walk you through the key financial results in the quarter. Total revenue reached RMB 287 million, up 50% year-over-year, driven by 151% growth in our AI and other segment. This segment accounted for 50% of total revenue compared with 30% in the same period last year. Our Internet business remained stable with revenue increasing 6% year-over-year in Q3. Gross profit increased by 64% year-over-year and gross margin improved to 75%, up from 68% in the year-ago quarter. Operating profit improved to RMB 4 million compared with an operating loss of RMB 72 million a year ago. On a non-GAAP basis, operating profit was RMB 15 million compared with an operating loss of RMB 60 million last year. By segment, our Internet business delivered approximately RMB 21 million in adjusted operating profit in this quarter, up 55% year-over-year. Adjusted operating loss for our AI and other segment narrowed by 82% year-over-year and 53% quarter-over-quarter to [ RMB 15 million ] in this quarter. On the balance sheet side. Our financial position remains strong. As of the 30th of September 2025, the company has cash and cash equivalents of about USD 224 million and long-term investments of USD 107 million. We continue to maintain discipline in cash flow management and capital allocation. Looking ahead for our Internet business, we will continue to deliver robust operating profits. We want to be clear that we prioritize operating profit growth over revenue growth. For our AI and other business, we also aim to further manage our cost and expenses to a more focused and efficient approach. First, we are focusing on high potential use cases for our robotics business, that is the only way to build sustainable and profitable business models. We concentrate on AI-powered, voice-enabled wheel robots, products that have proved to deliver a highly competitive ROI, [ a cheaper ] alternative for reception, museum and exhibition scenarios. Second, we leverage third-party and open source models and tools to enhance our robotic experience. This approach allows us to accelerate product updates, thereby increasing our overall efficiency. Third, for our advertising agency service and multi-cloud management services, we are taking a more disciplined approach, strengthening contract control [indiscernible] and customer value to better manage our costs and expenses. Overall, at the corporate level, we will continue to invest in AI robots and AI tools as we believe these two areas will drive our long-term revenue growth. However, we will stay disciplined and ROI focused in every decision. I believe Cheetah has entered a much better phase compared with a year ago. In product development, as we shared in the previous calls, we encourage our employees to use AI tools such as [ coding ] apps to build their own AI, not only to improve productivity, but also to enhance decision-making. Leveraging AI allow us to develop products faster and operate them with fewer people than before. Most importantly, with the AI opportunity, the business improvements we have achieved over the past year and growing recognition from the capital market, we are seeing renewed confidence and momentum across our teams. I personally believe these changes, stronger execution, disciplined investments, improved efficiency and an inspired team form the foundation for Cheetah to rebuild its success in this new chapter. Thank you. We are now happy to take your questions. Jing Zhu: Operator, please open the call for... Operator: [Operator Instructions] And our first question today comes from Thomas Chong from Jefferies. Thomas Chong: [Foreign Language] Unknown Executive: [Foreign Language] Operator: Our next question comes from Vicky Wei at Citi. Yi Jing Wei: [Foreign Language] Unknown Executive: [Foreign Language] Operator: Our next question comes from [ Lydia Lin ] at Morgan Stanley. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Operator: Our next question comes from [ Zhang Heng ] with Everbright Securities. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Operator: Our next question today comes from [ Alicia Soh ] with JPMorgan. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Operator: Our next question comes from Zeping Zhao with ICBC International. Zeping Zhao: [Foreign Language] Unknown Executive: [Foreign Language] Operator: Our next question today comes from Joanna Ma with CMBI. Joanna Ma: [Foreign Language] Unknown Executive: [Foreign Language] Operator: Our next question comes from [ Jing Wan ] with CICC. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Operator: Our next question comes from [indiscernible] from [ CYN ] Securities. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Operator: Our next question comes from [ Yongping Diao ] with Guotai Haitong. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Operator: And our final question today comes from [indiscernible] Securities. Unknown Analyst: [Foreign Language] Unknown Executive: [Foreign Language] Jing Zhu: Okay. Operator, please check if we have any further questions. If not, we will end the call. Operator: Yes, ma'am. We have no further questions in queue at this time. [Operator Instructions] I'm showing no questions, ma'am. You may proceed with any closing remarks. Jing Zhu: Okay. And then we can end the call. Thank you so much for joining our earnings conference call today. Thank you so much. Operator: Thank you, and thanks, everyone, for connecting to today's call. You may now disconnect your lines, and have a wonderful day.
Operator: Dear investors and analysts, good afternoon. Thank you for attending Super Hi International's Q3 2025 Earnings Call. Today, the company's Executive present on the call are Ms. Yang Lijuan, Executive Director and CEO; and Ms. Qu Cong, CFO and Board Secretary. Today's conference call may include forward-looking statements such as the company's strategies, business plans and performance outlook. The content of this earnings call, along with management's comments and Q&A, reflects their views as of today. Please consult the latest safe harbor statement in the earnings press release, which is applicable to this call. This session was -- will be conducted in Chinese with simultaneous English translation provided by an external agency. If there is any discrepancy, the Chinese version shall take precedence. The presentation materials will be uploaded to the company's IR page for your review. Ms. Yang Lijuan, CEO and Executive Director of Super Hi International, please? Lijuan Yang: Thank you. Dear investors and analysts, hello, everyone. I am Yang Lijuan, CEO and Executive Director of Super Hi International. Coming up, I will be highlighting the main development of Super Hi International's Q3 2025 performance. This year, thanks to our ongoing investment in customer and employee benefits and our strategy of prioritizing customer satisfaction, we are pleased to see significant progress in store management quality and restaurant operating results this quarter. Overall table turnover rate in Q3 was 3.9x and our same-store table turnover rate was 4x, both increasing by 0.1x compared to last year. Q3 revenue reached USD 214 million, a year-over-year increase of 7.8% and our Haidilao same-store revenue grew by 2.3%. As we continue to implement the customer and employee benefit policies and share benefit policy introduced in the first half of the year, we achieved an operating profit of USD 12.64 million this quarter, a decrease of USD 2.3 million or 15.4% compared to the same period last year. The operating profit margin was 5.9%, down 1.6 percentage points year-over-year. However, we were able to balance benefits for customers with operational improvement, adjusted some ineffective strategies and enhanced efficiency in areas such as product output and staff scheduling as a result. Our operating profit increased by USD 8.9 million or 240.5% compared to Q2. And also the OP profit margin rose by 4 percentage points from Q2, demonstrating significant quarter-over-quarter growth. Additional year-on-year gap in the third quarter has also been notably narrowed year-over-year. Let's review Q3's key initiatives. First of all, we focus on store operation. This quarter, we continued to reduce headquarters oversight of stores and eliminated performance ranking for individual tap. Our focus shifted to support, guidance and improved communication, allowing frontline stores and regional offices to better concentrate on the market customers and employees. During this process, our regional offices and stores actually generated many excellent service cases and management practices. At the same time, we have around 90 potential key personnel, building strong talent pool for our overseas management and development. Second, this quarter in creating a different Haidilao, we concentrated on the fresh cut scene or scenario. Fresh-cut meat is relatively fresh and new for overseas consumers and offers a better consumption upgrade experience. Currently, over 60% of our stores have launched these products and overall the take rate or the adoption rate has been increasing month by month and now surpassing 11%, which led to higher per table consumption. Overall feedback has been very positive. Additionally, some stores in Southeast Asia have completed the nightclub style theme renovation and compared to stores in other regions, the table turnover rate during late night hours has increased more significantly. Moving forward, we will continue to expand the scenario aiming to provide customers with richer and more unique dining experience. Third, regarding the store network expansion, we opened 2 new Haidilao stores this quarter located in Malaysia and Indonesia. Also, we discontinue a Singapore Haidilao restaurant. Also we are going to adjust 1 store in Thailand to a secondary brand based on changes in the surrounding business district and customer base. As of the end of Q3, we operated a total of 126 Haidilao restaurants overseas with 10 new restaurants opened and 6 stores discontinued this year. We have signed contracts for more than 10 Haidilao stores that are not yet open. Given the ongoing construction and time line, we anticipating -- we are anticipating opening a few stores in the fourth quarter, which will result in a total of over 10 new stores opened this year. Fourth, under the Pomegranate plan, our second international brand is steadily advancing in Q3, our malatang brand, Hi Bowl launched in Canada and quickly became profitable at the store level. The next step, we're going to work on refining customer flow, products and operations, where we're exploring the strategy internally. Currently, we aim to use information technology and smart middle office system to support management, which will make it easier to expand and roll it out to different regions gradually avoiding over extension. Additionally, other opportunities in various sectors identified earlier are also underway. In November, we opened a Sparkora BBQ store in Indonesia and also an Izakaya in Japan, both showing consistent growth and ramping up through ongoing adjustments and innovations, we have gained greater confidence in tackling challenges in the global market. We will persist in our management philosophy of connecting interest and securing management, making necessary adjustments to incentive policies and fully leveraging the mentorship system to attract and retain employees from various countries. Additionally, we aim to pass on and develop Haidilao's culture and management practices. We will focus on advancing the Pomegranate plan and also implement the Woodpecker plan for stores that underperformed. Moreover, we'll actively adopt new technologies and integrate AI to boost organizational efficiency. That concludes my overview of the business performance this quarter. Now Ms. Qu Cong will present the financial performance. Cong Qu: Thank you, Ms. Yang. Hi, everyone. I am the CFO of the company. My name is Qu Cong. Next, I'll introduce the Q3 financial performance. In Q3, the company generated a total of USD 214 million in revenue, a 7.8% increase from last year the same period. Haidilao restaurant operating revenue was USD 201 million, up 5.1% year-over-year due to ongoing business expansion, including a net addition of 5 Haidilao restaurants year-over-year. Additionally, increased customer traffic led to more table turnover rate year-over-year with our focus on takeaway business resulting, we saw increased multiple stores launching actually takeaway menu items, we are able to generate better results. Takeaway revenue reached USD 4.4 million, 69.2% rise from the previous year. Plus other business revenue stood at USD 8.9 million, 74.5% increase. Regarding costs and expenses, raw material costs totaled USD 71.2 million with a gross profit margin of 66.7%, down 0.3 percentage points year-over-year. Employee costs was USD 71 million, representing 33.2% of revenue, increase of 0.1 percentage points year-over-year. Since applying the discount strategy this year, these primary cost items have been optimized this quarter. Customer traffic driven by previous investment has continued to expand, continue to expand our revenue while ongoing management efficiency improvement during strategy implementation have helped. Compared to last year, our employee cost ratio remained similar. Efficiency gains and supply chain enhancement have partially offset the gross profit margin impact from customer discounts. Rent and related expenses reached USD 612 million (sic) [ USD 6.12 million ], 2.9% of revenue, up 0.2 percentage points year-over-year. Our depreciation and amortization totaled USD 21 million, about 10% of revenue, a decline of 0.3 percentage points last year -- from last year. Our utility expense were USD 778 million (sic) [ USD 7.8 million ], a 3.6% of revenue, a 0.2 percentage point decrease year-over-year. Operating expenses, including travel and other costs was USD 23.7 million, up 11.1%, an increase of 1.7 percentage points year-over-year. Among the operating expense mentioned earlier, we followed the same trend as last quarter. The other expenses showed the largest increase in revenue compared to last year. This includes customer -- sorry, higher outsourcing service fees, professional consulting fees and brand marketing costs in some countries. And the Pomegranate project and brand building resulting in higher expense year-over-year. The second largest increase was rental costs amounting for 2.9% of revenue. It was mainly due to company's increased number of leased properties this year, including Haidilao and second brand stores under renovation as well as short-term warehouse leases. In the third quarter, the company's operating profit was USD 12.6 million, down USD 2.29 million from the same period last year. The operating profit margin was 5.9%, dropping 1.6 percentage points from 7.5% last year. This aligns with our expectations for the profit sharing strategy, but indicates room for improvement in our management during dynamic operations. In the third quarter, net profit after tax was USD 3.59 million, a sharp decline from USD 37.6 million last year. This was because of the exchange rate fluctuation of the Japanese yen, Singapore dollar and British pound against U.S. dollars, causing a foreign exchange loss of USD 5.8 million after we have -- revaluation compared to a gain of USD 25.8 million in the same period last year. Regarding the operating cash flow, Q3 was USD 34.1 million down USD 6.5 million from last year. It was because of the cyclical fluctuation in operating receivables affecting by holidays and weekends, the fact that operating profit was lower than last year's same period and also because of our profit-sharing scheme. Regarding restaurant key performance in the same -- in Q3, we serve approximately 8.1 million customers representing 9.5% rise year-over-year. Haidilao has a daily table turnover rate of 3.9 rounds, which is 0.1 rounds higher than last year, where average order value was USD 24.6 down USD 1.2 from USD 25.8 last year because of strategic adjustment in menu pricing and marketing. The average daily revenue per restaurant reached USD 18,000, a USD 300 increase from last year, driven by a higher number of diners per table. Our 4 regions show a slight improvement year-over-year. East Asia remained a top performer, serving 1.2 million customers, 50% increase from last year. This basically was 0.6 rounds in rise -- increase in the table turnover rate, reaching 4.9. And the average spending per person in East Asia was USD 28.9. The average daily revenue per restaurant was USD 20,300, 14.7% increase. North America, the table turnover rate was 4 rounds up by 0.1 from last year. The average transaction value decreased by $4.4 compared to last year, but higher restaurant traffic and more customer per table resulting in a 2.8% increase in average daily revenue per restaurant, which was USD 22,100. Southeast Asia's table turnover rate was 3.7, increased by 0.1. It -- mainly due to increased investment in customer rewards and offering more cost-effective products. Other regions show a 3.7 round average table turn over rate. It was mainly because of new stores in the UAE that are still ramping up. Our same-store revenue grew by 2.7%. The average table turnover rate across 107 stores was up 4 rounds daily, an increase of 0.1 year-over-year. The average transaction value per customer -- average spending per customer decreased by $1.1. Regional performance trends within the same stores basically aligned with the overall results that I mentioned before, so I will not repeat. That's all for our performance review. We're now ready for your questions. Please feel free to ask questions. Operator: [Operator Instructions] The first question comes from Zeng Jun with Huatai Securities. Jun Zeng: So my first question is that what are the strategic plans for operations and expansion in each region next year? What will be the focus and pace of operation in different regions? And the second question is I understand that business development takes time but how should we project profit margins? And what kind of metrics can indicate a tipping point or an inflection point before starting full-scale acceleration? That's all for my 2 questions. Lijuan Yang: Thank you Zeng Jun from Huatai for your questions. Let me try to address your first question. Basically, different regions have distinct development strategies based on their unique environment and situations. As mentioned earlier, Southeast Asia and East Asia now shows strong overall growth. We aim to increase the local customer base by opening more high-quality stores. We also trust regional managers judgment to develop new business formats tailored to local preferences. For example, a Japanese Izakaya store has already opened in Japan and South Korea is planning to launch its own Korean BBQ restaurant as well. North America is a large market, especially in the U.S.. We focus on internal improvement, management enhancement and developing leadership talent. At the same time, we're actively expanding into the market. Many upcoming projects right now are in North America. So management and talent development are definitely a priority. Southeast Asia comprises many countries with very diverse conditions. Indonesia has experienced relatively stable growth. And we're applying a similar strategy to East Asia by expanding new stores and exploring new business models. On the other hand, Thailand needs to improve its management, focusing on internal development, including product quality, service and customer experience. Internationally, each country has a unique condition that require us to adapt. We emphasize customer and employee focus while embracing technological advancement and AI to gradually strengthen our mid- platform or middle office kind of management, easing the pressure on frontline staff. That's the first part of your question. And the second question is that first of all, we do not set short-term profit target for each store. I think relying on numerical goals for operation can lead to deviations and potentially harm customers and employees, outcomes that we aim to avoid. So instead, we prioritize the efforts of managers at each country and store level along with the health of their management practices. Our evaluation criteria are multilevel and multifaceted taking into account customer satisfaction, employee efforts and reasonableness of store performance figures. Sometimes this requires offering discounts, other times, focusing on internal enhancement and ultimately, good table turn over and profit margins will follow naturally. All of our store openings, whether under the Haidilao brand or Pomegranate Project are driven from bottom up. We don't rush the process. We emphasize the quality of each store we launch. I hope I answered your question. Operator: The next question comes from [indiscernible]. Lijuan Yang: All right. Thank you for the 2 questions. The first question is about the profit forecast for 2025 full year and the coming 3 years. In 2025, the company total revenue reached USD 610 million with an operating profit of $24.45 million resulting in an operating profit margin of 4% from January to September. And Q3 is typically the peak season. Usually, the operating margin will be slightly higher, but we are waiting for the end of the year before we can announce the official figures. As of the operating profit margin over the next 2 years, this involves projections and it's very difficult to project. Nonetheless, the company will continue efforts to enhance store management, open high-quality new stores and also explore initiatives -- innovative business models for our Pomegranate initiatives. Regarding localization, I think we have been increasing the localization rate. I mean -- but the different regions, things are different. For example -- internally, we have done the calculation, for example, in Asia and South Korea, Indonesia and Vietnam have a localization rate above 90%, while in North America, the United States, Canada and U.K. the rates are around 40% to 50%. Other countries are in between, but Singapore is a unique case because it's dominant kind of ethnicity is Chinese immigrants, making it very hard to define what local means. So that's basically an overview of the localization rates. Operator: The next question comes from Lai Shengwei with CICC. Lijuan Yang: All right. Thank you for the 2 questions. Mr. Lai. So regarding the plans for store inventory and also future store opening strategies, 10 Haidilao hot pot restaurants have already been opened this year with a few more expected to open in Q4. Currently nearly 20 projects in the pipeline are underway, including those that we have signed and also are about to be signed. However, due to varying property handover time and overseas construction periods, especially for longer time lines in Europe and in the United States, there will be an inevitable kind of cycle before opening. The company's overall store opening principle remains bottomed out prioritizing the quality of new locations over space. And as we mentioned, we have done some adjustment according to the Woodpecker initiatives. We will continue to monitor the store performance for timely adjustment. And the second question is basically about the current status of overseas employee satisfaction and turnover rate and how store manager performance ratings distributed over time. This year, initiatives to cut employee costs and improve employee care across different regions have shown positive outcomes. The average monthly employee turnover rate has actually dropped by 1 percentage point from same period last year, which was usually above 8%. The latest Q3 figure was just over 7%. Store performance has also seen improvement with a greater number of stores earning A ranking or A ratings or B ratings in management reviews. Going forward, our focus will remain on the 2 areas of retaining customers and developing employees. That's all for my answer. Operator: The next question will come from [indiscernible] with [ Founder Securities ]. Unknown Analyst: So what has been the trend of table turnover rate since Q4? What are the expectations for store performance during the upcoming peak season? Also are there any further plans or construction projects regarding overseas supply chain? And how are the new overseas brands progressing? Are there any operational data that you can share? Are there any differences in the synergy between the new overseas brands and Haidilao compared to the domestic ones or landscape besides incubating brands to yourself, are you considering acquiring promising projects? Lijuan Yang: Thank you for the 3 questions. The first one is about the Q4 table turnover rate forecast. Q4 is typically the usual peak season for hot pots. Based on the current situation, the demand for gatherings on both weekdays and holidays have significantly increased compared to Q3 and also year-over-year. So we can see that, as we mentioned, our profitability or margin was about 4% from Q1 to Q3 and Q4 should usually would be higher than that, but we will wait for the official figures to become available to disclose. The second question is about construction projects or plans for supply chain building. There are currently no plans for large-scale investment in building new supply chains. We will continue to promote localized procurement of raw materials, enrich and optimize our cooperation channels or partnership with importers in various countries and establish small localized R&D labs based on business needs. But we're not going to invest heavily in asset-light factories. And the last question is about new overseas or international brands. As was mentioned, we launched our Hi Bowl malatang in Canada in Q3. In November, we also opened Sparkora BBQ in Indonesia and Vietnam, along with an Izakaya Japanese pub in Japan, all are in very stable kind of growth phase with malatang already profitable. Regarding other brands, we are evaluating our current management capacity and aim to empower stores through an information and also smart platform, making it easier to manage and replicate the business across regions, we will proceed cautiously rather than rationally. The synergy between the second brands and Haidilao stores involve sourcing sharing such as property negotiations and also procurement because of our economy of scale. And also management efficiency can be achieved and improved through proximity. However, new brands target different customer groups and has different products and positioning. It requires managers with innovation and strategic thinking. Therefore, we're not going to adopt a dual management model blindly. Also, you talked about potential M&A. Apart from developing our business organically, we are also open to external partnership. Currently though, we have no specific targets or plans. We welcome suggestions of any promising opportunities that you may know of. Operator: The next question comes from [indiscernible]. Unknown Analyst: Since the beginning of this year, we have been offering discounts to customers such as more reasonable pricing, more affordable portions and more diverse dining options. In some areas, the average order value has decreased year-over-year. Could you provide further forecast in trends regarding average order value and also menu pricing? How does management balance this discount strategy with long-term profitability. And my next question is that how can effectiveness of employee incentive plans be quantified and evaluated? Is there any data showing a correlation with performance? Lijuan Yang: Thank you so much for the question. The first one is about our menu pricing and also discounts to customers. This year, we did optimize our pricing and portion sizes in some markets. So make more consumable -- consumers feel like they're getting good value for money. In the short term, the average transaction or the average value per table decreased slightly in some regions, but table turnover rate remained stable with slight increase. In the long term, we focus more on the overall operational quality rather than a single metric. The core of our profit sharing strategy is to improve customer satisfaction and repeat business, which ultimately lays the foundation for long-term profitability. So the long-term profit will come from our efficiency of management, of our customer and also employee and also the waste control, et cetera. The second question is about to quantify and evaluate the effectiveness of employee incentive plans. It's actually difficult to directly quantify and link employee incentives to operational metrics such as table turnover rate and profit. However, in terms of management, improving employee salaries and benefits and implementing more reasonable incentive schemes will enhance team morale and also our color coding management system, which will, in turn, improve the customer experience. With the implementation of this year's profit sharing measures, the overall table turnover rate and same-store table turnover rate both increased year-over-year in Q3. The profit margin also rebounded compared to Q2, which was in line with the company's expectation. As was mentioned by one of the previous questions, our churn rate of employee actually reduced by 1 percentage point, which was really rare in the industry. And that says a lot about our effectiveness of the employee. So that's my answer for your second question. Operator: [Operator Instructions] The next question comes from [ Wei Jaba ] with Citic. Unknown Analyst: My question are as below. What are the reasons for the changes in average order value? And how do you predict future trends to be? And also besides Singapore, Vietnam and Malaysia, both have a relatively large number of stores in the Southeast Asian market. What effective measures have been taken? What are your views on future store expansion potential? Lijuan Yang: Thank you so much for your questions. Let me address your second question first. Actually, the number of stores across different countries and regions depend on different factors, including local customers eating habits, acceptance of hot pot population, consumption levels, economic development, et cetera. It also is closely linked to our management, our branding, brand awareness in the region. In the countries that you mentioned, we enter early, established our brands for a long time, and hot pot is generally more accepted. That's why we have more stores, more present and we will keep exploring lower tier cities in these countries and regions, but only after thorough research, site selection and market preparation our approach will be steady and solid and deliberate to ensure the opening of high-quality stores. Operator: Thank you all for your questions. This is the end of today's earnings call. Thank you so much for your participation. See you next time. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Kenton Jarvis: Well, hello, everybody, and welcome to easyJet's Full Year Presentation for the period ending 30th of September 2025. I'm joined today by my full management Board on the front row here. So please feel free to ask them questions either after the event or in the Q&A session that we'll have. We also loaded a presentation first thing this morning on to the website. Hopefully, you've had a chance to look at that presentation. But if you haven't, I will give you the key highlights of it now, and then we'll go straight to Q&A, so we have a good amount of time for your questions. So we're very pleased to announce our third consecutive year of earnings growth. From a PBT perspective, that was a 9% increase to GBP 665 million. But actually from an operational performance before financing, so EBIT, we saw an 18% improvement with GBP 56 million of that improvement in EBIT coming from holidays and GBP 50 million of that improvement coming from the airline. On holidays, we had a very successful year for holidays. We were able to reach the GBP 250 million medium-term target that we set just 2 years ago, and we did that ahead of schedule. There was strong customer growth. We saw a 20% increase in packaged holiday customers. We also had a 32% increase in profit due to the very low fixed overhead base of that business. We were also really pleased with the proactive actions that we took when it came to resilience measures. to set up for the busy summer. We knew air traffic control was a problem. We knew it would be a bigger problem over French airspace, which we're particularly exposed to. And therefore, we wanted to get in front of that and did a lot of measures to do that, and we're very pleased with the performance. We saw a 3% increase in on-time performance and even more pleasing, a 4% increase in customer satisfaction. And at 80%, that's the highest level that we have had in over a decade. So a very strong performance despite the problems that still existed over French airspace. Moving on to the balance sheet. Our owned asset position has increased to GBP 4.8 billion now in terms of owned aircraft, and we expect that to increase to over GBP 7.5 billion by full year '28 as we see the neo aircraft family deliveries really ramp up. When it comes to net cash, we improved our net cash position to GBP 602 million. And that really is important along with the enhanced liquidity that we carry because that will help prefinance a lot of these aircraft orders that we're going to be getting over the next 3 years. I'd also like to highlight that our return on capital employed reached 18% from just 13% when we set the target. So now we're operating in the range that we were seeking to do as a high-teen return on capital. So that moved nicely for us. And following the success, we know that the upgauging journey is still in front of us. We started full year '25 with 82 A319s, and we finished with 82 A319s, but because we only had 9 deliveries and we took those into growth. So we're now looking forward to those increased Airbus deliveries, 17 next year, 30 the year after and 43 the year after that, so we can really start moving and upgauging the fleet and retiring the older less fuel-efficient A319s. And we would expect about 60% of those to go over the next 3 years by full year '28, and that will deliver the majority of the GBP 3 per seat benefit that we've been talking about. And following the success of easyJet holidays, we've upgraded that target to GBP 450 million by full year '30. And Garry and his management team are going to be holding a seminar in Luton head office in Capability Green on Friday, where they'll unpack how they're going to do that. But I'm sure you'll have a couple of questions anyway for Gary at the end of this presentation. As we look forward to winter, we have to admit that we're finding the reduction of winter losses more challenging than we originally hoped. We put a lot of capacity and productivity into this winter, and that did yield cost benefits. Our unit costs came down. We saw aircraft productivity utilization increased 5%. We saw crew productivity increase 6%. But what we have to remember is when we put those new routes on and we put that capacity on, that is an investment that the airline is making, and that takes typically 2 to 3 years to mature, which is what it's probably going to take because it's a slightly lower demand position in the winter. The other factor, which is why it's a little slower than we anticipated, is the fact that there are still 2 wars happening in our network. That means that in the Middle East, we haven't returned to Tel Aviv. We're no longer flying to Jordan, for instance. And many carriers have substantially reduced their capacity in those areas, which has put more capacity into the old favorites like the Canaries and Mainland Spain, Malaga, Alicante and therefore, more competition. But we really expect that to mature as we go forward. We saw a maturing of our domestic routes after we increased capacity following the reduction in domestic APD in 2023. Margins suffered a little bit, but now we have a very well-performing domestic program, and we're seeing some of that profitability return to cities as well. But that cost of investment sits with the airline. Obviously, from holidays, they benefit from the increased winter sun destinations. They benefit from a better schedule into cities for city breaks and immediately start selling into that, immediately start making profit because of their cost-plus business model. The airline, however, whilst we get the cost benefits upfront, it takes a little longer to get the revenue maturity benefits, but we're confident they come through. And the other thing we're mindful of for the winter ahead is our investment in Linate and Fiumicino. We're really happy to be able to get these slots in Linate. They don't come up very often. They've only come about because of the acquisition of the Lufthansa Group of ITA. And we placed 5 aircraft there and 3 in Fiumicino, which is a popular destination for us. But we know that it will take time for that to mature. We're having to fly the remedy routes that came along with that, and we know that the new routes will take time to mature, but we're very confident that we expect Linate to have the same profit characteristics as someone like Orly, which does very well in our network, but will take 2 to 3 years to mature to deliver that. So with all of that in mind, we still remain very confident of our ability to deliver to the GBP 1 billion target. And now 2 years ago, we were making that statement from a GBP 427 million profit base. Now we're making that statement from a GBP 665 million profit base. If we step back and look over the last couple of years since we set the medium-term targets, this is a slide I naturally love. It shows the progress we've made on every front. When it comes to our product range, we've had 13% more routes, and that is attracting customers and allowing us to grow. where more customers are choosing easyJet Holidays as their package provider. Originally, that was mainly coming from the airline. Now more and more, we're winning those customers from competitors, and you can see that in the competitor data. You can also see that in our growth of market share from 5% to 10%. And the focus on resilience measures really came through with almost more than I was hoping for a real tangible benefit in terms of the customer satisfaction scores, and that's so important for the brand going forward. So all of these key measures will help strengthen the long-term success for easyJet. So in summary, we're well positioned to capture the growth opportunities that lie in the years ahead. We're confident that if we execute well on our strategy alongside a continued disciplined approach on capital allocation that, that will drive us towards the medium-term targets and then beyond. Our asset-light easyJet holidays model is now going into a second phase of its development. We're looking to increase that U.K. beach market share from 10% and challenge the #1 and #2 in the market. We're starting to work much harder on the European expansion, and we're seeing good early signs of that. The city proposition is coming through nicely. So Gary can talk about all the activities that underpin the confidence that we can increase our targets up to GBP 450 million. And the neos are coming. We've seen a consistency from Airbus. The supply chain difficulties seem to be unblocking a bit. And last year, we said we're expecting 9 aircraft in full year '25. We got them. And we said then it goes GBP 17, 30, 43. A year later, we're still saying GBP 17, 30, 43. So Airbus haven't moved that schedule. So we're growing in confidence that upgauging will come through. And we know from the aircraft that we have replaced so far that, that is a GBP 10 benefit when a 320neo replaces a 319 or a GBP 16 per seat benefit when a 321 replaces a 319. And obviously, when you're making profit of GBP 6.40 roughly, those are big numbers in terms of a reduction in the cost for those aircraft we're flying. With all these levers and with one of the strongest balance sheet, investment-grade balance sheets in the industry, I think we're well positioned to push forward. And we firmly believe as a management team, if we focus on this execution, then over the medium and long term, we will provide very attractive shareholder returns. So many opportunities in front, very excited about the future and the potential for easyJet, and we'll go open to questions, Adrian? James Hollins: It's James Hollins from BNP Paribas. I'll save any holidays questions to visiting Gary Wilson Towers on Friday. So 3, if I may. First of all, on kind of holidays the airlines, it's quite sort of noteworthy that airlines was, I think, flattish PBT, all the growth is coming from holidays. Maybe sort of run us through kind of the airline-specific headwinds. And I think more importantly, how that plays out as we look at full year '26 before the upgauge story kicks in for the airline? Secondly, Jan, on your little video there earlier, you clearly noticed some cost efficiencies targets or cost efficiencies program. Maybe run us through in a bit more detail how you're seeing a potential cost program? Any quantification timing? Or am I just overstating it? And then thirdly, I think probably for you as well, Jan, any sort of -- is there any lease repurchase gains being incorporated into your full year '26 unit cost guidance? Kenton Jarvis: Okay. Well, I'll take the first one and then Jan can take the second 2. When it comes to profitability and airline versus holidays, as you put it, I think the first thing to say is we very much think of ourselves as a group, and it's a group target that we're all focused on pursuing. So we have a group target to deliver GBP 1 billion in profit before tax. We've seen good progression for the last 2 years. I probably leave it on that slide, shouldn't I -- there we go. We've seen good progression for the last 2 years, and we're confident we can keep progressing. Now it's fair to say that the PBT development, which was an improvement of GBP 55 million was GBP 60 million airline and GBP 5 million negative for the -- sorry, GBP 5 million negative for the airline and GBP 60 million for holidays. But when you look at it at an EBIT level, you can see a much more even spread. We increased our EBIT by GBP 106 million, GBP 56 million was holidays, GBP 50 million the airline. And what you've got to remember is, as a group, the airline bears the cost of the expansion. When we establish a new route, it's the airline that will get the productivity benefits. But equally, it's the airline will have to wait for the route maturity. EasyJet Holidays gets to sell straight into that additional capacity, especially if we've been putting it in regional U.K., which we have. And when we look at the interest costs, which are then the financing costs, which is the delta between the PBT development and the EBIT development, there's 3 main reasons there. Firstly, the GBP 3 billion, GBP 3.5 billion of cash we're carrying, the interest rate environment is lowered. So we're getting less income on the monies we're carrying there. Secondly, we retired of GBP 0.5 billion bond during the year. That was taken out many years ago at very low interest rates and the cash we had on deposit was earning greater interest rates than the bond that we're servicing, but we retired that. So that had an impact. And the third reason is we anniversaried the bond we took out in March '24 and therefore, had the impact of that. There also any FX exchange rate on the balance sheet, I think that was a hit this year of GBP 13 million, GBP 14 million year-on-year. That goes through that financing line as well. So the actual underlying performance moved forward for both airlines and holidays. Also, I'd point out that the opportunities in front of us Gary will talk you through the many opportunities he sees for holidays, but the upgauging is a great opportunity for the airline because that will allow us to deliver -- have a lower cost of production, which will sit in the airline that benefit as that comes through. Equally, the opportunity to fly back into the Middle East, which we're hoping to start up again in kind of this summer from certain destinations. It won't be anything like the volume it once was until that builds progressively over time, but that is a good destination in the winter. Jordan is a good destination in the winter. And not only will that be a profitable destination for us, but it will also take some of the pressure off the canaries, which have been taking -- which has been the alternate for so many destination choices, which are currently removed with 2 wars in the network right now. And hopefully, as French air traffic controllers get finally recruited, we'll see an improvement in that air traffic control space. We will maintain our investment in that space for as long as we need to. But then there should be some unwinding over time as we see a naturally improved performance. We haven't seen that yet, so we're going to keep the customer experience as high as we can until such a time comes. But that's really -- so I don't really see a big delta between the performance because underlying performance increased nicely for both. Jan? Jan De Raeymaeker: All right. Well, on the cost performance, I think, first of all, I think we had a good cost performance in 2025, which CASK going down 3%, of course, benefited by positive fuel throughout the year, but ex fuel CASK was down 1%. That was made possible because of increased productivity, especially through more winter flying on longer sectors, but also a very good operational performance with lower disruption costs and overall increased frequency efficiencies. That, of course, was offsetting the inflation that we're experiencing like any airline is currently experiencing. For next year, we expect CASK to moderately grow as we will benefit from lower fuel costs, which will then be offset by further productivity gains, but offset, of course, by the continued high inflation throughout the year. We will continue to invest also in additional resilience measures because we don't expect really a substantial impact of further improvement of ATC delays. And that does not take into account any potential benefit of any upgauging. Like Kenton said, we are only retiring 3 aircraft next year. So that means if you look at the GBP 3 per seat improvement that we're expecting over time, only GBP 0.25 has been realized so far, and we're still GBP 2.75 ahead beyond 2027. So if you look at cost actions for the future and what we're expecting, well, I think, firstly, I do expect further cost improvements possible. One, the upgauging definitely is the most important one, not in 2026, but rather beyond 2027. Ownership costs will definitely go down. I'll come back to that. But linked to the aircraft buybacks that we have done in 2025, we've done that because the ownership costs will go down. And if new opportunities will arise, we'll obviously work on them. Thirdly, we're further improving productivity, and there is work ongoing to see how we can further improve productivity by improving our network schedule, improving seasonality, looking at day of week improvements and just also improvement in our way of working and investing in new tools to make sure that we are more efficient. And we are also continuing to invest in all potential capabilities, whether it's operational, commercial or just enterprise IT investments, just making sure that we are more efficient in everything that we do. And to be honest, we are a low-cost company. And I think when we had a fire chat with Stelios, he said one of the things we should never lose is our low-cost DNA. And so continuing to tighten the screws everywhere is something that we're doing every day. So I think still opportunities to reduce cost and focusing on that every day. So that's on that. Your second question is whether or not we expect further ownership costs linked to potential buybacks. So first of all, we do expect cost reductions linked to the buybacks. So next to the 9 aircraft that we took -- the new aircraft that we took into ownership this year through cash, we had the opportunity to buy back 8 newer -- well, 8 neos and newer ceos throughout the year. The reason why we've done that is that this provides a unique opportunity to get back those assets which were sold and leased back through the pandemic. It gives us better access and better control on strategic assets, first of all, which is important in a tight supply market. But secondly, it also allows you to reduce the ownership costs going forward. Now the flip side of that is that it does have a one-off release of the maintenance provisions given that we are not now the aircraft are under ownership, and we're not provisioning for future maintenance costs given that we take those costs when they occur. But the key benefit of it is that we are keeping those assets under own control and it does release or improve our ownership going forward. So for next year, so the reduction of that ownership cost has been taken into account. However, what we do not take into account is potential future buybacks. If ever there would be future opportunities, we will obviously look at them, but only if they have a positive impact in future ownership cost. Gerald Khoo: Gerald Khoo from Panmure Liberum. Three, if I can. I think others in the market have commented about a bias towards late bookings. Are you seeing anything similar? And are you seeing any sort of impact on booking behavior from the U.K. budget? Secondly, on the holidays, I think you managed a 5% improvement in average selling price. I was just wondering whether you could break that down in terms of what's going on between accommodation mix, duration and price. I think in the past, you talked about the push into city being dilutive to average selling price. And obviously, you're up 5%. I was just wondering where that's going. And finally, on the topic of lease buybacks, I can understand the benefits to easyJet. Why are the leasing companies willing to park company with lot of good assets and with a good airline? Kenton Jarvis: I'll take the first one and then start handing them out. We do see a strong late booking trend. We have -- I don't think it's to do with the budget. To be honest, it's been running for about a year now. As we enter the late, it's been a strong booking period. The only time we didn't really see it was during our second quarter of this year. But all other months, we've seen a stronger late booking trend. However, we also see a strong early booking trend. So it's becoming a little bit polarized. So people are going out, securing what they want early, but people are also comfortable taking their -- booking their trips later. And you can see that in our Q1, where we're 81% sold, but 2 percentage points ahead year-on-year in Q2 earlier, but 26% sold and again, 1% ahead. easyJet Holidays, an impressive 20% growth last year, looking like a -- we're forecasting a 15% growth this year, but H1 is already 80% sold for the whole of the first half with good growth. So we still see the consumer there. We still see the consumer buying. In terms of the pricing, we're seeing it kind of starting to sequentially improve. So our fourth quarter pricing was probably about minus 2%. We're looking at the first quarter of minus 1%, maybe slightly better. And then as we go into Q2, pricing is ahead year-on-year. So we're starting to see that steady sequential improvement. And then we delivered a very strong summer this year, another record summer ironically. And so we look to continue to build because summer keeps showing the characteristics of a market with less demand than supply -- sorry, less supply than demand, even though we saw a bit of a heat wave in the actual summer months, it still yielded a very positive summer. So it looks again like demand sits firmly above supply when it comes to the summer for airlines. So let's go to Gary for holiday pricing and any mix that he sees. Garry Wilson: Yes, on the holidays pricing, the 5%, how we break it down, we saw a lot more activity in the late market and particularly from the traditional operators who clearly had committed to too much capacity. So there was a real aggression in the late market where they were pulling prices down. Now one of the benefits that gave us being fully variable is that the hoteliers who didn't have those committed beds were really active in reducing their prices because they were seeing that was hitting their occupancy. So we actually did quite well in terms of moving our margin from 12% to 13% while still having a 5% increase. And that would probably drive the number of 20% volume increase, which we talked about 25% some months before that, but we took the conscious decision that where we could get enhanced margins, we were better doing that than try and participate in some of the kind of crazy activity that some of our competitors were doing in the market. So we're really happy with how that played out. Kenton Jarvis: And why are people leasing back? Garry Wilson: Well, first of all, so far, as I know, I'm not working for leasing companies, so I can't really tell you what they are thinking about, but I'll try to put myself in their shoes. Well, first of all, important to note is that the partners we're working with, these are long-term partners so that we are really working with them on the long term and not on the short term. Two, I think over the past years that they had a good run on the leasings that we have with them would be the second reason. The third one is given that now the leases are getting closer to the end, I think probably for leasing companies, easier or better to have certainty about what's going to happen with the assets rather than having the uncertainty for the coming years. And finally, I suppose it also generates or liberates a part of the cash that they probably can reuse to invest in something else would be my GBP 0.50 not working for a leasing company. Kenton Jarvis: But yes, I mean, Gerald, in the pandemic, it was 2020 that these were taken out. The majority were 10-year leases. So it has been a good run, 6 years under the belt, but they're starting to think, well, they probably won't maintain them at that lease rate. I don't know if you remember when I first started, I talked about the amount those costs have gone up by. It was quite breathtaking. So it's been a good run, and we're getting them back and seeing a forward benefit in the P&L. Harry Gowers: It's Harry Gowers from JPMorgan. A couple of questions. Ken, you talked about some of the route maturity benefits from the capacity growth maybe taking a little bit longer than anticipated. Is that referring to Linate and Rome as well? And has the investment there been a little bit steeper maybe than you had previously expected? Second question, what sort of number or range should we be thinking about at the moment for the winter PBT losses? And then the last one, just thoughts on the Jet2 entry into Gatwick. Do you think this will need any kind of competitive response at all from easyJet on the airlines or the holidays side? Kenton Jarvis: I'll take 2 and 3 and let Sophie take one, but I'll take them in that order. So Sophie can have a think about the route maturity. But yes, it would involve Linate and Fiumicino. Jet2 entering London Gatwick, I mean, we are very happy competing with Jet2 and do so right throughout the regional U.K. So in every airport in regional U.K. outside of Gatwick, we compete with Jet2. And that competition has seen us go from nothing to GBP 0.25 billion of profit for holidays, growing steadily and taking now 10% of the market share. So very happy to have them as a competitor. When it comes to London Gatwick, they will represent 2.8% share of that airport. We represent 44% share of that airport. So our frequency, our destination choice, the duration to which you'll be able to holiday over will obviously be far greater with easyJet, we also have a scale and a cost benefit in terms of operating out of London Gatwick. So again, hopefully, it will promote holidays even more in the area. But you got to remember, too, we have been there quite some time and with that kind of presence and some. And therefore, I think that will probably be a more natural battle than with easyJet, who have 44% market share. So comfortable with that. When it comes to the upcoming winter, I think what I'd say there is for the second quarter, we expect the RASK to improve, like I said, from minus 2% to just under or about minus 1% in the -- sorry, that's in the first quarter. In the second quarter, I would expect a sequential improvement on that. I'd expect actually RASK to improve year-on-year because we're seeing more strength, but it's very early. So 26% booked. We're not really guiding to that. But what we have said is we expect the investment in Linate and Fiumicino to be about GBP 30 million in the winter. It was about GBP 20 million in our first summer and thereafter, sequential improvement and within a number of years, expect that to be a highly profitable base because that has all the characteristics, but we're having to fly the remedy routes from the ITA Lufthansa acquisition. So think about 30 in terms of that Linate for material investment for winter. But in general, how are you seeing the route maturity across the network? Sophie Dekkers: Yes. I would say that overall route maturity is probably in line with expectations, to be honest. I think we've just got to recognize we put a lot of new capacity in for this winter that's coming into its first winter. So Rome Linate, we put on sale quite late for the summer. So it had a very short selling window because the easy decision came through very late, and we had to action it straight away. As Kenton said, a lot of that capacity is on remedy slots. So we have to operate those slots, those routes specific for 3 years. And so that's coming into its first winter. We've also got brand-new capacity in Southend, so that comes into its first winter as well. So where you're putting new capacity into completely new routes or new routes for easyJet, that generally takes longer than when you're adding frequencies to existing routes. So the majority of our winter growth on the fleet that we added this summer is on routes that is adding frequency into routes. But we do have to recognize we've got 8 aircraft on the Linate Rome remedy slots and 3 aircraft in Southend, and they're coming into their first winter, so that will take time to mature overall. And then just to pick up on the Jet2 point, Kenton talked about the market share. In terms of route network and reaction from us, I mean, their most frequent routes will be Palma, which will be daily from Gatwick. We do 6 a day from Gatwick. They do -- it will be 2 a week, we do 3 a day. So in terms of us taking any kind of action against that in terms of our own network, I don't think we need to because we already have such a huge amount of frequency on those routes versus Jet2. So I don't think we need to be too concerned about that. And as Kenton said, it's a very small amount of capacity versus the frequencies that we have in there. Kenton Jarvis: Yes. And for this winter, we still won't be flying into Jordan and Tel Aviv. But we fully expect the winter after to have the network shape back in place. Andrew Lobbenberg: It's Andrew from Barclays. Can I ask a little bit more coming back to Rome and Milan? Can you give us some color, you're talking about GBP 50 million losses here. I mean, how much of the losses are from the remedy routes? And how strong are the non-remedy routes? Or how are the non-remedy routes trending relative to your other basis or something, just so we can have the confidence that once you rid of these blessed remedy routes, how lovely can it be? Second question might come to the unit costs. I'm sure you've done the math. I'm sure I could do the math if I had a brain. But how much of your small increase in total unit costs, how does that unpack to nonfuel unit costs and the nonfuel unit costs, excluding the share aircraft buyback gains. And then, yes, so what's the real underlying ex-fuel unit cost for next year? And then just a final question, how are those engines on the neos behaving? Are they still troublesome? Or have you got the new clever bits retrofitted so they're behaving better for you already? Have they got some fancy retrofit, haven't they? Kenton Jarvis: Thank you, Andrew. We'll take them in the order. I don't know whether David wants to take the engine question. But we'll start with Sophie on Linate and Fiumicino. Sophie Dekkers: Yes. So in terms of the capacity, I would say the non-remedy routes are definitely performing better. A lot of the non-remedy routes, some of them we were already operating actually previously inbound. So some of the routes like we're operating Gatwick and Manchester Linate. So that's just building the capacity from an outbound market perspective. So those obviously are maturing anyway and those are performing well. When we were comparing routes that we operate out of Malpensa versus ones that we're operating out of Linate on a like-for-like route basis pre the acquisition of the additional slots. Linate did get a premium over and above what we were able to get from Malpensa, which was the reason why we saw this as a great opportunity to get into a very completely slot-constrained airport in Linate. So I would say it is the remedy routes that are the investment, and that's we're investing in, but we know that there's a price at the end of the tunnel because what we can see on the routes that aren't remedy routes and what we were historically operating in Linate were very strong performing routes. So we see that as the opportunity. And in Europe, it's worth mentioning, you can't buy from other airlines, whereas in the U.K., you can buy slots. So someone like Heathrow, I think historically, a slot pair at Heathrow would go for something like GBP 25 million or higher, Andrew's home now. But that's the sort of investment you'd have to make in the U.K. In Europe, you have to make the investment through remedy slots. So we see this as an equivalent remedy slot investment to be able to get capacity into a completely slot-constrained airport like Linate, where you can't purchase the slots, which we obviously record on a different line if we were purchasing them. So the investment is through the route growth and the remedy routes, which will, longer term, after 3 years, we can operate whatever we like on those routes. That's the opportunity that we're investing in now. Kenton Jarvis: Thank you, Sophie. On the cost front, I'll hand over to Jan. But I mean, what we're signaling at the top level of a modest increase in unit cost is what I'm seeing every airline signal. But I'll pass over to Jan. And remember, we don't get much in terms of upgauging next year. We only get 3 retirements of those 2 A319s. Jan De Raeymaeker: Yes. So on the CASK level, so we're expecting for next year a moderate CASK increase where we will be benefiting from a lower fuel cost, especially in H1, less pronounced in H2, which means that the ex-fuel CASK will go up. And coming to your question, how much will ownership costs reduce or how much is the one-off cost in 2025 impacting 2026? So first of all, the GBP 54 million release of maintenance provision in the total cost of GBP 9 billion, I would say, is marginal, first of all. Secondly, that GBP 54 million has been partially offset by other one-off costs like, for example, the ETS cost that we have had or lower supplier contribution throughout the year. So that's for 2025. So they partially match themselves out. For 2026, now the reason why we're doing those aircraft buybacks is that these will reduce going forward, the ownership cost. So that will be partially offsetting the positive result in 2025 going forward. But so in the bigger scheme of things on a CASK basis, it's really marginal. David Morgan: On the LEAP engine troubles, I don't think we've been impacted any more than the kind of industry on the LEAP situation. And in many ways, we probably benefited in a couple of areas. We have a very good predictive maintenance system through Skywise. So this is an AI-driven predictive maintenance system that sort of monitor stuff all the time, changes components before they actually fail. And then on the modification, I think you're probably referring to the reverse bleed system modification. We've got the advantage of having our own MRO facility in Malta, which is about sort of 25% of our heavy maintenance, and they have the capability of doing that modification. They've done that modification on our engines. So I think we're probably slightly better placed than most on that. Jan De Raeymaeker: But I think as part of our resilience measures, one of the things we're doing is we're buying more spare engines. So we have increased our spare engines, both for CFM56 engines as also for the LEAP engines. Conroy Gaynor: It's Conroy Gaynor from Bloomberg Intelligence. So just on your winter loss reduction, I mean, I appreciate you've said it's perhaps a bit more difficult than anticipated. Should we think of this as just a delay that will unwind when larger planes get delivered or the routes that you've strategically invested in mature? Or are there other more structural things in there that could make this more difficult in absolute terms? And then second, just to perhaps get in a quick appetizer for Friday. How important is the non-U.K. source markets in your new medium-term plans for the holiday business? Kenton Jarvis: Okay. I'll do winter and then let Gary decide how much of a reveal he wants to give in advance of his big Jazz hands presentation on Friday. For winter, it really is a story of 2 quarters for us. So we've said we believe that Q1 can be a profitable quarter. I believe it can be. It won't be next year, but I believe it can be. October is proving to be an increasingly attractive late summer month. Now this October is going to see the kind of -- obviously, we're going to have the slight roll on from the summer, but we still expect a decent October performance. November will always be a bit sticky. And then the festive periods of Christmas and the interesting routes that you can fly to festive markets give Christmas are real peak quality. So as a team, I think getting that quarter to breakeven is something we will continue to work with. And when Tel Aviv and other more interesting winter destinations come online, then that will help. You've got to remember, we started flying to Cape Verde recently. That takes some time to mature, but it's doing very well, particularly out of Portugal and parts of the U.K. Egypt continues to do well and build. Morocco, we're opening a new base next year in Marrakech, that will help obviously with year-round performance. The second quarter is just a traditionally loss-making one for airlines. We invested quite heavily in the one just gone for resilience measures, but we really saw that pay back in the summer because while we saw some AT&C improvements in some of the regions through Europe, the French didn't get any better. So they met our expectations on that front. But they will, over time, they are recruiting. They are aware of their very poor performance compared with every European neighbor. And we are exposed to a lot of French airspace either overflying it or flying into it. And we will roll that back over time, but cautiously when we see that opportunity exists. It is when we do all the maintenance. The larger the fleet becomes to peak summer profit, the more maintenance you'll be doing in that schedule, and we have 25% of our heavy maintenance capabilities inside. If we see an opportunity, we will take it to increase that in-house heavy maintenance. But I see the seasonal loss in Q2 remaining stubborn and I see the opportunity to improve Q1. And that's how we think to winter really. But upgauging will naturally help because it will give a cost advantage through year for this business. And then Gary, sorry. Garry Wilson: I'll just try and dampen down your euphoric enthusiasm for Friday. We'll try and make as exciting as possible. But Wilson Towers and Capability Green is nothing to the financial institutions that we visit when we come and see you. We feel a bit like Tiny Tim from a Christmas Carol when we go into your places. So maybe bring some sandwiches and a flask when you come on Friday. On Europe, when we look at the GBP 450 million, we've built in about 10% will come from Europe. And that's a dead cert given our current network and current plans. But I think the Europe opportunity could potentially be huge if we think about it a bit differently. When you look at Germany, it's a bigger market than the U.K. for package holidays. So there is an opportunity in Germany that we're really thinking about how we could execute on that. Switzerland is a small market, but we're very well served there. So it's how we can maximize in Switzerland with the current network. And in France, that really is a North Africa story really in France, how we can get the right product for the right customer and distribute that in the right way. So I would say think about it as 10%. But through that kind of 3- to 5-year period, as and when we see any opportunities that could be maybe structurally different in how we would go about executing in Europe, then we'll look to take those. One example I'll give you on Friday will be working with travel agents. The vast majority of sales in Germany for holidays is through travel agents. We don't currently do that. So by working with travel agents, we should see a big kick up just by doing that. So it's things like that, that we'll be looking at. Kenton Jarvis: And we still see a great potential in cities. So we'll see how that progresses. It's growing nicely. Ruairi Cullinane: Ruairi Cullinane, RBC. Firstly, can the holiday's PBT margin improvement be sustained into full year '26? And secondly, how are you seeing the competitor capacity backdrop on easyJet routes this winter? Kenton Jarvis: Okay. Well, Gary, are you comfortable doing the first one, and then Sophie can talk about what we're seeing in the wider -- in our network in terms of probably '25 as well, how you saw capacity build and what the relativity was and then '26 afterwards? Garry Wilson: Yes. So we grew the PBT margin from 12% to 13% for this year. And I don't anticipate we would maintain at that level simply because when you look at European expansion, it's at a lower margin than the U.K. beach margin. When you look at city breaks are at a lower margin. So when we're looking at that growth, whilst the PBT growth, we're confident of in terms of how that margin will look, there will probably be a conscious dilution of that margin in order to get there. But that doesn't mean that we won't be looking at any big opportunities within that beach area to really enhance the margin. So I'll talk a bit on Friday about luxury. That's got a really high margin is doing well for us. So if there's other products that we could look to launch in the meantime that would maintain that margin at those levels, then that's what we'll do. Sophie Dekkers: Yes. So on a capacity basis, this summer then, let's take our Q4 as an example, we saw at a total market level around 3% growth and on our head-to-heads around 2% growth overall. What was interesting though, if we look at the airlines, some of the airlines that are growing the most, we had Ryanair who grew 2% in Q4, but only negative 1% on our head-to-head. So they took capacity out on our routes. Wizz grew 12% overall, but we were negative 8% on our routes, again, reducing their head-to-head capacity with us. Where we did see growth on our network was Jet2. They launched Luton this year as a new base for them. And a similar picture to the numbers at Gatwick, but not quite the same delta, but they have 5 aircraft based in Luton versus our 25 aircraft. And again, we have a lot more frequencies. We saw Jet2's results and what happened on yield on flight only. So London is definitely more of a flight only market. So it will be interesting to see kind of the growth and something we're looking at from a holiday perspective as well how we help to grow the package holiday market in London overall. So that's what we saw in terms of competitor capacity really across the network. As we look forward into winter, we're seeing a continuation of that picture really. If I look at Wizz's capacity and Ryanair's capacity on head-to-head routes with Ryanair this winter, for example, are adding 1 million seats actually that are head-to-head with us, but their overall growth is another 3 million on routes that are not easyJet operated routes. And Wizz are actually reducing taking another 700,000 seats out of head-to-head routes with us, and they're growing about 4.6 million on routes that aren't easyJet routes. So that gives you a bit of a flavor in terms of what we're seeing. And we're not seeing a big amount of growth from any of the legacy carriers. They're kind of flat, up 1%. We're seeing a bit of movement from Air France into Transavia because they're moving some of their capacity into the kind of lower-cost operating model. And similarly, we're seeing Eurowings growth as a transfer, I think majority is transfer across from Lufthansa. So a bit of transfer, but at a market level, you're not seeing a big dip growth overall in capacity. Dudley Shanley: Dudley Shanley from Goodbody. Two questions, if I may. First of all, the current booking patterns of early and strong late trends. What do you think that tells you about the consumer? And then second of all, thinking very long term, I think you have a power by their contract with GE and GE have been telling people they won't be signing those contracts at least at those rates again. Do you need to start thinking about engine shops into the future? I think as the LEAP engines start to come due for heavy maintenance? Kenton Jarvis: Thank you. Well, on the booking patterns being strong early and strong late, what does that tell us? Well, we're still seeing growth. So we flew 3.7 million passengers customers more as an airline in full year '25. We've got 1.4 million already booked more for Q1. easyJet holidays grew 20% last year, expects 15%, but that's a kind of similar growth number in absolute terms year-on-year as the base is getting bigger. So we still see people continuing to come towards easyJet for their holidays. Our repeat booking statistics are improving. So 71% now rebook within a 2-year period. Customer satisfaction is going up, which is really important for the long-term strength of the brand. So hard to know what to really read into the polarization of early and late other than we're ahead of where we were this time last year on all the seasons, on all the quarters that we have on sale. Engine shop, setting up our own engine shop. Well, we progressively in-sourced maintenance. We first did all our line maintenance then did the heavy base -- did the regular base maintenance and established the base maintenance facility in Berlin, for instance, to take on a lot of the European base maintenance. And we set up our first heavy maintenance facility in Malta that we got from SR Technics. And that does up to about 25% of our requirements. We would, as I said, look for more opportunities there. I think 50% is about right. So we can buy from the market 50% of the time, produce ourselves, do our own maintenance 50% of the time. You can then have much better conversations with the market about rates you would like. Otherwise you do it yourself. Engines, we have an attractive power by the hour. We're one of the last airlines to sign that because we did a well-timed order book, if you remember, 15 aircraft on order. So we placed an order for a lot of engines and a lot of spares in December '23 and secured a power by the hour agreement at that point. So we have more buffer into the future than I would argue almost every airline. It's not an unsensible thing to do. It is quite a leap that you're going to find the engineers and find the skills to do it, and you're still going to have to be buying the life limited parts and the parts of the OEMs anyway, but just competing with them in the engine shop maintenance. So it's not our priority. Our priority is to control heavy base maintenance first to the level that we want to control it, continue to work on the efficiencies. We only just bought and operated 1 year of the maintenance facility in Malta. So we want to get that really sharp in terms of its performance. And then it's something we can think about. But you're right, we have the power by the hour agreement, which does protect us for a little longer than most airlines. Well, thank you very much for coming here today. If you want to stay and have a coffee outside, I'm sure we'll be able to be hanging around if you had any other questions you wanted. But thanks very much. Appreciate it. Bye now.
Operator: [Audio Gap] 2025 Results Call. [Operator Instructions] I will now hand over the call to the presenters, Ms. Namfon Aungsutornrungsi, ThaiBev's Head of Investor Relations and members of ThaiBev's senior management team. Thank you. Namfon Aungsutornrungsi: Good evening, ladies and gentlemen, and welcome to the ThaiBev's Financial Results Conference Call for the year ended 30th of September 2025. I am Namfon Aungsutornrungsi, Head of Investor Relations. For the conference call tonight, I will begin with a summary of our full year 2025 results, then we will open the line for a Q&A session with our management team. For the summary of our results, the total sales revenue of the group for the fiscal year ended 30th of September 2025 was THB 333,286 million, a decrease of 2.1% compared to the same period last year. This was due to a decrease in sales revenue across all businesses. Net profit included associated companies was THB 31,153 million, a decrease of 11.7% compared to the same period last year. This was due to a decrease in net profit of spirits business, nonalcoholic beverage business, food business and other businesses, partly offset by an increase in net profit of the beer business. The Board of Directors has proposed a total dividend of THB 15,581 million or THB 0.62 per share, representing a 61.4% payout ratio. This includes an interim dividend of THB 0.15 per share that paid in June 2024 -- sorry, in June 2025 and a proposed final dividend of THB 0.47 per share. For the highlight of our operation, in 2025, the spirits business recorded a 1.8% year-on-year decline in sales revenue to THB 118,604 million. Sales volume decreased by 3.2%, primarily due to the weaker domestic consumption, while the international business, including Myanmar delivered a strong performance. Nevertheless, an increase in brand investment and marketing activities and a foreign exchange loss led to a decrease in net profit of 7% year-on-year to THB 19,880 million. The beer business recorded a decline of 2.5% year-on-year in sales revenue to THB 123,222 million in fiscal year 2025. Even as total sales volume rose 3.1%. The performance was affected by continued challenges in Vietnam market. offset partly by a steady recovery in Thailand. However, with lower key raw material costs and improved production efficiencies, the business delivered an impressive 24.6% jump in net profit year-on-year to THB 6,503 million. The nonalcoholic beverage business recorded a 1.6% year-on-year decline in sales revenue to THB 64,774 million in 2025, mainly due to a softer domestic consumer sentiment as well as the appreciation of Thai baht against the Singapore dollar. Despite lower packaging costs and improved production efficiency, higher brand investment and marketing activities to engage consumers across our channels together with increase in income tax expenses following the expiration of tax incentive in Thailand resulted in 13.4% year-on-year decrease in net profit to THB 5,141 million. In 2025, the food business reported sales revenue of THB 21,899 million, representing a 1.7% decrease year-on-year, primarily due to softening consumer sentiment, which affected spending. Increased labor costs and marketing expenses, along with higher depreciation from the restaurant expansion contributed to a net loss of THB 128 million in the food business. In 2025, the others business comprising publishing and printing registered a decline in sales revenue of 7.4% year-on-year to THB 4,999 million. This was mainly due to the absence of one-off contributions, including title sales and nonrecurring license income. As a result, the business reported a net loss of THB 243 million. Please note that in fiscal year 2024, the others business included a share of profit from the investment in FPL of THB 2,517 million. This contribution did not recur in 2025 and onwards. Now it comes to the Q&A session, and we will now open the call to any questions on our results. Ray, please open the line for Q&A. Operator: [Operator Instructions] The first question is from Xuan Tan from Goldman Sachs. Xuan Tan: First question is on spirits. So first question is on Spirits. Can you give some color on what happened to fourth quarter revenue in terms of the magnitude of decline specifically? Sopon Racharaksa: Yes, this is from Sopon from Spirit Group. Okay. Let me again paint you the picture also from the whole year. We started with not so good in first quarter, as you know, and then we're climbing up, it was climbing up. From the second quarter and third quarter, I think these 2 quarters, I think we were doing so good, matching the expected. But then the fourth quarter that you just mentioned, actually, if you look at in Thailand because Thailand is our major market, if you look at the fourth quarter, there are several incidences that happened in Thailand as well. We look at first from actually the border conflict I think you might already well aware of this already that this happened in that area that actually in that region, our sales is -- most of the sales are in that area. So we -- our agent has had to stop from selling. And so we -- in the fourth quarter, almost the whole quarter that we have to actually be -- so taking the safety first, we try to actually avoid selling into that area because also no one's actually be living in that area. And also those Cambodian workers who were working in Thailand, they left the country and went back to Cambodia. So I must say that it's over 600,000 people that they were our customer before taking the white spirit. So that's quite the unfortunate incident for the border conflict. And then also in the -- almost to the -- during the fourth quarter, there were a flood in the North and also in the Central of Thailand. Now you might heard the news about the flood in the southern but there were flood in the North, Northern and the Central of Thailand during the fourth quarter as well. And then we were waiting also in the fourth quarter for the new policy from the Thai government looking to the new government coming and then waiting to see what will be the new policies in terms of the promoting. And they just launched that policy this quarter, which is the first quarter. So the fourth quarter, I would say there will be some stagnant and waiting period of what will be going on for this new government and also for the natural disaster coming and also the conflict between the 2 countries. So that caused us that we were almost to be good after the third quarter and then have -- unfortunately, we had to drop in the fourth quarter. So that will be the impact of what's going on in the fourth quarter. Ueychai Tantha-Obhas: Xuan Tan, this is Ueychai. Another reason because fourth quarter last year, we sell in quite a bit because expected to have a sellout during the new year. And it doesn't come out because during the time, the economy is not as good as we thought. So it's kind of loaded too much on the fourth quarter. That's why when you compare the fourth quarter last year and this year, it's not a fair comparison. The impact of this year is also what Khun Sopon mentioned on the Cambodia border and everything but it's not that great because the other big reason is we're selling quite a bit on the fourth quarter last year. Expect a good new year, but it's not come out as we expected. Xuan Tan: That's helpful. If I were to take a step back and look at spirits volume, it has been declining for the past 3 years. So do you think there is a structural issue going on? And if that's the case, does it make sense to actually scale back on brand investment and marketing activities? Sopon Racharaksa: So we still don't see any structural change in Thailand or even in our international just yet. I think it's just only that in Thailand, particularly on the economy, if you look at the economy after the COVID time a couple of years ago, and then we are out of the COVID but the economy is still not so good. The grassroots, household debt are still around. So the purchasing power of the economy, so they're still impacting the consumption of the alcoholic beverages. So I think we still see as a typical impact from the general economy at this moment, still haven't seen the structural change, particularly in the Thai market as well. Operator: Our next question is from Zheng Feng Chee from DBS. Zheng Feng Chee: Okay. So a couple of questions. The first one, maybe touch on the marketing spend, right? So it seems a bit elevated as a percentage of sales. So do you foresee that level of spending going forward? Or is this higher level of sales is because of lower sales, the percentage is a bit higher? And how should we see that marketing spend going forward to FY '26? That's the first question. And maybe a second question would be, are you able to share some color in terms of potential corporate actions and time line for corporate actions maybe in your beer business or nonalcoholic beverage business? Maybe these 2 questions. Namfon Aungsutornrungsi: When you talk about the marketing spend, you talk about across the group, right? Zheng Feng Chee: No, more for spirit segment because it's quite high as a percentage of sales. But is this more like because sales is lower or... Sopon Racharaksa: This is from Sopon from Spirit Group. Thank you for your question. On the marketing expenses and A&P, I think we are cautious about this spending. So we are trying to utilize our trading network better because that's our strength in Thailand. And we'll try to only do necessarily promotion for our products, even though that next year, we're going to launch new product more and more. But then again, we only try to do through the trade marketing networks that we have already in place in the country. So again, we are cautious about the spending, and we'll do our best to keep it as normal. Unknown Executive: This is [ Tip ], based on the competition... Namfon Aungsutornrungsi: Sorry, you want to ask anything more for the spirits side? Zheng Feng Chee: No, no. That's very helpful. Namfon Aungsutornrungsi: Okay. Then we update on the competition in the beer side. Unknown Executive: This is Teck. The competition in beer in Thailand, we say that the competitive in the beer market is always like that. And it's only between only the 2 local companies, okay? But we do not see a big or any major change in the competition in Thailand as yet. Thank you. Zheng Feng Chee: Okay. Got it. So maybe follow-up in terms of how is the beer performance doing? Because I think there is this Japan, China tension, right? Is it diverting more tourists to Thailand? Are you seeing some improved performance in beer or in the last couple of weeks? Teck Tan: In Thailand, our performance is quite impressive, and we continue the good momentum. Thank you. You can see that our profit also grew by double digit. So still continue the momentum. Ueychai Tantha-Obhas: Lester, maybe you comment on the Vietnam. Teck Tan: Yes, I guess you may have said to our call a couple of weeks ago, I think local market conditions have been tough. So while we picked up market share, if you look at total volumes and total revenue, they are down slightly, and that's an indication of the total market, not just ourselves. But because it's an open market, so competition remains very, very fierce. And we've got all the international players that we compete against. But it's good to see that Bia Saigon continues to be the #1 brand in Vietnam, and we will have to keep it there at a very adequate level of spend. Back to your question about A&P. Because it is a competitive market, we will have to do it very efficiently to make sure we remain #1 at an adequate level of spend to meet competition. Zheng Feng Chee: Okay. That's very helpful. So I mean, given that beer performance seems to be improving, is it any potential that IPO will be happening in FY '26? Or do you think that to be delayed further? Unknown Executive: This is a repeat question. I asked this question at least. And I think the answer remains the same as before. As you well know, the market conditions now are not conducive to a listing of the company. So we will continue to drive performance in the company and improve in many other ways to get it ready so that when the market is ready, we will be ready to go for IPO. Operator: Our next question is from Meghana Kande from CGS International. Meghana Kande: So I have a couple of questions. Maybe first, just following up a little bit on the spirits side. So you've launched a few new products this year already, and you just mentioned that you plan to launch a few more next year. So just wondering when do you expect to see that scale up in your volumes where you start to achieve the economies of scale given the high A&P spend that you have planned -- you've already done this year and have planned for next year? Basically, just wondering your expected time line on the scale-up for your new products. That's my first question. Second is regarding your nonalcoholic beverage side in Thailand. So I think we're seeing F&N do quite well with the Malaysia dairy side. But I think on Thailand, the domestic market was a little bit weak, as mentioned, because of the domestic consumer headwinds. But we're also simultaneously hearing some competitors gaining market share on the NAB side. So maybe can you just help explain your strategy a little bit in terms of pricing action, marketing, any product development for your NAB specifically in Thailand? And my third question is regarding your beer segment. So I'm kind of looking at your other markets, international markets like Myanmar and Cambodia. So can you give any color on the volume trends for your beer and spirits as well in Myanmar? How has your market share trended this year? And also lastly, any progress update on your Cambodia brewery? Songwit Sritham: This is Songwit, Chief of Spirits in Thailand. So regarding your question about the NPD. So let's say that for the last year, we launched 2 major brands that the first one was the new single malt that we call PRAKAAN that mainly we sell domestic and also export for some country, for example, in the Europe and Japan. And then the second brand that we launched with the new category we call the ready-to-drink or RTD. And if you asks about our expectation. I would say that for the new whiskey single malt, we still need time to get the breakeven but that's not a huge investment. But for the ready-to-drink category, we see the breakeven just only within the 1 year after the launch. So that in the last year. And then for this year, that Khun Sopon mentioned that for the series of our NPD, actually, we are cautious about our spending. So we launched the same brand mainly but we extend the SKU. For example, we launched the brown spirit in the affordable size, meaning the 200 ml and which is -- which are the current brands, meaning HongThong, Makro, Meridian and SangSom. And we see the trend that due to the phasing of the challenging of the economy. So we said the target price is more affordable. However, we still maintain our gross margin on that particular group. And then second one, we just launched a new product last week that is called HongThong ready-to-drink as well. And HongThong is the #1 brand in Thailand. So we don't need to invest any more A&P to build brand that put more of the distribution, especially for the off-trade and the modern trade channel. So I think that's all for our strategy in NPD. Sopon Racharaksa: This is Sopon again. For the Myanmar market for spirit group, I must say that last year was a very good year for us, even though we was hit by the earthquake in March. but we came out quite solid after that, the sales revenue went up more than 20%. And then the result was so good. And then the only difficulty that we are facing in the market would be internal logistics that we will not be able to go into some area. Those are conflict area in the border of Myanmar and also difficult to find a hard currency, particularly the U.S. dollars. That's we have to slowly try to think along how to get the U.S. dollar for our importation. But in general, with our market share over 70%, and we strongly introduced quite a new products in the market as well. So I'm quite confident with this market. Unknown Executive: Excuse me for NAB, actually, the information that you just mentioned about the market share, I think, is not the right information because, in fact, in the very high aggressive competition, we are able to secure and grow our market share in the core categories, and we are the only brand that grows both in drinking water and also in CSD categories, which are the biggest -- 2 biggest categories in NAB in Thailand. So we are still maintain -- secure our leadership in all core categories and also grow the volume offtake and also market share. Sopon Racharaksa: In Cambodia, all the 3 facilities being built. It's completed -- going to be completed in the next few months within the end of the year. And I think commercial productions will probably sometime toward December into January. So that's the status. Ueychai Tantha-Obhas: I think with the breweries and also the factories of NAB, we'll be able to claim that we are local production. So that will help, and we will start next year again in January. So we will come out with the product with all the packaging and everything Cambodian and made in Cambodia, which is now quite acceptable with the people in Cambodia. Meghana Kande: Got it. It's very helpful. Just 2 small follow-up questions. So one on Myanmar. Did I hear correctly that the market share was over 20%? Just want to confirm if I heard that correctly. And second, on the NAB side, thank you again for clarifying regarding the market share trend there. But just wondering on your strategy for next year in terms of marketing or pricing action for next year for NAB? Ueychai Tantha-Obhas: In Myanmar Spirit, I think we gained share. Right now, we're in the region of 72% of whiskey market increased from last year's 70%. So in NAB, I think we still have -- I mean, for Oishi still quite a small business there, but growing. But for F&N, it's doing quite well there. But I can't -- we don't have the information on market share actually for that market. Namfon Aungsutornrungsi: Meg, I think the second question you asked about the marketing spend for NAB going forward. Is it? Meghana Kande: Yes, that's right. Yes. Market share -- sorry, marketing spend and also your ASP pricing, any action on that? Namfon Aungsutornrungsi: Actually, in terms of ASP, normally, we do not disclose because this one, we're quite careful because we also don't want our competitor to know what is the plan for us. Yes. In terms of the marketing spend for NAB as you know, it's not just spirits. I think it's all across the segment that we carefully spend our marketing. We try to do it more efficiently as well as in order to make the bottom line improve in 2026. Yes. So we all control it across category. Operator: [Operator Instructions] Our next question is from Selviana Aripin from HSBC. Selviana Aripin: I have a question with regards to commentary, if you could provide some comments around raw materials input costs, particularly going into 2026. What should we expect? I know there was -- I guess we have enjoyed quite favorable raw material costs, particularly in the beer in this financial year. Should we expect that to continue into next year? Probably if you could help us with that comment for beer as well as spirits division, that would be helpful as well packaging in general. Ueychai Tantha-Obhas: Selviana, thanks for the questions. I think in terms of all that is quite favorable next year. Start with molasses, right now, the current trading is about 30% to 35% lower than last year. They start the trading already. In terms of malt, Dr. Pisanu will comment later on. But on NAB, there are 2 big cost of goods ingredients, which is packaging. We bought a resin, which is main for the packaging at about 60% price of last year, which means that we will have a very favorable cost in terms of resin. And this year, in Thailand, the sugar business -- the sugar is very good. That's why it's quite a lot of product sugar produced. So we expect the sugar price to come down. So all these 3 category, we believe to have a very favorable sort of cost of good, okay? That's the overall. In terms of malt, Dr. Pisanu, will give you more color. Pisanu Vichiensanth: I think I can give you the short answer. The price of the malt declined heavily last year. And for next year, the price of the malt is still declining another 2 digits. So you can be rest assured that the cost of goods sold is going to be good. And the other part of the raw material is about the broken rice. The price come down more than 20%, another 20% further down from last year. So Khun Ueychai, kindly explained it to you. The rest, aluminum, carton, corrugated paper, labels are coming down in price. And I think the cost of goods sold is going to be good for next year. I mean, overall, for -- in the future, the market is very challenged for us, but we are lucky to have a very favorable cost of goods. So we should be able to really sort of protect our profitability this coming year. Operator: Our next question is from Hussaini Saifee from Maybank. Hussaini Saifee: Just a couple of questions. First is that maybe if you can help me with your expectations for broad level expectations on the growth side and margins outlook for various businesses in FY '26? And the second question is also at the macro level, how does the -- how do you see the impact of high and regional macro environment on the demand outlook? And what steps are being taken to mitigate the overall consumer softness? Namfon Aungsutornrungsi: Saifee, can I recap your question? The first one, you asked about the growth outlook and the margin improvement in 2026. Is it right? Hussaini Saifee: Yes, that's correct. Namfon Aungsutornrungsi: Yes. For that first question, I think we cannot give you in terms of the forward-looking for -- in terms of the growth as well as the margin for next year. Normally, we don't give the forward-looking. Sorry about that. For the second question, you asked about demand and customer sentiment in the region as well as Thailand. Is it the question that you asked? Hussaini Saifee: Yes. That's right. That's correct. Ueychai Tantha-Obhas: Well, this coming year, the sentiment -- okay, we have to -- for Thailand, the government has tried so hard to really sort of promote the economy. I mean, like you probably heard about the half-half has worked very well for our products, all categories. And then we believe we heard the government that they will have a Phase 2 in January. That's also plus for us. It's probably positive for the consumer sentiment. They also try to promote local tourism by offer 50% of the cost, you can claim and all that. All that are positive because the government is trying hard to really push the economy for next year for this. So we believe that we will gain traction from those also. And next year, in Thailand, as I mentioned before, there will be elections. In the past history, every time we have election, the consumption of beverage alcohol is increasing during the elections. That also another plus for our alcoholic beverage in Thailand. So in conclusion, in Thailand, we believe that it will be a bit favorable, better than the current or last year. Operator: Our next question is from Xuan Tan from Goldman Sachs. Xuan Tan: Can I check on net gearing? Could you explain why the net gearing increased year-on-year? What is the CapEx plans and whether there's room to raise dividend payout ratio? Kosit Suksingha: Tan, Kosit speaking. I think for the net gearing increasing, actually, the -- if you look at the interest-bearing debt by itself, actually, we -- as an absolute amount, we are lower. However, when we look at the gearing or some of the debt to EBITDA because of this year, some of the impact on EBITDA. So that's why the ratio looks to be high. Regarding to the CapEx, right, as we already informed during the -- even the last month on press conference, the majority of the investment in Malaysia and Cambodia is almost spending in terms of the operating. So we not expect the same level that will happen in 2026. So that's why I think we think it will be going back to the normal level probably mid of next year. Xuan Tan: And how about dividend payout ratio? Any room to increase? Prapakon Thongtheppairot: This is Prapakon. I think we'll maintain that our dividend will be at least half of the profit we made, and we maintain that. And subject to our cash flow availability, I think we maintain our dividend per share this year and although despite our earnings a bit softened. So in a way, the payout have increased slightly. Xuan Tan: Second question, can I clarify on NAB business? First is why is minority interest so high relative to the reported net profit? And second, dairies volumes seem to have been restated. Is that the case? And what was the reason behind this? Kosit Suksingha: Maybe I yes. I think the -- so the interest expense in the NAB segment because you know that actually, we have the CapEx investment on the cow farm AgriValley in F&N, then we fully consolidation of F&N the whole group into the ThaiBev consolidation. So part of the interest expense during the CapEx investment in the Malaysia also include in the ThaiBev this year fully. So that's why when we see the year-on-year, the ramp-up of the CapEx and interest in Malaysia will happen year-on-year increase this year. Can I get the questions again on your dairy? Are you asking about the volume of dairy? Xuan Tan: Yes. The first half, I think dairy volume was about 300 over and then full year, we are still at 300. So I assume there was a restatement or what changed for dairies volume? Kosit Suksingha: Sorry, Kosit, again. So I think actually, when the first half is -- when we look at the details, as we released the half year review, right, we probably will not like go into a deep dive in terms of how we categorize the dairy and nondairy. So then when we audit the full year, we try to reshuffle in the more comparable. The dairy right now, we focus on the key brand that like Carnation, Teapot and Magnolia. So that is both justify the dairy. Some part of that one like nutrisoy or other soy milk, we classify to be the soft drink. So that's why this dairy will be comparison wise to wise in terms of year-on-year on the key dairy product of the group. Xuan Tan: Okay. Sorry. So the volume, which other segment did it go to? Namfon Aungsutornrungsi: Sorry, Xuan, can you repeat your question, sorry? Xuan Tan: Yes. So there was a restatement, right, in terms of where the certain volumes are. Unknown Executive: Correct. Namfon Aungsutornrungsi: Yes, yes. It's reticulaize. Xuan Tan: Okay. Okay. Got it. Lastly, just a comment. I guess we have seen companies listed in both Thailand and Singapore giving forward-looking statements. So it will be really helpful if you can reconsider that for future earnings. Operator: [Operator Instructions] As there are no further questions, we will now begin the closing comments. Please go ahead, Ms. Namfon Aungsutornrungsi. Namfon Aungsutornrungsi: Thank you, everyone, for joining our conference call tonight. And if you have any more questions, please contact IR at ir@thaibev.com. Thank you, and have a good night.
Operator: Good morning, afternoon and evening, and welcome to the Noah Holdings Limited Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Doreen Chiu, company's Investor Relations. Please go ahead. Unknown Executive: Thank you, Jason. Good morning, afternoon and evening to everyone, and welcome to Noah's Third Quarter of 2025 Earnings Conference Call. Joining me today are Ms. Wang Jingbo, our Co-Founder and Chairlady; Mr. Zander Yin, Co-Founder, Director and CEO; and Mr. Grant Pan, the CFO. Mr. Yin will begin with an overview of our recent business highlights, followed by Mr. Pan, who will discuss our financial and operational results. They will all be available to take your questions in the Q&A session that follows. Please note that the discussion today will contain forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from those in our forward-looking statements. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the SEC and the Hong Kong Stock Exchange, nor does not undertake any obligation to update any forward-looking statements, except as required under applicable law. With that, I would like to pass the call over to Mr. Yin. Zhe Yin: Thanks Doreen. [Interpreted] Good morning to everyone, and thank you for joining us today. During the quarter, we are seeing 3 very clear trends emerge. First, despite ongoing revenue pressure, our profitability and margins improved significantly with non-GAAP net income increasing by over 50% year-on-year. Second, investment products have seen accelerated growth and are accounting for a larger share of new revenue. And lastly, key initiatives, including the establishment of 4 overseas booking centers and the rollout of AI-related projects have transitioned from planning to actual implementation. These 3 trends give us greater confidence that our transformation strategy is making solid progress. Financially, net revenues for the third quarter reached RMB 633 million, down slightly year-on-year, but up sequentially, marking the second consecutive quarter of sequential growth. The year-on-year revenue decline was mainly due to continued softness in both domestic and overseas insurance businesses, in line with our expectations that 2025 to 2026 would be a period of revenue mix adjustment. Notably, our revenue mix continues to improve significantly, driven by growing investment products revenues, which accounted for approximately 28% during the quarter compared to 18% a year ago, a clear improvement compared to the same period last year and something we will continue to focus on going forward. As a result, our bottom line delivered a solid performance with non-GAAP net income for the third quarter up more than 50% year-on-year to RMB 229 million. This brings non-GAAP net income for the first 3 quarters of 2025 to RMB 587 million, a clear reflection of the results our prudent investment strategy and cost controls are delivering. Performance of our overseas and domestic operations are each following distinct trends. For overseas operations, it has maintained a pattern of strong investment product growth and soft insurance product distribution. Net revenues from our overseas wealth management business were RMB 146 million in the third quarter, a year-on-year decrease of 22.7% due primarily to a decline in revenue contribution from the distribution of insurance products. Sequentially, however, revenues were up 13%. By the end of third quarter, overseas AUA reached USD 9.3 billion, up 6.8% year-on-year. Notably, transaction value of U.S. dollar private secondary products in the first 3 quarters increased nearly 2.5x year-on-year to USD 688 million. Net revenues from Olive, the overseas asset management were RMB 118 million in the third quarter, up 8.6% sequentially, driven primarily by growth in AUM and recurring service fees. By the end of third quarter, overseas AUM was USD 5.9 billion, up 5.3% year-on-year. Net revenues from Glory Family Heritage, which provides overseas insurance and comprehensive services were RMB 47 million in the third quarter, up 19.8% year-on-year. While investment services remain our core focus, we shall continue to serve clients with insurance products through our capital-light commission-only broker model. On the domestic side, we are seeing strong momentum in the secondary market, a continued focus on exits in the primary market and the insurance segment entering an adjustment phase. For Noah Upright, our domestic public securities business continued to benefit from a rebound in the Asia market. Transaction value for RMB-denominated private secondary products in the first 3 quarters grew 206% year-on-year to RMB 8.97 billion. Net revenues from domestic public securities for the third quarter were RMB 116 million, up 8.7% year-on-year and underscoring the strategic direction we are headed in with growing AUA and expanding investment capabilities. Net revenues from domestic asset management, Gopher, were RMB 189 million in the third quarter, up 4.9% year-on-year as it maintained stable profitability and continues to facilitate exits from existing assets. Net revenues from domestic insurance business, Glory, were RMB 5 million in the third quarter, down 44.8% year-on-year. The pace of the fall in net revenues was in line with our planned pace of consolidation and transformation to domestic insurance business. Overall, the rebalancing of our overseas and domestic operations is making solid progress with investment product growth increasingly acting as a new growth driver. In the third quarter, we continue to make solid progress in our overseas expansion with the establishment of 4 booking centers, which form the foundation of our global operational system. In the United States, we officially obtained a U.S. broker-dealer license and will continue to steadily build our business there in accordance with local regulatory requirements. In Singapore, we continue to strengthen our capabilities and build out our team. While in Hong Kong and Shanghai, we continue to serve as a core hub for operations, compliance and support systems. Our global operations framework is gradually improving, providing an important foundation for future cross-regional client services and asset allocation. AI is a disruptive force in wealth management industry with immense future potential and serves as our second strategic growth driver for the future. Over the past few months, we have begun implementing our AI RM + AI operations system plan. Initial pilots were launched during the quarter to improve client outreach, content generation and back-end operations as well as cross-departmental collaboration in Singapore specifically. In the latest update to our app, we officially launched our AI RM, Noah, providing clients with deeper engagement and interaction. I want to emphasize, however, AI is not simply a PPT concept for us. It is an institutionalized operational capability. We will continue to develop AI capabilities across the entire value chain in a steady and pragmatic manner. Looking ahead, we remain firmly committed to advancing our 3 core strategies: First, strengthening our core capabilities in investment product selection, fundraising and co-investment to increase the proportion of investment products in our revenue mix, drive product innovation and create a differentiated competitive advantage. Second, establishing AI as our second strategic growth driver by strengthening the development and deployment of AI tools across relationship management operations and investment research to firmly embed it into our organizational DNA and operational system. And lastly, leveraging our full emphasis booking centers as a foundation for a globally coordinated service platform that delivers a consistent wealth management experience to global Chinese clients. At the same time, we will continue to maintain prudent operations and drive quality growth striving to improve shareholder returns by improving capital efficiency, optimizing cost structure and strengthening cashflow. We'll continuously enhance our competitiveness in market share in the global Chinese wealth management market. Thank you. Now I'll hand over to our CFO, Grant, to provide a detailed overview of the group's financial performance. Qing Pan: Thank you, Zander, for the comprehensive strategy and market overview and warm greetings to everyone joining us today. For those of you that in the United States, happy Thanksgiving and holiday season. I also want to make an introduction of the AI RM, Noah actually did the English translation just now, if you have noticed. I'm very pleased to share Noah's financial performance for the third quarter of 2025 and resource allocation priorities from a financial perspective. During this quarter, we delivered solid profitability supported by prudent investment decisions and disciplined cost management. Non-GAAP net income reached RMB 229 million, up 52.2% year-over-year and 21.2% sequentially with a margin of 36.2%. The first 9 months of 2025, non-GAAP net income totaled RMB 587 million, a 40.5% increase from the same period last year. This was achieved despite a 7.4% year-over-year decline in total net revenues for the quarter as we continue to optimize our revenue structure. Total revenue for the third quarter was RMB 633 million, reflecting a year-over-year decline primarily driven by lower insurance income amid intensified competition in both domestic and overseas insurance markets. Yet it still recorded modest sequential improvement overall, marking our second consecutive quarter of growth. Total transaction value remained high at RMB 17 billion, maintaining the same elevated level as the previous quarter and rising 19.1% year-over-year. RMB-denominated products increased 28.7% year-over-year, while U.S. dollar-denominated products grew 9.6% year-over-year. The strength in investment-led transactions helped offset softness in insurance and domestic management fees, which continue to weigh on overall revenue. Onetime commissions related to investment products grew 85.5% year-over-year, supported by stronger client sentiment, expanded range of quality global investment solutions offered to our clients. Overseas net revenues for third quarter remained robust at RMB 311 million, contributing 49.1% of total net revenues. By revenue type, onetime commissions were RMB 159 million, up 2.2% sequentially. For the first 3 quarters, the transaction value of RMB private secondary products, which surged 26% to RMB 9 billion and U.S. dollar private secondary products, excluding cash management, climbed 244% to USD 688 million. Recurring service fees exceeded expectations, rising 4.7% year-over-year and 3.6% sequentially to RMB 421 million. The increase was supported by higher overseas product management fee contributions and some extensions of domestic fee funds. When domestic exit activities were slower than expected, we do not view this as a structural issue. We acknowledge and recurring income may face some pressure in the near-term. We're proactively managing our portfolio and strengthening overseas product fee contributions to mitigate the impact. Performance-based income remained stable from last quarter, stood at RMB 22 million. Our overall operating expenses declined 1.6% sequentially to RMB 461 million. For the first 3 quarters, it has dropped 6.5% year-over-year, reflecting improved efficiency across the organization. This discipline enabled us to expand our operating margin to 27.6% for the first 9 months from 25.5% a year ago, with operating profit reaching RMB 519 million, up 4.6% year-over-year. In the third quarter alone, operating profit was RMB 172 million with a 27.2% margin. Non-GAAP net income rose to RMB 229 million, up 52.2% year-over-year and 21.2% sequentially, reflecting continuing operational strength and solid investment performance. That said, we may encounter a moderation in the fourth quarter as market conditions evolve. As of September 30, 2025, total assets under management, AUM, stood at RMB 143.5 billion. U.S. dollar-denominated AUM grew 5.3% year-over-year and 2.6% sequentially to USD 5.9 billion, while U.S. dollar-denominated assets under advisory, the AUA, increased 6.8% year-over-year and 2.0% sequentially to USD 9.3 billion. This ongoing expansion in overseas assets highlights Noah's success in capturing offshore investment demand and strengthening our international footprint. Our overseas client base continued to grow. with registered clients up 13.1% year-over-year and active clients reaching 3,561 by the end of the third quarter. The number of newly acquired golden clients defined as professional investors has reached to over 1,000 by the end of the third quarter, reflecting our ability to attract and retain high-quality clientele. Our balance sheet remains strong and debt-free. As of September 30, 2025, cash and short-term investment totaled RMB 5.0 billion, even after a dividend payout of RMB 550 million. With 0 interest-bearing liabilities, we remain significant liquidity and flexibility to support global growth and technology investments. In closing, even under softer revenue conditions, our disciplined operating model and prudent investment approach delivered solid profitability and margin expansion. With a strong balance sheet, growing global presence and ongoing digital transformation and AI application, we remain confident in Noah's ability to deliver sustainable growth and create long-term value for all stakeholders. Thank you for your trust and continued support, and we'll now open the floor for questions. Operator: [Operator Instructions] The first question comes from Helen Li with UBS. Heqing Li: Can you hear me? Unknown Executive: Yes. Please go ahead. Helen, we lost you. Operator: The next question comes from Peter Zhang with JPMorgan. Peter Zhang: [Foreign Language] Congratulations on the very strong results. I have 2 questions. First is management gave very clear guidance on strategy on AI on increasing the investment product proportion and on the booking center. And I have 2 follow-up questions. First is, can we understand what will be the potential financial impact from these strategies? For example, with the adoption of AI, will we see any cost saving on the operating expense side? Or will we see any improving in revenue? And regarding the booking center, particularly on the U.S. booking center, will we see very strong upfront investment into the 2026 where we fully launch this business? And the second follow-up question is we also wish to understand from the investor perspective, is there any metrics we can track on Noah's progress in this strategy in the coming 1 or 2 years? And my second question is on the overseas relationship manager and the domestic coverage city. I observed that overseas relationship manager headcount has dropped in third quarter, while the domestic coverage city has increased in third quarter. And the trend is a bit different from the trend we have been observing in the I think past 2 years. We wish to understand what's the rationale behind? Is there any major change in our company strategy? Or this is just due to some market or the RM headcount fine-tuning? Qing Pan: Thank you Peter, and thanks for actually asking a pretty comprehensive question. So, I'll try to take the first question and Zander will supplement on the second one. So, for the first question, especially on the 3 significant measurements, especially for the strategy of optimizing revenue structure. I think a couple of things that investors could track or pay attention to is one is the weight of revenue that's coming from investment-related products. We do believe that both revenue and top line will continue to grow. But at the same time, the structure that comes from investment-related products, given the actually expansion on product shelf and how the recovery of sentiment relating to investing from our clients, we believe that, that's one of the things, obviously, we could track. Secondly, obviously, we want to see a meaningful accumulation on investment-related AUM and AUA as well. Secondly, to your question, I believe our Chairlady, Noah, could also add on is the AI investment. It's not a small optimization or extracurricular activity in terms of AI investments. We're actually looking to innovate the business model on top of the traditional offline or physical RM team, if you will, by actually adding 2 teams. One is the AI RM that will continue to activate the existing client group to activate sort of the nonactive clients or new clients. We believe that AI actually provide a more structural method and a more tailor-made capability to active the new client leads. And secondly, we're actually trying to see if we could -- as Noah actually do have pretty established infrastructure in terms of systematic infrastructure as well as the capability offering various products, we want to see if we could use with the help of AI to consolidate or aggregate some of the EAM services that seems to be pretty mature in overseas market. So basically, in short, we're trying to see if the AI capabilities that we continue to invest in will increase the capability on several fronts. One is obviously client acquisition, new client acquisition; and 2 is to upgrade the business model in the future. So, we have been doing that, especially the design organization structure this year, and we'll have a strategic investment in AI starting from 2026. To your question on the booking center, yes, we will have a little bit of infrastructure construction, obviously, in the U.S. booking center, but we already had presence in the U.S. market for the past few years. So many of the teams are actually already out there. Obviously, we'll be adding some of the mid-back-office capability for the broker-dealer business. But from the budget standpoint, it's actually not going to be a very significant addition in terms of operating expenses, but basically the necessary infrastructure for the year of 2026. Okay. So, Peter, that's the first question. Zhe Yin: [Foreign Language] Unknown Executive: [Interpreted] [Let me do a quick translation first.] So, CEO just mentioned for the 3 strategies is actually very correlated because the key thing is trying to do is to drive the company as an AUM-driven company. So, during these structural changes, and we've been trying to more -- because in the past few years, the clients are more conservative in terms of investment. But the recent year, we have seen that there has been changed and clients have been more active in the investment now. So that's why we believe that AUM-driven structure in terms of our revenue is the key engine for the company growth in the near future. And when we're talking about AUM-driven revenue growth, that is why we needed to think about the AI development and also the different booking centers that we've been having in globally. Because for AI investment that it can help to enhance our business efficiency and also it provide a better experience to our clients and which we believe that it can further reinforce our momentum. In terms of giving clients a better service and our sales performance. And also, for broking center, basically, it's the same idea. We've been trying our clients to plan as well because we have seen more global demand in terms of the investment need. And that's why we needed to build up the platform and provide these infrastructures to our clients. And also, yes, it may have a little impact unavoidably. But that we believe that with our strong balance sheet, we've been able to keep a very prudent investment team, but at the same time, been able to support our development. Zhe Yin: [Foreign Language] Unknown Executive: [Interpreted] To your second question, Peter, CEO emphasized that we didn't change any of our focus on developing our overseas market. When you have seen that they dropped the number of our overseas RM, I would also say that it's more like an active adjustment internally instead of other reasons. It's because to have the right RM is actually -- require a lot of investment and time. And I mean we will need to have the right RM. And that's the reason why we've started to invest in our AI development and try to introduce the AI RM concept. Now that you've just met. It's actually one of the AI RM that we are having. And because when we look at the efficiencies, they can actually cover the number of clients will be a lot more, and that is what our CEO mentioned, the capacity that AI RM could have compared to any human beings. And also, you may have seen the number of cities in domestic market we cover seems to have increased. But again, that's not exactly the same types of office that we've been having in some of the major cities. Those increases are mainly just that the cut will call it more like a clubhouse. It's more for client relationship and for our elite clients better experience with us. So, we wanted to emphasize that our focus on developing overseas market remains the same. Jingbo Wang: Can you hear me? [Foreign Language] Unknown Executive: [Interpreted] [Yes. Let me do a very quick translation.] So, what Chairlady has mentioned, we've been started to invest in different types of AI or investment-related fund since 2016, and we've been staying very close to a lot of top-tier high-tech company. And why we bring this up is because we've been trying to demonstrate where do all this knowledge about AI and technology we've been adopting. And for example, investors or analysts could been seeing that we've been launching all these type of infrastructure fund in our -- under our brand as well. So, we've been trying to demonstrate that we have a very deep knowledge about AI. And that we believe that's going to have a very structural changes to the wealth management industry. In the past, it's more like RM-driven, human-driven model, but we believe that going forward, it's more like an operational driven model. What is the operational driven model, we believe this depends on -- I mean, it depends on development of AI, which is, for example, we can have an AI wealth management team, it could have people still to do the data analysis and some people may hold license. But at the end of the day, it's about AI. They've been able to help and enhance human beings' knowledge about different investment products and their client needs. And so that they can come up and they can cover a lot more clients per person unlike in the past. And that's what we call this operational driven. And also, when we are developing the overseas market, what we've seen is it's hard to rely on human being at the sense that because the cost could be high and also the loyalty, or the stability may not be as high or not be that high. And that's why the company believe that using operational-driven wealth management system is a more efficient way of running this business. And that's not only happening in Noah, we believe that it's going to be very -- it's going to be a new development in the entire industry in the coming 3 to 5 years' time. But that we've been trying to take advantage, or we've been trying to take step ahead of the industry so that the company can be ahead of the industry to adopt this operations-driven model. And to supplement this also, we've been introducing the EAM or what we call IAS system in the U.S.A. And also, we've been hiring this commission-based agency during our insurance products. That said, overall, we are talking about -- from the company's point of view, it's about building the global platform, the infrastructure for all these operational-driven models being able to deliver good results for the company. Jingbo Wang: [Foreign Language] Unknown Executive: [Interpreted] So as a conclusion, we believe that with AI, so currently, what we are having is that all of our RM, they have their own AI assistant. And we believe that, that can enhance the capacity to like become -- one people become 3 RMs. And more importantly, it is about the new business unit or business line that we've been setting up. So, another one will be AI wealth management that we mentioned previously, which is within the AI wealth management team, they've been able to give better experience to the new clients and also, they've been able to help to take into our client base and try to reconnect with those clients may not be very active in the past few years. And another business that we've been trying to -- or we have been developing is also this AI ecosystem team, which is they've been focusing to serve the EAM business that we've been mentioned and also this commission-based agency that will be supplement the company's development. Operator: [Operator Instructions] Our next question comes from Calvin Wang with Citi. Unknown Analyst: [Foreign Language] Congrats on the solid premium in third quarter. And I have a question on investment product sales, which sustained a robust growth in the quarter. What measures have Noah taken specifically? And looking into the fourth quarter, what is our strategy in investment product sales across domestic and overseas markets? Are there any products that would be our key focus this year? Zhe Yin: [Foreign Language] Unknown Executive: [Interpreted] You may be aware that in this company, we have this CIO report, which has been issued every half year. And during the recent publish, we talked about the 3 types of products that we believe that should be paying more attention to. So, for the first time is some fund or investment that has been able to fight inflation, which would be more traditional types of funds, including those property fund or maybe gold or material-related types of funds. And secondly would be more technology related, which is using technology to fight inflation. For example, this AI that would been mentioned, not only for the companies adopting of the using, but also related type of investment as well. And the third one would be some newly developed business is more like the crypto that we've been paying -- or we've been advising our clients to pay more attention to. And I mean, as Chairlady mentioned, luckily, we've been connecting with the U.S. product market since 2016, and we have developed a team there to sourcing different types of funds or investment products for our clients. And that's why we've been able to been enhancing our product share in the past few years. And that's why starting from the last few years, you may have been able to see reflecting on our financial performance. Instead of just PE fund being able to sell to clients, we have seen a very substantial improvement in selling hedge funds. That is the secondary market types of fund that we've been able to sell to our -- to our clients. And also, about the renminbi market, we may have to say that, yes, because of the performance of our Asia market, we have seen a lot of interest in our clients for the renminbi-related products. However, the company still keep a very rather prudent and conservative belief towards the renminbi type of product. We still believe that our strength or our focus is more on overseas investment products is more particularly these technology-related type -- AI-related type products. Zhe Yin: [Foreign Language] Jingbo Wang: [Foreign Language] Unknown Executive: [Interpreted] [Thank you, Chairlady.] So, what in mentioned, timing to CEO's answer is we probably shouldn't just look at a particular type of products when we've been doing -- answering this question. It's more about the company's position. It's also about our own DNA, which is that we've been able to serve all the global Chinese. We understand them, and we know how to give them better services. And also, it's about the infrastructure that we have, the broking centers globally and also the different business units, for example, Ark in Hong Kong, in Singapore, they've been able to provide services for opening accounts, buying equities, buying bond-related products. And also, we have Olive, our asset management that's been strong traditionally in PE funds, and we're now introducing hedge fund. And also, our brand Glory, we've been able to provide trust services or even insurance advice and family planning. So, it's about the infrastructure that we've been having and means that we've been always able to meet our clients' needs. So, for example, that's why what we've been keep on saying, we wanted to be an AUM-driven revenue model. That's also why we've been starting to build up the commission-based insurance agency team because we've been trying to lower the running cost, but at the same time, still provide comprehensive services. to meet our clients' needs. And I guess that's our advantage of the company. So, it's not about picking what products to be sold to the clients, but we've been able to provide whatever our client needs and meet the demand. Jingbo Wang: [Foreign Language] Unknown Executive: [Interpreted] So, Chairlady, this also explained the strategy. So since starting this year, I mean, for -- we wanted to focus on the Chinese high net worth. So, it's not no longer competing by providing what type of products, but about we've been able to provide the services. So, she emphasized again about the RM team that we've been building, the group booking center we've been able to have globally so that we've been able to provide services across different time zones and across different geographical restrictions. And also, when we've been serving the high net worth, one thing is different. They no longer just related to one geographical places. They've been speaking different languages. And when we've been entering different markets, we also face the difficulties of regulatory requirement. And that is one of the lowest competitive edge because if any wealth management company with a smaller scale, that may be a very difficult thing to override. And that's why we've been in the right size to be able to set up our global infrastructure platform, being able to cooperate with local EAM IAF team so that we've been able to provide global to any potential high net worth clients that we've been able to reach. Jingbo Wang: [Foreign Language] Unknown Executive: [Interpreted] I guess Chairlady wanted to further share her confidence -- I guess she's very excited and everyone can sense that. We've been able to find the right strategy going forward to develop this company. So again, she emphasizes about the global platform. It's about the different business units that we have already developed and invest in the previous years. And it's also about the new development like ecosystem and AI RM. Together, we've been able to serve globally and meet all the clients, all the particularly Chinese high net worth needs in this global market. So, she's very confident and has a very high hope about this development strategy for the company. Operator: And the next question comes from Jin Jiang Yan with CICC. Unknown Analyst: [Foreign Language] My first question is about the investment income and income from equity affiliates. I see that both these items have significant meaningful contribution to the growth of net profit. And I would like to -- could you please share the reasons behind and the trends in the fourth quarter? And the second question is about the active clients. I see that the active clients increased both double digits Y-o-Y and Q-o-Q. Could you please share what you have observed from the clients' behavior, the impact on the financial statement and the trend in the fourth quarter? Zhe Yin: [Foreign Language] Unknown Executive: [Interpreted] So, about the investment gain that we've been having. So, one of the major reason is due to the previous investment the company is having, particularly being the GP for some of its PE funds, and we've been seeing some exit in the recent years during the good market. And also, we can have a valuation gain for some of the investment as well. And in terms of active clients, we've been able to have the better result because we've been now more focusing on investment products and which for investment product and life insurance clients may have repeat buying with us that we've been able to enhance or have or maintain a rather stronger relationship with them. And that CEO emphasis why that's the reason why we would like to be more focused as an AUM-driven company. Jingbo Wang: [Foreign Language] Unknown Executive: [Interpreted] So, Chairlady further explained that, that is because one of the -- I mean, the investment gain that we've been able to have is because the right decision that we have made in the past. So being invested in different types of these PE fund or also even listed in the U.S.A. We may have some hurdles in the previous year, but that we've been seeing good results. For example, this investment income, that is one of the example showing that the company has been able to make right decisions in the previous years. And that's also the reason explained why. I mean, when we have good result investment, that is an attraction point to our clients that made them more willing to invest with us. Operator: And the next question comes from Helen Li with UBS. Heqing Li: [Foreign Language] I have a follow-up question regarding AI application. How will AI support client acquisition in the overseas market? Given the recent decline in overseas relationship managers, does this suggest a strategic shift towards serving existing clients' overseas investment needs rather than focusing on expanding local client acquisition? And is the reduction in headcount primarily affecting mid- to back-office RM? Or does it also affect client-facing front office RM? Do you still plan to expand the client-facing front office RM team? Previously, the target was to grow the overseas RM team to 300 in the medium-term. With the adoption of AI, has there been any change to this medium-term target? Jingbo Wang: [Foreign Language] Unknown Executive: [Interpreted] So, to answer your question, the Chairlady is just joking about that we want to -- we don't want to share the secret of how we've been able to get clients, but that's more like a joke because I mean, ultimately, it's about how many clients that we have already been served. We have already served more than 400,000 clients over the last 22 years. And also, with all these different types of PE fund that we have invested, we have mapped a lot of potential high net worth or going to be high net worth or have become high net worth individuals by their business development. So that the company is very confident that we have already had the database. But that in the past, one of the difficulty is that we have the capability or we are capable to serve these types of clients in a good way. But that with the AI assistance, we believe that we've been able to deliver better services and better solutions to all our clients. And that's why with this kind base that we already have, we've been able to give the right service to them with the assistance of AI. So, she also provided one example. We have this client in Singapore. We met him and he became a client. He invests with us only top 5 days. And that is impossible in the past. It may take more than 2 months in the past. But now with the assistance of AI, that is providing solutions, explanation and different types of understanding. And that's the reason why it has enhanced the company's efficiency in getting potential clients. Zhe Yin: [Foreign Language] Unknown Executive: [Interpreted] The CEO just explained how AI is affecting the company. We believe that everyone is talking about AI, every company wants to use AI. But it's about if they have the basic to be able to really adopt AI. That is -- because using AI and using AI efficiently is 2 different topics that we've been talking about. And why Noah been able to have in this competition is because we have adopted digitalization. I mean, in the earlier stage, we have developed the right system. We internally have all these data analysis, or system buildup, even the OA structure and all that. And because of that, we've been able to adopt AI in a faster pace compared to some of our peers. And also, when Helen is asking how AI has been able to help the company, CEO's answer was, yes, we have already seen some benefits being arise using AI, but that AI's adoption could be out of our imagination. So, the benefit that we've been experiencing could be a lot more in the future. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Dorien Chu for any closing remarks. Unknown Executive: Yes. Thank you. And thank you very much for joining us today. And if anyone has any further questions, please contact IR team as usual. Thank you very much. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Peter Nyquist: Hi, and good morning, everyone, and welcome to this second quarter Investor and Analyst Call. My name is Peter Nyquist. I'm heading up Investor Relations at Elekta. With me here, I have, for the first time, our new President and CEO, Jakob Just-Bomholt, and welcome Jakob for the first call, and hopefully, many to follow. Together with Jakob, we have our CFO, Tobias Hagglov. Jakob and Tobias will present the results for the second quarter and in the fiscal year of '25-'26. So we'll start off with Jakob giving some initial reflections on his first quarter as CEO, followed by a summary of the Q2 financials, including the order view announced today. Then, Tobias will go into the more details around the financials and Elekta's outlook. Jakob will then present the change in operating model and the organizational structure, leading to the cost reductions that we announced today as well. And after presentation, we will, as usual, be available for a Q&A session. But before I start, I want to remind you that some of the information discussed in this call contains forward-looking statements. These can include projections regarding revenues, operating results, cash flow as well as products and product development. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the statements. With that said, I will hand over the word to you, Jakob. Jakob Just-Bomholt: Yes. Thank you very much. Yes. So let me start by talking a bit about some of the initial reflections and then give highlights on Q2. Then, Tobias, you will go into Q2 financials in greater details. And then, importantly, we'll get back to Elekta Reset if you will, our new operating model. But on initial reflections, before I go into the details here on that slide, I would just say, fundamentally I like what I see. I'm now 4 months into the position. Obviously, prospectus will modify somewhat, but I do think directionally, what we will outline here in terms of strength and challenges and opportunities, we'll set the direction for the company ahead of us. We have been very open. Elekta is not performing at full potential. As incoming CEO, I think that's great, give us a lot to do. It also gives us an opportunity to do better. When we look at the company, we don't feel, and I don't feel that there are structural headwind. Of course, we have competition like for any company. But the challenges are really within our control to face. And that's what we're about to do. Today, we disclosed our must-win battle 1, we call simplify and power speed, but I'll get back to it. But let me go a little bit in details with some of the reflections. And if I start on the positive side, it's not positive, cancer burden is increasing. You all know that. Cancer incidence is on the rise, but fortunately, due to aging population and growing population, we see more and more that cancer is a chronic disease, so you get treated, you're cured, you come back, and then, you're using Elekta equipment again. Then, the second mega trend is that there is a shortage of professionals. I've heard numbers up to shortage of 80 million. So that really speaks for us as a vendor into the industry to innovate, to support the professionals with speed and better treatment and more precision. At Elekta, if I turn to the right, we're well positioned. We are #2. We are not #1. That's in many ways attractive position to be in, but we are clearly #2. Radiation therapy is an attractive and growing MedTech segment. We look at the segment likely to grow faster than the average MedTech segment. Then, we have many strongholds built up over many years in key markets outside U.S., strong in Europe, strong in many Middle East Africa markets, strong, very strong in China, strong in a number of Asia Pacific regions. But clearly, what we also imply here is that we are not strong enough in the U.S., and I'll get back to that on some of the challenges and opportunities. We are the only dedicated -- 100% dedicated company focused on radiotherapy. I think it's such a strength because when you're dedicated, you have to have product passion, you have to focus on your customers, you have to execute fast. We have a well-recognized brand. And what I truly cherish coming from a company with more indirect sales force, we have a direct sales force. So we are really in control of our commercial execution. When we look at R&D spend, we have been willing to spend on innovation. I think that's right because when you look at the graphic, again, to the left, there is a need for us to innovate. We need more precision, we need more speed. We are not mature or end of the road in terms of innovation. When you look at gross spend, we spent roughly 12%. So it's very high for a MedTech company. So it's certainly sufficient to realize what I would call future best-in-class solutions because that is the future of Elekta that we have best-in-class products, highly innovative, and the current spending run rate supports that. And then, we have, if you will, a razor blade model. So we sell our solutions, but then we supplement that revenue generation by more predictable, profitable software upgrades, but also service markets. And as you see, our service business continues to grow. So it's -- there are a lot of strength. We are fairly asset-light. We have, as you will outline, Tobias, good net working capital. Our physical CapEx requirements are relatively low. So there are many things to like about Elekta. And if we go on the next page, then importantly, also, we have a strong portfolio logic. If I just speak a little bit to it, then perhaps many of you know. But the products are complementary, both from a brand commercial, but also workflow perspective. So if I start from the right, we are building software that really connect the different modalities because that's a customer need. And often when we tender, it's not only a Linac, it's bundled with other products as well. But our Gamma Knife, what started Elekta, that is the gold standard for stereotactic radiosurgery of the brain, and we are uniquely positioned with -- and clear market leader. Same for brachytherapy actually. It's highly targeted, internally delivered dose for specific cancers. It's not for all. It's cost effective. So it's also attractive for emerging markets. And very often, it complements the Linac's treatment so you can get a boost, and then, you get your Linac treatments or the other way around. And then, we have our Linacs. And we are the only one with both MR-guided and CT-guided Linacs. So the CT-guided Linac is really the workhorse for high volume, broad cancer treatment, and MR-guided is top of the line with the ultimate precision. So I want to take away -- my takeaway is, and hopefully, yours as well, the portfolio logic is good. That's not where we have a challenge. We don't need to slice off or do big portfolio changes. It really makes sense. But then, of course, if we get into improvement areas, and we also believe in the statement that we are not at full potential and the industry attractive, then what do we need to look at? If we look at gross margin, it's too low. We used to be in the 40s, better up actually in 40s. We did see a dip post-pandemic or during the pandemic. And we never really recovered. And if we look at it now, we have too much single source, too much supplier dependencies. Some of them take advantage, and we will double down on continuous engineering to make sure that we have a relentless COGS reduction focus in the years ahead. It's not -- there's not a quick fix, but it's going to happen, and it's certainly viable. Then, we -- when we look at our 12% gross spend on innovation, I do think we need to become more focused, more commercially driven. Elekta comes with very strong scientific routes, strong within academia. I would certainly push us to be a little bit more commercially focused when we take innovation bets in the future. And then, of course, over time, we need to grow at or above the market. When we look at our growth rate, we have to accept that we have been growing over the last really half a decade, even a bit longer, a bit slower, somewhat slower actually than main competitors. We don't like that. Specifically, we need a turnaround in our U.S. business. We'll get back on the FDA, I'm sure. And then, we want to preserve our China position, where Elekta very cleverly have been early in the market, have localized our supply chain. And then, overall, when I look at the commercial organization, and as you know, I've taken the regions in direct report, we need stronger commercial execution. We will have to apply cost focus across all spend categories, standardizing our processes. And then, I'll get back to organization, but we're looking at simplification. But it really starts with a new operating model, that's a starting point that then leads into a simplified organizational structure to target faster speed, faster speed on product development, operational execution, commercial execution, really with the goal of focusing on our customers and patients. And then, on quality of earnings, we will work hard to make the link between EBIT and cash strength. So these are some of the reflections I initially want to share with you. As we'll disclose in the end, we'll give a strategy update with further details during January. If we then look at Q2 specifically, and I'll do it fairly fast, a decent quarter, I would say. We did 1% organic growth, 2% on orders, strongest in Europe, 11%. So we continue to see momentum of our product launches. That's good. APAC saw revenue growth outside China, but it couldn't compensate for the double-digit decline in China. But on China, it's quite positive that we are now seeing growth in orders. They had a depleted backlog. We knew that. We now saw in Q2 order growth, and when we look at the momentum, it looks quite positive for second half skewed towards Q4. Then, negative growth of 8% in U.S. despite actually quite good order intake, but clearly, we need a commercial turnaround. I'll say the commercial organization needs Elekta Evo, but we need a turnaround in the U.S. We did have growth in LatAm. Then, one of my first actions as CEO was to change the reporting lines of the regional heads reporting to me. And then we initiated an action to review, to make a comprehensive review of the order backlog. And that's what I want to update you on today. Compared to the order review presented in June, we have implemented, I would say, a little bit firmer interpretation of order criteria in areas such as delivery times, end customer side, down payment price indexation, et cetera. There will always be a judgmental call, is a license there, is a site ready, and now, we apply a firmer interpretation. It's predominantly old orders that we are now canceling. But this action, I would say, we should have better forecasting accuracy, both in terms of sales development and profitability. The cancellation is SEK 2.2 billion. I would say this is it. We don't expect further structural revision of the order backlog. That's for me important to communicate. I've been in it at great detail. I would also like to stress that it has no revenue impact for this year or next year as such. And there's no cash flow impact. So we are not going to pay back any customer deposits. So that's where we stand. I would like to end by saying it's quite important to take away that we have an order backlog that I consider at a healthy level, 2x annual sales give and take, based on last year's sale. So we have a lot of business to look forward to, if you will. So if I close on Q2, book-to-bill of 1, all right. Rolling 12 months, importantly, 1.09. We continue to see good momentum in Europe. Of course, I like to see over time higher net sales growth than 1%. That's clear. Good margin uptake, close to 38%. On EBIT, 10.1% versus last year, 9.8%. But if you adjust for lower capitalization and higher amortization, it's actually quite a significant improvement in, if you will, cash-based EBIT margin. And then, you will outline to be as -- but if we look at year-to-date cash generation significantly better than same period last year and good to see that net debt versus a year ago has been reduced by almost SEK 700 million. So that concludes, and then, I look forward to coming back to the operating model. Tobias Hagglov: Okay. Yes. Thank you, Jakob, and good to have you on board here. So I will then move into the quarter here a little bit more in detail. You mentioned that, Jakob, that we grew here in the quarter by 1%. This is then in constant exchange rates. We had a decline in our solutions operations by 4%, while our service grew by 7%. And also, I would like to mention here that the product launches of Elekta ONE and Elekta Evo had a continued positive contribution in the quarter. Then, looking at the profitability, we land here in the second quarter a gross margin of 37.9%, which then means 220 basis points improvement year-over-year. We see that our new products continued to contribute positively. We also have a higher share of our service business in the quarter. Our Brachy and Neuro business, strong development, strong growth in the quarter. Price continues to be positive. And then, here, as we had in the previous quarter, we have a negative impact then from tariffs and FX, and this negative impact is then 70 and 50 basis points, respectively, corresponding to a total of SEK 163 million in the quarter. The operating margin, adjusted EBIT margin, amounted to 10.1%, a 30 basis points improvement, and you are fully correct Jakob that we have a reduction in our gross R&D. When you see the impact in net R&D, it's increasing in the quarter, driven then by both lower capitalizations and higher amortizations. Selling and admin expenses increased somewhat in the quarter, and this was selective investments in marketing and IT and a bit of the phasing of the ASTRO cost here compared to last year as well as then some transition-related costs. But we will come back, as you were pointing out Jakob here to the program that we are on here. Net income amounted to SEK 229 million, and adjusted earnings per share amounted to SEK 0.65. So let's move into next slide. And FX, I think that we have a similar view here of the FX movements as we had in the previous quarter. So how does FX then impact our operations? The first point being is that, as you know, our reporting currency is the Swedish krona. And when you have a strengthening of the Swedish krona versus the main currencies, U.S. and euro, this means that the sales in dollars and euro actually becomes less worth in Swedish krona, which then leads to in nominating terms lower revenues and earnings in SEK everything else equal, the translation effect as such. Then, secondly here, we also have more revenues and cost in dollars. And when you actually then have a depreciation of the U.S. dollar versus our main cost currencies, euro and pounds, we also have then an unfavorable currency transactional impact in the quarter. And as you see in this table then, FX then had a negative impact of 50 basis points on the adjusted gross margin and 60 basis points on the adjusted EBIT margin. Then, coming back here to Jakob's point here, we have a reduction of the net debt of SEK 700 million year-over-year, and it's obviously then driven by the cash flow generation. If you look now year-to-date, we have -- in the seasonal weak start since we're building working capital in the first 2 quarters to larger quarters later in the year, we normally have a weak start of our cash flow generation. But if you compare this to last year, we are about SEK 900 million better when you look at the cash flow after continuous investments. When you look at the quarter, we improved our cash flow year-over-year by SEK 389 million. And this is then driven here, to your point, Jakob, to lower R&D spend as well as more favorable development of working capital here with more customer advances as well as a reduction of accounts receivables. And our net working capital as a percentage of net sales is now a negative of 7%. If we then look at the cash conversion here, it amounts to 91% compared to 65% a year ago. And if you then look at some more long-term trends and key financial metrics and look into the net sales, gross margin, EBIT margin and operating cash flows, which obviously are all key metrics here for driving profitable growth and return to our shareholders is that we have seen net sales on a rolling 12-month basis, which is relatively flat year-over-year. However, we see a positive trend for the -- both the gross margin and the EBIT margin. And then, here, what we just were talking about is that we have seen -- also seen a positive development for the operating cash flow, where we had delivered a significant improvement year-over-year. If we then focus a bit on the outlook for the second half of the current fiscal year '25-'26 and the full fiscal year, we reiterate our full-year '25-'26 outlook, where we expect net sales in constant currency to grow year-over-year. We expect sales in China to start recovering during the second half of '25-'26. And furthermore, we expect a continued negative impact from tariffs and FX at current exchange rates. So with that, I hand over to you, Jakob. Jakob Just-Bomholt: Yes. Yes. So if we move on in terms of driving improvements, then we commenced really 3 months ago, forensic, if you will, of Elekta data 360 review as a leadership team and together with the Board to assess the situation. And with the outset in that analysis, we then defined 4 must-win battles, of which we are today disclosing the first one. We call it simplify, empower, speed. And it's really about a new operating model. I've seen certain comments saying, "Oh, it's a cost-saving exercise". It's not. It's a new operating model. Then, there are consequences of that new operating model that I'll come back to in terms of cost saving. But the aim was really to increase velocity for our product development organization, our commercial execution and our operational execution. The secret sauce of a company like Elekta when we compete with the even larger enterprise has to be speed, agility, customer intimacy, product passion. So what we are trying to do with this exercise, and we will do it is to simplify how we are organized. We will eliminate complexity and certainly become a bit more assertive and insist on accountability. But with accountability also comes the ability to empower teams, so we move decision-making closer to our customers. And then, in doing so, we approached the organizational review, zero-based. We say, okay, this is -- these are the focus areas, this is how we want the operating model to work, what organizational size do we then need to support those priorities? And we have then moved it into a much more decentralized model with regional-based P&L. So we will take our regions P&L that will add up give and take to Elekta's P&L, again, to increase ownership mindset, make sure we drive decisions closer to where we meet customers, increase speed, agility, make people work as owners of their own business, if you will. If we then look at this slide, there has been changes to the executive committee. It's not all of these boxes that are part of the executive committee, but they do report to me with the exception of Neuro that reports to Brachy. But let me highlight some key functions here. We have made changes in the executive committee. We communicated that almost 3 months ago. We feel good about these changes. We have now hired new CFO, but thank you so much to you, Tobias, for still being here in the interim. We have hired a new Head of HR, soon to be disclosed. We have a search ongoing for COO. We have strong regional managers. But what we did do when we looked at how we are organized is to say how can we increase the span of control, and some of the consequence, I will outline on the following page really stems from that we have increased the so-called span of control from 6 to 8.5. And we have reduced organizational layers from 9 to 6. And you can say, "Ah, is that a big thing?" It's a big thing because it reduces the chains in the chain of command. It makes us more agile. And obviously, it has significant consequences, not least on management positions. So if we go on the next one, then I'll outline some of the consequences. So based on the new operating model, and based on the supporting org structure and a zero-based approach, we have then defined that we need to do a net reduction in our workforce, roughly 10%. We are 4,500 today. And we have identified 450. It will happen pretty quick. It has major impact on material positions. The targeted cost reduction is no less than SEK 500 million. It's a net reduction. It will have full impact our Q1 '26-'27, but you're going to start to see impact really from our Q4 this year. If we give a split because some of the resources are part of COGS today, 30%, we estimate, our COGS goes into gross margin and 70% OpEx. Those numbers may change, but directionally, they are right. And then, we are going to communicate with Q3 latest the restructuring charts. But I'll just reiterate what it is, what is stated to the right. We are doing this to get speed and agility. We are doing this to firm up accountability, so we can empower our teams. Yes, absolutely, we need cost discipline across the organization. And then, we are doing this to increase velocity across the board at Elekta. So it's a big day. I would also say it's a tough day because we have to disappoint a lot of colleagues that they will no longer be part of the journey. But our job is to continue to be successful, financially successful, so we can invest in life-saving technology, and that's what we are committed to. And then, we look forward to giving you further strategy update during January '26. We are deliberating the date. We'll get back to you in due course. We will have our interim report early March. And then, we will invite for our Capital Markets Day in June here in Stockholm and very much look forward to that with the leadership team standing behind the updated financials. Thank you. So let me conclude here by saying good performance, strong performance in Europe. Yes. Elekta Evo is making an impact. It's also a great product, I have to say. Gross margin, improving. Cash flow, as you outlined, Tobias, continues to be better than last year. We have now disclosed our first must-win battle leading to a simplified organization, but as I said, really with a view of accelerating execution. And then, we have done a comprehensive order review. And based on firmer interpretation of criteria, we canceled SEK 2.2 billion, but no cash flow effect, no revenue impact. Peter Nyquist: Great. Thanks, Jakob and Tobias, for a little bit longer presentation, but it was very much needed in where we stand right now. So we have still 30 minutes for Q&A. I think Jakob went through the calendar. There's nothing to add to that. So try to keep the questions 2 at each time, so if you have further questions you can line up later in the queue so everybody has a chance to ask question. So by that, operator, we are now open for a Q&A session. Operator: [Operator Instructions] The first question comes from the line of Deshpande, Kavya from UBS. Kavya Deshpande: Two for me, please. First was just around the order review. So I understand your reasoning was just applying stricter criteria on the back of the June review. I don't know if you could provide any more color on sort of the regional exposure of the orders that were canceled. And then the second was just on the Evo in Europe. So would you be able to compare how it's been doing this quarter versus last quarter? I appreciate you called it out on the call, but it wasn't called out in the press release, hence, the question. And whether the strength was mostly upgrades or whole device sales? I don't know if you could provide color on that. Jakob Just-Bomholt: Sure, I can do that. Yes. So we did the order review. And as I said, we applied the same criteria, but in a firmer context. If we look at regions, it was predominantly our Middle East, Africa region. That's where we saw the biggest impact. There were -- it was old orders. So some of them up to 5 years. And there will always be a degree of subjectiveness, do we think the ride is going to be ready, is there funding in this or that location? And as I said now, we apply the firmer interpretation. On Evo, up from last quarter in terms of units marginally, and outlook, good second half. Operator: The next question comes from the line of Vadsten, Mattias from SEB. Mattias Vadsten: I'll keep myself to 2 questions. After some commentary on sales growth going forward, perhaps after 2025-'26, so if we look at recent 5, 10 years, Elekta has grown, let's say, around 3% per annum. Order momentum has not been there recently in some areas. It's understandable, for instance, China. With the cost savings also now ahead and the operational improvements, you talked about the third program, I think, so what kind of growth rate do you see doable for the company more structurally, let's say, midterm? Yes, it sounds maybe difficult to outpace the growth we've seen in the recent 5 years. Or am I missing something there? That's the first one. And then, I have another one. Jakob Just-Bomholt: So we don't provide more guidance than what we have for this year, and that's a positive organic growth rate. On mid- to long-term, we will come back to that at Capital Markets Day. On cost savings, I'll just like you to come back to what I said. We are adjusting the operating model to accelerate commercial execution. As a consequence of operating model, there are cost savings. And over time, we clearly need to grow at or above the market. That's our ambition, and we'll come back with the detailed plan latest Capital Market Day next year. Peter Nyquist: You had a second question. Mattias Vadsten: Yes. You disclosed book-to-bill for China, which is appreciated, and it looks like the order momentum picks up. Could you also remind sort of how book-to-bill for China looked, let's say, last 12 months or now fiscal 2024-'25 just to get a sense of where we are on China right now? That is my second one. Jakob Just-Bomholt: Yes. So, yes, we had a book-to-bill roughly 1.3 this quarter, roughly 1.3 last quarter. I think rolling 12 months, as I recall, 1.14. Then, I think they're important to say, well, we recognize at Elekta, we are bullish than most MedTechs on China, but we have the visibility we have. So Elekta got in early. We have localized our supply chain, then the market was strong. Then, we had the anticorruption campaign. It became much weaker. But if we look at our first half, we have seen the RT market up by a very strong amount. And we are now seeing positive year-on-year order growth. And when we look at our sales funnel, it looks like a strong both revenue order growth, double digit, high double-digit second half. So we -- that's the visibility we have, and we believe in it. Tobias Hagglov: Absolutely. Absolutely. And just to add to that, Mattias, when you look at the book-to-bill here for China, it has actually been a steady increase, and you saw a reported number, but if you would look at the rolling 12, it has actually been a steady improvement here over the quarters here, and it has been ongoing for a while. Peter Nyquist: We'll move to the next question. Operator: The next question comes from the line of Liljeberg, Kristofer from Carnegie. Kristofer Liljeberg-Svensson: Also 2 questions. First, coming back to the implied cost savings from the new operating model, it seems all else equal that would add some 3 percentage points to the EBIT margin. But I think you talked about this being a net effect, but are there some negative factors that might offset this? For example, you mentioned that you want to improve quality of earnings. One way of doing that is, of course, to stop capitalized R&D, and if you were to do that, I guess that would, at least from an accounting perspective, remove part of the, otherwise, positive effect, if you could comment on that. Jakob Just-Bomholt: Yes, we absolutely can. So yes, you should think that way that we say no less than SEK 500 million, and there will be a full impact on the margins with the split I outlined COGS and OpEx, but, of course, come into EBIT. I think let's keep accounting separate. I'd just say that, in general, we like to build a closer link between the EBIT and cash generation. We have heard that from a number of you also that you would like to see that, I agree. I'm not a big fan of too much capitalization, some you have to do, but we are certainly deliberating on what is the right approach going forward, but that's accounting. So I think we need to keep that separate. Kristofer Liljeberg-Svensson: Okay. Yes, to be clear, so the way you report EBIT, it might not improve the full SEK 500 million? Jakob Just-Bomholt: I would more say it differently that the 3% you should expect with full run rate for Q1 next fiscal. And whether we will do adjustment in how we do to capitalize is a separate topic. And frankly, we haven't decided on anything except what I'm saying that I would like to see a stronger link between EBIT and cash flow. Tobias Hagglov: Absolutely. Kristofer Liljeberg-Svensson: Okay. And then my second question, of course, the importance here of getting Evo approved in the U.S. I saw you comment or said to one of the Swedish news agencies that you expect to have an approval within the 180 days review period. So maybe if you could talk about your confidence? And how this process is ongoing with the FDA? Jakob Just-Bomholt: Yes. Yes. So we have been confident along the way. It's just taking a really long time. So we submitted over the summer. And as you outlined here, you have a 180-day window. There are periods in the submission process where the clock has stopped. But you should say, 180 to 200 days. And we do expect to get approval within. Of course, it's not fully in our control, there is a regulatory body. But based on indications, we are positive. We have been positive all along the way. We are even more positive now than we were 3 months ago. Operator: The next question comes from the line of Germunder, Ludwig from Handelsbanken. Ludwig Germunder: Ludwig Germunder from Handelsbanken. I have 2, please, and I'll take them one by one. So the first one is around the regional restructuring of the P&L. As a consequence of this, do you have any -- or could you say anything about how incentive systems will change to drive the more local P&L ownership? Jakob Just-Bomholt: Yes, I could. And I probably will, in due course, but first, I would like to discuss it with the regional management team. Today, we are announcing the change in structure. But clearly, clearly, we want incentives to match the value creation of Elekta. It's very clear. And I would, in general, like to see a stronger ownership mindset in the company. Ludwig Germunder: Okay. And my second question is on the cost savings as well. You gave us the figure of SEK 500 million annually in cost savings. Would you be willing to give us some more flavor on the different parts? And how they will move in, let's say, next year? So, I mean, if you share up the OpEx and -- or should we expect different parts to move given the SEK 500 million? Or should we expect a decrease? Or in the parts expected to increase? Jakob Just-Bomholt: Yes. Yes, it's a good question. I think the guidance we gave here is no less than SEK 500 million. So the approach has been to start by saying what is the right structure, and then, we are down to now individuals. In general, we have been doing it to increase commercial execution and operational execution, and very importantly, avoid duplicate work, which we have identified, delayering become more agile. I will not go into the specific details in terms of where are we removing the 450. We -- as you can imagine, we have a town hall this afternoon. We will -- I think our staff deserves to be told first in greater detail. But I think what you should take away is that we do this for enhancing the execution, and then, as a consequence, savings no less than SEK 500 million, and we are fully committed to. You will see the full run rate effect Q1 next year, and that's not too far away. Tobias Hagglov: And you also had allocation there, what's in the gross margin and what's below the gross margin. Jakob Just-Bomholt: Yes. Good point. Peter Nyquist: We'll move to the next question. I think it's from Erik Cassel at Danske Bank. Erik Cassel: First, I want to talk a bit about the software backlog and deliveries in Europe. I mean, we're naturally seeing EMEA margins come up quite significantly. And I just want to get some sort of understanding on how much of that is driven by software? And if possible, I'd like to know if the software book-to-bill is still positive in EMEA? Tobias Hagglov: Yes. Well -- I mean, I think we stated here. I think, as you alluded to here, we have seen a very strong contribution from -- I mean, both in terms of the Elekta Evo per se as well as the upgrades here in -- on the existing Linacs, what we call them, Iris. And when it comes to -- we see a continued strong development here. And you heard Jakob talk about in the second half. So that remains, and that is what we -- still, we view it very positively. Jakob Just-Bomholt: Yes. So I can say -- yes, sequentially, Erik, we had double-digit growth sequentially on Iris and Elekta planning. Erik Cassel: Is that on orders or on deliveries? Jakob Just-Bomholt: Both. Erik Cassel: And is the book-to-bill still positive? Jakob Just-Bomholt: We don't go in -- it is actually, but we don't go in further details. In general, we keep our book-to-bill at a fairly aggregate level for competitive reasons. Tobias Hagglov: Yes. Erik Cassel: Okay. Perfect. Then just last question. Solutions seems to be down some 20% organically in Americas. I was just wondering, how much more is it down in the U.S. since that's a key driver? LatAm seemed pretty strong. And how many more quarters of negative organic growth in the U.S. do you expect to see? Jakob Just-Bomholt: Yes. So we actually had a good order quarter in the U.S. in Q2. But we do expect that solutions will bounce back, obviously, when we get Evo FDA approved. So we look forward to our Q4 this year. Then, we need to get reference sites upgraded. We need to sell into our installed base, make the market recognize the Evo platform, which is versatile and precise. And then, it's going to be the grind of selling and competing. Tobias Hagglov: And I can also add a little bit flavor without giving numbers that both the orders as well as the revenues are better in the U.S. than on average for Americas. Peter Nyquist: Thanks, Erik. [Audio Gap] Veronika Dubajova: I'm going to keep it to 2, please. The first one is just how you're thinking about the competitive landscape? Obviously, Varian or Healthineer has announced the plan to launch a new next-generation Linac platform sometime in 2026. I'm just curious kind of how you think either will stack up against that as sort of you as fast forward into '26 and '27 and whether this is a concern for you? And then my second question is a bigger question, obviously, the ambition to return to market growth. I know you guys don't want to guide, but I'm just curious if you might be willing to at least give a little bit of a time line on when you think that is achievable? Is this already a project for '26-'27? Is there more R&D work that's going to take a bit more time and we need to wait a little bit longer? So that -- any color you can give around that, that would be great. Jakob Just-Bomholt: Yes, I can take those. In general, I prefer not to comment on competitive -- competitors' product portfolio. We focus on us. And, of course, in our engine room, we benchmark, and we are taking note of the same data points that you highlight. We look at our competitive situation here now and we think we stack up. Of course, we have certain improvement in areas. We have certain strength. I'm not going to disclose them all. It would not be a smart move. And then, as I started out by saying we invest 12% of revenue in R&D. So we have a number of pipeline projects ourselves, some exciting, some need tweak. So -- and then let's see how we stack up. But I personally would say, and I live that in other companies as well, being dedicated to RT and being willing to fund investment. And being passionate about what you do from a product development perspective can take you very far, and it should be the secret sauce of a company like Elekta. Then, when we come to growth, yes, clearly, our ambition is over time to grow at, I would dare to say, above market. No MedTech company would want to lose market share as we have been doing for some years. I've been very clear to the organization, very clear to the commercial part, but also to the product development guys that now is time to shape up. In terms of when, I think let's come back when we have Capital Market Days. I think that's appropriate. So it's not hip shooting, but it's really anchored in a financial plan. Peter Nyquist: Thanks, Veronika. We'll move to the next question, Jon Unwin at Barclays. Jonathon Unwin: I just had a question on the R&D expense. You've commented that 12% of revenues, but also that you need to sort of focus on more commercially viable projects. Is there scope for that 12% of percentage of sales to come down over time as you focus the R&D intensity on the commercial projects? And then, my second question is on the midterm targets and sort of taking over the CEO role, and how confident you are in the ability to increase gross margin to pre-pandemic levels and EBIT margin above 14%? And any color you can give on a time line for those targets would be helpful. Jakob Just-Bomholt: On R&D expense, what I can say is 12% is in general high. It's, in many ways, good because it's funded today in our cash flow at least. What I stated was that when we look at both existing portfolio and future portfolio initiatives, we will have a strong commercial lens as well as scientific and feature lens to really understand what are we solving for. I think, if you take, for instance, our MR-guided Linac, Unity, wonderful product, truly making impact in the market. Commercially, we haven't achieved what we hoped for when we started out that project. And we want to make sure that we learn from that when we move forward. Is there scope for further reduction? We'll see. I think it starts by saying, do we have the right projects in the pipeline? If we do, we'll keep at 12%. If we don't, we'll reduce. In terms of midterm targets, I'll restate, we'll get back to that in our Capital Market Day. I would say, though, I think there are opportunities to increase the gross margin. But I'm not going to say whether that's at or above our midterm guidance. We'll come back to that. Peter Nyquist: And next question will come from Sten Gustafsson at ABG. Sten Gustafsson: So 2 questions on Evo, please. Firstly, regarding going back to the FDA approval process, have they communicated with you that there is a delay related to the government shutdown? Do you think that has had any impact on the timeline for your approval process? And my second question would be if you could remind me about the -- how you plan to roll out the launch globally of Evo in China, Japan and other key markets? Jakob Just-Bomholt: Yes. To take your first question, no. No impact from shutdown. We have a good dialogue with the FDA, actually very good. Secondly, rollout, yes, we got the Evo domestic approved in China. So that's good. Focus is on ensuring market access. It's coming in. It's actually proceeding quite nicely. The sore spot is in U.S., but I think we discussed that already. Sten Gustafsson: So it's already approved in China? Jakob Just-Bomholt: Yes. Sten Gustafsson: Excellent. Jakob Just-Bomholt: Yes. We think so also. Peter Nyquist: Thanks, Sten. Now, we'll move to the next question from David Adlington at JPMorgan. David Adlington: First one, just a sort of bigger picture one on the 450 roles being cut. Just wondered how you think about eliminating that level of workforce -- tentative workforce without having an impact on R&D, quality of services, manufacturing capacity? Just how you're thinking about that? And then secondly, as you look into next year, Street has got mid-single-digit top line growth. How comfortable are you with that with -- given the fact that the order book has been tracking some way below that? Jakob Just-Bomholt: So if I take the first one, keep in mind, we solve for something different than reducing headcount by 10%. We solve for speed, execution, accountability, delivering products faster to the market. And in doing so, we have delayered the organization, increased span of control. So as such, if you do the math, then it has a very significant impact on managerial positions. We are not reducing frontline field service engineers, so it is an office-based managerial reduction. And we do it because we believe we can, frankly. And we believe that we -- it will enable us to move faster with firmer accountability. We have had too many functions with duplicate roles, duplicate managers, and that's what we are resetting. And then, we also take the liberty to be a little bit less corporate, a little bit more business savvy. So we are streamlining central functions across the board under with due consideration to guardrails and controls. So we feel good about that, and it's confirmed throughout that we should be able to move, I will have to say, faster than we are today from a commercial and product development perspective. In terms of longer-term guidance, I'll stay at what we said, we guide this year, positive organic growth rate, and then, we'll come back at the Capital Market Day, and we very much look forward to that. Peter Nyquist: Thanks, David. And now, we'll come up to the last question for this session, and that is a question from Ludvig Lundgren at Nordea. Ludvig Lundgren: Yes. So 2 for me. And first one on gross margin. I wonder if you had any effect from tariff mitigation actions here in the quarter and whether you have some further pricing potential here moving ahead? Tobias Hagglov: Yes, we have some. But I think in -- on average here, that the -- what we see as a net impact from the tariffs is actually that it drags down the gross margin in the quarter. But, obviously, here, to your point, and I think also what we alluded to in general, more broad terms that we will continue to work here on the passing through this cost through the value chain and also here addressing in terms of productivity as such. Ludvig Lundgren: Okay. Great. And then final one on the order cancellations here. I guess, these were mainly orders that had a very small or no prepayments connected to them. So I wonder, like looking at the remaining part of the order backlog, have all of the remaining orders, some prepayment attached to them? Or how does it look for the main part? Jakob Just-Bomholt: A very significant part. Typically, if it's public tender, we don't get prepayment. Then, we have some older orders that we have deemed very high likelihood will lead to revenue generation that are without prepayment. But in general, you should think that all orders coming in now from private sector will have prepayment or they have to be validated by me and CFO. Peter Nyquist: Thanks, Ludvig. And that was the end of this call. But maybe before closing, a final remark from your side, Jakob. Jakob Just-Bomholt: Yes. So we are on it. This is a quarter of execution. As you may also sense, we have focused on what happens this quarter, next quarter, the next 18 months. We know that we are not at full potential. It's a lot of hard work. I take a lot of comfort in that everyone from Board of Directors to management team to Elekta employees are committed that we know we need to change. We know we can do better. And we don't do it just for our shareholders, we also do, but we also do it so we can continue to drive our purpose of building hope, invest in technology, as I started out by saying there's a huge unmet need for radiation therapy. And there is a strong need for us to innovate and be a strong competitive alternative to the major player. So look forward to meeting all of you in future engagements. Peter Nyquist: Thanks. Tobias Hagglov: Thank you. Jakob Just-Bomholt: Thank you very much, everyone. Peter Nyquist: Thank you.
Rivka Neufeld: Hello, and thank you for joining us today. Welcome to Strauss Group's Third Quarter and First 9 Months of 2025 Results Earnings Call. On our call today, management will provide a review of the results, followed by a questions-and-answer session. [Operator Instructions] As a reminder, this online Zoom earnings call is being recorded Wednesday, November 26, 2025. A recording of this call will be available on the company's website a few hours after the call. I would like to remind everyone that this online webinar may contain projections or other forward-looking statements regarding future events or the future performance of the company. These statements are only predictions and may change as time passes. Strauss Group does not assume any obligation to update this information. Actual events or results may differ materially from those projected, including as a result of changing industry and market trends, reduced demand for our products, the timely development of new products and their adoption by the market, increased competition in the industry and price reductions as well as due to risks identified in the documents filed with the company with the Israeli Securities Authority. Online with me today are Mr. Shai Babad, Strauss Group's President and CEO and Mr. Tobi Fischbein, Group CFO; and myself Rivka Neufeld, Head of Investor Relations. We will begin with a review of the quarterly results by CEO, Shai Babad; and then move on to the financial highlights of the quarter presented by CFO, Tobi Fischbein. We will then move on to a Q&A session. Shai, the floor is yours. Shai Babad: Thank you very much, Rivka. Can you put the presentation on? Thank you very much, and welcome this afternoon to our quarterly financial reports. We are very happy to have you here. What we'll try to do in the next 25, 30 minutes is to give you just some kind of an overview of the results with our highlights and then open it up for some questions. I'll start and Tobi will continue. So if I look at the major highlights of this quarter, following all previous quarters, we are continuing a very, very solid and strong growth. Growth this quarter is approximately 16% if I take pro forma growth, taking out all the divestment activity that we departed from last year. And if we look from the beginning of the year, it's approximately 19% growth 9 months to 9 months into 2025. When we look at our EBIT and operational profit, we also see a substantial growth, and I'll touch it when we see the results and the same goes for the net income. So it was a very strong quarter for Strauss in the first 9 months. When we look at our productivity journey, we are up to track, and I'll say a few words about that later on. We are continuing to execute our strategy. There were various innovation initiatives that were launched in the third quarter that we will touch later on and also the inauguration of the plant-based factory facility in the South -- in the North, sorry. So here are the major results. You can see here growth to ILS 3.3 billion from approximately ILS 3 billion, 13% growth. If you take the full year to full year numbers, if you take pro forma activity with the divestments that were done last year, then it's 16% growth, 17% growth. When we look at EBIT margins, mostly, by the way, of the growth is from price -- from increasing prices and a very small amount of the growth comes from volume, but still there's volume growth in 3 months and also in the quarter and also 9 months since the beginning of the year. When we look at our EBIT, our EBIT summed up to ILS 312 million with 43% growth from last year, substantial growth, and we'll see later on, most of it has been driven from our international coffee activity. And when it comes to cash flow, our net profit also ILS 146 million compared to ILS 300 million in 9 months. We can see that in the quarter, we did very well, 40% more than last year. But when we look at net profit 9 months into the year, we are 50% less. But last year, we had tax incentives of approximately ILS 60 million. And also there is financial activity, financial expenses this year that were higher than last year. And therefore, if we take the tax incentives, actually, the gap is the other way around. And when we look at cash flow, we generated a very high cash flow this quarter of ILS 245 million compared to minus ILS 100 million last year. And also when we look here to -- since the beginning of the year, year-to-date, we are approximately ILS 150 million better than last year. And by the end of the year, we expect it to be on positive cash flow. Of course, 3 major commodities are affecting our results, the Robusta, the Arabica and the Cocoa. And although we see in the Robusta and in Cocoa in the last quarter, some kind of decreasing prices whereas Robusta is continuing with very high prices. Still, we don't see the impact on that -- or full impact on that on our results, taking Brazil outside of the equation in everywhere in all our other geographies, we have hedging activity, and we have a very high inventory as well. And taking that into consideration, there is time until we actually see in our results the impact of the reduction of the prices in the P&L. And I will touch later on how do we see our Cocoa and our confectionery activity. When we look at Israel, so Israel is with a 3% growth, quite a solid growth. Part of that growth is limited because of divestment activity that we've done last year with our -- in our Health & Wellness division with fresh vegetables that we divested last year. If we do apples-to-apples, also you can see in Health & Wellness, there's not actually a decrease. There's actually a slight increase in revenues. But when it comes to EBIT, you can see in total Israel, ILS 12 million reduction, 7.7% and all of it comes from Health & Wellness. You can see there's a ILS 90 million decline. Here, it's very, very important to note that we consider this as a onetime thing. We had some functional issues in our dairy factory in the north during August and some in September. It affected a little bit our business. And therefore, you can see that they did less than last year. But looking ahead, looking into October, which was already finished also in November, those onetime problems are behind us, and we will see going into -- going ahead, Health & Wellness getting back to track and back to -- on growth and on profitability. When we look at our Fun & Indulgence, you see an increase here, but the increase is a little bit misleading because last year, the ILS 9 million that you see in EBIT is actually ILS 27 million because there was an ILS 18 million loss in derivatives there. This year, the results of ILS 50 million in the Fun & Indulgence because in our confectionery business, the Cocoa is impacting our business, still very high cocoa prices. Now when we look into the future and asking ourselves when do we see the effect, we think that when we'll get into 2026 and during 2026, there will be a full turnaround of the business of our confectionery business and cocoa prices that we know today, which we hedged and the inventory that we have for 2026 and with the current cocoa prices that they are in the market now, we are very confident that our business will do a turnaround -- substantial turnaround next year, and we'll see much higher profits in this segment. Next. If we look at our innovation activities, so you can see there's a vast innovation there. There's a cross-branding collaboration between our brands in alternative milks and in our dairy. There's a new Arab coffee that we targeted for the segment. We also withdraw all our protein desserts. We've done a series of Zero Sugar. Our Cow Free innovation, our new disruptive innovation of bringing milk drinks and spreads -- cheese spreads with proteins that don't come from a cow, the same protein, the said BLG protein, it comes from either mushroom or yeast. And from that, we managed after 2.5 years of development to develop these products. And the advantages of these products are that they are very similar in the taste to cheese and milk. They have the same protein and the same health components, but they don't have the lactose. So anyone who is sensitive to lactose will not have a problem having those products and also they don't have cholesterol because they don't come from animals. And we think there's a place for them in the market and demand from consumers for these type of products. We also launched in the confectionery some Nostalgic snacks that we had. And we had the inauguration of our plant in the North, which I'll speak about later. And with our confectionery business, we did a lot of variety of different chocolate tablets and snacks. If we look at our coffee activity, the international coffee activity, so this is the main -- we think this is the main news of this quarter. We also have seen that last quarter, but this quarter, we see it even in a more influential way, in a more impactful way. Our coffee business is improving substantially. Growth has been 30% due to price increase and a little bit of volume increase. But mainly, mainly operating profit, you can see jumped to -- by 140% to ILS 163 million, reaching the double digit -- almost a double-digit margins. The reason is, of course, our activity in Brazil. Can we move to the next slide? You can see that in Brazil, again, profit more than doubled, almost tripled with 170% growth this quarter and overall from the beginning of the year, almost doubled with 27% increase in revenues in this quarter and 37% increase from the beginning of the year. What we believe looking forward is that Brazil -- the proforma that we have managed to generate in Brazil over the last 6 months is a new platform, which will also be carried out in the next year and the next quarters. That doesn't mean that we'll see the same level of profit and such high profits and margins, you can see the margins here in Brazil this quarter are reaching 11.3%. But it does mean that the new platform definitely will not stay at the 4% or 5% that they were in the past and will jump towards more like 8%, 9% and 10% and will be much more healthier business. The reason is, is that we are managing to maintain prices, high prices and maintaining the margin in roast and ground coffee, while we are continuing to grow all our non-R&G activity, which is generating a double-digit margin. So looking into the next quarters and looking into next year, we do see a jump in the profitability of our international coffee businesses with an emphasis on Brazil. And we do think this will be a new normal, maybe not as high as this quarter, maybe a little bit lower, but still a new normal to this business, unlike what we used to see in the past. In our water business, you can see there was growth in our revenues here in Israel, mainly due to 4% growth, mainly due to quantities of installed base, which grew. We launched this quarter the Shabat machine. It's basically for juice to keep the seventh day, the Shabat. Until today, our machines were not closure for the seventh day for the Shabat. And now those machines are applicable for people who keep the Shabat for ready-to-use-juice, and it's a new solution for approximately 30%, 40% of the people of Israel who keep the Shabat in some sort of way. We do think that will be a future growth engines for us. Nevertheless, we see a decrease in operating income of ILS 3 million, up 11%. It mainly comes from our operations in China. In China, there is intensive competition by Xiaomi who entered the market. And since they entered the market, we've seen -- we continue to grow double digit on growth on revenues. But on the other hand, we had to give discounts and to have -- to reduce prices in order to maintain our position in the market in order to continue to grow. And we also had to invest in new products. Unlike the onetime events that we had in the dairies in Israel, this will follow us into the next quarter or 2 and into next year. And we predict that maybe by the end of 2026, the platform will get back to what we used to see in the past. Still, it's very important to mention that we still have high -- because in China, the results are net margins and net profit and net margins, we still have high net margins in China, but much less than we had in the past. When we look at our productivity, so productivity is in line with our plan. We said that by the end of 2026, we will reach between ILS 300 million and ILS 400 million in productivity, and we do see ourselves reaching the target. We are on track with the strategic procurement with all of the streams that we opened in this productivity program with working capital, with RGM, with logistics, with manufacturing and of course, with capability building, upskilling and reskilling our people to being able to use the new tools that we are bringing into the company. A little bit about talking -- moving forward, what are the engines of growth that we developed specifically this quarter, which we think will follow us next year and will help us a lot to continue our growth. So one is, of course, our factory in the north. We build our own factory for alternative milks. Till today, everything that we've done was outsourcing from third quarter onwards, the end of third quarter onwards, everything that we're doing, we're doing in our factory. That will enable us to give much better products, much more variety, much higher variety of our products. And also not just to play until today, everybody in Israel plays in the segment of alternative milk drinks. We will bring it also into yogurts and desserts, which is -- this is our claim to fame. This is where we are #1 in the market. This is our strength here in Israel. And we'll take the very, very strong brands that we have in desserts and we have in yogurts, and we'll be able to implement them in our factory. Our factory will allow us to give much more capacity into the market in a much higher quality and tastier products than we used to have in the past. On the one hand, get into new categories like the desserts, like the yogurts with our beloved brands, local brands here of our desserts and yogurts. And also our manufacturing costs are much lower than what we used to have when we outsourced Alpro since the beginning of the year before we had the factory. Putting all those components together, we see this as a major engine of growth in the next quarters and also in the next years. Cow Free, which I've mentioned before, we -- when we look at dairy and milk industry in Israel and all over the world, we divide it into 3 segments. One segment is the traditional milk, everybody knows. The other one is the alternative milk such as soy, almond or oat. And the third one is the new segment that we brought to life. And I think we are one of the first companies, innovative companies to bring these segments into the world, which is basically like milk, but not milk because it doesn't come from a cow, but it has the same protein, it has the same components and nutritional advantages, but -- and the identical taste, the sensoric taste, but it doesn't come from a car. It doesn't have lactose, it's -- people who can't take lactose can actually consume it. For Jewish people who are religious, you can eat it after meat, people who differentiate between meat and milk and people who like the taste of milk, but don't do it for various reasons, will be able to get those products. And we believe that those 3 segments, there's a place for those 3 segments. This segment is going to start very small and it's going to grow. It's not something that we're going to see that next quarter or quarter after that is becoming substantial. It will take time to build the category as it took time to build the milk alternatives categories or plant-based category in Israel for many, many years. But we do think that this is a very profound and very unique category that there's place and that there's a consumer need and requirement from consumers for this category. And we're very, very happy that we were the first one to innovate and to launch these products. In Yotvata, where we do all our milk drinks, traditional milk drinks and protein drinks based on milk, we had capacity constraints over the past year, 1.5 years. And basically, 20%, 25% of the demand, we were not being able to meet. And we deployed the new line about 2 months ago. And by December, after all the testings are done, the new line will start being productive. So by 2026, our capacity will grow by 40% to 50% and the demand of 20%, 25%, which we don't meet today and we don't give an answer today, we'll be able to give an answer. So in our milk drink, which is part of our, of course, Health and Wellness segment, we'll see substantial growth next year with opening up capacity bottlenecks. And Shabat, which I mentioned before, which is a huge launch and the growth engines for our water business. As you remember in the strategy, we talked about taking our water company and making it a multiproduct company from a single product company. So this year, we launched under the sink, we launched the soda machine, and we also launched the Shabat. We launched an affordable machine in the U.K., and we'll continue to launch new devices from a different price tag and a different price range and also different functionality to answer consumer needs. And we do see the ongoing growth of the water business. And with those new products, especially with the Shabat, which is very, very high demand for this product, we sold thousands of those machines, and we stopped sales because we are waiting for new machines to come to us, so we can continue to sell them. We see potential for substantial growth in the next year. And just summing up, if you remember, our strategy talked about 4 pillars, Israel focusing on the core and growth and Brazil transforming the R&G and growing the non-R&G and our water business, growing our water business and growing internationally as well with productivity, CapEx and investment into the business. So looking at the parameters that we set to the strategy that we want to achieve, I think that we are in line and even way over in line, growing 5% over the years, '24, '26. We think we -- as you can see in our results in '24 and also now in '25, we are growing much more than 5%. When we talk about expanding the margin, you can see that there's a substantial improvement, and we believe that a lot of that improvement is a pro forma improvement into our margin in our coffee business which will be a new level. We do think the productivity of ILS 300 million to ILS 400 million will reach that target and even exceed it. We are investing a lot in CapEx, whether it's on productivity, whether it's on engines of growth, such as the new plant in the north that you've seen such as Cow Free that we launched Shabat that we launched and also in digitalization, in automation that we put in the company to be more productive and to assist us to grow in a more healthier way. And when we focus on our portfolio, when we started, we were around 60%, 65% core. Our portfolio was core. Core was being #1 in the market, growing more than 5% and having a double-digit margin. Today, we believe that by 2026, after we turned around Brazil, after we divested Sabra and divested other parts of our businesses, we believe that we'll be able to reach this target. The last big business that we need to do the turnaround in profitability is our confectionery business. And as I said before, looking into 2026, knowing already what we have as cost of goods when it comes to hedging cocoa and also the inventory of cocoa, we believe that we'll be able to do a substantial turnaround to the confectionery business and to bring it back to levels that we saw in the past. And by that, we'll complete fixing the -- or transforming all the big businesses and all the core businesses of Strauss having more than 85% of the business as a core business. So just to sum up before I give it to Tobi, we believe it was a very strong quarter with substantial results for the coffee business, which we believe a lot of them will come to be pro forma. We had some onetime problems in Israel, which are already fixed, and we don't see them following us in the next few quarters. And we are looking to turning around our confectionery business once we will -- our P&L will absorb the new cocoa prices, which are much lower than what we had in the past. And from here, Tobi it's yours. Tobi Fischbein: Thank you, Shai. On Slide 19, looking at the quarter's sales more closely, we see continued growth in all segments, while the most significant contribution came from Coffee International, especially from Brazil. Excluding the appreciation of the Israeli shekel, group sales grew by 13.2%. We also see the impact of divestments in the quarter with Sabra and Obela being the most noteworthy. These businesses were consolidated in the group's 2024 non-GAAP results. Moreover, we also see the impact of the divestment of the Ultra Fresh business in Q4 of 2024 and the coffee retailer Coffee-to-Go in Israel at the end of Q2 of 2025. Without these businesses, our pro forma growth in Q3 of 2025 would have been 16.3%. On Slide 20, where we look at the sales for the first 9 months of the year, and we see similar trends as in Q3. Moving now to operating profit on the next slide. What we see here is that the group delivered significant improvement in both Q3 and the 9 months of 2025. Higher EBIT and EBIT margin can be attributed to the higher sales achieved and ongoing productivity measures and despite the impact of raw material cost inflation. In Coffee International, we see the impact of pricing, whereas in Strauss Israel, pricing did not compensate for higher raw material costs. As Shai mentioned, Strauss Water's EBIT was impacted by intense competition in China. Looking at the next slide, we can see operating profit and margins by business segments. On Slide 23, we see that net income in the third quarter increased by 42.7% following significantly higher EBIT. In the 9-month period, higher financing and tax expenses impacted net income. Higher financing expenses in Q3 and the 9-month period were attributed to the impact of the stronger shekel, which led to foreign exchange hedging expenses as well as FX differences as well as higher interest paid mainly related to financing working capital and higher interest rates in Brazil. Tax expenses were also higher, reflecting tax income received in 2024 following the release of provisions due to previous tax assessments and the profit mix in 2025. Moving to cash flow performance. On Slide 24, we see that in Q3, our operating and free cash flow improved significantly. Free cash flow amounted to ILS 245 million, an increase of ILS 343 million over the comparative period last year. This was supported by higher EBITDA, lower inventory levels in Coffee International as well as lower CapEx. On Slide 25, we look at the net debt -- net financial debt, and we see that the higher free cash flow led to a decrease in net debt as well as an improvement in the net debt-to-EBITDA ratio. Let's now take a closer look at our business segments, starting with Israel. On Slide 27, Strauss Israel, we see that sales in the third quarter of 2025 mainly reflected pricing in a number of categories, while divestments of the Ultra Fresh business in Q4 of last year and of the retail chain Coffee-to-Go at the end of Q2 of this year impacted growth. Without these divestments, sales growth would have been approximately 5.2%. On Slide 28, we see Strauss Israel sales for the first 9 months. And we see here that growth across the board stemmed both from pricing as well as higher volumes. Moving to EBIT for Strauss Israel, both in Q3 and the 9 months, we see that both the impact of higher raw materials as well as pricing were reflected on the operating profit performance. In Coffee Israel, pricing offset higher green coffee prices, whereas in Fun & Indulgence, snacks and confectionery, pricing actually did not compensate for higher cocoa costs. In Health & Wellness, we saw a one-off cost related to food safety and quality control activities as well as higher raw material costs and increased marketing expenses supporting the plant-based milk category. Moving to Coffee International on Slide 31. For the key highlight here, of course, of the quarterly results, Coffee International, we saw strong growth in sales that was driven primarily by pricing. And the sales growth offset green coffee input cost inflation, while operational efficiencies supported margins. On Slide 32, we can see that geographical breakdown of sales for Coffee International in Eastern Europe, Central and Eastern Europe. We see that sales growth was achieved across the board following pricing as well as higher total volumes. Our Brazilian JV, as explained before, grew nicely, and we also saw strong growth in Poland, both from pricing and volumes. Moving to the sales for the first 9 months of the year. On the next slide, we see a similar picture, showing the same overall market dynamics. On Slide 34, we see the Três Corações, our Brazilian JV performance on a 100% basis and on Brazilian real. And we see the increase in sales supported mainly by pricing in the roast and ground categories, but also the continued growth in non-grow R&G categories. Moving now to Slide 36 for the Strauss Water performance. During the quarter and first 9 months of the year, we saw higher installed base, higher sales, both in Israel and the U.K. as well as better sales mix. The gross profit was positively impacted by exchange rates and productivity measures, while higher Strauss Water, our JV in China with higher contributed lower equity gains. Moving to the next slide. We see higher Strauss Water yuan-based 100% results. We see there that with double-digit top line growth with lower net income due to intense competition and efforts to preserve and expand market share through promotions, marketing and R&D by diversifying the portfolio offering. It should be mentioned also that the R&G versus shekel exchange rate led to lower sales and profit when translated into shekels in the period. With that, we conclude management's presentation, and we will open the call for Q&A. Rivka Neufeld: Thank you very much, Tobi. I'll now fetch your questions. So the first question I have is regarding Cow Free, could you please give us more color on the Cow Free dairy drink and spreadable products released this year? What are some of the early indications from retailers and consumers in Israel? And what demand and sales volumes are you experiencing? Shai Babad: So as I mentioned before, the new category is basically a category that is there to imitate the nutritious values of milk. It has the same milk protein, the BLG protein that we have with milk that comes from a cow, and it has very similar elements. It also has almost the same test as the milk drink and also the same thing in the cheese spread. The advantages of that is that it doesn't come from a cow. It's more sustainable. It doesn't have lactose. So everybody senses that lose can actually have those products. It has very, very similar to milk and cheese whoever likes the taste of milk will find it identical -- almost identical. And it doesn't have cholesterol because it doesn't come from animals. And for Jewish people, it's also -- who differentiate between meat and milk, it also we call it power, which means you can eat it after you eat meat. So we think there's a lot of place for this because in all the milk alternatives, they don't actually have the taste of milk. And someone who actually wants the taste of milk and also wants the protein. Most -- and by the way, people don't know this, but in most milk alternatives, there's not really many nutritious values, not in oat and not in almond. There's a little bit of protein in soya, but not as much as we have in milk. And here, we actually have the advantages of milk. We have the same taste of milk for people who like getting the taste of milk, but people who doesn't want it to come from a cow, people are sensitive to lactose or any other reason, we'll be able to have this category. So for these reasons, we believe there's place for this category. Yet this category is very, very small. Right now, there's not even time to talk about revenues or demand. It's just starting. It will take time. We'll need a couple of more quarters before we can actually have some data and really understand. Right now, we know that everything we put in the market was sold, but it's very, very, very small quantities, still under test. We are -- there's also educating consumers what is this new category? What do you mean it's milk, but it's not milk? What do you mean it doesn't come from a cow? Whatever I told you now is something that really needs to be explained and really needs to be experienced by the consumers. So we really think it will take time to this category will go -- grow. Nevertheless, it took more than 10 years to grow the alternative milk category here in Israel. And today, it's more than ILS 1 billion category. It's still continuing to grow. We do believe the country can grow to being a very big category in Israel to give solution in Israel, not just in milk, drinks and spreads. You can look about it in yogurts and in desserts and in any dairy products that we have today. There's questions of the availability of those proteins that come from yeast and mushrooms and don't come from a cow how available they are going to be. Once this will come more scalable, then there'll probably be more factories that will produce this or it will be easier to make this on scale. Right now, the availability of -- or the ability actually to keep these products into the market is very, very limited because the product -- the input product of the protein is very limited in the amounts that is being produced today. So I hope I gave some kind of an answer. We can speak about this for the next 20 minutes, but I think this wasn't the session -- this wasn't the reason of the session. Rivka Neufeld: So I actually have another follow-up question regarding Cow Free from Chris Reimer from Barclays. Shai Babad: Yes. Rivka Neufeld: So are these products -- are the results of these products in line with your expectations so far? Shai Babad: Yes, very much and even more. When it comes to the sensory test, when it comes to the consumers' reaction to what we've done, very much in line, but I want to be very careful. There are still very limited amount of products that we put on sale and it's still very, very early. I think that a year from now, by the end of next year, after we have a year of launching, after we have a year of deploying them in the market after that we will be able maybe to scale a little bit up our production abilities and getting more protein and putting more products into the market, we'll be smarter to say what do we think. But we do think this is a very, very exciting category. We do believe very much in this category. And we believe there's a path to grow this category so that the milk industry will be broken down into 3 major categories: the traditional milk, the alternative milks that are not milk such as soy, almond and oat and also Cow Free, which is basically imitating milk, but it's not milk, has all the advantages of milk and the taste that just doesn't have the disadvantages of lactose, cholesterol, sustainability and others. And we do think that over the years, the space for these 3 categories and the Cow Free category can grow substantially. Rivka Neufeld: So staying in this same sector, what do you see in terms of the plant-based milk line? How is that performing so far, especially given...? Shai Babad: It's performing really well. We also managed to grow our market share very rapidly over the last few weeks when we launched. Our products are much higher quality, much tastier. We brought in a variety of new products into the market. And once we'll -- and so far, we've only been in the milk drinks or milk alternative drinks category. Once we'll go into desserts and to the yogurts, this is where we own the market. We have the highest market share. We are the #1 player. Once we'll take our loved brands and we put our loved brands on plant-based products in the desserts, in the dairy, we believe we can grow this category very much. And the new plant that we have designed, which is the highest technology and with our partners with Danone bringing in their highest IP into the factory, we will really be able to grow this category and also grow this category with new products. Rivka Neufeld: So given your explanation, when looking at the global market, demand does seem to have some challenges in terms of the alternative milk market. So how does that correspond with how you see the growth opportunities here in Israel? Shai Babad: So far, we don't see any demand. There was a hiccup in the last few years, but we do see alternative milks continue to grow in Israel, the demand is quite constant. The category has been growing. In the previous year, it has been growing double digit. Now it's growing high single digit. We don't see a problem. And this is only on the side of the milk -- alternative milk drinks or plant-based drinks category. Once -- as I mentioned before, once we'll get into the desserts and once we'll get into the yogurts, which is a very big category for us and give that in alternative milk solutions, we do believe we'll be able to grow this category much more and to gain market share in the category and also develop new products because today, there's not real products when it comes to desserts and yogurts in this category. And I think we'll be able to bring in products, which will be very, very unique, very, very tasty, very, very good and with our love brands, which are the #1 brands in the desserts and the yogurt categories. Rivka Neufeld: Moving to the Water segment. Regarding expansion in the Water segment, how long do you think it will take to come to fruition considering the market in China and depending on the launch of the new facility? Or is that more of a 2027 story? Shai Babad: So it's really very, very hard to know. We are -- we do want to see a -- the new facility will start -- will come in place and start in the beginning of 2026. It has nothing to do with the new facility. We don't have -- it's not a capacity constraint that is today affecting us. It's more the competition of Xiaomi and the fact that they have reduced prices and we're facing kind of a price war right now and the discounts at the beginning of machines. Still there's good margins, I must say, having a 5%, 6% net margin is not a bad margin in our business. And the growth is very solid. We've seen -- although this war with Xiaomi is putting very high pressure, we still grew 13% year-over-year, which is very high growth in the category. We're still gaining market share and still growing. Yes, this will follow us probably in the next couple of quarters. If it's 2 quarters, 1 quarter, 3 quarters, 4 quarters, yet to be seen. We'll keep you updated. We do think that -- we hope that by 2026 or maybe end of 2026, we'll be able to overcome this is [indiscernible], this [indiscernible] on the right order, but this downhill going back backfill, but it's too early to say. Rivka Neufeld: Final question so far is, are there any more segments of the business being considered for divestiture? Shai Babad: We always look at portfolio optimization. We always look what is the right way for us. We look at the trends, we look at consumer needs. We look at where we have our competitive advantage. We look at do we have a sustainable way to grow to meet consumer needs in the next 5 to 10 years. And we look, can we -- are we #1 player? Are we #2 player? Are we a substantial player in those categories. And then we look, is this business profitable or can we make it profitable? And if the answer to all this is yes, then it's fine. If not, then we ask ourselves can we fix one of the no answers to these questions. And if we can't fix it, then we ask, does it support the core activity, does it support our portfolio? And sometimes when the answer to that, yes, is keep it. And only when the answer is no to all the questions about then we divested. So I won't give you a specific business that we're looking at. And of course, it's an internal information once we do something, we will just announce it. But we are always looking at portfolio optimization, making our portfolio is right for us, as right for consumers as well so that we will serve our consumers in the best way where we have a competitive advantage by keeping -- or by maintaining growth and by maintaining high margins. Rivka Neufeld: Okay. We don't seem to have any more questions. So I will now turn the call back to you, Shai, for closing remarks. Shai Babad: Well, thank you very much, Rivka. So as I said before, this has been a very good quarter for us and also 9 months into the year. I think that one of the major things that we've managed to do over the past few quarters and also looking into the fourth quarter and hopefully into next year as well is to transform the pro forma -- the platform of our coffee business in Brazil and a little bit in the CE as well. We do believe that we can get higher margins there, be more sustainable. As I said before, I'm not sure they'll be as high as we've seen in the third quarter, but I do think that we'll be a higher performer. We do think Israel had a onetime leap, and they'll go back into growth and to higher margins and profitability as was before, especially health and wellness, as I mentioned before, those onetime problems we don't believe will continue into the future. We don't see them repeating themselves. And we do think that we are on track to growth. Today, the business is healthier than it was in the past. Most of our categories, almost all of them besides the confectionery are already there with high margins, high growth and with high adjustment to consumer needs. The only last business that we believe that in 2026, we'll see the full turnaround is our confectionery business. So overall, when we look ahead, we see continuous growth through all the growth engines and others that I didn't mention in this presentation, but all the growth engines that we set ourselves this quarter that I've shown in this presentation. And also with continuing to work on our core categories of growth and by fixing also our confectionery business, we'll continue to see in the pro forma of the new coffee business, we'll continue to see overall profitability and overall growth improving. Rivka Neufeld: Thank you, and thank you for joining us for Strauss Group's Third Quarter and First 9 months of 2025 Results Earnings Call. And this concludes our call for today. So thank you.
David Surveyor: Well, good morning from me as well. And as Andrew said, welcome to the Select Harvests 2025 Half Year Results Presentation. So my name is David Surveyor, and I'm the Managing Director and CEO of Select Harvests. Joining me delivering this presentation is our Chief Financial Officer, Liam Nolan. Next slide, please. The 2025 full year results presentation will be delivered by webcast on the link displayed as advised to the ASX. After Liam and I have delivered the presentation, there will be time for questions before we commence our investor road show. [Operator Instructions] In the event, we have outstanding questions at the end of the allotted time, please contact Andrew Angus via the e-mail on the screen, and we'll deal with them subsequently. Next slide, please. This slide simply outlines the disclaimer and basis of preparation of the information contained in the presentation. Next slide again. And so in terms of the agenda, I'll start by providing a business update before handing over to Liam, who will discuss the financial results in detail. And then following Liam, I'll discuss strategy and the forward outlook before we both take questions. Next slide, please, and again. To set the scene on today's presentation, there are 3 observations we would [indiscernible]. The first is that over the last couple of years, we have consistently spoken about the almond macro heading into positive space and this supporting price. We think this is now increasingly apparent to everyone and remains our forward prognosis. Secondly, the company's self-help activities delivered through our PMO are making a difference. It's evident in the results we are seeing record safety, tight cost management, better farming practice, step change in processing and increasing price capture. And thirdly, in terms of financial discipline, our focus has been on driving the base business. Profit is increasing and despite a lower crop, it's a turnaround approaching $150 million over the last 3 years of results. We have a drive on cash and net debt reduced by half and no big capital spends that stretch the balance sheet. Rather our spends are smaller continual increments for [indiscernible]. Next slide, please. So if we move to talk about safety. People are critical to Select Harvests. We continue our focus on safety improvement. Our TRIFR as at the full year was a record 5.5. Now I think it's reasonable to say that the 3 years of high performance, we have demonstrated a step change in safety. We're driving a clear sense of deep and felt safety leadership to our people. We're training our people. We're raising the visibility of safety across the organization. We're reducing workplace incidents and hazards and ensuring compliance. Now just as with running a business, you never get to perfection on safety. And so we're not satisfied. We still have much to do to achieve our sustainability goal of zero harm. The branding curve shown on the right-hand side is a framework to measure the maturity of an organization's safety culture, and we still have a long way to go. Our position on the curve evaluates how deeply safety is embedded in behaviors and attitudes across the workforce. As our safety culture matures, injuries and accidents decline dramatically and operational efficiencies increase. We're now starting to see safety become self-sustaining with energy from the shop floor and farm hands. If we go to the next slide, please. In terms of the almond macro, the global demand and supply dynamic is in great shape. And this slide provides a sense of key data and key drivers. On the demand side, prices have been increasing as the long-term global almond economic macro has improved, noting there was a midyear dip when talk of a 3 billion pound California crop surfaced, and we'll talk about that more later in the presentation. Total global demand continues to grow with CAGR of 5% to 7%. Food megatrends continue to favor healthy foods and convenience foods, both of which are almond positive. As a further comment, we are seeing positive global sentiment towards Australian supply and Select is recognized by customers as being more connected to the market and more physically present than others. We also note that ultra-processed foods are getting negative press, especially around snack eating. This makes almonds even more attractive. In terms of unit production costs shown on the bottom left of the slide, Australia has a significant relative competitive advantage to the U.S. This being a function of operational costs and yield performance. We've used data from UC Davis in this analysis, but we've taken a conservative approach to the size of the differential and not others have assigned higher unit cost disadvantage to U.S. growers. On the supply side, California represents approximately 80% of global supply and almond acres appear to have peaked at 1.4 million bearing acres, of which approximately 20,000 acres may be abandoned and plantings have reduced over time. The 2025 planting number is not yet released, but anecdotally, it's being reported as continuing to reduce with an estimate of only perhaps 3,000 new acres being planted. Australia is about 10% of global supply and forward volumes are also reasonably flat. The time to maturity for trees is 6 to 7 years, so the supply side cannot quickly respond to an uptick in demand. So we have a very positive almond macro that is sustainable over at least a 7-year horizon and relative competitive advantage where Select Harvests is well placed to benefit with very good medium-term pricing. We can go to the next slide, and we'll talk about our financial results. The company has delivered a meaningful improvement in net profit after tax to $31.8 million with a return on capital of 6.8%. Now this number includes a profit of $5.8 million on our water rebalancing strategy. The Board has determined there is no dividend to be paid this year, and this reflects the company's focus on continuing to reduce its debt levels. The company is conscious of the need to balance debt reduction with paying dividends. And once we get debt down, then dividends will resume. It's worth noting that the company has made $31.8 million in a year when the Australian crop size was smaller. And so the results reflect the broad improvements being made in Select Harvests. The average price for the 2025 crop was $10.18 per kilogram. And we recovered a couple of extra tonnes in the final few weeks to finish at 24,903 metric tons. It was a year that included some price volatility, and we saw this when the U.S. objective forecast was released in July and prices dropped by 20% and then recovered as the real crop size has become apparent. Operating cash flow was $118.6 million as we accelerated sales and bedded down our logistics capability. This is the price we struggled to deliver in our first attempt at logistics and the obviousness of the opportunity should now be apparent to all. We think there is further opportunity in this space to drive on a lower working capital position and increase cash generation. Net debt has halved and sits at $79.1 million. This year also saw the company refinance banking facilities with new terms moving to 3- and 5-year money to reduce our risk and also lower our costs. Now what I'd like to do next is provide some more detail on each of our key results drivers, the volume, price and cost. And if we could go to the next slide, please. I think it's difficult to escape the fact that 2025 crop is disappointing for the entire Australian almond industry. A lower cracker rate from thicker holes and some frost damage did not help. This year, we once again operated an earlier harvest, 10 to 14 days varying by far to optimize hygiene and reduce insect damage. We've continued our work on shaker oscillation frequencies and trial new shakers for increased efficacy of removing nuts from trees. This was successful, and we have ordered 24 new machines. I think the company did an exceptional job in getting harvest complete and looking after the quality of the crop. Now the positive, however, of a small crop is that it helps drive innovation in approach. Operationally, we ran a pilot program to see if we could extract further kernel yield from our [indiscernible]. The answer is we can, and I will talk about this more fully later in the presentation. Next slide, please. As I've already noted, the company delivered an average price over its full crop of $10.18 per kilogram. Now earlier in the year, we started to give the first sense of Select's work in getting a price premium for our products. We have continued to refine our work and measurement in this space. The top chart shows our performance against Stratamarkets based on price at the time of signing a contract, the FX rate of the day and an adjustment for tariffs. Now the math for this requires some assumptions. So to the extent it's inaccurate, however, it's consistently inaccurate and so it does not give variation by individual transaction. And the work says that over the year, Select Harvests has taken a global commodity and delivered a price premium over the global markets of some $8 million or 2% to 2.4% with some of this value benefit going to external growth. Now I caution, this is 1 year of data only and it's happening in an up cycle, although we also saw the premium gain remain true in the midyear price correction. Now I'm keen to continue building our data because as we prove the sustainability of our approach, it means we now bring extra profit leverage to every horticulture and processing improvement that we make. The bottom chart shows global almond pricing increasing from the start of the season and peaking in May, June 2025. As I previously noted, we experienced a July price correction of 20% following the USDA objective forecast of 3 billion pound prices have since recovered. Now the most recent October 2025 California almond position report shows a reduction in receipts of 7.97% compared to 2024. A direct extrapolation would imply a 2.5 billion pound U.S. crop, which we think does not capture some delayed receipts as the wet weather likely slowed delivery to processing plants. So therefore, we think a 2.6 billion to 2.7 billion pound U.S. crop is likely, and the next California crop report will give further insight. The net result in our view is a further solidifying and increasing of price. And I'll give a sense of Select Harvests' outlook position later in the presentation. If we move to the next slide, please. Total production costs, which is the cost of growing, harvesting and processing was successfully held flat in 2025 on a normalized 29,000 tonne basis at $6.71. Now I specifically note comments by Dr. Brittney Goodrich on work done for UC Davis saying that between 2019 and 2024, grower costs in the U.S. have increased by between 47% to 53%. Now whilst the time periods are not perfectly compatible, it's a stark contrast to Select Harvests' ability to control its cost base over the last 3 years. This year, there were some notable improvements in the cost of labor efficiency, fertilizer costs, harvest costs and processing costs with some offsetting cost increases in water sprays and electricity. Now let me hand over to Liam for a detailed discussion on our financials. Liam Nolan: Next slide. Thank you, David. Select Harvests' net profit after tax is $31.8 million, up from $900,000 in 2024. The key drivers of the result are $10.18 Select Harvests achieved almond price, up 32.4% from 2024. This is offset by a lower crop size, as David previously mentioned, down 15.7% to 24,903 metric tons. Despite the rising costs in areas such as water, bees and electricity, the company has managed to keep the cost per kilogram consistent with 2024, normalized to a 29,000 tonne crop. Our lower finance costs are due largely as a result of lower debt and the part year benefit of lower costs from the refinance of the company debt facilities. As announced at the half year, the company has refinanced our debt facility in 2025. We refinanced the syndicated debt facility to 3 and 5 years and were very well supported by our banks, NAB, Rabo and welcoming Commonwealth Bank to the syndicate. By extending the tenure and adding a third bank, we've reduced our future refinancing risk. Our total committed facility of $240 million has $150 million limit for 3 years and $90 million for 5 years. This structure provides flexibility for both short-term liquidity and longer-term funding needs. We've also been able to lower our financing costs, which include a 61 basis point reduction compared to 2024 and an over 200 basis reduction on our overdraft facility. We currently have $170 million in undrawn committed facilities, providing strong liquidity to support operations and any future growth. Next slide. 2025 EBITDA growth of $37 million or 81% is essentially driven by the impact of the crop profit, up $26.4 million from $27 million in 2024. And in the current year, we benefit from $5.8 million from the water rebalancing, which completed in 2024. The company balance sheet has improved significantly during 2025. Through a combination of improved earnings and strong cash flows, the gearing ratio has reduced from 34% in 2024 to 15.1% in 2025. The strength of our balance sheet can be seen through lower working capital, lower lease liabilities and most pleasingly, lower debt. Next slide. 2025 operating cash flows are up $109.1 million to $118.6 million. The cash flow generation included the carryover of 2024 working capital of around $21 million, meaning the underlying operating cash flow generation was up -- was almost $100 million before lease payments. The strong cash conversion from the $82.4 million EBITDA is attributable to strong earnings, excellent sales velocity and a step change in our logistics performance in 2024. We also had a very strong focus on our cash collections as we ended the financial year. Our investing cash flows were impacted by investments in the pre-cleaner and dryer, new shakers, Optimus and the water rebalancing. Our financing cash flows benefit from the $17.4 million relating to the 2024 equity retail raise. All these strong cash flows and management of the audited cash are the key drivers to improve net debt to $79.1 million. Next slide. Throughout 2025, management and the Board have developed a capital allocation model. Today, we wanted to introduce a framework on how we deploy capital. In doing so, we have developed a framework that aligns with our strategic goals and objectives, and the model is designed to be attractive for existing and future -- and investors. The first element of our capital allocation is around strengthening our core. With our first priority, as David mentioned earlier, is on gearing and our intent to see our gearing continue to lower. It's very much the first priority, and it enables the company to operate freely. Our base capital expenditure is targeted to be around 80% of depreciation, and this is very much focused on replacement CapEx. However, we are eager to invest in the business and specifically growth CapEx, which we broadly define as CapEx in higher returning initiatives. And this could include -- or this includes investments like our new Harvests Shakers and Project Optimus. A future action, which is not in any immediate plans, involves how we look to fund major investments. And in this instance, we would look to fund these through a combination of debt and equity. Our allocation model is also focused on returning excess cash to our shareholders through a combination of dividends and buybacks based on their intrinsic value relative to the market. As a company, we are focused on deploying capital in a disciplined and structured manner to ensure the best outcome. Next slide. This slide, it was brought up at the first half results, and I don't propose going through this in detail, but I'm happy to answer any questions later on. David? David Surveyor: Thank you. Next slide, please. All right. Thanks, Liam. And next slide again. Okay. So this slide shows our strategy coming to fruition. The historic view of Select Harvests has been based on profit and growing. This is the first time the company has decided to show profitability along our value chain. The company's strategy is generating returns by broadening value creation beyond horticulture to encompass processing and sales. The investments we have made are low cost and high returning. This slide gives you more of a segmented view of where Select Harvests makes money. Our strategy is about firstly having substantially greater almond volume; secondly, leadership in process and scale and efficiency; and thirdly, maximizing the return from the crop. And you can see value is created through not only almond horticulture and in fact, in a year where we've had lesser almond supply, the profit results have been supported by our ability to process with excellence and maximize the value from the market. Most importantly, the 3 streams, when leveraged collectively, create the opportunity for superior returns. We continue to innovate and have new opportunities, which we will run through our project management office, and they position the company well to take advantage of the almond macro. Now I'll talk about progress on strategy execution over the next slides and then connect it to the PMO and the value created. Next slide, please. The traffic light shows performance. The first strategic priority is substantially greater almond volumes. And whilst there is less green in 2025 than 2024, it's the result of the lower crop. The 2026 crop will be the first full year of our improved horticulture approach. As we benchmark our farms against others, we are confident we'll get more yield over time as we optimize fertilizer, bee density for reduced flight distances and water. There's a meaningful price for improvement, an extra 1,000 tonnes comes with limited incremental cost. Controllable costs are being kept tight as we improve on-farm efficiency for sprays, seasonal labor and organizational design. However, we are seeing increases in water, bee and fertilizer costs going forward. A smaller Australian crops are a lower external grower. So we have added an external grower Liaison Resource and expect to see some incremental supply growth in 2026. We have this year continued our investment at Piangil to improve water drainage with Phase 1 complete, and we will likely undertake a Phase 2 drainage project and start to plan for the replant of some of the [indiscernible] trees at Piangil. We've also invested in Mountview drainage dam improvements, along with a 12-hectare replant of an area previously lost to the 2022 floods. We're restoring productive land capacity. In effect, what you're seeing us doing is improving the defensive capacity of the farms to weather events. The second priority is leadership in processing. And as with the farms, processing cost down initiatives continue with less line stops, packaging line efficiencies and labor, et cetera. Having increased the capacity of Carina West to 40,000 tonnes, the investment in Optimus Phase 2 is nearing completion, and I'll talk about this project and some new initiatives on the following slides. The third priority is maximizing returns from the crop. We have on the earlier slide seen the results of our price optimization stream at $8 million. Customer optimization has seen an increase in direct supply, which is now approximately 50% of our business. From a selling perspective, it has also allowed us to build new quality grades specific to customer needs. So by way of example, historically, mixed variety almonds were sold as manufacturing or standard 5 grade. But by dealing directly with customers that use mixed nut and fruit combinations in bars and packages, we can sell mixed variety almonds at a lower price Supreme grade -- as a lower price Supreme grade almond. So instead of selling at, say, $10 a kg, we're achieving $10.90 a kg. And for the customer, they win with a discount on their sourcing of Supremes because they are a mixed variety almond. To enabling pillar -- logistics has been turned to its strength. We have data and analytics starting to roll out. And I think worthy of quick comment is our culture with our employee alignment and engagement scores sitting in the top quartile of all Australian businesses. Now I mentioned continuing innovation being run through our project management office. So the next 3 slides will give you a flavor of those activities. Next slide, please. So let's start with Project Optimus. So if you'll recall, we announced Project Optimus Phase 2, which is a 10,000 tonne capacity expansion at the end of last year. And there are 2 stages to this piece of work. Stage 1 is complete. We've automated the roller speed of our shear rollers to match their rate of wear and then balance each of these shear rollers across decks to get the optimal throughput and not overload any one deck. We've also upgraded our hulling and shelling color sorter so we take out lower quality product earlier, and in the process, ensure we do not overload the decks when ran at faster speeds. The second stage is being installed as we speak, increasing the capacity of what was deck 7 through 9, so we can further balance flow volumes and get optimal throughput. And then finally, increasing the conveyancing capacity to utilize our downstream sorting assets. This 10,000 tonnes will be operational for 2026, and we will have a total capacity of 50,000 tonnes. Next slide, please. Let's talk about kernel recovery. During the year, we started to consider the possibility of extracting further kernel from our hull piles. In the picture, you can see us pilot testing a new approach to reprocess hull and recover any salable product. No other processor in Australia is doing this, and we have proven it's possible and expect to see a yield gain of approximately 3%. This will immediately drive increased profitability for our own crop and that of our external growers. It delivers an outstanding payback and again, will be operational in 2026. Next slide, please. We trialed 6 new harvest shakers in 2025 and have decided to back this up with another 24 shakers for the coming harvest. The new technology has improved efficacy for getting nuts off trees and may lead to lower cost if we can reduce the number of blocks of land that require reshapes. The new machines will increase our ability to capture in-shell and ensure higher quality nuts as they are more quickly collected and removed from farms to minimize the risk of insect damage and mold. This investment also has a quick payback with the money recovered in less than 2 years. A number of the new shakers are already on water and they are steaming towards us. Next slide, please. The project management office. We continue to use the PMO to drive outcomes within the business. It's becoming part of our DNA. The PMO in 2025 as net of inflation delivered $16.7 million of value. And 2026, we'll see a continuation of PMO with each initiative individually tracked and monthly reported. Next slide, please, as we talk about the outlook, and one more again. Now I have in previous presentations made comment that crop forecasting is a full [indiscernible]. And so I'm not intending to repeat this approach. And we note the U.S. based on this year's crop forecast accuracy is as equally challenged as Australia in this regard. This year's bloom was good, but it was relatively quick. We've not experienced the frost damage that we saw in the prior year. The single biggest challenge this year was bees, particularly in South Australia. The company mobilized and secured sufficient bees across all farms to allow a successful [indiscernible], including sourcing bees from Western Australia. Based on the slow start to summer and cooler weather, we expect this year's harvest to commence approximately 2 weeks later than normal. Now our view on the California crop remains consistent. We think they've reached peak acres. And ultimately, we will see the crop size reducing given the limited replanting. California crop receipts at the end of October, as I noted, are 7.97% behind prior year. There may be some catch-up to this number, but a 2.6 billion to 2.7 billion pound crop seems likely. Quality is expected to be affected by insect damage and rain during harvest, and we see an implied carryout of 300-something million pounds at the end of the California crop year. Let's move to talk about margins. We're seeing strong demand in India and China in the segments that we play. This combined with a lower-than-expected U.S. crop is positive for prices. In fact, prices are increasing now on our prognosis is supply and demand dynamics will see prices continue an upward trajectory. To provide some price direction, if you had a normal crop profile and the entire crop available to sell today, we would expect to see an average price of about $10.30 per kilogram. I note this is higher than the current market consensus of $10.07. Our long-term view remains there's continued global growth in demand at 5% to 7% CAGR. Going forward, however, we do see some headwinds in our uncontrollable costs for bees, water, fertilizer and energy. We'll endeavor to offset these through the investments in capacity, yield recovery, shakers and our PMO. Select Harvests has already commenced selling its 2026 crop as we continue our approach to price optimization and sales velocity and expect to continue to outperform the pricing benchmark with approximately 55% of the 2026 crop hedged at $0.6485. Next slide, please. So I think to bring it all together, the company profitability is increasing with an almost $150 million recovery from 2023 and our business model has evolved. The balance sheet is strong and the company is looking to further reduce debt. The gains from our PMO are coming through, and we have more to deliver. The macro environment for almonds is positive, and we expect it to remain this way for future years. The company remains focused on maximizing yields, processing and expanding our midstream capabilities, capturing as much price as we can and staying tight on costs. So thank you. And I'll now hand back to Andrew Angus to manage just through the questions. Andrew Angus: Thank you, David. We've got Josh Kannourakis from Barrenjoey. Josh Kannourakis: Can you hear me okay? David Surveyor: Yes, we can, Josh. Josh Kannourakis: Just first question, just around into next year. So you mentioned on the cost side, obviously, a little bit of a step-up across a few of those things, but also some of the PMO activities. How much of that do you think you'll be able to offset of the sort of cost structure into next year? And can you just run us through maybe a little bit of a breakdown or a waterfall of how you're thinking about the sort of cost profile into next year? David Surveyor: You want to take that one? Liam Nolan: Yes. So in terms of costs, we've highlighted there are some pressures, particularly relating to water, bees and electricity. And so roughly at a high level, we're seeing water specifically being quite a big number in 2026 as an increase. The total -- those total costs are sort of roughly around $20 million that will go into the cost base in terms of just the hard inflationary increases. And in terms of offsetting those, we've got initiatives that really are driven around improving yield as an example through kernel recovery and the Shakers project, just to name a few, to really offset those. We would be targeting to offset as much as possible, but probably a large portion of those will be offset. Josh Kannourakis: Okay. Great. And then second question, just in terms of the value-added and third-party processing side of the business. I know you guys don't split it out separately, but can we just talk a little bit about maybe the delta from '25 into '26, how you're thinking about that? Because it feels like that also could be a tailwind into next year. David Surveyor: Yes. I think correct. We think there will be some tailwinds on that as we -- there will be a couple of things that drive it. One of them is that, as I mentioned, we expect to get a little bit more volume in terms of third-party volumes through the business. So that will translate and will come through. And we previously said it comes through at about $1 a kilo. We would imagine that number will continue. So as we grow those volumes, so there will be some profit tailwinds. And then the other thing that's really changed is that with -- in our value-added part of the business, we have had some fairly meaningful price increases in the last couple of months. And in some respects, that, as much as anything, is reflecting the fact that we often sign contracts, particularly things like [ pace, ] which might run for a full year period and the acceleration that we've seen in almond prices, that's now starting to flow through into those contracts for some of our value-added products. So we'd expect to see some upside in that as well. Andrew Angus: All right. David, we've got Mark Topy from Select Equities. Mark, can you hear us? Mark Topy: Yes. Just a question firstly around the global trading. China, you've talked previously about the third-party relationships and the direct you're building there. Can you talk us through just how you're seeing the China market and also the India sort of global trading and just the background to the compound growth that you're seeing in the market on demand side? David Surveyor: So I think -- yes, absolutely. So if I sort of refer to my comment, we're seeing both China and India being strong for us in terms of the way we run the business. We have actually increased -- I'm slightly guessing at the number here going from memory, Mark, but I think we increased our volume in China by about 3% to 5% actually year-on-year. So we remain very positive about China. We're certainly conscious of the fact that people do sometimes talk about the China economy softening. But as I think I've noted in other conversations, we just haven't seen that in the way that we operate. And we think that's because we've increased our customer base and that we've increased the amount of direct supply that we've got. So we've got a much better insight into the marketplace and better connection, I think, with customers than we've ever had before. So I think those things really help support our pricing position in China. And I gave an example during the presentation around one of the ways, but we have several that we're using to ensure that we maximize the price position that we're getting out of that market. In India, we, again, are seeing good strong demand, noting, of course, that India is more of an in-shell market. But again, we've got a lot of inquiry and demand coming through, and we've made sales to both India and China as it relates to our preselling of the 2026 crop. Mark Topy: Great. And as a follow-on, just on the tariffs. I know the flux around the tariff sort of position changes all time, but can you give us a read on that U.S. tariff sort of position at the moment in the China market? David Surveyor: So look, the U.S. tariff at the moment sort of operating about 45%. We're not acting on any basis that says that we think it's ever going to increase or decrease. If it did -- let's just go to the positive. If it did increase, I think the practical reality is that there is a certain price that the Chinese consumer is prepared to pay. And almost no matter what happens to that tariff, it becomes academic because we've sort of reached the point where people aren't going to pay more. And equally, if the tariff went down a little bit, I think there's still a bit of room before we start to see any impact in pricing. The other thing that's, I think, key to ponder about the U.S. tariff position or the retaliatory tariffs more so as it relates to China's response is that whilst direct U.S. supply into China has greatly reduced, you've essentially seen the fact that China always, if you like, always finds a way. And you've seen volumes going to China via Vietnam and via Malaysia and they greatly offset the direct supply that was going in, which is an alternative channel that's become the route to market for U.S. supply. Mark Topy: Great. So just your pricing around that, so I suppose we sort of factor some tariff benefit in our future pricing, I guess that's where I was getting to. David Surveyor: Sorry, say that again, Mark. Mark Topy: Yes. Just factor in some future benefit on the tariff pricing in the current year, how we just see that? David Surveyor: I think I'd say -- definitely, Mark. I think I'd say we're not forecasting any further benefit from tariffs. We're operating on the basis that they'll probably continue as they are, but we will capture value by virtue of our sales and marketing processes. And that's what I was trying to describe with that $8 million of gain because we've backed out effectively in those calculations any of the advantage that you might get from tariffs. Mark Topy: Great. And just secondly, just on that crop, I know you're being conservative on not giving an estimate, but I guess, do you foresee that you might give us a bit more feel about how it was progressing at the AGM? And is there anything sort of negative at all that you're seeing in the crop at the moment? David Surveyor: So you're quite right, it's way too early to start thinking about forecasts for the crop. We may well give an update. In fact, undoubtedly, we'll give a market update and outlook update when we get to the AGM. So that will certainly occur. Specific to your question, there are no negatives that I've got to report around the crop that we've seen so far. Andrew Angus: All right, David, we got James Ferrier from Canaccord Genuity. James Ferrier: Can I start on the transformation items that you ran through and third-party volumes in particular, because there's probably a sort of a cyclical recovery element to FY '26 if you assume the industry crop size is going to go back to normal levels, plus you've got that extra capacity to chase more volume as well. So if that eventuates, is 7,000 to 8,000 tonnes extra volume a realistic outcome for you? David Surveyor: So it's a very good question. I think if you did a sort of -- if you like bounce back to normal on crop size, you'd probably end up with an external grower volume of somewhere around the 10,000 tonne level. And then, of course, we're aiming to see that number go up a little bit as we attract additional growers to the company. James Ferrier: Yes. Okay. That's helpful. And then that kernel recovery line investment less than a year payback. So you're basically looking at $5 million extra EBITDA in FY '26. And I'd assume that would come through in the form of a higher crack out rate. David Surveyor: No, because what we're doing is -- so if you -- for anyone that's been to one of our plants and if you think -- if you can think about going outside the factory and you can see a pile of hull and shell, which we typically are either using to fire our CoGen plant or it's going to Compost or some of it is going to be sold as [indiscernible] input for cattle, what we've realized is in that pile, there is some kernel that actually remains in it. And so we have devised a process that allows us to, in line, extract that before it gets to the hull and shell pile. So it's not a [ crack ] issue as such. We're taking it out of that stream. James Ferrier: Okay. Understood. That's helpful. On the outlook, probably a couple of follow-ups here to Josh's question. So Liam, you talked about water, bees and electricity as the 3 main drivers of the uplift in production costs in FY '26. Where does fertilizer sit given you didn't mention it there? Liam Nolan: In terms of cost on fertilizer in 2026, marginally up on 2025, but we are planning to use some more as well from what we've previously used. So subject to the crop being able to take it, our plans are through our horticultural program to invest more in our fertilizer from a quantity perspective where it makes sense and where the crop is able to respond to it. James Ferrier: Yes. Understood. And you mentioned on the value-add items, David, you mentioned that -- apologies, yes, I just muted myself somehow. You mentioned that there were some recent price increases implemented across the value-add product lines. Can you quantify the earnings benefit you're expecting in FY '26 from that? David Surveyor: Probably not, James. Probably not given that we don't do that sort of segment level of reporting, I probably -- I wouldn't do that. But it's certainly some catch-up that is, if you like, reflective of the rate of increases that you've seen in in-shell and kernel prices over the last 12 months. James Ferrier: Okay. Lastly, just in the context of that capital allocation framework, why didn't the Board decide to return excess capital in the form of a dividend or a buyback given where the gearing is and the significant improvement in earnings? What am I missing on that framework that would have prevented that outcome of eventuating? David Surveyor: We might both have a go at this. I think that essentially what you're seeing in the dividend for this year is -- so we've got our gearing down and we've got it down to sort of 15.1%. But we'd like to get it a little bit lower still. And so what you're really seeing is the company trying to get to a lower level of gearing. And once we get to sort of an internal target number that we might have in mind, then we go to resuming dividend payments. And we just want to make sure that the business is robust for any cyclical shifts that may happen through the cycle. The company had been through a period where it could survive 1 year, but if you go back over recent history, when you get 2 or 3 challenging years in a row, it really put the balance sheet under pressure. And so it's really a decision around making sure that we are as robust as we can be. But absolutely, there is recognition from the company and a desire from the company to actually return to paying dividends back to shareholders. Liam, do you want to talk about the capital? Liam Nolan: Yes, sure. And I think just the one thing to add in 15.1% is a [indiscernible] number. It is the lowest point of the year. And so we do have a big fluctuation as we go through in our working capital throughout the course of the year as well. So the desire is to see it lower and see it a bit lower for longer. Andrew Angus: We've got another question from Mark Topy at Select Equities. Mark, are you there? Mark Topy: Sorry, can you hear me now? Andrew Angus: Perfectly. Mark Topy: The cash flow you achieved this year was a real step-up. So I'm just wondering how do you see that going forward? Can you repeat the sort of cash collecting you achieved in the current year and maintain that really strong cash flow trend? David Surveyor: Yes, good question. So the answer is absolutely yes, we think. In fact, we think there's still more to be taken out of our working capital. But I think we've sort of proven to ourselves the value of sales velocity, getting our logistics [ teams ] right, and we've got the next crank of the wheel to do over this coming year to try and shift our working capital position. That's -- and again, it kind of goes to -- a couple of years ago, we started that presales process. We're underway this year. In fact, we're a little bit further ahead this year than we were last year, and we're very keen to see more cash generation from the business. Obviously, it will be helped by higher prices as well. Mark Topy: Great. And just as a follow-up, then just to clarify that debt level. So what is the target debt level across, I suppose, the year allowing for that, obviously, that increase in working capital in the first half? Liam Nolan: Yes. So we're not publicizing what the target is at the moment, Mark. Suffice to say we want to get it lower than 15.1%, which is where it is at the moment. And in terms of -- yes, it does -- as I said, it does fluctuate quite a lot during the year. And I think we've seen even in 2025 in the half year results, you can see that the debt level remains stubborn all throughout the year, and it really only drops down in sort of August and even September each year before it ramps up because of the cycle that we're in. Mark Topy: Great. And maybe again, you might give us a bit more detail around that at the AGM perhaps in terms of where you see that target debt level being in terms of dividend payments and so forth? David Surveyor: Well, I think, Mark, you're right, there'll certainly be another -- at that time of year, there's certainly -- midyear, there's another moment for the Board to consider the company's debt position and its view on paying dividends. I think that's exactly right, and we'll respond at that time. Andrew Angus: David, we have one last question from Chris [indiscernible], who's a retail holder. Chris, are you there? Unknown Attendee: Hello? Andrew Angus: Chris, are you there? Unknown Attendee: Can you hear me now? David Surveyor: Yes. We got you. Unknown Attendee: It seems you're on the right track sort of moving forward. I guess just a few questions. Just on the presentation on Page 14, when you talk about the EBITDA, the source of the changes, I guess the biggest contribution is in relation to pricing. So where you've got $62 million there. So this EBITDA, is this in relation to obviously, the prior year, this being the AGM? Is this the contribution in relation to the increase in prices, for example, and then the other -- the lower volumes, the change in relation to the volume change, it's not in relation to the latest forecast, for example. Liam Nolan: Yes. So the year-on-year changes, Chris, in the increment, yes, you're right. Unknown Attendee: Yes. So really, the biggest contribution to the results this time has been the relationship with the prices, which is sort of out of your control to a large degree. And then the second question is just in relation to bees. I'm just wondering with the Varroa mite and whether it was possible to have more control over the situation with bees on the property. I guess they need to be shifted around. They're always looking for pollen. But I'm just wondering if there's any initiatives there to increase the pollination from bees and whether -- what effect that would have had on your production if you didn't have the issue with the bees and the Varroa mite, what increase in production there would have been or pollination and consequently, the almonds, I guess, if you can give some color in relation to that. David Surveyor: Sure. Yes, we'll do. So to your first point, I mean the 2 -- as the chart points out, you're quite right, the 2 big things that really start to drive the number relate to the crop size, and you see that in the volume, orange bar, and you're quite right, the almond price. And of course, the almond price is -- the actual price that you get, you've got a piece -- there's a chunk of that, which 100% is the movements in the commodity price of almonds. But then you've got the things which Select Harvests does above that. And so particularly that there are 2 things that are critical for that. One is obviously our sell price, and I spoke about $8 million, but that bar would be made up of the premium that we've got over the global market position. And then another chunk of it, which we haven't broken out, is our ability to sort and pack product for the highest possible value. So you've got a couple of things that are sitting in that price bar, which are beyond the impact of the commodity price changes, but you're 100% correct that commodity price change is a very significant determinant of how the numbers flow through in terms of the profitability of the business. To your second point about bees, that is a super question. The biggest challenge around bees relates to South Australia, if I was to put a geographic boundary on it. So with Varroa mite, the Australian government has moved to treating Varroa mite as something that's in place and it's got a managed response to it. South Australia is slightly unique because in some respects -- and by managed response, what that means is they're accepting that Varroa mites in the Australian geography and it's about how is it best managed. And so there's some protocols around that. But South Australia has, if you like, been of the view that it is Varroa mite-free and therefore, is trying to structure itself to stay that way. And as a result, it has effectively put up a border between South Australia and the rest of Australia to prevent bees being able to travel from, say, New South Wales or Victoria into South Australia as they undergo a very significant evaluation and testing regime. The result of that is, I think not only for almonds, but more broadly across South Australian, there's an issue where there is not enough bees locally within South Australia relative to the demand requirement, and that's certainly true for almonds. So the Select Harvests response to that has been that for the bloom that we've just been through, we did some scrambling where we -- and I spoke about mobilizing. But in effect, what we did was we took some bees out of Queensland, went through a very rigorous process to get those bees authorized to move into South Australia. And the other thing that we did, which no other player did, we sourced bees out of Western Australia. And Western Australia is Varroa mite free. So actually bees can effectively transfer from WA to South Australia reasonably comfortably. And so we've got this mechanism that has us trying to work with our existing bees suppliers for the way that we would normally source bees. And then we've extended out of that to find ways to try and bring them out of Queensland, but also Western Australia and more importantly, Western Australia as a go-forward position. So we're now doing some work for the next bloom period where we're trying to make sure that we have got more security around these. And particularly, we are in the process of looking to purchase bees. We historically have not been a bee owner, but we are trying to source bees out of Western Australia as the majority of those bees so that we can bring them to South Australia and ensure that we're protected for the coming season. So there's a lot of activity going on around bee management to ensure that because the effect of not having bees is a major event for Select Harvests and in fact, any almond growers because it means you won't be able to pollinate across your various varieties. So it's a big deal event. And so we have put some really significant energy and activity solving for it. Andrew Angus: Thanks, David. Look, we're going to have to wind up. We've got a couple of outstanding questions, which I'll follow up separately, but we are due somewhere in 5 minutes. So I think it's probably time to end. David Surveyor: Okay. Well, perhaps I might conclude simply by thanking everyone for attending and participating. We appreciate getting the questions, and we hope you found our 2025 results presentation useful. Thank you. Bye-bye.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to Alarum Technologies Third Quarter 2025 Earnings Results Conference Call. [Operator Instructions] This conference is being recorded. I will now turn the call over to Kenny Green, Investor Relations at Alarum. Kenny, please go ahead. Kenny Green: Thank you. Good day to all of you, and welcome to Alarum's conference call to discuss the results of the third quarter of 2025. I would like to thank management for hosting this call. Today, we are joined by Shachar Daniel, Alarum's CEO; and Shai Avnit, CFO. Shachar will begin the call with an overview of the third quarter, followed by Shai, who will review key elements of the financials. Finally, we will open the call to our question-and-answer session. Before we get started, I want to highlight the forward-looking statements disclaimer. This conference call may contain, in addition to historical information, forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal security laws. Forward-looking statements include statements about plans, objectives, goals, strategies, future performance and underlying assumptions and other statements that are different than historical facts. For example, when we discuss our strategy of prioritizing long-term relationships and market share capture over short-term margins and profitability, expected trends in market demand and AI-driven growth, our business momentum and pipeline, our expectations regarding future revenue patterns and margin improvements, the anticipated impact of our strategic investments and product mix and our estimates regarding fourth quarter 2025 revenues and adjusted EBITDA, we are using forward-looking statements. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that may result in expectations not being realized and may cause actual outcomes to differ materially from expectations reflected in these forward-looking statements. Potential risks and uncertainties include those discussed under the heading Risk Factors in Alarum's annual report on Form 20-F filed with the SEC on March 20, 2025, and in any subsequent filings with the SEC. All such forward-looking statements whether written or oral, made on behalf of the company are especially qualified by these cautionary statements, as such, forward-looking statements are subject to risks and uncertainties, and we caution you not to place undue reliance on these. On the call, the company will also present non-IFRS key business metrics. The non-IFRS key business metrics the company use our EBITDA and adjusted EBITDA, non-IFRS gross margin, non-IFRS net profit or loss and non-IFRS basic earnings or loss per share or EPS. The exact definitions and reconciliations of these non-IFRS key business metrics are described in the company's financial results press release, which is available in the investor lobby of Alarum's website. These measures may differ materially from similarly titled measures used by other companies and should not be considered in isolation from or as a substitute for financial information prepared in accordance with IFRS. And now I'd like to turn the call over to Mr. Shachar Daniel, Alarum's, CEO. Alarum -- Shachar, please go ahead. Shachar Daniel: Thank you, Kenny, and good morning, everyone. Thank you for joining us. Let me start with the headline. Q3 was a breakout quarter, $13 million in revenues, up 81% year-over-year and 48% sequentially. This is one of the strongest quarters ever in Alarum's history and clear evidence that our platform has begun critical infrastructure for some of the world's leading and most exciting AI labs and global technology companies. This significant jump was driven by increased consumption from major AI customers, continued expansion within existing enterprise accounts and strong adoption of our newer AI-centric products. During the quarter quarter we saw 26% more paying customers, 17% higher average revenue per customer and 48% sequential revenue growth. While our largest customers contributed just over 1/4 of our revenues and our top two contributed just over 40% growth was growth based. We also continue to see significant traction from our major global e-commerce platforms in Asia, which faced repeat and expanding orders, despite the natural volatility of this yearly hyper growth phase of the AI market, we are confident that demand is broadening and growing sharply, and AI will be a core long-term and significant growth engine for us. Profitability. As we noted last quarter, our gross margin will see a short-term impact by the mix of our two very large customers, both globally recognized brands operating at extraordinary scale. There's significant consumption at the start of significant work with them naturally comes with our -- with lower unit pricings, and for us, higher initial infrastructure costs. Part of our delivery for these customers only at the early and initial stages of delivery relies on third-party partners and those costs flew directly into cost of revenue. That said, these customers validate the strength of our technology, reinforce our ability to deliver data at native scale and represent significant long-term strategic upside. Earlier this year, given the strong potential we saw, we made the delivery decision to aggressively expand capacity at premium residential infrastructure and build dedicated high throughput pipeline ahead of revenue. And this front-loaded investments are the primary reason for the temporary pressure on margins. And importantly, I strongly believe that this is exactly the right long-term strategy. While remaining profitable overall, we are sacrificing some near-term profitability to strongly capture market share and secure more relationship in the segment growing several hundred percent year-over-year. Looking ahead, margin improvement. This margin pressure is short-term planned and fully addressable. Several initiatives are already underway and are part of our strategy: one, in-house solutions. Our goal is to serve as the customers' leading and most reliable provider. To achieve this, we leverage our deep market expertise and long-standing relationships with numerous vendors. And sometimes when needed, we select a partner to collaborate with. And once we validate continued demand for the specific product, we will either develop it in-house, alternative or consider acquiring the solution. This approach will allow us to enhance our capabilities at lower risk and ensuring demand while significantly improving our gross margins over time. Two, network optimization. We're identifying large optimization opportunities across our service and network architecture. Improved efficiencies have already begun and will continue to improve over time. Three, shift toward higher-value products. As dataset, scrapers and website unblockers grew as a percentage of the revenue, unit economics and margins will improve also. We remain confident in our ability to expand both growth and operating margins as our product mix continues to shift and our infrastructure becomes more efficient. AI market dynamics. We are operating at the frontier of the largest AI model training runs on the planet. At this stage of the AI build-out, demand from leading labs can move sharply quarter-to-quarter a day; one, refresh massive data sets; two, test new architectures or shift compute priorities. This volatility is normal in a market that is still in a land grab phase. As models move from research to more structured production and fine-tuning cycles, revenue patterns will naturally become smoother and more predictable. Until then, our major KPIs are year-over-year trends, penetration and quality of relationships. Across all these three, we have never been stronger. Product suite expansion. Our AI-strengthening product suite is scaling rapidly. Dataset and material and fast-growing revenue contributor. Website Unblocker delivered triple-digit sequential growth. Custom scrapers delivered high double-digit sequential growth. IP proxy network stable to growing in absolute terms and continues to support massive AI workloads. Our revenue mix is evolving from a single product proxy business into a diversified multiproduct data infrastructure platform. This shift is expected to drive stronger long-term margins and healthier unit economics. Outlook and summary. We remain confident that we are in the right position at the early stages of a massive and long-lasting transformation in the data industry. Looking ahead to Q4, and as Shai will detail shortly, we expect revenues approximately of $12 million plus minus 7%, which is up a very significant 62% year-over-year and will allow us to end the year at around $41 million in revenues, up almost 30% year-over-year and well ahead of our internal expectations earlier in 2025. From global tech leaders to fast-growing start-ups, all are increasing their reliance on high-quality real-time public web data at unprecedented scale, and Alarum is uniquely positioned to serve this market. Our vision was and remain clear. Alarum will become one of the foundation data infrastructuring companies powering the AI area. I will now hand it over to Shai for the financial details and our Q4 outlook. Shai? Shai Avnit: Thank you, Shachar, and hello, everyone. I will start by reviewing our key financial results for the third quarter of 2025, comparing them to the same period last year, unless otherwise noted. Following that, I will provide our guidance for the fourth quarter of 2025. Detailed definitions and reconciliations of our non-IFRS key business metrics can be found in our Q3 2025 financial results press release. And one final note before I begin, the figures I will be discussing are rounded for clarity and ease of reference. Turning now to our financial performance and first revenues. Revenues in the third quarter of 2025 reached $13 million compared to with $7.2 million in the third quarter of 2024, an increase of approximately 84% year-over-year. As Shachar mentioned, the increase was driven mainly by artificial intelligence customers with a significant contribution from one large-scale AI customer, which accounted for about $3.5 million in revenue in the quarter. At the same time, we continue to see a shift in customer segments with strong growth in the AI vertical, offsetting declines in other segments. Gross margins. As a result of our increased investments into our business to capture opportunities ahead and due to the higher share of large-scale projects with AR customers, non-IFRS gross margins for the third quarter of 2025 was 56% compared to 74% in the third quarter of 2024. As Shachar mentioned, the lower margin reflects the work we are doing with large customers, mainly AI companies, which require data gathering at significantly higher scales, necessitating upfront costs, including a larger volume of servers and stronger, higher quality infrastructure as well as lower unit price charges. In addition, the first material products served in 2025 triggered related third-party costs. Overall, this is consistent with our strategy to engage in large scale, high strategic opportunities that we believe can drive meaningful long-term growth and profitability even at the cost of lower short-term margins that we expect to improve in the future. Expenses. Operating expenses in the third quarter of 2025 were $7.4 million compared to $4.1 million in the third quarter of 2024. The increase was driven mainly by planned operating expenses investments that we discussed last quarter. This includes higher employee-related costs, particularly in R&D and sales-related compensation as we continue to grow the team to accelerate product development, expand our capabilities as well as by the overall increase in the scale of operations. Net profit in the third quarter of 2025 was $0.1 million compared to a net profit of $4.2 million in the third quarter of 2024. As a reminder, the Q3 2024 profit was particularly high due to a sharp fair value decreases of investors' warrants related to the share price decreases in the quarter. Those decreases resulted in high financial income of $3.5 million. The vast majority of the warrants expired in 2025, and hence, they do not impact our bottom line anymore. Adjusted EBITDA. Adjusted EBITA in the third quarter 2025 was $1.2 million compared to $1.4 million in the third quarter of 2024. Basic earnings per ADS in the third quarter of 2025 were $0.01 compared to $0.60 in the third quarter of 2024. The high Q3 2024 figure was a result of the onetime financial income I just mentioned. On a non-IFRS basis, basic earnings per ADS were $0.18 in the third quarter of 2025 compared to $0.20 in the third quarter of 2024. Our current share count is approximately 71.2 million ordinary shares or 7.1 million U.S. listed ADSs. As of September 30, 2025, the company's shareholders' equity increased to $31.1 million, up from $26.4 million on December 31, 2024. Our cash, cash equivalents and debt investment balance, including accrued interest as of September 30, 2025, was approximately $24.6 million compared with $25 million at the end of 2024. Alarum's solid cash position supports our ability to continue investing strategically while maintaining a focus on sustainable value creation. Guidance. Moving over to our outlook for the fourth quarter of 2025. Our guidance reflects what we see today based on customers' orders, backlog and current consumption trends and is given as of today's date. We currently expect that in the fourth quarter of 2025, revenue will be around $12 million with an up and down range of approximately 7%, representing about 63% year-over-year growth. Adjusted EBITDA for the fourth quarter of 2025 is expected to be around $1 million with a range of plus/minus $0.5 million. To summarize, 2025 continues to be a year of strong momentum, a solid balance sheet and growing market interest. We remain focused on our commitment to generating long-term sustainable value for all our stakeholders. With that, we will now open the call for questions. Operator? Operator: [Operator Instructions] Our first question is from Brian Kinstlinger with Alliance Global Partners. Brian Kinstlinger: Can you talk about the large project for data set delivery? How is the program going? What's customer satisfaction like? And how should we think about the consistency from this customer in terms of revenue contribution over the next 12 to 18 months? Shachar Daniel: Okay. Hi, Brian. So first of all, a smaller correction, it's not a project, yes. It's a demand for one of our products, which is -- in this specific case, it's a combination between a scraper and data set. And this demand is a natural demand in our space, like many other customers that have their own needs of some of our products. This specific, let's call it, customer consumption is huge from the volume aspect. And of course, it's taking a significant portion of our revenues. So that's why we can talk about it specifically. Now regarding your question for the future. So as I mentioned, I think, a few times in the last period and periods in plural and also in my pitch a few minutes ago, you know we can divide the world of data needs and data collection at this stage to let's say, to -- we can classify to two groups. One is the group of customers that are using the data and the data needs for their -- in the production stages. They are selling their products, they're selling their analytics to customers and working more or less, they are stable more or less, and we know the need, we know the need for the coming period, and we can predict the future. The second is customers or our customers that are basically in the, let's call it, in the R&D stage, which are developing their LLM and their AI models. In this stage, their needs basically can change often. They can change from month to month, so it can change sometimes from week to week because they are in the stage of developing their model. And as you know, in many other spaces when you are in the R&D stage, you don't have -- you as the company, as a customer, you don't have a real prediction, what is the amount of data that you will need from this or that source, what is the duration? Things are changing often, websites are changing the way they are acting very often. And according to this, their needs and their demand can be changed sometimes on a weekly basis, sometimes on a monthly basis and sometimes it can go for a long time. But to be very honest and transparent, we don't have, and I think our customers, basically don't have reliable information that they can share or I can share with you regarding the future of this or that use case product need, et cetera. The third question is how -- for this point of time, the level of satisfaction is high. We are providing a huge amount of data for these customers and others, the rotation -- the retention is good, and we're in a very good position from this aspect with this customer and some others. Brian Kinstlinger: Do you see once R&D customers have developed their models that usage is higher or lower or just more predictable? Shachar Daniel: Okay. So I think that we can divide it I think maybe to two phases, one phase is in the education stage when they are educating the model, they need a huge amount of data in a very short time. And then when it comes to the stage of production, let's call it, the production stage, then they will use maybe the same amount of data, but it will not be on a short time, they will divide it over the quarters and over the time. The second thing, which is even more important is that the data sources, meaning -- even if you finish to educate your model from one data source, and you go to production stage, then the next big thing is coming. And now you want to train him about this specific vertical or this specific area. And then again, you will get into the cycle of downloading a massive -- a huge amount of data and then go to something that is more sustainable. So I cannot say now it will be higher or lower, but I think that it will be more sustainable. And in this way, we can be -- we can predict, and we can be more accurate in our predictions for the long future. Brian Kinstlinger: And then as you've had this announcement and success here, can you talk about what the pipeline to sell this new dataset delivery solution is to other customers? Shachar Daniel: So that -- what was the first part of your question, Brian? Brian Kinstlinger: Yes, yes. You've got this customer that you're delivering large data sets to. It's a new solution for you. What's the pipeline to sell this solution to other customers? Shachar Daniel: Okay. So it's not the pipeline. We already have some other customers that we are leveraging this product and these capabilities to other customers, which are smaller, not -- it doesn't have to be smaller customers, it's -- their need is at this point of time is smaller again because it's in the R&D stage. So basically, they are in a different stage. So now they need a lower amount of data, but it doesn't say -- it says nothing about the future because they can ramp up very fast and increase the demand. So first of all, we have current -- other current customers that are using this data. And second, we have a few others in the pipeline for this specific data set or for other data sets or for the scrapers, the unblocker and other products that we started to see a great ROI from them in this quarter. Brian Kinstlinger: Okay. And then as revenue scales and maybe you have less reliance on partners for data set delivery, how should we think about the gross margin recovering as you've used the word temporary pressure on gross margins. And as part of that, what volume would you need maybe -- that would trigger more investments in infrastructure and capacity, and how do you think about the recovery long term in pricing or unit economics? Shachar Daniel: Okay. Let's start from your -- the first part of your question. So basically, if we simulate a situation in this quarter that we wouldn't use any third-party vendors and all of the solutions were in-house. So basically, you could see the gross margin something between almost a 70% gross margin, okay? If we simulate exactly the same situation in this quarter. Now -- but let's say, I want to emphasize something that is very important. The world of data collection and data scraping and the data sets has a huge variety of product capabilities and needs. And for us, I think it's too risky to start and develop everything internally before we see the real demand unless we can predict a real demand coming very soon. So in this way because we have hundreds of customers that basically are by themselves are scraping companies, data set companies, we are leveraging the fact that we have the approach and the door to these customers. And if something is coming in, let's say, a current customer that is asking -- existing customer that is asking from us a capability or a need that we don't have it right now, so we will use this third-party white label solution, then we will stay with the major vendor, we will have the control in our hand, and if we see that the demand is sustainable, is here to stay and some more other customers have this need, we can very fast develop it internally or vice versa or to buy even to as a kind of acquisition to acquire this vendor or this solution. In this way, we mitigate risks because we mitigate expenses of R&D and solutions that maybe we don't have -- will not have a demand. We are leveraging the fact that we have basically approached to all the markets. And the downside is that you will see -- you can see sometimes if we use this approach, again, for example, you can see the impact on the gross margin and, of course, on the EBITDA. So this is, I think, my answer for the first part of your question. Can you repeat what was the other part, Brian? Brian Kinstlinger: Yes. I'm wondering when -- yes, it sounds like pricing is a little low. So when will -- when and how do you think about the unit economics, which is what I assume pricing is, when is that improving? And are you using -- to your response of the other answer, are you going to be using heavy load of third party in the fourth quarter? Shachar Daniel: Lower, first of all, lower even we are -- now at this date, we are -- we have our own, for example, our own internal solution that we are testing it even in production stage. So it will be lower. And so it might -- even in this quarter, we can see this in Q4, we can see the improvement. And hopefully, if everything goes well, and the demand this year in the next quarter, it will be a material improvement. And second thing, regarding the unit price. So I think that as time is running, it looks like that we talked about in your previous question, the need or the demand from this kind of customers even -- maybe will go down from the size and volume. And of course, directly the unit price will go up. Second thing, it looks like that for this amount, we will see a lot of small players that are basically competing are kind of competitors now will not be able to stay in the game because what stands behind this huge amount of data is an infrastructure with global coverage and millions and millions of endpoints that need to be changed or replaced all the time in order to be preventing from blocking by the website. So at this point, I think that we will stay only the leaders, and then naturally, it might make the price per unit go up a little bit. But still, in these amounts, which is not bad, by the way, it's not bad. It's not a bad thing, but the more important thing is to make our infrastructure as we're talking about third parties, our servers, our -- all the DevOps behind our company to make it more and more efficient. And by this, by the way, to decrease the cost of goods and to improve the gross margins because naturally, when volumes are going up, unit price is going down. It's okay, it's good. It's a good thing. And if you know how to adapt the cost of goods behind, then you can be in a very good situation. Operator: [Operator Instructions] With no further questions, I would like to turn the conference back over to Mr. Daniel for closing comments. Shachar Daniel: Okay. So thank you very much for joining us for this third quarter investors call, it was a pleasure, and hope to see you next quarter and hope Alarum will keep the delivery and the amazing achievements to achieve till now. Thank you very much. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
Kenton Jarvis: Well, hello, everybody, and welcome to easyJet's Full Year Presentation for the period ending 30th of September 2025. I'm joined today by my full management Board on the front row here. So please feel free to ask them questions either after the event or in the Q&A session that we'll have. We also loaded a presentation first thing this morning on to the website. Hopefully, you've had a chance to look at that presentation. But if you haven't, I will give you the key highlights of it now, and then we'll go straight to Q&A, so we have a good amount of time for your questions. So we're very pleased to announce our third consecutive year of earnings growth. From a PBT perspective, that was a 9% increase to GBP 665 million. But actually from an operational performance before financing, so EBIT, we saw an 18% improvement with GBP 56 million of that improvement in EBIT coming from holidays and GBP 50 million of that improvement coming from the airline. On holidays, we had a very successful year for holidays. We were able to reach the GBP 250 million medium-term target that we set just 2 years ago, and we did that ahead of schedule. There was strong customer growth. We saw a 20% increase in packaged holiday customers. We also had a 32% increase in profit due to the very low fixed overhead base of that business. We were also really pleased with the proactive actions that we took when it came to resilience measures. to set up for the busy summer. We knew air traffic control was a problem. We knew it would be a bigger problem over French airspace, which we're particularly exposed to. And therefore, we wanted to get in front of that and did a lot of measures to do that, and we're very pleased with the performance. We saw a 3% increase in on-time performance and even more pleasing, a 4% increase in customer satisfaction. And at 80%, that's the highest level that we have had in over a decade. So a very strong performance despite the problems that still existed over French airspace. Moving on to the balance sheet. Our owned asset position has increased to GBP 4.8 billion now in terms of owned aircraft, and we expect that to increase to over GBP 7.5 billion by full year '28 as we see the neo aircraft family deliveries really ramp up. When it comes to net cash, we improved our net cash position to GBP 602 million. And that really is important along with the enhanced liquidity that we carry because that will help prefinance a lot of these aircraft orders that we're going to be getting over the next 3 years. I'd also like to highlight that our return on capital employed reached 18% from just 13% when we set the target. So now we're operating in the range that we were seeking to do as a high-teen return on capital. So that moved nicely for us. And following the success, we know that the upgauging journey is still in front of us. We started full year '25 with 82 A319s, and we finished with 82 A319s, but because we only had 9 deliveries and we took those into growth. So we're now looking forward to those increased Airbus deliveries, 17 next year, 30 the year after and 43 the year after that, so we can really start moving and upgauging the fleet and retiring the older less fuel-efficient A319s. And we would expect about 60% of those to go over the next 3 years by full year '28, and that will deliver the majority of the GBP 3 per seat benefit that we've been talking about. And following the success of easyJet holidays, we've upgraded that target to GBP 450 million by full year '30. And Garry and his management team are going to be holding a seminar in Luton head office in Capability Green on Friday, where they'll unpack how they're going to do that. But I'm sure you'll have a couple of questions anyway for Gary at the end of this presentation. As we look forward to winter, we have to admit that we're finding the reduction of winter losses more challenging than we originally hoped. We put a lot of capacity and productivity into this winter, and that did yield cost benefits. Our unit costs came down. We saw aircraft productivity utilization increased 5%. We saw crew productivity increase 6%. But what we have to remember is when we put those new routes on and we put that capacity on, that is an investment that the airline is making, and that takes typically 2 to 3 years to mature, which is what it's probably going to take because it's a slightly lower demand position in the winter. The other factor, which is why it's a little slower than we anticipated, is the fact that there are still 2 wars happening in our network. That means that in the Middle East, we haven't returned to Tel Aviv. We're no longer flying to Jordan, for instance. And many carriers have substantially reduced their capacity in those areas, which has put more capacity into the old favorites like the Canaries and Mainland Spain, Malaga, Alicante and therefore, more competition. But we really expect that to mature as we go forward. We saw a maturing of our domestic routes after we increased capacity following the reduction in domestic APD in 2023. Margins suffered a little bit, but now we have a very well-performing domestic program, and we're seeing some of that profitability return to cities as well. But that cost of investment sits with the airline. Obviously, from holidays, they benefit from the increased winter sun destinations. They benefit from a better schedule into cities for city breaks and immediately start selling into that, immediately start making profit because of their cost-plus business model. The airline, however, whilst we get the cost benefits upfront, it takes a little longer to get the revenue maturity benefits, but we're confident they come through. And the other thing we're mindful of for the winter ahead is our investment in Linate and Fiumicino. We're really happy to be able to get these slots in Linate. They don't come up very often. They've only come about because of the acquisition of the Lufthansa Group of ITA. And we placed 5 aircraft there and 3 in Fiumicino, which is a popular destination for us. But we know that it will take time for that to mature. We're having to fly the remedy routes that came along with that, and we know that the new routes will take time to mature, but we're very confident that we expect Linate to have the same profit characteristics as someone like Orly, which does very well in our network, but will take 2 to 3 years to mature to deliver that. So with all of that in mind, we still remain very confident of our ability to deliver to the GBP 1 billion target. And now 2 years ago, we were making that statement from a GBP 427 million profit base. Now we're making that statement from a GBP 665 million profit base. If we step back and look over the last couple of years since we set the medium-term targets, this is a slide I naturally love. It shows the progress we've made on every front. When it comes to our product range, we've had 13% more routes, and that is attracting customers and allowing us to grow. where more customers are choosing easyJet Holidays as their package provider. Originally, that was mainly coming from the airline. Now more and more, we're winning those customers from competitors, and you can see that in the competitor data. You can also see that in our growth of market share from 5% to 10%. And the focus on resilience measures really came through with almost more than I was hoping for a real tangible benefit in terms of the customer satisfaction scores, and that's so important for the brand going forward. So all of these key measures will help strengthen the long-term success for easyJet. So in summary, we're well positioned to capture the growth opportunities that lie in the years ahead. We're confident that if we execute well on our strategy alongside a continued disciplined approach on capital allocation that, that will drive us towards the medium-term targets and then beyond. Our asset-light easyJet holidays model is now going into a second phase of its development. We're looking to increase that U.K. beach market share from 10% and challenge the #1 and #2 in the market. We're starting to work much harder on the European expansion, and we're seeing good early signs of that. The city proposition is coming through nicely. So Gary can talk about all the activities that underpin the confidence that we can increase our targets up to GBP 450 million. And the neos are coming. We've seen a consistency from Airbus. The supply chain difficulties seem to be unblocking a bit. And last year, we said we're expecting 9 aircraft in full year '25. We got them. And we said then it goes GBP 17, 30, 43. A year later, we're still saying GBP 17, 30, 43. So Airbus haven't moved that schedule. So we're growing in confidence that upgauging will come through. And we know from the aircraft that we have replaced so far that, that is a GBP 10 benefit when a 320neo replaces a 319 or a GBP 16 per seat benefit when a 321 replaces a 319. And obviously, when you're making profit of GBP 6.40 roughly, those are big numbers in terms of a reduction in the cost for those aircraft we're flying. With all these levers and with one of the strongest balance sheet, investment-grade balance sheets in the industry, I think we're well positioned to push forward. And we firmly believe as a management team, if we focus on this execution, then over the medium and long term, we will provide very attractive shareholder returns. So many opportunities in front, very excited about the future and the potential for easyJet, and we'll go open to questions, Adrian? James Hollins: It's James Hollins from BNP Paribas. I'll save any holidays questions to visiting Gary Wilson Towers on Friday. So 3, if I may. First of all, on kind of holidays the airlines, it's quite sort of noteworthy that airlines was, I think, flattish PBT, all the growth is coming from holidays. Maybe sort of run us through kind of the airline-specific headwinds. And I think more importantly, how that plays out as we look at full year '26 before the upgauge story kicks in for the airline? Secondly, Jan, on your little video there earlier, you clearly noticed some cost efficiencies targets or cost efficiencies program. Maybe run us through in a bit more detail how you're seeing a potential cost program? Any quantification timing? Or am I just overstating it? And then thirdly, I think probably for you as well, Jan, any sort of -- is there any lease repurchase gains being incorporated into your full year '26 unit cost guidance? Kenton Jarvis: Okay. Well, I'll take the first one and then Jan can take the second 2. When it comes to profitability and airline versus holidays, as you put it, I think the first thing to say is we very much think of ourselves as a group, and it's a group target that we're all focused on pursuing. So we have a group target to deliver GBP 1 billion in profit before tax. We've seen good progression for the last 2 years. I probably leave it on that slide, shouldn't I -- there we go. We've seen good progression for the last 2 years, and we're confident we can keep progressing. Now it's fair to say that the PBT development, which was an improvement of GBP 55 million was GBP 60 million airline and GBP 5 million negative for the -- sorry, GBP 5 million negative for the airline and GBP 60 million for holidays. But when you look at it at an EBIT level, you can see a much more even spread. We increased our EBIT by GBP 106 million, GBP 56 million was holidays, GBP 50 million the airline. And what you've got to remember is, as a group, the airline bears the cost of the expansion. When we establish a new route, it's the airline that will get the productivity benefits. But equally, it's the airline will have to wait for the route maturity. EasyJet Holidays gets to sell straight into that additional capacity, especially if we've been putting it in regional U.K., which we have. And when we look at the interest costs, which are then the financing costs, which is the delta between the PBT development and the EBIT development, there's 3 main reasons there. Firstly, the GBP 3 billion, GBP 3.5 billion of cash we're carrying, the interest rate environment is lowered. So we're getting less income on the monies we're carrying there. Secondly, we retired of GBP 0.5 billion bond during the year. That was taken out many years ago at very low interest rates and the cash we had on deposit was earning greater interest rates than the bond that we're servicing, but we retired that. So that had an impact. And the third reason is we anniversaried the bond we took out in March '24 and therefore, had the impact of that. There also any FX exchange rate on the balance sheet, I think that was a hit this year of GBP 13 million, GBP 14 million year-on-year. That goes through that financing line as well. So the actual underlying performance moved forward for both airlines and holidays. Also, I'd point out that the opportunities in front of us Gary will talk you through the many opportunities he sees for holidays, but the upgauging is a great opportunity for the airline because that will allow us to deliver -- have a lower cost of production, which will sit in the airline that benefit as that comes through. Equally, the opportunity to fly back into the Middle East, which we're hoping to start up again in kind of this summer from certain destinations. It won't be anything like the volume it once was until that builds progressively over time, but that is a good destination in the winter. Jordan is a good destination in the winter. And not only will that be a profitable destination for us, but it will also take some of the pressure off the canaries, which have been taking -- which has been the alternate for so many destination choices, which are currently removed with 2 wars in the network right now. And hopefully, as French air traffic controllers get finally recruited, we'll see an improvement in that air traffic control space. We will maintain our investment in that space for as long as we need to. But then there should be some unwinding over time as we see a naturally improved performance. We haven't seen that yet, so we're going to keep the customer experience as high as we can until such a time comes. But that's really -- so I don't really see a big delta between the performance because underlying performance increased nicely for both. Jan? Jan De Raeymaeker: All right. Well, on the cost performance, I think, first of all, I think we had a good cost performance in 2025, which CASK going down 3%, of course, benefited by positive fuel throughout the year, but ex fuel CASK was down 1%. That was made possible because of increased productivity, especially through more winter flying on longer sectors, but also a very good operational performance with lower disruption costs and overall increased frequency efficiencies. That, of course, was offsetting the inflation that we're experiencing like any airline is currently experiencing. For next year, we expect CASK to moderately grow as we will benefit from lower fuel costs, which will then be offset by further productivity gains, but offset, of course, by the continued high inflation throughout the year. We will continue to invest also in additional resilience measures because we don't expect really a substantial impact of further improvement of ATC delays. And that does not take into account any potential benefit of any upgauging. Like Kenton said, we are only retiring 3 aircraft next year. So that means if you look at the GBP 3 per seat improvement that we're expecting over time, only GBP 0.25 has been realized so far, and we're still GBP 2.75 ahead beyond 2027. So if you look at cost actions for the future and what we're expecting, well, I think, firstly, I do expect further cost improvements possible. One, the upgauging definitely is the most important one, not in 2026, but rather beyond 2027. Ownership costs will definitely go down. I'll come back to that. But linked to the aircraft buybacks that we have done in 2025, we've done that because the ownership costs will go down. And if new opportunities will arise, we'll obviously work on them. Thirdly, we're further improving productivity, and there is work ongoing to see how we can further improve productivity by improving our network schedule, improving seasonality, looking at day of week improvements and just also improvement in our way of working and investing in new tools to make sure that we are more efficient. And we are also continuing to invest in all potential capabilities, whether it's operational, commercial or just enterprise IT investments, just making sure that we are more efficient in everything that we do. And to be honest, we are a low-cost company. And I think when we had a fire chat with Stelios, he said one of the things we should never lose is our low-cost DNA. And so continuing to tighten the screws everywhere is something that we're doing every day. So I think still opportunities to reduce cost and focusing on that every day. So that's on that. Your second question is whether or not we expect further ownership costs linked to potential buybacks. So first of all, we do expect cost reductions linked to the buybacks. So next to the 9 aircraft that we took -- the new aircraft that we took into ownership this year through cash, we had the opportunity to buy back 8 newer -- well, 8 neos and newer ceos throughout the year. The reason why we've done that is that this provides a unique opportunity to get back those assets which were sold and leased back through the pandemic. It gives us better access and better control on strategic assets, first of all, which is important in a tight supply market. But secondly, it also allows you to reduce the ownership costs going forward. Now the flip side of that is that it does have a one-off release of the maintenance provisions given that we are not now the aircraft are under ownership, and we're not provisioning for future maintenance costs given that we take those costs when they occur. But the key benefit of it is that we are keeping those assets under own control and it does release or improve our ownership going forward. So for next year, so the reduction of that ownership cost has been taken into account. However, what we do not take into account is potential future buybacks. If ever there would be future opportunities, we will obviously look at them, but only if they have a positive impact in future ownership cost. Gerald Khoo: Gerald Khoo from Panmure Liberum. Three, if I can. I think others in the market have commented about a bias towards late bookings. Are you seeing anything similar? And are you seeing any sort of impact on booking behavior from the U.K. budget? Secondly, on the holidays, I think you managed a 5% improvement in average selling price. I was just wondering whether you could break that down in terms of what's going on between accommodation mix, duration and price. I think in the past, you talked about the push into city being dilutive to average selling price. And obviously, you're up 5%. I was just wondering where that's going. And finally, on the topic of lease buybacks, I can understand the benefits to easyJet. Why are the leasing companies willing to park company with lot of good assets and with a good airline? Kenton Jarvis: I'll take the first one and then start handing them out. We do see a strong late booking trend. We have -- I don't think it's to do with the budget. To be honest, it's been running for about a year now. As we enter the late, it's been a strong booking period. The only time we didn't really see it was during our second quarter of this year. But all other months, we've seen a stronger late booking trend. However, we also see a strong early booking trend. So it's becoming a little bit polarized. So people are going out, securing what they want early, but people are also comfortable taking their -- booking their trips later. And you can see that in our Q1, where we're 81% sold, but 2 percentage points ahead year-on-year in Q2 earlier, but 26% sold and again, 1% ahead. easyJet Holidays, an impressive 20% growth last year, looking like a -- we're forecasting a 15% growth this year, but H1 is already 80% sold for the whole of the first half with good growth. So we still see the consumer there. We still see the consumer buying. In terms of the pricing, we're seeing it kind of starting to sequentially improve. So our fourth quarter pricing was probably about minus 2%. We're looking at the first quarter of minus 1%, maybe slightly better. And then as we go into Q2, pricing is ahead year-on-year. So we're starting to see that steady sequential improvement. And then we delivered a very strong summer this year, another record summer ironically. And so we look to continue to build because summer keeps showing the characteristics of a market with less demand than supply -- sorry, less supply than demand, even though we saw a bit of a heat wave in the actual summer months, it still yielded a very positive summer. So it looks again like demand sits firmly above supply when it comes to the summer for airlines. So let's go to Gary for holiday pricing and any mix that he sees. Garry Wilson: Yes, on the holidays pricing, the 5%, how we break it down, we saw a lot more activity in the late market and particularly from the traditional operators who clearly had committed to too much capacity. So there was a real aggression in the late market where they were pulling prices down. Now one of the benefits that gave us being fully variable is that the hoteliers who didn't have those committed beds were really active in reducing their prices because they were seeing that was hitting their occupancy. So we actually did quite well in terms of moving our margin from 12% to 13% while still having a 5% increase. And that would probably drive the number of 20% volume increase, which we talked about 25% some months before that, but we took the conscious decision that where we could get enhanced margins, we were better doing that than try and participate in some of the kind of crazy activity that some of our competitors were doing in the market. So we're really happy with how that played out. Kenton Jarvis: And why are people leasing back? Garry Wilson: Well, first of all, so far, as I know, I'm not working for leasing companies, so I can't really tell you what they are thinking about, but I'll try to put myself in their shoes. Well, first of all, important to note is that the partners we're working with, these are long-term partners so that we are really working with them on the long term and not on the short term. Two, I think over the past years that they had a good run on the leasings that we have with them would be the second reason. The third one is given that now the leases are getting closer to the end, I think probably for leasing companies, easier or better to have certainty about what's going to happen with the assets rather than having the uncertainty for the coming years. And finally, I suppose it also generates or liberates a part of the cash that they probably can reuse to invest in something else would be my GBP 0.50 not working for a leasing company. Kenton Jarvis: But yes, I mean, Gerald, in the pandemic, it was 2020 that these were taken out. The majority were 10-year leases. So it has been a good run, 6 years under the belt, but they're starting to think, well, they probably won't maintain them at that lease rate. I don't know if you remember when I first started, I talked about the amount those costs have gone up by. It was quite breathtaking. So it's been a good run, and we're getting them back and seeing a forward benefit in the P&L. Harry Gowers: It's Harry Gowers from JPMorgan. A couple of questions. Ken, you talked about some of the route maturity benefits from the capacity growth maybe taking a little bit longer than anticipated. Is that referring to Linate and Rome as well? And has the investment there been a little bit steeper maybe than you had previously expected? Second question, what sort of number or range should we be thinking about at the moment for the winter PBT losses? And then the last one, just thoughts on the Jet2 entry into Gatwick. Do you think this will need any kind of competitive response at all from easyJet on the airlines or the holidays side? Kenton Jarvis: I'll take 2 and 3 and let Sophie take one, but I'll take them in that order. So Sophie can have a think about the route maturity. But yes, it would involve Linate and Fiumicino. Jet2 entering London Gatwick, I mean, we are very happy competing with Jet2 and do so right throughout the regional U.K. So in every airport in regional U.K. outside of Gatwick, we compete with Jet2. And that competition has seen us go from nothing to GBP 0.25 billion of profit for holidays, growing steadily and taking now 10% of the market share. So very happy to have them as a competitor. When it comes to London Gatwick, they will represent 2.8% share of that airport. We represent 44% share of that airport. So our frequency, our destination choice, the duration to which you'll be able to holiday over will obviously be far greater with easyJet, we also have a scale and a cost benefit in terms of operating out of London Gatwick. So again, hopefully, it will promote holidays even more in the area. But you got to remember, too, we have been there quite some time and with that kind of presence and some. And therefore, I think that will probably be a more natural battle than with easyJet, who have 44% market share. So comfortable with that. When it comes to the upcoming winter, I think what I'd say there is for the second quarter, we expect the RASK to improve, like I said, from minus 2% to just under or about minus 1% in the -- sorry, that's in the first quarter. In the second quarter, I would expect a sequential improvement on that. I'd expect actually RASK to improve year-on-year because we're seeing more strength, but it's very early. So 26% booked. We're not really guiding to that. But what we have said is we expect the investment in Linate and Fiumicino to be about GBP 30 million in the winter. It was about GBP 20 million in our first summer and thereafter, sequential improvement and within a number of years, expect that to be a highly profitable base because that has all the characteristics, but we're having to fly the remedy routes from the ITA Lufthansa acquisition. So think about 30 in terms of that Linate for material investment for winter. But in general, how are you seeing the route maturity across the network? Sophie Dekkers: Yes. I would say that overall route maturity is probably in line with expectations, to be honest. I think we've just got to recognize we put a lot of new capacity in for this winter that's coming into its first winter. So Rome Linate, we put on sale quite late for the summer. So it had a very short selling window because the easy decision came through very late, and we had to action it straight away. As Kenton said, a lot of that capacity is on remedy slots. So we have to operate those slots, those routes specific for 3 years. And so that's coming into its first winter. We've also got brand-new capacity in Southend, so that comes into its first winter as well. So where you're putting new capacity into completely new routes or new routes for easyJet, that generally takes longer than when you're adding frequencies to existing routes. So the majority of our winter growth on the fleet that we added this summer is on routes that is adding frequency into routes. But we do have to recognize we've got 8 aircraft on the Linate Rome remedy slots and 3 aircraft in Southend, and they're coming into their first winter, so that will take time to mature overall. And then just to pick up on the Jet2 point, Kenton talked about the market share. In terms of route network and reaction from us, I mean, their most frequent routes will be Palma, which will be daily from Gatwick. We do 6 a day from Gatwick. They do -- it will be 2 a week, we do 3 a day. So in terms of us taking any kind of action against that in terms of our own network, I don't think we need to because we already have such a huge amount of frequency on those routes versus Jet2. So I don't think we need to be too concerned about that. And as Kenton said, it's a very small amount of capacity versus the frequencies that we have in there. Kenton Jarvis: Yes. And for this winter, we still won't be flying into Jordan and Tel Aviv. But we fully expect the winter after to have the network shape back in place. Andrew Lobbenberg: It's Andrew from Barclays. Can I ask a little bit more coming back to Rome and Milan? Can you give us some color, you're talking about GBP 50 million losses here. I mean, how much of the losses are from the remedy routes? And how strong are the non-remedy routes? Or how are the non-remedy routes trending relative to your other basis or something, just so we can have the confidence that once you rid of these blessed remedy routes, how lovely can it be? Second question might come to the unit costs. I'm sure you've done the math. I'm sure I could do the math if I had a brain. But how much of your small increase in total unit costs, how does that unpack to nonfuel unit costs and the nonfuel unit costs, excluding the share aircraft buyback gains. And then, yes, so what's the real underlying ex-fuel unit cost for next year? And then just a final question, how are those engines on the neos behaving? Are they still troublesome? Or have you got the new clever bits retrofitted so they're behaving better for you already? Have they got some fancy retrofit, haven't they? Kenton Jarvis: Thank you, Andrew. We'll take them in the order. I don't know whether David wants to take the engine question. But we'll start with Sophie on Linate and Fiumicino. Sophie Dekkers: Yes. So in terms of the capacity, I would say the non-remedy routes are definitely performing better. A lot of the non-remedy routes, some of them we were already operating actually previously inbound. So some of the routes like we're operating Gatwick and Manchester Linate. So that's just building the capacity from an outbound market perspective. So those obviously are maturing anyway and those are performing well. When we were comparing routes that we operate out of Malpensa versus ones that we're operating out of Linate on a like-for-like route basis pre the acquisition of the additional slots. Linate did get a premium over and above what we were able to get from Malpensa, which was the reason why we saw this as a great opportunity to get into a very completely slot-constrained airport in Linate. So I would say it is the remedy routes that are the investment, and that's we're investing in, but we know that there's a price at the end of the tunnel because what we can see on the routes that aren't remedy routes and what we were historically operating in Linate were very strong performing routes. So we see that as the opportunity. And in Europe, it's worth mentioning, you can't buy from other airlines, whereas in the U.K., you can buy slots. So someone like Heathrow, I think historically, a slot pair at Heathrow would go for something like GBP 25 million or higher, Andrew's home now. But that's the sort of investment you'd have to make in the U.K. In Europe, you have to make the investment through remedy slots. So we see this as an equivalent remedy slot investment to be able to get capacity into a completely slot-constrained airport like Linate, where you can't purchase the slots, which we obviously record on a different line if we were purchasing them. So the investment is through the route growth and the remedy routes, which will, longer term, after 3 years, we can operate whatever we like on those routes. That's the opportunity that we're investing in now. Kenton Jarvis: Thank you, Sophie. On the cost front, I'll hand over to Jan. But I mean, what we're signaling at the top level of a modest increase in unit cost is what I'm seeing every airline signal. But I'll pass over to Jan. And remember, we don't get much in terms of upgauging next year. We only get 3 retirements of those 2 A319s. Jan De Raeymaeker: Yes. So on the CASK level, so we're expecting for next year a moderate CASK increase where we will be benefiting from a lower fuel cost, especially in H1, less pronounced in H2, which means that the ex-fuel CASK will go up. And coming to your question, how much will ownership costs reduce or how much is the one-off cost in 2025 impacting 2026? So first of all, the GBP 54 million release of maintenance provision in the total cost of GBP 9 billion, I would say, is marginal, first of all. Secondly, that GBP 54 million has been partially offset by other one-off costs like, for example, the ETS cost that we have had or lower supplier contribution throughout the year. So that's for 2025. So they partially match themselves out. For 2026, now the reason why we're doing those aircraft buybacks is that these will reduce going forward, the ownership cost. So that will be partially offsetting the positive result in 2025 going forward. But so in the bigger scheme of things on a CASK basis, it's really marginal. David Morgan: On the LEAP engine troubles, I don't think we've been impacted any more than the kind of industry on the LEAP situation. And in many ways, we probably benefited in a couple of areas. We have a very good predictive maintenance system through Skywise. So this is an AI-driven predictive maintenance system that sort of monitor stuff all the time, changes components before they actually fail. And then on the modification, I think you're probably referring to the reverse bleed system modification. We've got the advantage of having our own MRO facility in Malta, which is about sort of 25% of our heavy maintenance, and they have the capability of doing that modification. They've done that modification on our engines. So I think we're probably slightly better placed than most on that. Jan De Raeymaeker: But I think as part of our resilience measures, one of the things we're doing is we're buying more spare engines. So we have increased our spare engines, both for CFM56 engines as also for the LEAP engines. Conroy Gaynor: It's Conroy Gaynor from Bloomberg Intelligence. So just on your winter loss reduction, I mean, I appreciate you've said it's perhaps a bit more difficult than anticipated. Should we think of this as just a delay that will unwind when larger planes get delivered or the routes that you've strategically invested in mature? Or are there other more structural things in there that could make this more difficult in absolute terms? And then second, just to perhaps get in a quick appetizer for Friday. How important is the non-U.K. source markets in your new medium-term plans for the holiday business? Kenton Jarvis: Okay. I'll do winter and then let Gary decide how much of a reveal he wants to give in advance of his big Jazz hands presentation on Friday. For winter, it really is a story of 2 quarters for us. So we've said we believe that Q1 can be a profitable quarter. I believe it can be. It won't be next year, but I believe it can be. October is proving to be an increasingly attractive late summer month. Now this October is going to see the kind of -- obviously, we're going to have the slight roll on from the summer, but we still expect a decent October performance. November will always be a bit sticky. And then the festive periods of Christmas and the interesting routes that you can fly to festive markets give Christmas are real peak quality. So as a team, I think getting that quarter to breakeven is something we will continue to work with. And when Tel Aviv and other more interesting winter destinations come online, then that will help. You've got to remember, we started flying to Cape Verde recently. That takes some time to mature, but it's doing very well, particularly out of Portugal and parts of the U.K. Egypt continues to do well and build. Morocco, we're opening a new base next year in Marrakech, that will help obviously with year-round performance. The second quarter is just a traditionally loss-making one for airlines. We invested quite heavily in the one just gone for resilience measures, but we really saw that pay back in the summer because while we saw some AT&C improvements in some of the regions through Europe, the French didn't get any better. So they met our expectations on that front. But they will, over time, they are recruiting. They are aware of their very poor performance compared with every European neighbor. And we are exposed to a lot of French airspace either overflying it or flying into it. And we will roll that back over time, but cautiously when we see that opportunity exists. It is when we do all the maintenance. The larger the fleet becomes to peak summer profit, the more maintenance you'll be doing in that schedule, and we have 25% of our heavy maintenance capabilities inside. If we see an opportunity, we will take it to increase that in-house heavy maintenance. But I see the seasonal loss in Q2 remaining stubborn and I see the opportunity to improve Q1. And that's how we think to winter really. But upgauging will naturally help because it will give a cost advantage through year for this business. And then Gary, sorry. Garry Wilson: I'll just try and dampen down your euphoric enthusiasm for Friday. We'll try and make as exciting as possible. But Wilson Towers and Capability Green is nothing to the financial institutions that we visit when we come and see you. We feel a bit like Tiny Tim from a Christmas Carol when we go into your places. So maybe bring some sandwiches and a flask when you come on Friday. On Europe, when we look at the GBP 450 million, we've built in about 10% will come from Europe. And that's a dead cert given our current network and current plans. But I think the Europe opportunity could potentially be huge if we think about it a bit differently. When you look at Germany, it's a bigger market than the U.K. for package holidays. So there is an opportunity in Germany that we're really thinking about how we could execute on that. Switzerland is a small market, but we're very well served there. So it's how we can maximize in Switzerland with the current network. And in France, that really is a North Africa story really in France, how we can get the right product for the right customer and distribute that in the right way. So I would say think about it as 10%. But through that kind of 3- to 5-year period, as and when we see any opportunities that could be maybe structurally different in how we would go about executing in Europe, then we'll look to take those. One example I'll give you on Friday will be working with travel agents. The vast majority of sales in Germany for holidays is through travel agents. We don't currently do that. So by working with travel agents, we should see a big kick up just by doing that. So it's things like that, that we'll be looking at. Kenton Jarvis: And we still see a great potential in cities. So we'll see how that progresses. It's growing nicely. Ruairi Cullinane: Ruairi Cullinane, RBC. Firstly, can the holiday's PBT margin improvement be sustained into full year '26? And secondly, how are you seeing the competitor capacity backdrop on easyJet routes this winter? Kenton Jarvis: Okay. Well, Gary, are you comfortable doing the first one, and then Sophie can talk about what we're seeing in the wider -- in our network in terms of probably '25 as well, how you saw capacity build and what the relativity was and then '26 afterwards? Garry Wilson: Yes. So we grew the PBT margin from 12% to 13% for this year. And I don't anticipate we would maintain at that level simply because when you look at European expansion, it's at a lower margin than the U.K. beach margin. When you look at city breaks are at a lower margin. So when we're looking at that growth, whilst the PBT growth, we're confident of in terms of how that margin will look, there will probably be a conscious dilution of that margin in order to get there. But that doesn't mean that we won't be looking at any big opportunities within that beach area to really enhance the margin. So I'll talk a bit on Friday about luxury. That's got a really high margin is doing well for us. So if there's other products that we could look to launch in the meantime that would maintain that margin at those levels, then that's what we'll do. Sophie Dekkers: Yes. So on a capacity basis, this summer then, let's take our Q4 as an example, we saw at a total market level around 3% growth and on our head-to-heads around 2% growth overall. What was interesting though, if we look at the airlines, some of the airlines that are growing the most, we had Ryanair who grew 2% in Q4, but only negative 1% on our head-to-head. So they took capacity out on our routes. Wizz grew 12% overall, but we were negative 8% on our routes, again, reducing their head-to-head capacity with us. Where we did see growth on our network was Jet2. They launched Luton this year as a new base for them. And a similar picture to the numbers at Gatwick, but not quite the same delta, but they have 5 aircraft based in Luton versus our 25 aircraft. And again, we have a lot more frequencies. We saw Jet2's results and what happened on yield on flight only. So London is definitely more of a flight only market. So it will be interesting to see kind of the growth and something we're looking at from a holiday perspective as well how we help to grow the package holiday market in London overall. So that's what we saw in terms of competitor capacity really across the network. As we look forward into winter, we're seeing a continuation of that picture really. If I look at Wizz's capacity and Ryanair's capacity on head-to-head routes with Ryanair this winter, for example, are adding 1 million seats actually that are head-to-head with us, but their overall growth is another 3 million on routes that are not easyJet operated routes. And Wizz are actually reducing taking another 700,000 seats out of head-to-head routes with us, and they're growing about 4.6 million on routes that aren't easyJet routes. So that gives you a bit of a flavor in terms of what we're seeing. And we're not seeing a big amount of growth from any of the legacy carriers. They're kind of flat, up 1%. We're seeing a bit of movement from Air France into Transavia because they're moving some of their capacity into the kind of lower-cost operating model. And similarly, we're seeing Eurowings growth as a transfer, I think majority is transfer across from Lufthansa. So a bit of transfer, but at a market level, you're not seeing a big dip growth overall in capacity. Dudley Shanley: Dudley Shanley from Goodbody. Two questions, if I may. First of all, the current booking patterns of early and strong late trends. What do you think that tells you about the consumer? And then second of all, thinking very long term, I think you have a power by their contract with GE and GE have been telling people they won't be signing those contracts at least at those rates again. Do you need to start thinking about engine shops into the future? I think as the LEAP engines start to come due for heavy maintenance? Kenton Jarvis: Thank you. Well, on the booking patterns being strong early and strong late, what does that tell us? Well, we're still seeing growth. So we flew 3.7 million passengers customers more as an airline in full year '25. We've got 1.4 million already booked more for Q1. easyJet holidays grew 20% last year, expects 15%, but that's a kind of similar growth number in absolute terms year-on-year as the base is getting bigger. So we still see people continuing to come towards easyJet for their holidays. Our repeat booking statistics are improving. So 71% now rebook within a 2-year period. Customer satisfaction is going up, which is really important for the long-term strength of the brand. So hard to know what to really read into the polarization of early and late other than we're ahead of where we were this time last year on all the seasons, on all the quarters that we have on sale. Engine shop, setting up our own engine shop. Well, we progressively in-sourced maintenance. We first did all our line maintenance then did the heavy base -- did the regular base maintenance and established the base maintenance facility in Berlin, for instance, to take on a lot of the European base maintenance. And we set up our first heavy maintenance facility in Malta that we got from SR Technics. And that does up to about 25% of our requirements. We would, as I said, look for more opportunities there. I think 50% is about right. So we can buy from the market 50% of the time, produce ourselves, do our own maintenance 50% of the time. You can then have much better conversations with the market about rates you would like. Otherwise you do it yourself. Engines, we have an attractive power by the hour. We're one of the last airlines to sign that because we did a well-timed order book, if you remember, 15 aircraft on order. So we placed an order for a lot of engines and a lot of spares in December '23 and secured a power by the hour agreement at that point. So we have more buffer into the future than I would argue almost every airline. It's not an unsensible thing to do. It is quite a leap that you're going to find the engineers and find the skills to do it, and you're still going to have to be buying the life limited parts and the parts of the OEMs anyway, but just competing with them in the engine shop maintenance. So it's not our priority. Our priority is to control heavy base maintenance first to the level that we want to control it, continue to work on the efficiencies. We only just bought and operated 1 year of the maintenance facility in Malta. So we want to get that really sharp in terms of its performance. And then it's something we can think about. But you're right, we have the power by the hour agreement, which does protect us for a little longer than most airlines. Well, thank you very much for coming here today. If you want to stay and have a coffee outside, I'm sure we'll be able to be hanging around if you had any other questions you wanted. But thanks very much. Appreciate it. Bye now.
Operator: Thank you for standing by, and welcome to the Ryman Healthcare Half Year Results Briefing. [Operator Instructions] I would now like to hand the conference over to Ms. Naomi James, Chief Executive Officer. Please go ahead. Naomi James: Good morning, everyone. I'm Naomi James, Chief Executive Officer of Ryman Healthcare. Thank you for joining us for our half year results for the 6 months to 30 September 2025. With me today is Matt Prior, who commenced as Chief Financial Officer on the 31st of July; and Hayden Strickett, our Head of Investor Relations. We're going to be working to get through the presentation in around 30 minutes to allow time for Q&A before we wrap up at midday. Looking at the agenda, I'll provide an overview of sales, stock, operations and development before handing to Matt, who will speak to the financials and capital management. And I'll then provide an update on outlook and strategic priorities before opening up for Q&A. Hayden Strickett: Starting on Slide 4. As you'll see from today's results, we are well on our way to delivering better returns and are doing the things we said we would do when we raised capital at the start of the year. This is the first positive free cash flow result that Ryman has announced in more than a decade. We have made substantial progress towards achieving our cost reduction target in the first half and increased our target for the full year. Our refreshed sales strategy is rebuilding momentum with 2 quarters of sequential growth at our new 30% deferred management fee. Our balance sheet reset is now complete with the full bank refinancing we announced at the start of the week. And we have today announced that we will hold an Investor Day in February, which will cover our strategy refresh and new capital management framework. Let me start with the first half highlights on Slide 5. And starting with our sales performance. We've seen a rebuild in sales volume for the first half with total sales of 704. While down on the second half of last year, which was a record, this was up on the fourth quarter of last year and is at a significantly higher value with the new level of DMF. On the operating side, we've stepped up the level of cost out. To 30 September, this is now at $40 million annualized, and we've uplifted the full year target to $50 million to $60 million. This is reflected in our financial performance with a significant improvement in operating EBITDAF and positive free cash flow for the half of $56.2 million on total revenue up 13% on both pricing and occupancy growth, while total costs fell 2%. We've completed the refinancing of all banking facilities, significantly extending the average facility tenor to 5 years. As part of this refinancing, we also improved our pricing and have more resilient financial covenants. Through the half, we completed an ASX foreign exempt listing, which we committed to do at the time of the capital raise. This is a pivotal step in broadening Ryman's investor base while reinforcing our commitment to the Australian market. Finally, we've made good progress with the strategy and portfolio review with additional land divestments bringing total contracted sales to $110 million. We will be coming back to the market at an Investor Day in February with an update on our refresh strategy and capital management framework going forward, including our dividend policy. Now jumping into the detail, starting with sales on Slide 8. We've seen continued improvement in sales effectiveness and contract conversion driven by strong lead generation from village open days and targeted sales and marketing initiatives. Looking at the first quarter, we saw a 12% step-up and another 9% step-up in the second quarter in our occupied sales. As a reminder, these are RV unit sales only, and we do not include care RADs in our sales numbers. This year, we introduced quarterly reporting. So you already have the sales figures you see on this slide. The new news is the update to our full year guidance to 1,300 to 1,400 units, which I'll speak to at the end in the outlook section. Moving now into pricing and the breakdown in sales mix. On Slide 9, you can see the changes we made to the pricing model are now fully in place. As a reminder for those new to the Ryman story, our sales, which are recognized at the point of occupancy typically lag contracting by 6 months on average. We made the shift to a standard 30% DMF on the 1st of October 2024. So contracts signed prior to that date have now been settled and the first half of this year reflects the pricing changes. You can see that 3/4 of new residents are moving in on our standard 30% DMF with the remaining quarter being a mix of DMF options, demonstrating the flexibility in our pricing framework across DMF and unit pricing to meet individual needs. Our contracts are long dated and the benefit of these changes will build over time with annual portfolio turnover currently at 12%. As well as the uplift in DMF, we're also seeing a significant step-up in weekly fees with an average 60% uplift in the level of weekly fees on rollover of units. Moving now to sales contracts on Slide 10. You can see again the significant improvement half-on-half coming through in our forward contract book with both increased contracting levels and a reduction in cancellations. Market conditions are still mixed across the regions. We are seeing early signs of recovery in Victoria, while Auckland is yet to show meaningful improvement, which is significant for Ryman with around 30% of the portfolio in Auckland. Our contracted level of stock is lower, reflecting the recent completion and settlement of presold units at Kevin Hickman and Nellie Melba. Stepping now into the breakdown between resales and new sales on Slide 11. Our average resales pricing has been broadly stable on first half 2025, while slightly down half-on-half due to mix impact. Independent units are down 2% year-on-year, while serviced units are up 1%. We've seen our gross resales margin, which reflects the cumulative capital gains on each unit continue to moderate from historical highs. This reflects the flat housing market we've experienced in recent years. We've seen resales volumes increase across both independent and service departments compared to the prior half. But you will see there is still a gap between sales and turnover, 81 units for the half, which means as we signaled at our full year results, there is a working capital drag through the half with an increase in resale stock and the payout balance. Turnover is an important driver of cash generation in our model through both DMF and capital gains. With improving resales, we have a significant opportunity both to increase cash generation and to release cash from the $330 million of bought back resale stock we have today. Turning to new sales on Slide 12. New sales have reduced, reflecting the planned ramp down in development in response to elevated industry stock in some locations. As a result, our level of new sales stock has remained broadly flat over the past 6 months. We do have elevated levels of serviced apartments following the opening of 5 main buildings over the last 18 months. This is a key area of focus for us, and we are considering a number of options to improve utilization of this product. Average pricing remains strong, supported by a favorable mix with 45% of new sales coming from Australia. And importantly, our total new sales stock value of around $470 million at the end of the half represents a significant cash release opportunity going forward. As we open the operations section on Slide 14, I'm pleased to share that Ryman has once again received significant external recognition. I know these award slides sound a bit repetitive given how many we've won over the years. But this is ongoing recognition across both the aged care and retirement living parts of our business, which truly reinforces the strength of Ryman's reputation. Importantly, our internal customer survey results have also continued to improve year-on-year across all parts of the village. It's been especially pleasing to see this progress in a year where we've undertaken a significant reset across many parts of the business. And I want to acknowledge the dedication and commitment of our Ryman team members who work every day to deliver great service for our residents and are working to make our business performance even more sustainable. Moving now to aged care performance on Slide 15. Starting with pricing, we have seen significant period-on-period improvement in both room premiums in New Zealand, up 10% on PCP and an average refundable accommodation deposits, or RAD balances in Australia, up 5%. These gains are in addition to the base care funding uplifts implemented in both New Zealand and Australia. In New Zealand, a base care funding uplift of 4% took effect from 1 July. We have also successfully trialed a new product for residents transferring to care from within the village, which we're now rolling out across all of our New Zealand villages. This allows us to grow the level of resident capital in care in New Zealand and gives our residents more choice in how they fund the cost of their care. In August, we communicated the closure of our 2 oldest rest home level care centers in Christchurch. Time to align with the opening of the 80-bed new Kevin Hickman facility, every resident has been supported to find a new home that meets their needs. Moving on to Slide 16 and the significant progress with aged care reforms across both Australia and New Zealand. In Australia, reforms have been enacted and are now moving into the implementation phase. Changes to allow a 2% annual retention of new RADs came into effect on 1 November. With our average incoming new RAD in Australia currently exceeding $800,000, this is expected to deliver a meaningful increase in revenue from new RADs moving forward. Ryman is already well progressed in meeting the new clinical care minute requirements, which become mandatory with the new funding changes. We've also seen significant progress made in New Zealand with the government announcing the establishment of a ministerial advisory group. While it is lagging Australia in undertaking the necessary reforms, we expect New Zealand will benefit from being able to draw on lessons from the Australian reforms, taking the elements that have worked well and delivered meaningful benefits while supporting the delivery of high-quality care without creating undue compliance burden. And the New Zealand government has been specific on the timing it wants to achieve, advised by the middle of next year to enable it to enact changes to the funding model in 2027. This will provide time for all political parties to commit to funding reform ahead of the New Zealand election next year. And there's a big focus on the reforms gaining bipartisan support has occurred in Australia. Moving now on to development. I'm pleased to announce today the appointment of Richard Stephenson as Chief Development and Property Officer. Richard brings deep sector experience with more than 20 years working across the retirement living and aged care sectors in New Zealand and Australia. The addition of Richard to our senior executive team positions Ryman for a return to disciplined growth and supports the continued delivery of high-quality communities for residents. Moving now to Slide 18, which sets out the status of our program of works across our in-flight projects. We've made good progress in the last half with the completion of the final stage at Nellie Melba completing the village, the completion and opening of the Kevin Hickman main buildings, the commencement of the main building at Patrick Hogan and progress of Keith Park Stages 8 and 9 with these independent apartments forming the bulk of our second half build guidance. We expect updated plans for our Hubert Opperman village to be finalized and approved next calendar year, allowing for the commencement of construction, which will be the first project we deliver under the outsourced model. And we continue to have more than 300 RV units sitting in our land bank for future stages on these projects, which have planning approvals and are ready for development as and when market conditions support it. Jumping forward to our land bank on Slide 20. In February, we announced that we were undertaking a comprehensive review of our land bank, which was independently valued at $376 million at 30 September. We have been exploring the best opportunities for growth in terms of both our existing villages and our greenfield sites and are also determining which sites would deliver better value for shareholders through divestment. A number of sites were identified for potential divestment during the early stages of this review, and we're pleased to report the successful sale of Park Terrace in Christchurch for $42 million and Mount Eliza in Victoria for $35 million. This is in addition to the existing contracted sales at Karori and surplus land at Nellie Melba totaling $33 million. We will provide a further update on our land bank review at our Investor Day in February and expect to have identified sites to be retained for future development as well as additional sites for divestment. Now I'll hand over to Matt to run through the financials. Matthew Prior: Thanks, Naomi. As my first half at Ryman, it has been fantastic getting to see the opportunity to unlock value in the business on a number of fronts, which I will touch on today. For the result, I'll talk to the financial highlights in our P&L, cash flow and valuations as well as speak to the refinancing update, which we announced earlier in the week. Starting with Slide 22. As Naomi has spoken to, we have made meaningful progress in the first half, which is reflected in these financial results. I'll call out 4 highlights on this slide. Firstly, we have seen a significant improvement in financial performance with losses before tax and fair value movements reducing $57.6 million year-on-year, underpinned by revenue growth of 13% and disciplined cost control. Next, free cash flow of $56.2 million was positive, underpinned by strong net development cash flows and lower finance costs. And thirdly, acknowledging the quality of our $1 billion of unrealized development assets, which represents a material cash opportunity. Lastly, the full refinancing of our bank debt, which has extended average tenor to 5 years, improved pricing and introduced a fit-for-purpose covenant structure. The refinancing completes our balance sheet reset and provides a robust foundation to grow earnings. Moving to Slide 24. Strong revenue growth is a notable highlight for the half, driven by the benefit of both our growing resident base, up 4% year-on-year in volume terms and stronger pricing in both aged care fees and retirement village fees. Year-on-year growth in DMF revenue includes a one-off adjustment for the prior year period relating to a historical GST issue, which was disclosed at the full year result. Removing this impact, DMF was broadly flat year-on-year. There are a number of factors at play here, including the changes to our pricing model as well as the accounting changes made in the prior year. If we look at independent units, we have moved from a 20% to a 30% DMF, but with revenue recognition period changing from 7 years to 9 years. Similarly, service apartments have moved from the 20% to 30% DMF with recognition changing from 3 years to 4.5 years. This means that whilst the change in DMF contract terms is building a higher-value contract book, it will take time to flow through to the P&L, and this is shown in revenue in advance. In simple terms, revenue in advance represents DMF, which has been contractually accrued but not yet recognized in the P&L. The balance will underpin future DMF revenue. I would stress that our front book revenue profile across both DMF and weekly fees is significantly greater than the revenue in place from our back book, which supports our growth in years to come. Slide 25 shows the significant progress we have made in our cost-out programs over the past year. Non-village expenses reduced half-on-half by 27% to $54 million, with the majority of this improvement coming from last year's restructure to support services. Adding to this is also some reallocation of costs to villages following these operational changes. Village expenses increased 7%, reflecting additional capacity, which has come online, noting that we have opened 5 main buildings in the past 18 months. While cost savings remains a key focus for the business, this is being approached in a considered way given the importance of the Ryman brand and our strong resident proposition. Moving to Slide 26. Combining the revenue and cost improvements I've talked to, we have seen a $26.4 million year-on-year lift in operating EBITDAF to $40.1 million, a key measure we focus on internally to track the core operating performance of our business. I would note that this does not include any realized capital gains on retirement village ORAs, which are reflected in other metrics such as cash flow from existing operations. The chart shown on this slide shows the improvement with non-Village cost reduction and positive leverage in developing village growth providing the most benefit. Moving to Slide 27. A key strategic priority for FY '26 has been segmenting our financials between aged care and the retirement village parts of the business, which we will report on going forward. I'd like to highlight that this is a non-GAAP disclosure, which currently sits outside of our financial statements. Segmentation is based on property type with the aged care segment comprising our care centers and the Retirement Village segment comprising our independent living units, service apartments as well as common areas and amenities. I should also make clear that home care services provided to a resident in RV are included in the Retirement Village segment. Central to this analysis is the allocation of support services to each of the segments. A substantial amount of the support is provided through our office functions such as operations, clinical, procurement and contracting. Allocating these costs to the segments provides a complete picture of our cost structure and business performance. The output of this work provides metrics such as EBITDAF per aged care bed of approximately $15,000 on an annualized basis. For a scale operator such as Ryman, this is significantly below the full potential of our portfolio, and there are transformation projects underway to improve performance. It is also important to note that the figures shown on a per bed or unit metric are averages with variations seen throughout the portfolio. Our transformation progress will be reflected in these segment measures going forward. Slide 28 details our cash flow from existing operations, or CFEO, for short, which is down year-on-year when excluding interest. Robust cash flow from village operations aligned with the improvement in operating EBITDAF has been offset by lower net cash flow from resales. Resales cash flow continued to be impacted by growth in our bought back stock, which grew $53 million in the half. Excluding this, our cash performance would have been meaningfully higher. I'd also highlight that we have made some refinements to our cash flow methodology. The most significant change is the allocation of interest on unsold new stock and land bank to development activities. Whilst much of this interest does not meet the criteria for capitalization, functionally, it still relates to our development business. Other changes include the allocation of sales and marketing costs between CFEO and CFDA and similarly, reallocating costs on land bank sites such as rates or site security to CFDA. The composition of CFEO shows the improvement in village operations, but this is held back by gross receipts from resales compared with the previous half, which had the benefit of stronger sales. Totaled against lower non-village expenses and attributed interest costs, there was a slight improvement in overall CFEO. Turning to Slide 29. We have seen strong net cash release from the development side of the business with our project spend reducing significantly as we sell down existing stock. The opportunity to release cash from inventory is substantial with approximately $470 million of new sales stock at 30 September. Consistent with my previous comments, the figures on this slide reflect our updated methodology with cost allocation to CFDA, including marketing and selling costs as well as allocating notional interest on unsold new stock and our land bank. Slide 30 shows the positive free cash flow for the half, which was the first time in many years for Ryman. Free cash flow of $56 million was partly offset by a headwind of $42 million in other movements, primarily FX with the 3% decline in the New Zealand dollar for the period. While this has had a negative impact on the Australian dollar debt, I'd note that our Australian dollar assets have also seen an FX uplift, which is an offsetting benefit to our balance sheet and our NTA. And as Naomi has already highlighted, there have been subsequent land bank sales that will benefit our second half cash position. Turning to asset valuations on Slide 31. Independent valuations across our sites consider unit and pricing information, capital spend and site-specific factors with further details in our presentation appendices. The half saw a positive fair value movement of $3.2 million, reflecting a number of changes, including price, but the outcome was broadly flat, taking into account FX and the previous result adjustment. There has also been a small impairment for 3 care centers as detailed in the financial statements, noting that the broader care portfolio is valued annually. The overall investment property carrying value and net tangible asset value remained broadly flat against the previous result. My final slide on financial performance provides a summary of our profit and loss with per share measures, which I won't speak to in detail given most line items have already been covered. Earnings per share of negative $0.044 was down for the half with the improvement in operating earnings offset by lower fair value movements as well as the higher number of shares on issue following the February equity raise. Now on Slide 34. As announced earlier in the week, we have successfully completed a full refinancing of our syndicated loan facilities. This extends our weighted average maturity to nearly 5 years with no maturities until FY '31. To achieve this, we have received strong support from our lending group who has recognized the turnaround that is underway at Ryman by providing funding out to 7 years. Our new ICR covenant is 1.50x adjusted EBITDA to interest, excluding interest on development debt. This designated development debt includes our committed developments that are in flight as well as recently completed care centers in New Zealand. Importantly, our existing covenant waiver remains in place with first testing of the new covenant to apply from September 2026. Overall, this refinancing retains significant funding headroom of over $500 million and provides a strong foundation to support our strategy and long-term value creation. Finishing my sections, I'll talk to treasury management on Slide 35. Since the equity raise earlier this year, we have delivered annualized interest savings of around $67 million, driven by lower debt following the February equity raise, positive free cash flow and a reduced cost of funds. With nearly 70% of drawn debt now on fixed rates and an average hedge tenor of 3 years, we have strong interest cost certainty. Combined with a lower debt profile post equity raise, this positions us for substantially reduced interest going forward. Before I hand back to Naomi, I'd like to thank all the operational teams across Ryman's Villages as well as the development and support teams in Christchurch, Auckland and Melbourne that helped deliver these results. I'll now hand back to Naomi to talk to our outlook. Naomi James: Thanks, Matt. On Slide 37, we have our updated full year sales guidance to 1,300 to 1,400 RV units. This reflects expected broadly flat total sales half-on-half in a mixed market with new stock delivery weighted to the first half and a lower level of new sales. In these numbers, we haven't assumed a recovery in the Auckland market, which makes up approximately 30% of our portfolio by number. We have increased our cost saving target for the year to $50 million to $60 million annualized. We have also confirmed the top end of our build rate guidance for the year at 330 units and beds. And we have moderated our CapEx guidance, reflecting the release of contingency on a number of in-flight projects, which have completed as well as some timing -- cash timing impacts. And we take a more disciplined approach to sustaining CapEx in the existing villages. Slide 38 gives you an update on the strategic priorities we announced at the time of the equity raise and what we said would be our focus in FY '26. I won't step through the slide as we've already covered each of these points through the presentation. But I would say we have made meaningful progress in releasing cash from the business, improving our performance and resetting the business for a return to disciplined growth. Let me wrap up on Slide 39. Our near-term focus continues to be on building our sales momentum, releasing cash from the balance sheet and driving operational efficiency across the business. Ryman is positioned for significant cash flow growth as the housing market recovers, aged care funding reforms are enacted, our aging population grows strongly on both sides of the Tasman and aged care scarcity increases. And I'm looking forward to sharing more with you at our Investor Day in February on our refreshed strategy, focused approach to growth and new capital management framework, including our new dividend policy. I will now open up for Q&A. Operator: Your first question comes from Bianca Murphy with UBS. Bianca Fledderus: First question is just on future development -- no, sorry. My first question was on your commentary that you are signaling that you will be returning to disciplined growth again. But at the same time, we continue to see vacant stock increase as well as bought back stock. And I know it, of course, takes a few years to develop a village. But can you just touch on the confidence, I guess, that Ryman is ready to return to growth again given where your stock levels are? Naomi James: I think I caught all of that. But I guess just talking to, first of all, the stock levels, what we've seen half-on-half is obviously build rate and new [ stock ] sales rate much more closely match each other. And that's what we're wanting to achieve in terms of moderating the rate of growth in our in-flight projects, which has seen us defer some of those later stages. We are intending to bring those stages forward as and when the market conditions support those developments, and that will be done on a progressive basis. And in terms of our greenfield land bank and sort of future expansion around the existing villages, that's something that we're intending to come back and talk about further at the Investor Day in February. Bianca Fledderus: Okay. That's helpful. And then I believe you previously mentioned that you expect stock levels to peak in FY '26. Do you still expect that to be the case? And if so, is your expectation that will be first half or second half? Naomi James: So in terms of the stock levels, we've obviously seen those increase through the first half with resales being at a slightly lower level compared to turnover. We are very actively working to get those to match each other with the range of sales effectiveness initiatives that we've got underway. We are also a little bit dependent on market conditions, particularly when it comes to the portfolio in Auckland. And ultimately, that's going to determine the exact point in time that we reach that point and start to see that cash come back down and the buyback level come back down. So probably can't predict more precisely than that, Bianca, but we're certainly working very hard to get to that as soon as we can. Bianca Fledderus: Okay. And then yes, following up on that, could you just talk about what you're seeing in terms of market conditions in the first weeks of the second half? Naomi James: Sure. Do you want to talk to that, Matt? Matthew Prior: Sure. Thanks, Naomi. So Bianca, in terms of what we're seeing so far in the second half, but before I do that, just rewinding slightly to the first half, in the first half, we did see higher volume of new sales and good movement on new stock deliveries with the rate of move-in probably a little bit faster than expected. In H2, I would say that we're optimistic given the recent cuts to the OCR, but it's really too early to say how those cuts will translate in terms of an uplift in current conditions. For October and November specifically, we've seen consistency with our first half sales performance, although we're entering this kind of quietly -- sorry, quiet seasonal period of December and January with this mixed market conditions as a backdrop. And as I said, optimism around the OCR cut, but it's too early to say how that will play through in the second half. Operator: Your next question comes from Arie Dekker with Jarden. Arie Dekker: First question, just on new sales stock and the ILUs in particular. Just given the influence of Australia in the first half. Just keen to get a bit of an indication of how much of that nearly 300 ILUs in new stock sits in Australia versus New Zealand? And then just related to that also, what your expectations are for pricing in Australia given the mix of stock that you have remaining there? Matthew Prior: That's a very detailed question. We might have to come back to you offline as to the composition. Naomi James: In the first half, Arie, one thing we'd point to is with the Nellie Melba final stage completing, we have had a number of sales come through from that. We had 76 units added in Nellie Melba. We are seeing good trading and market conditions over there, and that's a relatively recent thing. But we haven't, I don't think, provided quite the level of split that you've just asked us for in terms of the split between New Zealand and Australia. So that's probably the further detail we can provide around that. Arie Dekker: Okay. No, sure. Just in terms of cost-out expectations, which have increased through the first half, which is clearly pleasing as you're spending more time in the business. I mean, could you just sort of characterize how far you've gone, I guess, in sort of peeling back the layers of the onion and whether your expectations would be that based on what's still to go that we could see further upsizing of that envelope through the balance of this year and into next year? Matthew Prior: Thanks, Arie. So in terms of what we've seen so far is, obviously, we had $23 million last year. We initially expected $23 million this year. At the half, we've achieved $40 million. The current year savings are really across both non-village and village. I would say in emphasis areas, it's around the support services, as you would know, procurement as well, refurbishment CapEx and really village efficiency initiatives. It's really giving us the early gains that we're being able to talk to and now update and increase our guidance to the $50 million to $60 million. As we do more work, we'll be able to give you more confidence around the timing of that. But at this stage, not looking to change the original numbers in terms of total target. Arie Dekker: I know I wasn't expecting you to. But what you're suggesting there is there is more work to do in terms of looking across the business and certainly potential for that to be increased further? Naomi James: Yes. You'll remember, if you go back to the cap raise, Arie, we talked about a cash improvement target of $100 million to $150 million made up of a mix of cost and revenue. So that is still our overall target that we're working to. We've given you the cost indications to date. And one of the things we're mindful of is being able to give a clearer view around timing of when the revenue improvements will flow through as well. So that's probably something we're going to come back on in the new year with some further detail around it. Arie Dekker: Great. Yes, that makes sense. And then just on the RAD retention benefit that's coming in, in Australia. I mean, what's your -- obviously, too early to see on the evidence, but I guess, just some comments on your expectations with regards how it might change the mix and the SKU of residents you see coming in on a DAP versus a RAD. Do you have any comments there? Naomi James: I don't think we'd expect to see it change the mix, Arie. We've certainly seen a little bit of benefit ahead of the 1 November commencement for residents looking to avoid that new regime. It applies to new RADs from the 1st of November. But typically, it's driven based on the capital that individuals have access to. And it's also strongly linked with the tax and means testing settings in Australia. So it's fairly resident circumstance specific as to how those choices work rather than tied with that DMF retention. Arie Dekker: Okay. No, that's good. And then just, I guess, returning and just asking a specific question back to the answer you've already given with regards to that the resales and improving volumes there to bring it more in line with turnover and then clearly, clear inventory as well. I guess just on the tools you're using, I guess we can't sort of see it come through at an aggregate level. And then also, there's obviously the phasing of it all and that in terms of settlements. But can you just talk to the extent to which you are using price as a tool in resales to increase volumes, whether you are doing that or not? And what sort of levels where it is being applied? Naomi James: Sure. So we're using a range of initiatives, Arie, and price is really only one of those. I think we signaled at the full year that we would use pricing in a targeted way where we have building resale stock or where we have older new sales stock. I won't talk to sort of anything specific around discounting. It's obviously a competitive market. But price is certainly not the only thing we are doing. We have a range of other incentives and measures in place targeted at a village level and also have invested quite a bit in the training of our sales staff to really make sure that they've got sort of the right toolkit, the right range of incentives and are able to do a really great job at selling the new DMF offering, which they are really hitting their strides with. So it's a range of things with targeted pricing really just being one part of it. Arie Dekker: Okay. And then just the last question for me, it's a quick one. Congratulations on the divestments of Mount Eliza and Park Terrace. Could you -- I may have missed it, but could you just comment on where those -- the values achieved for those versus the FY '25 book value? Naomi James: Yes, they're broadly in line with book. Operator: The next question comes from Will Twiss with Forsyth Barr. Will Twiss: Thanks for the extra disclosure on the Village and the care earnings. If we think about that $15,000 per bed EBITDAF in aggregate, can you give us an idea of what that looks like if we think about mature versus non-mature care centers? And then a follow-up to that, what is the split between what that looks like in Australia versus New Zealand? Matthew Prior: Hi, Will. It's Matt. I'll talk to the Australia and New Zealand piece. So care in Australia is more profitable. It reflects the funding reforms that have occurred in that market. And whilst we're not providing the $15,000 EBITDAF per bed split between the 2 markets, you can see from the country segment reporting in Note 2 that Australia has a higher margin at a country level and the bulk of the P&L is care. So hopefully, that's helpful in terms of giving you an indication. And look, with the lower margin in New Zealand, it really is particularly as a result of the funding environment. So a scale operator like Ryman, we should be looking to get efficiencies from that scale, and we will from our transformation programs to improve performance. But that said, lower earnings in New Zealand aged care is reflected in our valuations also, and we do need to see meaningful improvement in funding to support investment in new capacity. And just on that, the same applies to obviously mature versing immature care centers. This is a high fixed cost business. They benefit from occupancy. So you should expect obviously a lower margin in a more immature care center. Will Twiss: Okay. Great. But maybe if you could just give us a ballpark of where you think that EBITDAF per bed would be in a mature center today? Naomi James: Yes. I think, the complex thing there is, obviously, the premiums we're realizing do vary quite a bit across the portfolio. So it's not a consistent position. It is region-specific. And I think in terms of perhaps that portfolio target in Australia and New Zealand, that's something we might come back in the new year and give you a further view on what we think a fully optimized position might get to, including the benefit of the sorts of aged care reforms that are being looked at in New Zealand. Will Twiss: Okay. No, that all makes sense. And then just moving to the village side. There's quite a big delta, sort of $50 million, $60 million between the village fees and the village OpEx. When can we sort of expect that delta to start closing materially? And then I guess, following up from that, is it still your expectation that over time, you can get these 2 lines to closer to breakeven? Matthew Prior: Yes. Good question, Will. So focusing on RV, not care. Looking at the costs I should point out the cost is a blend of independent and serviced and the cost of delivering service is higher within that blend. You can see in the appendices that we've given the [ IA ] kind of unit fees of approximately $156 based on the current back book, if you can think about it this way, with the costs being at a current point in time. My observation coming in as a CFO is this is an industry issue. It's affecting a number of operators in this kind of high inflationary environment. A large part of the reason that Ryman has lifted its fees after many years of keeping them flat is to partly address this issue. So the front book will address this in combination with some of the cost-out programs that we have underway, and that will close that gap on the RV side progressively over time, but it will take time. Will Twiss: Great. And then just last one from me. If we think about the kind of step down in maintenance CapEx in the first half, how should we be thinking about this as a base going forward? Naomi James: I think the step down, and it's not a significant step down, Will, in terms of FY '25, it really just reflects a different level of cost discipline across the business and financial discipline across the business. We want to invest in the existing villages, but do that in a way that really is value-oriented. And so there will be some movement period-to-period based on opportunities, particularly where we can create value through investing in the villages. But in every dollar we're allocating, we are really making sure it is well spent, and that's reflected in the numbers. Operator: [Operator Instructions] The next question comes from Stephen Ridgewell with Craigs Investment Partners. Stephen Ridgewell: Congratulations on the improved free cash flow results and progress on improved operating results. Look, I just wanted to touch on the operating EBITDAF result, which you called out earlier, Naomi was up sort of 200% or so off a low base. And then maybe also look at the resale gains because if we include that to the operating EBITDAF, that number is down 3%. So given the cash resale gains, look to be down about 34%. I just want to follow up on Arie's question on the decline in resale margins. Directionally, it's as expected but the magnitude does perhaps look a little bit steeper. And I just wanted to see if there were any call outs with regards to mix or other considerations? Or does that kind of fairly reflect the level of discounting that Ryman has connected over the half to clear the resale stock? Naomi James: I think in terms of just what's driving that reduction, which is obviously not new to this half, Stephen. We see the HPI inflation in recent years as a significant factor. And remembering that in resales, about half is service departments, which are turning over on average in 4.5 years and half is independent at about 9 on average. And so particularly with service departments, you see that more recent lower level of house price inflation having an impact. And so that's sort of as significant a factor in terms of the resale margins. The pricing, I think, is more of a factor in terms of mix as well. And so as we see newer villages making up a larger proportion in the volumes and not necessarily having the same level of resale gains just purely as a percentage terms in terms of house price inflation, that's also flowing through to sort of what you print in terms of that overall percentage margin change. Stephen Ridgewell: Okay. So you're calling out maybe a slightly younger average tenure potentially for those resales because just to -- I guess we did see a 540 bps sequential decline in independent gross resale margins on Slide 11 and 350 bps sequential on service. So that would seem a bit steeper than what we're seeing across the rest of the sector and the housing market generally. So it reads more -- without that color, did more discounting, but you're suggesting it's more of a mix shift. Is that right? Naomi James: Look, I think it's a combination of those things, Stephen. So rather than one of them. And just to call out the -- we've obviously got the city villages as well as the regional ones. We've got the newer villages as well as the older ones. And then we've got the service department and independents in the mix and all of that overlaid with broadly flat HPI over the last 5 years or so. So those factors are all playing into that resales trend. But obviously, pricing is a factor as well. Stephen Ridgewell: Okay. And I guess if we look into the second half, I mean, are we going to see -- should we be seeing a stabilization in those, if you like, like-for-like resale margin trends? Or is this a fair read is this the new normal just given where the housing market is in this part of the cycle and what you need to do to get clear stock? Naomi James: Look, it's obviously fairly mix dependent, Stephen, but I'd expect there's potential to further downward, but with perhaps a slower moderation in that in terms of where it trends, but very mix dependent in terms of where the sales are coming from. Stephen Ridgewell: Okay. And then just maybe one on the CapEx. I think it's been mentioned earlier that the CapEx guide was lowered a bit. Naomi, you sort of called out cost discipline. I was just wondering as well, though, does that pull down and what we're seeing is that the build rate is at the top end of the range, prior range and the CapEx guidance is lowered. Does that reflect perhaps lower CapEx going into next year or lower build rate going into next year? I'm just trying to interpret the moving parts there because typically, if your build rate was at the top end, you'd expect CapEx to be a little bit higher from where I sit. Just trying to understand that. Naomi James: So the way I'd think about the build rate, Stephen, is really just that we're expecting to deliver in full to schedule rather than any change in development activity. In terms of the CapEx, there's a couple of things in that. One is that we have released meaningful contingency from some of the projects that we've completed, which is really pleasing. And then there's some timing in that. There's always a -- we're obviously completing Keith Park final, the current stages 8 and 9 near the year-end. We're getting towards the end of Northwood around the year-end. That just means you do sometimes have some timing impacts as to when that can flow through those projects. No change to schedule or delivery in any of that -- impacting any of that. Stephen Ridgewell: Okay. And maybe just one last one for me. Just on the volume guidance upgrade, it's obviously good to see. Just maybe a question on the mix. And Matt, you sort of called out kind of earlier that perhaps you'd see some improvement in continued improvement in resales in the second half, but new sales perhaps sort of dipping a little bit just given obviously the front books coming back. I mean I was just wondering if you could give us some indication of maybe how sharp that mix shift you might expect to see in the second half on the settlements. And I appreciate it's early days, but is it likely to be quite a different mix in the second half or incrementally different, if you like? Matthew Prior: Yes, you had 2 kind of large tranches of stock come through in the first half in terms of Nellie Melba and Kevin Hickman. So those 2 definitely play a role in first half new sale performance, and you can see the mix from what we have disclosed in our trading updates and the result. So it probably is more of an even spread in H2 than what it was in H1, which had the benefit of those 2 large tranches. So I'm not going to give you specifics, Stephen, in terms of the combination of those factors into H2, but hopefully, that's directionally helpful. Operator: The next question comes from Nick Mar with Macquarie. Nick Mar: Just following on from that. Just within the contracting rates, can you give us any idea of how that's looking on retail, just how close you're getting to the sort of termination run rate on a go-forward basis? Naomi James: So Nick, I think you were asking how close is the resale contracting rate to matching the turnover rate? Did I hear that correctly? Nick Mar: Yes. So within that sort of $674 million of new sales contracts in the first half, how close that is to the $619 million of termination? Naomi James: So we haven't given a specific split in terms of the guidance, but we are certainly seeing that gap narrow. And while resales is sort of below where we want it to be, we're chasing that hard to get back up to that turnover level, and that's a near-term focus for us. So that's a near-term goal we are working to chase down. We have indicated, I think, in the guidance that new sales are probably a bit lighter in the second half. And so you'll factor that into sort of the resales rate through that period in how you read that. Matthew Prior: And Nick, just to add to that, not just for the target of achieving turnover, but also to the extent there's $330 million of stock value attributed to that, which is something -- which is a large prize for us to get after in terms of cash release. Nick Mar: Yes, absolutely. And do you think that the current set of incentives, tools, pricing, everything like that is enough to get you to that, notwithstanding sort of a material change in market conditions? Or are you sort of needing to wait for the market to pick up in Auckland to be able to actually execute on that piece? Naomi James: I don't think we're waiting for the market to pick up, Nick. I think property is cyclical. We all know that, and we're chasing that down in the current market. It's just a little harder, particularly probably at the Auckland end. But certainly, in lots of markets, we're well exceeding that. And so our focus is on closing the gap. Nick Mar: Yes. So my question was in order to do that sort of nearer term, do you need to run more discounting or bigger incentives to get the cadence up? Naomi James: Not necessarily. I think it's a matter of continuing what's occurring, which is really using the full range of sales initiatives and options we've got to drive near-term sales performance. Matthew Prior: And I think you've seen, Nick, in the half that there's been a trend in sales effectiveness towards better conversion and that conversion rate of leads through to contracts, through to settlements has been one of the highlights of the half. So to the extent we can continue to build and develop those tools, it goes beyond price in terms of sales performance. Nick Mar: That's helpful. And then could you just talk through that resident funding trial that you've done kind of transfers to care and any intentions of sort of going back and allowing ORAs across other care beds in your portfolio and trying to sell down that way? Naomi James: Yes. So I guess just starting with the resident. When it comes to care, our residents are coming either from within the village or often coming from outside the village. And so that resident fund product that we have trialed and are now rolling out is really about helping our residents transfer within the village and use the capital they have, whatever level of capital that might be to fund their care. We do also provide care in certain cases into service departments, and that's an ORA structure in terms of where that's used. But we also see daily accommodation premiums as a really important option because -- very often, care residents are coming to us at a difficult time in life. There's a lot of uncertainty around how long they might require care for and what level of care they might need. And so we want to have the terms and offerings right to sort of match the residents' needs. High occupancy in care is key to profitability. And so having a range of pricing options is what's going to support that. And we think this new resident fund adds to the range of options that our residents have in coming into care. Nick Mar: Sorry, what specifically is the resident fund and what's the mechanism? Naomi James: So it's effectively a capital amount that applies as a deposit to fund through both effectively the value on the capital as well as through drawdown of that amount to fund the care. So whatever level of capital an individual might have, they can use both the capital base and the drawdown from that to fund their care without needing to have separate funding or capital available to pay their room premiums. It effectively allows us to discount the room premium in using that capital in that way. Nick Mar: And then the last part of the question, are you considering sort of having ORAs available over the [ balanced ] care portfolio in New Zealand? Naomi James: We see that as one option, and it's an option that's used today in service departments and care suites. As to the extent of broader use of it, that's something we'll keep considering in really matching the range of pricing options to what residents are looking for. Occupancy is critical in care. So we want to be able to maximize occupancy and realize the premium for the accommodation in a way that's aligned with how the resident is best able to fund that. And not everyone has a capital sum and not everyone is wanting to sign an IRA at a point where they are moving them or a family member into care. Operator: There are no further questions from the phone lines at this time. I will now hand it to Hayden for rest of Q&A. Hayden Strickett: Your first online question is from David Kingston. Well done on an overall -- on the overall progress and positive free cash flow. When are you expecting positive EPS? Matthew Prior: Yes. Thanks for the question, David. So EPS, as you'll see it in the face of the accounts, is driven pretty heavily by the fair value movements period-to-period. These are independent, hard to pick. You'll see from our fair value change from last year to this year, it was a substantial difference. But going forward, to the extent of build rate moderating and as well as valuation being stable, we wouldn't expect that to have the same degree of change. But that's the main factor affecting EPS beneath our operating performance. Hayden Strickett: Your second online question comes from [ Francois ]. Sales application trends beyond the reporting period of September 2025 with a split of ILUs and care suites, please? Matthew Prior: Thanks, [ Francois ]. We're not going to give the complete split, but I would say that it's continuing at a very similar level of contracting post 30 September. Again, we're coming into this quiet kind of December, January period. But what we're seeing to date across October and November is at a very similar level of contracting. Hayden Strickett: There are no further online questions. I'll hand back to Naomi. Naomi James: Thanks, Hayden. Thanks, everyone, for joining us today. Appreciate your time and look forward to giving you an update next year at Investor Day. Thank you. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
Ana Bartesaghi: Good morning, and welcome to Grupo Supervielle's Third Quarter 2025 Earnings Call. I'm Ana Bartesaghi, Treasurer and IRO. Today's conference call is being recorded. [Operator Instructions] Speaking today are Patricio Supervielle, our chairman and CEO; and Mariano Biglia, our CFO. We're also pleased to welcome Alejandro Catterberg, President of Poliarquía Consultores, one of Argentina's leading political analysts, who will briefly share his perspectives on the post-election political and reform outlook. Gustavo Paco Manriquez, Banco Supervielle's CEO; and Diego Pizzulli, CEO of InvertirOnline, will also be available during the Q&A session. Before we begin, please note this call may include forward looking statements. Please refer to our earnings release and SEC filings for further details. Julio Patricio Supervielle: Ana. Good morning, everyone, and thank you for joining us today. Let me begin with a broader macro perspective, which is quite encouraging. Following the recent midterm elections, Argentina is entering a new era. The path towards normalization and reform is gradually taking shape, and the financial system is poised to play a critical role in enabling this transition. We see the expansion of credit and a more dynamic banking sector as essential drivers of sustained economic recovery and inclusive growth. In this new environment, we are committed to returning to deliver profitability and sustain long-term value. And we are doing so supported by strategic initiatives that continue to unlock the full value of our franchise. While we are optimistic about the future, the most recent quarter presented some challenges. Systemic pressures and a very tight monetary policy characterized by unsustainably high real interest rates and historic reserve requirements ahead of the elections had a severe impact on economic activity and particularly the entire banking sector. This dynamic significantly compressed financial margins and constrained lending capacity. As a result, we recorded a net loss of ARS 50.3 billion, in third quarter 2025. Encouragingly, we are now beginning to see early signs of stabilization. Post-election confidence is improving, interest rates have declined sharply with room for additional reduction and monetary conditions are slowly easing. As we consider what these early improvements may signal for the broader environment, Alejandro Catterberg will briefly discuss the political landscape and what's ahead for the government reform agenda. But first, let me quickly walk you through a few highlights from the quarter on the following slide. Starting with loan growth, which remains solid, up 8% in real terms, slightly ahead of the system. Growth was led by the corporate segment, while retail declined slightly as we further tightened origination standards. Asset quality weakened as expected with the NPL ratio rising to 3.9%, mainly driven by the retail side. However, our NPL ratio -- share of individuals remains below our retail loan share, highlighting our focus on payroll and pension customers. On the funding side, deposit growth was strong, up 15% quarter-on-quarter in real terms and over 40% year-on-year. Dollar deposits climbed to another record high, up 31% sequentially. Our remunerated account strategy continues to gain traction and helping deepen client relationships. Profitability was most impacted, mainly due to margin compression and a higher cost of risk. Partially mitigating this, we maintain a tight control on cost, which declined 2% quarter-on-quarter and 12% year-to-date in real terms. We maintain a sound capital base to support growth as monetary policy continues to ease and loan demand resumes. Our CET1 ratio reached 13.2% at quarter end and rose to 14.5% in October, supported by lower deferred asset tax deductions. We are on track with executing our strategy, scaling our SuperApp, enhancing customer engagement and expanding cross-sell opportunities, particularly at [ Yole ], where we saw another strong quarter of volume and fee growth. While the quarter had its challenges, we are focused on controlling what we can control and continue to invest in our business to further advance our competitive position and ensuring long-term success. With that, I'll hand it over to Mariano to go deeper into our financial performance and perspectives. Mariano Biglia: Thank you, Patricio, and good day to all. Our third quarter results were heavily impacted by temporary macro and regulatory headwinds, which drove a 43% sequential decline in net financial income. With 1-day interest rates increasing to a peak of over 90% and 150% when adjusted by reserve requirements, funding costs increased by ARS 56 billion. Deposit rates adjusted almost immediately, while loan repricing lags due to longer duration, creating a temporary squeeze on spreads. Additionally, local market volatility ahead of the midterm elections impacted bond prices, resulting in weaker investment portfolio yields. In parallel, the Central Bank raised minimum reserve requirements by over 23 percentage points and moved compliance from a monthly average to a daily basis, further tightening liquidity, which had a negative impact of nearly ARS 21 billion. Lastly, the sharp rise in real interest rates generated a negative spread on our UVA mortgage portfolio, which impacted financial margin by close to ARS 18 billion. As a result, our peso NIM declined to 11.7% and total NIM fell to 10.8%, down 1,100 basis points and 1,000 basis points, respectively, quarter-over-quarter. Let's now turn to the next slide to review our 2025 -- turning to Slide 5. We are resetting our expectations for full year 2025. We now anticipate real loan growth of between 35% to 40%, led by corporate lending with retail gradually resuming growth as disposable income improves. Deposits are forecast to grow 30% to 35% with further share gains in U.S. dollar-denominated deposit balances. Regarding asset quality, we now expect an NPL ratio between 4.7% to 5.1%, reflecting asset quality trends among consumers and the result of the more challenging environment in recent months. Consequently, net cost of risk is now projected at 5.8% to 6.3%. NIM is now anticipated between 15% to 18% as high interest rates and reserve requirements through late October weighed on 4Q results. Turning to Slide 6. We now forecast net fee income growth of 5% in real terms. We are reinforcing our focus on operational efficiencies, including reductions in headcount and non-staff expenses. We now expect operating expenses in real terms to decline 8% to 10%. We now expect full-year ROE to range between negative 5% and 0%. Lastly, we anticipate ending the year with a CET1 ratio between 12.5% and 13.5%. Looking ahead, we intend to provide the 2026 preliminary outlook of key variables early next year, once there is greater clarity around reserve requirements, liquidity conditions, economic activity and the broader macroeconomic framework. Additional details on our quarterly performance and outlook are available in the appendix of our earnings presentation. This concludes our prepared remarks. We are pleased to welcome Alejandro Catterberg for a brief overview of Argentina's political outlook before we move to Q&A. Alejandro Catterberg: Thank you. Thank you for the invitation, Patricio, Ana. Thank you for having me here. Thank you, people for joining. My idea is just to give a brief analysis of what happened or what the election give us and what are the scenarios that we should start thinking from now on for Argentina. I would like to make basically 4 points. And then I don't know if we have time for Q&A. Happy to answer. Number one is that after a year of huge volatility, uncertainty, a big number of self-inflicted mistakes and damage by the government, it ended up quite positive for the government. Of course, as we all know, the election end up being better than expected a few weeks or months before the election, probably worse than what the government could have got if they decided to follow a different strategy and path by the beginning of the year. But that is in the past. But basically, with the result of the election, the government had a huge opportunity to begin the second stage of their administration with a lot of -- in control, in political control and with huge opportunities in front of them. A few numbers of trends had been confirmed by what happened this year and especially in the elections. Number one, it's something that some of you heard me before saying is that we have a confirmation that we have a huge change in the political cycle. The political cycle that lasts for 20 years and that was basically dominated by the Kirchner and the other hand of the same coin Macri was over in 2023. This election cycle basically confirmed that. We no longer had Juntos por el Cambio. All of the parties that were part from Juntos por el Cambio suffered huge defeats or very bad electoral results. The radical party performed or got less than 1% at the national state. They lost a huge number of seats in the Congress. Coalición Cívica led by Elisa Carrió, they had extremely bad results. They lost 4 of the seats they control in the House. The PRO party in the provinces that they run outside La Libertad Avanza, they performed very badly. Clearly, that idea that we have, and I've been saying that there was before and after 2023 has been consolidated with this electoral cycle. We are seeing the implosion of the political parties at the national level or the traditional political parties. We are seeing the implosion and the disappearance and the loss of influence of the leaders that dominate Argentina over the last 20 years. I'm talking about Mauricio Macri and Cristina Kirchner. We are seeing a huge fragmentation and atomization of politics in Argentina. As a consequences of all of that, we are seeing a greater role from the governors and the provinces. The governors and the provinces are becoming the main players besides, of course, La Libertad Avanza and Javier Milei. And that is changing the Argentina economy and politics, and we should -- and I believe this trend will continue, and we are moving forward to a different organization of politics with a much more fragmented distribution of power with the governors and the provinces becoming more -- having a higher degree of autonomy, less constrained by the national political leaders. And of course, that has correlated with some economic trends that we are having here in Argentina with this or many of these provinces starting to receive investments in the extractive industries for the first time in their history. And finally, as a consequence of all of this, we are seeing a consolidation of Javier Milei and La Libertad Avanza and especially the decisions that the President took after the victory. The changes within the government that the President made after the victory clearly sends the signal that he is concentrating most of the power that somehow he had delegated in other advisers like Guillermo Francos, Santiago Caputo. And the key post in the government is being fulfilled by Karina Milei people and Javier Milei himself. Also that is the broader picture of the things and the trends we have seen after the election. Number three, going to the Congress that we're going to see from December 10 in a few days from now and the agenda that is coming, you have probably read this, but there was a huge change and some positive surprises, especially in the Senate because all of the tight race of -- most of the tight race end up being on the favor of La Libertad Avanza. So La Libertad Avanza end up getting 3 extra Senators that better than what we thought and the Peronism end up losing 3 extra Senators out of the expectation. So the Peronists went from 34 Senators to 28. That is a key piece of information, guys, because the Senate has always been the most difficult part of the political system in Argentina to go through reforms. The Peronist has always been traditionally dominated by the Peronist because the Peronist traditionally dominate the provinces and the small provinces. Since the Peronist are losing the provinces, as I said before, are fading away, that translates into the Senate and the number of seats that the Peronist is now controlling the Senate is no longer the majority. And at some point, they may even lose the first minority. So it opened the door for the Senate to approve reforms. La Libertad Avanza until today has 6 Senators plus 9 from the PRO, 15 in total. They go from 6 to 21. The PRO go from 9 to 5. So they go from 15 to 26. They need to get 11 Senators to get the majority. And basically, those 11 Senators are very easy to reach. They need to make agreements with number of Governors that are willing to collaborate with the government and with -- and are willing to vote for many of the reforms. There is a, how do you call, the chair game, in which now the government has more chairs than -- there are more governors than chairs. So the governor will have the incentives to collaborate. And I don't find any difficulty. So I don't expect any difficulty for the government to be able to gather a majority in the Senate during the summer in which they're going to be discussing the reforms. In the House, the picture is quite similar. La Libertad Avanza has moved from 44 to 91 plus 18 from the PRO. So there are only 20 seats away from having the majority in the House, and there is 46 seats in the hands of the governors who they could easily reach agreements to get to that number. So the reform seasons will start in a few weeks from now. The government will be able to approve for the first time in the administration, their budget. So like Milei and La Libertad Avanza run the country the last 2 years without a budget. Next year, we will have a budget being approved by the Congress. And a big number of reforms will be discussed. Basically some labor reforms, some tax reforms, some other reforms regarding, for example, criminal policies or judicial things or many other aspects, many of the things that were left behind in the [ buses law ] last year are going to be put it back on the table. Other issues like the Glacier Law will probably be discussed and there is a high probability that will be approved that is critical for the mining industry because basically, they will send the decisions regarding Glacier's policy to the provinces of each province decided what to do with that. And on top of that, we have other reforms coming, institutional reforms that will be very important. The most important of all, the government will have a new chance to complete the Supreme Court and to nominate some new judges into the Supreme Court. So I do expect that this or most of this reform will be approved during the summer. I don't know if one of them or the other will be a fully game changer. At some point, I think they are relevant and they change and increased productivity in the long term in Argentina. But also what happens with the economic policies and the normalization of the economy, interest rates and all of the stuff are as relevant as the reforms coming from the Congress. Finally, my last comment is that I have received many questions from clients or from investors like you guys saying, well, listen, Ale, I have saw this picture before, I have saw this movie before. In 2017, Macri won the midterm selection with almost the same amount of support and votes that Milei got and almost exactly in the same provinces that Milei won last month. So we all know what happened with Macri a few months after he won the midterm election. And I have to say that I find some differences this time with the previous time. And most of the differences, I think, plays on the favor of Javier Milei or that the chance that these times work it out better. On the economic side, clearly, by this time, Milei has done the dirty work and the fiscal adjustment is already done. Mauricio Macri got to the midterm elections without having done the fiscal adjustment, and he was forced to do it after the 2018 crisis. The adjustment in relative prices clearly has been probably better under -- or has moved faster under Milei than what Macri was able to do by 2017. We have a good emerging markets environment right now. Macri, 2 months after winning the midterm election faced one of the toughest drought in the agricultural sector, while Milei is going to face one of the greatest harvest in 2 or 3 months from now. Macri by this time has used all of the markets or has, how you say, consume all of the access to the market. Milei has not been able to go back to the markets. They will go back to the market probably starting next year. By this time, Macri had an energy deficit of more than $5 billion. Argentina now because of how Vaca Muerta is producing has a surplus of energy account by more than $7 billion. That is on the economic side. On the political side, clearly, Milei is facing a weaker Peronism and a much weaker Cristina Kirchnerism that Macri was facing. Milei has a very favorable Senate, much more favorable than what Macri had, even though the House was more easy for Macri than for Milei. But on the whole, I think the chances to move forward with the reforms should be easier now for Milei than what it was for Macri after the 2017 election. We have governors who are -- who have a more important role and have the incentive to collaborate with the government because basically, they don't have another place to go right now. We have an administration and probably a President that is much more committed into pushing the reforms and going deeper with surplus than what Macri was. Macri and Milei still had very similar public opinion support by the time. We finished our November survey and the trust and confidence index that I do for Universidad Di Tella increased 16% this month. Milei approval rating went up 6 points this month. So basically, we are going back to the numbers that we have seen around June, July this year before the whole deterioration process started. We have not reached the highest point that Milei was able to achieve by the beginning of 2025. But clearly, after the election, Milei recovered almost all of the deterioration that he suffered during the last 3 or 4 months of huge uncertainty. And on top of all of that, besides the economy and the political considerations, we have something that could be a game changer or it is a game changer, and that is the full support in economical terms and in political terms of the U.S. Government and President Trump. So all of that context, in my opinion, creates the conditions to make the story or the probabilities of Milei to move forward and have a third year of administration clearly better than what Mauricio Macri had as a third year. So for me, Argentina and the government has a huge opportunity in front of us. I hope that the government and the President had learned from the mistakes he made in the last few months and some of the mistakes he made in the first year of his administration. I hope that this time, he pushed for good judges to go to the Supreme Court. I hope that this time, he's able to -- or he delivered on the promises and the agreement that he made with the governors. I hope that this time, he's able to change part of his narrative style and the way he communicate and his constant aggression against some of the independent media. But to put it in a simple ways, I think it's up to the government and up to Milei not to lose this opportunity. So with that said, Ana, thank you very much. Ana Bartesaghi: Thank you, Alejandro. At this time, we are conducting the Q&A session. [Operator Instructions] The first question comes from Ernesto Gabilondo with Bank of America. Ernesto María Gabilondo Márquez: My first question will be on your loan growth expectations. You have guided between 35%, 40% this year. I know that you don't have a guidance for next year yet, but can you give us some color on what are your growth expectations per segment? And maybe Alejandro can also add to this question. Can you share the names and amounts of private investments announcements so far, so we can detect the potential lending activity in the different regions and sectors? And then my second question is on your ROE expectations. You have mentioned to expect an ROE between minus 5% to 0% this year. And then again, you will provide guidance next year. But any color on how should we think about the ROE next year? Just the general trends, high single digit or low double digit, I think, will be very helpful. Julio Patricio Supervielle: Ernesto, thank you for your questions. I'll take it first and then be complemented probably by Mariano. In terms of loans, loan growth this year was constrained by tight monetary conditions. But since the midterm elections, we see the first signs of a turn. Real rates are falling, reserve requirements easing and credit demand improving. In 4Q 2025 and early 2026, we see growth coming mainly from corporates and SMEs, particularly in the oil and gas chain with retail coming maybe probably later picking up in the second quarter of 2026 as rates and employment conditions improve. In terms of -- if, let's say -- all what we heard from Alejandro in terms of macro reforms and the deflation continues, we see real loan growth in 2026 reaching in the area of 30% to 40%. And that's, I think, for -- in terms of loan growth. To fund this growth, by the way, let me add that our strategy of remunerated accounts for corporates and payroll clients have been also now extended to the entire ecosystem that will -- this will strengthen our funding base. And I think it anticipates what fintechs will do when they start to play like Mercado Pago. So I think it's the right move. So in short, corporate and SME lending will lead the recovery and retail resume as of second Q '26. And we think that 2026 will be a strong year. [indiscernible] do you want to complement something on loans? Unknown Executive: No. I think that's... Julio Patricio Supervielle: Okay. And then in terms of ROE for 2026, we have a long-term view, which is constructive and particularly so after the outcome of the midterm elections. So -- but there are several drivers that support a positive trajectory for us in terms of ROE starting in 2026 and extending beyond. The first one is the releveraging -- the gradual releveraging of banks. And this is, of course, connected to the reforms that are implemented by the government to expected improving consumer confidence, disposable income and also an increase in money demand by Argentines. And I think that we can expect also that with money demand, there will be lower liquidity requirements as of 2026, creating more room to leverage and to expand. Also, we plan -- we will be looking to international markets if conditions are there to tap debt. We are doubling down on cost controls to lift operating leverage. And we are also, as I mentioned before, advancing our key strategic initiatives such as the remunerated account now extended to the entire old ecosystems. So basically, all of this with, let's say, focus on fee growth, better asset liability management and prudent underwriting, I think will give us the way to improve ROE. Importantly, we are investing for the long term, and we are conscious that certain initiatives have longer paybacks, but they are designed to build durable earnings power for our franchise. So while the path to 15% and 20% ROE may be extended, we are building all the necessary blocks basically to -- and put it in place. And we believe that as leverage normalizes and reform takes traction, Supervielle can converge towards ROE levels in line with peers in the region. Unknown Executive: I think I might also ask about some big initiatives that Argentina has for the next year. Unknown Executive: The investments that -- the private investments that have been announced so far in the different regions and sectors, I think, will be very helpful. Alejandro Catterberg: Ernesto, I don't have the exact list of especially the mining big projects that have been going on. But clearly, when you look at the geography and the political geography of Argentina, what we are seeing is a rapid change in the economic dynamics that, that is creating. I mean provinces that has basically traditionally lived from public funds that we were receiving from federal coparticipation now has starting to receive direct investment and direct projects that are becoming a reality. So for example, provinces in the whole north, you go to Jujuy, you go to Salta, Rioja, San Juan, Catamarca with all big mining projects from silver to gold to lithium. Mendoza , who has been a province that traditionally has rejected mining because they are more concerned about the impact of mining in tourism and in the wine industry, whatever. Finally, last year, Governor Cornejo has jumped into mining and basically are starting copper projects. As you all know, we have the same -- and as Chile, and I don't know and nobody has found the reason why the Chilean side of the Los Andes could have huge reserves of copper and not the Argentinian side. So Mendoza has started. Neuquén and the south provinces of Patagonia with, of course, Vaca Muerta and the oil and gas industry. So -- and on top of that, you have the traditional all of the La Pampa region with Córdoba, Mendoza and all of the agricultural production that so far it's about to have a good impact next year. So in general terms, the extractive industries are booming, are accelerating. Many rigid projects have been approved. And I think that will have an impact that -- the way I like to analyze Argentina, especially on the political and social side is, is having an impact on the distribution of political power. And I think that trend will continue, even though we don't have Milei or we have someone is coming back, et cetera, et cetera, et cetera. And also on the long-term view, we are seeing a shift in Argentina that is starting to distribute the power that -- economic and political power that has been so concentrated in Buenos Aires and in La Pampas more to the provinces. Julio Patricio Supervielle: Sorry, let me add to Alejandro. With all these investments that are being announced by the -- all the debt emissions by the oil and gas industry, they will have -- as soon as they start being invested, all the value chains of these industries will start to move. So this will ignite growth and loan demand precisely in the value chains that we are focusing because we -- by the way, we just -- we opened recently a branch in Añelo and another branch in the -- where the ecosystem of mining in San Juan is. So even though we were present before, now we have a more direct presence and because we want to focus on that. Alejandro Catterberg: But let me add something on the political side. Probably one of the things that will start showing up as a concern, and I tend to believe that will start to happen next year as long as inflation demands or people worry about inflation end up vanishing away, it has gone from by far being the #1 problem to now being shared with another problem. What I tend to believe in the long term in Argentina will happen and as in many other countries, it's a labor problem. So probably what we will start seeing is demands from some sector of the society that will suffer from losing job in the unproductive industries in the suburbs of Buenos Aires City and jobs being created on the new provinces, and I don't know how labor demanded are in these industries. So if you want to -- if you ask me what consequence or what negative implications these changes could have for this government on the next government and also if you add artificial intelligence and the impact that, that will have on labor as a general and globally. Probably what we will start seeing next year or in the next -- or in the future years is that the problems and the tensions and the social tensions changes from related to inflation towards relating to employment generation. Ernesto María Gabilondo Márquez: And just a follow-up with Patricio on the ROE expectation. So you were mentioning that Supervielle is positioned for the long term, but the ROE of 15% to 20% may be extended. So considering what you posted in or what you're guiding for this year, would it be reasonable to see around a single-digit ROE next year and then moving to your medium-term target by 2027, 2028? Julio Patricio Supervielle: Mariano, do you want to answer? Mariano Biglia: Ernesto, yes, let me complement on this. I think for next year, although we haven't given guidance because we still want to see how the monetary policy, the regulation evolves after the elections. But it's reasonable to think that we will reach our medium-term target ROE for the end of next year. So for the full year, we will be on high single digits or low double digits depending on the pace on how fast the things that we need to happen, evolve. That is lower interest rates. We are already seeing that in November, which is an inflection point for interest rates. Also minimum cash requirements. We are already seeing some flexibilizations with the last regulations decreasing non-remunerated cash requirements. There's still some way to go looking forward. Cash requirements are still on 50% level for site deposits, which still extremely high. So we need that to continue easing. And then also improvement in NPLs, we think will happen next year that will allow us not only to reduce cost of risk, but to resume real growth on the retail side. And that is something that we think can happen when economic activity improves with more loose monetary policy, with economic conditions improving, not only on an average for the country, but also across industry. We know there are some industries that are still lagging in the recovery of activity and some of those industries have a lot of employment. So those dynamics should allow us to lower cost of risk, increase in retail. And again, with a lower of cash requirements, increase the weight of the loan portfolio in our balance sheet. That is what will lead us to our target for medium-term ROE. And depending on how fast that happens, we will be on lower single -- double digits or if it take more time on single -- higher single digits. Ana Bartesaghi: Our next question comes from Brian Flores with Citi. Brian Flores: I have 2 questions here. I think the first one is a bit on growth. You mentioned in the presentation that you want to achieve a more balanced loan mix between corporate and retail. You're probably prioritizing corporate, as you were mentioning the strong demand and the unlocking of a lot of pent-up demand perhaps. Just wanted to clarify if this means that corporate loans could reach around 50% of the loan mix in 2026? And also, naturally, this brings lower yields. So just wondering if we should see a recovery in risk-adjusted NIMs by the second half of 2026, perhaps? And then I'll ask my second question. Julio Patricio Supervielle: We believe that the right approach, considering also the competitive landscape of new banks coming into the country, I mean starting to work in the country, we believe that the right approach is to have a balanced approach in terms of serving enterprises, SMEs and families or individuals. Having said that, loan demand will resume as of second Q 2026 for -- we believe it will resume if -- with consumer confidence improving and better maybe disposable income for individuals. And -- but to answer your question, today, I think the balance between enterprises and Mariano will confirm that, enterprises and individuals is tilted towards enterprises, corporations. So it means more than 50%. I believe that this will continue to be the case, in my opinion, maybe the first half of 2026. And then when we see the conditions for individuals and loan demand arise -- raising again, then it will probably go back to 50%, 50-50 or maybe higher, being optimistic at the end of the fourth quarter 2026, being optimistic, maybe more retail demand, so in order to have higher NIMs. I don't know if you want to complement the question. Mariano Biglia: I think regarding the weight of corporate and retail, that is very complete. What I can add maybe is that on the corporate side, although maybe it will -- we expect it to be more balanced with retail for the end of next year. But also we can start to see maybe in the second half of the year, a change in tenors. Because remember that right now, and this is true also across the industry, almost all lending is for working capital. It's very short term. So what we could see happening next year is that we can see more loan demand for longer-term investments and not only working capital. So that will also help to these yields. Brian Flores: No, super clear. And then on risk-adjusted NIMs, should we think about, let's say, a U-shaped recovery by late 2026, as you mentioned, cost of risk coming down perhaps. Is this maybe a correct observation, Mariano? Mariano Biglia: Yes, I think it could be earlier than that. As you know, with the expected loss model that is pro cycle, we are already provisioning all the deterioration that -- even the early deterioration that we see in the -- particularly in the retail portfolio. So when we see conditions improving, cost of risk should decrease very fast and not only having to see an important recovery in real terms in the growth of the retail portfolio. So in that case, we should be able to see a recovery in risk-adjusted NIMs for the retail portfolio, and that will also translate into the whole portfolio maybe earlier in the year and not having to wait for the second [indiscernible]. Brian Flores: No, super clear. And my second question is on risk management because obviously, we're all excited about the Argentina story. And I think Alejandro started saying that one of the key concerns that we receive, I think, is we have been here before. And Patricio, you mentioned a lot of optimism, right, in not only the political, but also, I would say, the economic landscape. But I just wanted to hear your thoughts on what if, right, what could happen if things do not go well, if the reserve requirements remain high? Are there any considerations by you or the Board regarding any alternatives, could be partnerships, asset sales, M&A, if the base case scenario does not pan out and we have, let's say, a less bullish scenario? Julio Patricio Supervielle: Well, yes, I mean the -- I think that the risk scenario that a lot of people are talking about is the policy that the government is having about reserves, foreign reserves. And they are -- I think there is a certain risk that, for instance, you have people -- a lot of people traveling abroad, spending money abroad because you have this sensation that is relatively cheap. And at the same time, the Central Bank is not building reserves. So well, we -- I can understand the way the reason because they have the support of the U.S.A. and so on. But eventually, things are volatile in the world, and that could potentially be a problem. I think, of course, they want to focus on inflation and make sure that rapidly inflation comes down. And this is why I think they are keeping a tight control on FX. Regarding our franchise, I think what we're doing, we are working always to improve our resiliency in terms of the way we originate the way our origination standards for individuals. We anticipated earlier than other banks that the deterioration that took place this year. So we are -- I think we are good in this. And at the same time, since Paco came -- arrived to the company, to the bank, he's implemented a complete reshuffle of the culture of the bank in order basically -- in order to become much more customer-centric and have people more accountable. So we have people now that are completely engaged, aligned and committed to going the extra mile. We are working with -- in the ecosystem -- in our ecosystem, we have a very strong company in our own ecosystem, which is InvertirOnline, which is in the verge of the next stage of InvertirOnline because they already achieved something which is quite remarkable is they are the most and by far, the biggest digital broker in the country for retail investors. This is fantastic what they did in the last 4 years. But now they are -- they will maintain this. They are very efficient, and they have the scale and the technology, but now they will go to the second stage, which is to concentrate on wealthy people, wealthier and affluent people in enterprises, in IFAs. And they have the teams to do that, the engineers, and they will invest more on that to make sure that we get fast to this stage. And this engine gives us the opportunity to do a fantastic cross-sell with -- in order to acquire bank clients. So I think we are prepared to competition. We are prepared for what is coming. And we've lived for different previous crisis and so on. Unknown Executive: No. Also, Patricio, we are always open to make some strategic alliances. So we are open in order to define the new future for Argentina in our industry. So yes, we are open. We are analyzing a lot of them. But basically, also, we have a conversation with a huge retailers in order to make some strategic alliances. So yes, we are open. We understand the change in the transformation in the world about this industry. So yes, we are open, and we want to make a new bank, a very attractive bank. So yes, we are open for new businesses. Ana Bartesaghi: Maybe our next question comes from Camila Azevedo from UBS. [Operator Instructions] Camila Villaça Azevedo: I'll keep it brief. I want to comment -- I want you to address more on asset quality topics. So could you please give more color about the NPL dynamics during the quarter? Do you think that the numbers seen in the quarter was the peak? Or are you seeing any signs of peak? When should we expect it to happen in both segments? And which would be the comfortable coverage ratio level that you imagine given this context? Julio Patricio Supervielle: Well, first of all, asset quality deterioration this quarter mirrors system-wide trends as the credit cycle adjust to the macroeconomic environment. After a very unusually benign period of NPLs, low NPLs, they rose across existing and new customers, driven by pressure on disposable income and tariff adjustments and also the shift to a disinflationary environment where debt no longer erodes in real terms. This was most visible in retail. We had anticipated this deterioration because -- and a tightening origination criteria in personal auto and car loans since the beginning of the year and reinforcing collection and also client support. Unfortunately, the sharp pre-election rate hikes added further stress to -- through our individual NPL shares, but our individual NPL share in the market remains below our retail loan share. So this is showing relative resilience. We believe that these NPLs are -- going forward, I think we believe that this trend is manageable, and we expect gradual improvement as macro conditions and consumer confidence normalizes. I don't know if you want to add or, Mariano, complement. Mariano Biglia: Yes, I can just complement on the NPL expectations. Maybe we can see a peak in the fourth quarter as a rollover of early deterioration comes NPL maybe at the end or during the fourth quarter. And also when conditions improve, not only we will see NPLs decreasing, but also loan growth increasing. So that will also dilute NPLs, and we will see that number improving. But for the impact of high interest rates on economic activity in the third quarter, we still can see [indiscernible] the NPL ratio increasing in the fourth quarter. And I think that will be the peak. Camila Villaça Azevedo: Super clear. Yes, the coverage ratio, please. Mariano Biglia: And regarding the coverage ratio, as I mentioned before, we follow the expected loss models. So when NPLs are very low, coverage tends to go very high. In fact, in the past, we were above 200%. So now that those provisions are being used. So that's why we see the coverage decreasing, but it should always remain above 100% compared to NPL. So we should see it in the range of 110%, 120%. Ana Bartesaghi: The next questions come from Ricardo Cavanagh with Itau. Ricardo Cavanagh: As I look into 2026, for me, it's not just another year. It has a big déjà vu of Argentina of the '90s with positive expectations for credit and credit to GDP was double where it stands. So my question would be, which are the new actions that you believe you still need to take? And which are the new risks that you think you still need to face in order to generate new results in a new and different environment? Perhaps the first question is if you agree with this possibility or with this positive outlook as well. Julio Patricio Supervielle: I think that we need to make sure that there is -- we need to make sure that we increase the leverage of the bank. This is a challenge of all banks, but in our case, it's our challenge. And I think that we will -- it's clear that savings in Argentina is still a pending issue for Argentina. The share of savings of GDP is still very low. So in order -- we need to build a bridge in order to make sure that the bank gets leveraged. And this bridge, I believe, will come in international markets. So we will be looking in order -- we will tap international debt markets if conditions arise. And flavor of this is what we already did with multilaterals where we -- 45 days ago, we got up to $270 million in terms of facilities 3 years from multilaterals because we have a focus in SMEs. So -- and another thing that I think for me, it's very interesting. I don't know whether it will happen or not. It's first in -- to try to repeat what we did in 2017, where we also tapped in peso-linked debt. This is not yet the case because there is not yet a market for peso-linked debt. But we did this in 2017. And also something that maybe for this stage is maybe a dream, but this is my dream at least. I think that if confidence is built in Argentina, then there will be a possibility of rotating assets. I mean let's say, doing originating loans and maybe sell those loans to the local capital market or maybe international markets if there is a -- this is something that could happen. And so we are always looking to this opportunity because this will be a fantastic way of growing without consuming capital. Ana Bartesaghi: I think we have the last questions come from Pedro Offenhenden from Latin Securities. Pedro Offenhenden: I had one question on how do you assess liquidity conditions in the system going forward -- in the system and in the bank going forward? And if you see liquidity as a potential constraint for great growth in 2026? Julio Patricio Supervielle: As the monetary base remains very small even in historical terms, we're already seeing a rebound in money demand after the elections. This is key, the increasing money demand. This should support system-wide deposit growth. And as confidence consolidates, we could expect that a gradual lengthening of deposit duration, that is people investing in -- more people investing in time deposits. Another thing, another issue, which is central also is the Central Bank favoring financial intermediation because as of today, around 30% to 35% of deposits of the system come from money markets. And this is not normal. And if you want -- if the Central Bank wants to, let's say, to favor credit to the private sector, then they need to go to eventually regulate differentiated reserve requirements for -- to make deposits more attractive than money market funds. And for us to also to tackle the liquidity constraints, I think we have the right strategy because the rollout of the [Foreign Language] and cash management solutions for corporates, payroll accounts and all the entire ecosystem, I think, positions us well to capture more stable and high-quality deposits. And as I said before, finally, we will try to tap the international markets if conditions arise. Ana Bartesaghi: Thank you, Pedro. So I think we had some in the Q&A, but I think all of them were addressed. [ Ignacio ] [indiscernible], I think all of them mainly were addressed. The rest of the KPIs in terms of guidance, we are going to provide them maybe at the beginning of the year formally. So we will have more, as Mariano mentioned, clarity in terms of what happens with requirements and rate as well. Then from Cap Securities, [indiscernible], we already discussed about NPLs. And then in terms of shares canceled, they are automatically being canceled after 3 years of being in the treasury held by the treasury. So I think by the end of the year, be this next year, 3% of the capital has been canceled and -- but not more than that. So I think with no more questions, I think we arrived to the end of the Q&A session. Thank you all for joining us. A lot of people today. We're sorry, we delayed a bit, and we know there is another call from another bank at the same time. So thank you all for joining. Julio Patricio Supervielle: I do appreciate your question. It was a difficult quarter, but it was -- I'm optimistic for 2026. And we do have the 2 -- I think the 2 best CEOs of Argentina for -- to tackle for the bank. And with Paco and Diego for InvertirOnline. So I think we -- I'm very optimistic about the future. Thank you very much.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to Alarum Technologies Third Quarter 2025 Earnings Results Conference Call. [Operator Instructions] This conference is being recorded. I will now turn the call over to Kenny Green, Investor Relations at Alarum. Kenny, please go ahead. Kenny Green: Thank you. Good day to all of you, and welcome to Alarum's conference call to discuss the results of the third quarter of 2025. I would like to thank management for hosting this call. Today, we are joined by Shachar Daniel, Alarum's CEO; and Shai Avnit, CFO. Shachar will begin the call with an overview of the third quarter, followed by Shai, who will review key elements of the financials. Finally, we will open the call to our question-and-answer session. Before we get started, I want to highlight the forward-looking statements disclaimer. This conference call may contain, in addition to historical information, forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal security laws. Forward-looking statements include statements about plans, objectives, goals, strategies, future performance and underlying assumptions and other statements that are different than historical facts. For example, when we discuss our strategy of prioritizing long-term relationships and market share capture over short-term margins and profitability, expected trends in market demand and AI-driven growth, our business momentum and pipeline, our expectations regarding future revenue patterns and margin improvements, the anticipated impact of our strategic investments and product mix and our estimates regarding fourth quarter 2025 revenues and adjusted EBITDA, we are using forward-looking statements. These forward-looking statements are based on current management expectations and are subject to risks and uncertainties that may result in expectations not being realized and may cause actual outcomes to differ materially from expectations reflected in these forward-looking statements. Potential risks and uncertainties include those discussed under the heading Risk Factors in Alarum's annual report on Form 20-F filed with the SEC on March 20, 2025, and in any subsequent filings with the SEC. All such forward-looking statements whether written or oral, made on behalf of the company are especially qualified by these cautionary statements, as such, forward-looking statements are subject to risks and uncertainties, and we caution you not to place undue reliance on these. On the call, the company will also present non-IFRS key business metrics. The non-IFRS key business metrics the company use our EBITDA and adjusted EBITDA, non-IFRS gross margin, non-IFRS net profit or loss and non-IFRS basic earnings or loss per share or EPS. The exact definitions and reconciliations of these non-IFRS key business metrics are described in the company's financial results press release, which is available in the investor lobby of Alarum's website. These measures may differ materially from similarly titled measures used by other companies and should not be considered in isolation from or as a substitute for financial information prepared in accordance with IFRS. And now I'd like to turn the call over to Mr. Shachar Daniel, Alarum's, CEO. Alarum -- Shachar, please go ahead. Shachar Daniel: Thank you, Kenny, and good morning, everyone. Thank you for joining us. Let me start with the headline. Q3 was a breakout quarter, $13 million in revenues, up 81% year-over-year and 48% sequentially. This is one of the strongest quarters ever in Alarum's history and clear evidence that our platform has begun critical infrastructure for some of the world's leading and most exciting AI labs and global technology companies. This significant jump was driven by increased consumption from major AI customers, continued expansion within existing enterprise accounts and strong adoption of our newer AI-centric products. During the quarter quarter we saw 26% more paying customers, 17% higher average revenue per customer and 48% sequential revenue growth. While our largest customers contributed just over 1/4 of our revenues and our top two contributed just over 40% growth was growth based. We also continue to see significant traction from our major global e-commerce platforms in Asia, which faced repeat and expanding orders, despite the natural volatility of this yearly hyper growth phase of the AI market, we are confident that demand is broadening and growing sharply, and AI will be a core long-term and significant growth engine for us. Profitability. As we noted last quarter, our gross margin will see a short-term impact by the mix of our two very large customers, both globally recognized brands operating at extraordinary scale. There's significant consumption at the start of significant work with them naturally comes with our -- with lower unit pricings, and for us, higher initial infrastructure costs. Part of our delivery for these customers only at the early and initial stages of delivery relies on third-party partners and those costs flew directly into cost of revenue. That said, these customers validate the strength of our technology, reinforce our ability to deliver data at native scale and represent significant long-term strategic upside. Earlier this year, given the strong potential we saw, we made the delivery decision to aggressively expand capacity at premium residential infrastructure and build dedicated high throughput pipeline ahead of revenue. And this front-loaded investments are the primary reason for the temporary pressure on margins. And importantly, I strongly believe that this is exactly the right long-term strategy. While remaining profitable overall, we are sacrificing some near-term profitability to strongly capture market share and secure more relationship in the segment growing several hundred percent year-over-year. Looking ahead, margin improvement. This margin pressure is short-term planned and fully addressable. Several initiatives are already underway and are part of our strategy: one, in-house solutions. Our goal is to serve as the customers' leading and most reliable provider. To achieve this, we leverage our deep market expertise and long-standing relationships with numerous vendors. And sometimes when needed, we select a partner to collaborate with. And once we validate continued demand for the specific product, we will either develop it in-house, alternative or consider acquiring the solution. This approach will allow us to enhance our capabilities at lower risk and ensuring demand while significantly improving our gross margins over time. Two, network optimization. We're identifying large optimization opportunities across our service and network architecture. Improved efficiencies have already begun and will continue to improve over time. Three, shift toward higher-value products. As dataset, scrapers and website unblockers grew as a percentage of the revenue, unit economics and margins will improve also. We remain confident in our ability to expand both growth and operating margins as our product mix continues to shift and our infrastructure becomes more efficient. AI market dynamics. We are operating at the frontier of the largest AI model training runs on the planet. At this stage of the AI build-out, demand from leading labs can move sharply quarter-to-quarter a day; one, refresh massive data sets; two, test new architectures or shift compute priorities. This volatility is normal in a market that is still in a land grab phase. As models move from research to more structured production and fine-tuning cycles, revenue patterns will naturally become smoother and more predictable. Until then, our major KPIs are year-over-year trends, penetration and quality of relationships. Across all these three, we have never been stronger. Product suite expansion. Our AI-strengthening product suite is scaling rapidly. Dataset and material and fast-growing revenue contributor. Website Unblocker delivered triple-digit sequential growth. Custom scrapers delivered high double-digit sequential growth. IP proxy network stable to growing in absolute terms and continues to support massive AI workloads. Our revenue mix is evolving from a single product proxy business into a diversified multiproduct data infrastructure platform. This shift is expected to drive stronger long-term margins and healthier unit economics. Outlook and summary. We remain confident that we are in the right position at the early stages of a massive and long-lasting transformation in the data industry. Looking ahead to Q4, and as Shai will detail shortly, we expect revenues approximately of $12 million plus minus 7%, which is up a very significant 62% year-over-year and will allow us to end the year at around $41 million in revenues, up almost 30% year-over-year and well ahead of our internal expectations earlier in 2025. From global tech leaders to fast-growing start-ups, all are increasing their reliance on high-quality real-time public web data at unprecedented scale, and Alarum is uniquely positioned to serve this market. Our vision was and remain clear. Alarum will become one of the foundation data infrastructuring companies powering the AI area. I will now hand it over to Shai for the financial details and our Q4 outlook. Shai? Shai Avnit: Thank you, Shachar, and hello, everyone. I will start by reviewing our key financial results for the third quarter of 2025, comparing them to the same period last year, unless otherwise noted. Following that, I will provide our guidance for the fourth quarter of 2025. Detailed definitions and reconciliations of our non-IFRS key business metrics can be found in our Q3 2025 financial results press release. And one final note before I begin, the figures I will be discussing are rounded for clarity and ease of reference. Turning now to our financial performance and first revenues. Revenues in the third quarter of 2025 reached $13 million compared to with $7.2 million in the third quarter of 2024, an increase of approximately 84% year-over-year. As Shachar mentioned, the increase was driven mainly by artificial intelligence customers with a significant contribution from one large-scale AI customer, which accounted for about $3.5 million in revenue in the quarter. At the same time, we continue to see a shift in customer segments with strong growth in the AI vertical, offsetting declines in other segments. Gross margins. As a result of our increased investments into our business to capture opportunities ahead and due to the higher share of large-scale projects with AR customers, non-IFRS gross margins for the third quarter of 2025 was 56% compared to 74% in the third quarter of 2024. As Shachar mentioned, the lower margin reflects the work we are doing with large customers, mainly AI companies, which require data gathering at significantly higher scales, necessitating upfront costs, including a larger volume of servers and stronger, higher quality infrastructure as well as lower unit price charges. In addition, the first material products served in 2025 triggered related third-party costs. Overall, this is consistent with our strategy to engage in large scale, high strategic opportunities that we believe can drive meaningful long-term growth and profitability even at the cost of lower short-term margins that we expect to improve in the future. Expenses. Operating expenses in the third quarter of 2025 were $7.4 million compared to $4.1 million in the third quarter of 2024. The increase was driven mainly by planned operating expenses investments that we discussed last quarter. This includes higher employee-related costs, particularly in R&D and sales-related compensation as we continue to grow the team to accelerate product development, expand our capabilities as well as by the overall increase in the scale of operations. Net profit in the third quarter of 2025 was $0.1 million compared to a net profit of $4.2 million in the third quarter of 2024. As a reminder, the Q3 2024 profit was particularly high due to a sharp fair value decreases of investors' warrants related to the share price decreases in the quarter. Those decreases resulted in high financial income of $3.5 million. The vast majority of the warrants expired in 2025, and hence, they do not impact our bottom line anymore. Adjusted EBITDA. Adjusted EBITA in the third quarter 2025 was $1.2 million compared to $1.4 million in the third quarter of 2024. Basic earnings per ADS in the third quarter of 2025 were $0.01 compared to $0.60 in the third quarter of 2024. The high Q3 2024 figure was a result of the onetime financial income I just mentioned. On a non-IFRS basis, basic earnings per ADS were $0.18 in the third quarter of 2025 compared to $0.20 in the third quarter of 2024. Our current share count is approximately 71.2 million ordinary shares or 7.1 million U.S. listed ADSs. As of September 30, 2025, the company's shareholders' equity increased to $31.1 million, up from $26.4 million on December 31, 2024. Our cash, cash equivalents and debt investment balance, including accrued interest as of September 30, 2025, was approximately $24.6 million compared with $25 million at the end of 2024. Alarum's solid cash position supports our ability to continue investing strategically while maintaining a focus on sustainable value creation. Guidance. Moving over to our outlook for the fourth quarter of 2025. Our guidance reflects what we see today based on customers' orders, backlog and current consumption trends and is given as of today's date. We currently expect that in the fourth quarter of 2025, revenue will be around $12 million with an up and down range of approximately 7%, representing about 63% year-over-year growth. Adjusted EBITDA for the fourth quarter of 2025 is expected to be around $1 million with a range of plus/minus $0.5 million. To summarize, 2025 continues to be a year of strong momentum, a solid balance sheet and growing market interest. We remain focused on our commitment to generating long-term sustainable value for all our stakeholders. With that, we will now open the call for questions. Operator? Operator: [Operator Instructions] Our first question is from Brian Kinstlinger with Alliance Global Partners. Brian Kinstlinger: Can you talk about the large project for data set delivery? How is the program going? What's customer satisfaction like? And how should we think about the consistency from this customer in terms of revenue contribution over the next 12 to 18 months? Shachar Daniel: Okay. Hi, Brian. So first of all, a smaller correction, it's not a project, yes. It's a demand for one of our products, which is -- in this specific case, it's a combination between a scraper and data set. And this demand is a natural demand in our space, like many other customers that have their own needs of some of our products. This specific, let's call it, customer consumption is huge from the volume aspect. And of course, it's taking a significant portion of our revenues. So that's why we can talk about it specifically. Now regarding your question for the future. So as I mentioned, I think, a few times in the last period and periods in plural and also in my pitch a few minutes ago, you know we can divide the world of data needs and data collection at this stage to let's say, to -- we can classify to two groups. One is the group of customers that are using the data and the data needs for their -- in the production stages. They are selling their products, they're selling their analytics to customers and working more or less, they are stable more or less, and we know the need, we know the need for the coming period, and we can predict the future. The second is customers or our customers that are basically in the, let's call it, in the R&D stage, which are developing their LLM and their AI models. In this stage, their needs basically can change often. They can change from month to month, so it can change sometimes from week to week because they are in the stage of developing their model. And as you know, in many other spaces when you are in the R&D stage, you don't have -- you as the company, as a customer, you don't have a real prediction, what is the amount of data that you will need from this or that source, what is the duration? Things are changing often, websites are changing the way they are acting very often. And according to this, their needs and their demand can be changed sometimes on a weekly basis, sometimes on a monthly basis and sometimes it can go for a long time. But to be very honest and transparent, we don't have, and I think our customers, basically don't have reliable information that they can share or I can share with you regarding the future of this or that use case product need, et cetera. The third question is how -- for this point of time, the level of satisfaction is high. We are providing a huge amount of data for these customers and others, the rotation -- the retention is good, and we're in a very good position from this aspect with this customer and some others. Brian Kinstlinger: Do you see once R&D customers have developed their models that usage is higher or lower or just more predictable? Shachar Daniel: Okay. So I think that we can divide it I think maybe to two phases, one phase is in the education stage when they are educating the model, they need a huge amount of data in a very short time. And then when it comes to the stage of production, let's call it, the production stage, then they will use maybe the same amount of data, but it will not be on a short time, they will divide it over the quarters and over the time. The second thing, which is even more important is that the data sources, meaning -- even if you finish to educate your model from one data source, and you go to production stage, then the next big thing is coming. And now you want to train him about this specific vertical or this specific area. And then again, you will get into the cycle of downloading a massive -- a huge amount of data and then go to something that is more sustainable. So I cannot say now it will be higher or lower, but I think that it will be more sustainable. And in this way, we can be -- we can predict, and we can be more accurate in our predictions for the long future. Brian Kinstlinger: And then as you've had this announcement and success here, can you talk about what the pipeline to sell this new dataset delivery solution is to other customers? Shachar Daniel: So that -- what was the first part of your question, Brian? Brian Kinstlinger: Yes, yes. You've got this customer that you're delivering large data sets to. It's a new solution for you. What's the pipeline to sell this solution to other customers? Shachar Daniel: Okay. So it's not the pipeline. We already have some other customers that we are leveraging this product and these capabilities to other customers, which are smaller, not -- it doesn't have to be smaller customers, it's -- their need is at this point of time is smaller again because it's in the R&D stage. So basically, they are in a different stage. So now they need a lower amount of data, but it doesn't say -- it says nothing about the future because they can ramp up very fast and increase the demand. So first of all, we have current -- other current customers that are using this data. And second, we have a few others in the pipeline for this specific data set or for other data sets or for the scrapers, the unblocker and other products that we started to see a great ROI from them in this quarter. Brian Kinstlinger: Okay. And then as revenue scales and maybe you have less reliance on partners for data set delivery, how should we think about the gross margin recovering as you've used the word temporary pressure on gross margins. And as part of that, what volume would you need maybe -- that would trigger more investments in infrastructure and capacity, and how do you think about the recovery long term in pricing or unit economics? Shachar Daniel: Okay. Let's start from your -- the first part of your question. So basically, if we simulate a situation in this quarter that we wouldn't use any third-party vendors and all of the solutions were in-house. So basically, you could see the gross margin something between almost a 70% gross margin, okay? If we simulate exactly the same situation in this quarter. Now -- but let's say, I want to emphasize something that is very important. The world of data collection and data scraping and the data sets has a huge variety of product capabilities and needs. And for us, I think it's too risky to start and develop everything internally before we see the real demand unless we can predict a real demand coming very soon. So in this way because we have hundreds of customers that basically are by themselves are scraping companies, data set companies, we are leveraging the fact that we have the approach and the door to these customers. And if something is coming in, let's say, a current customer that is asking -- existing customer that is asking from us a capability or a need that we don't have it right now, so we will use this third-party white label solution, then we will stay with the major vendor, we will have the control in our hand, and if we see that the demand is sustainable, is here to stay and some more other customers have this need, we can very fast develop it internally or vice versa or to buy even to as a kind of acquisition to acquire this vendor or this solution. In this way, we mitigate risks because we mitigate expenses of R&D and solutions that maybe we don't have -- will not have a demand. We are leveraging the fact that we have basically approached to all the markets. And the downside is that you will see -- you can see sometimes if we use this approach, again, for example, you can see the impact on the gross margin and, of course, on the EBITDA. So this is, I think, my answer for the first part of your question. Can you repeat what was the other part, Brian? Brian Kinstlinger: Yes. I'm wondering when -- yes, it sounds like pricing is a little low. So when will -- when and how do you think about the unit economics, which is what I assume pricing is, when is that improving? And are you using -- to your response of the other answer, are you going to be using heavy load of third party in the fourth quarter? Shachar Daniel: Lower, first of all, lower even we are -- now at this date, we are -- we have our own, for example, our own internal solution that we are testing it even in production stage. So it will be lower. And so it might -- even in this quarter, we can see this in Q4, we can see the improvement. And hopefully, if everything goes well, and the demand this year in the next quarter, it will be a material improvement. And second thing, regarding the unit price. So I think that as time is running, it looks like that we talked about in your previous question, the need or the demand from this kind of customers even -- maybe will go down from the size and volume. And of course, directly the unit price will go up. Second thing, it looks like that for this amount, we will see a lot of small players that are basically competing are kind of competitors now will not be able to stay in the game because what stands behind this huge amount of data is an infrastructure with global coverage and millions and millions of endpoints that need to be changed or replaced all the time in order to be preventing from blocking by the website. So at this point, I think that we will stay only the leaders, and then naturally, it might make the price per unit go up a little bit. But still, in these amounts, which is not bad, by the way, it's not bad. It's not a bad thing, but the more important thing is to make our infrastructure as we're talking about third parties, our servers, our -- all the DevOps behind our company to make it more and more efficient. And by this, by the way, to decrease the cost of goods and to improve the gross margins because naturally, when volumes are going up, unit price is going down. It's okay, it's good. It's a good thing. And if you know how to adapt the cost of goods behind, then you can be in a very good situation. Operator: [Operator Instructions] With no further questions, I would like to turn the conference back over to Mr. Daniel for closing comments. Shachar Daniel: Okay. So thank you very much for joining us for this third quarter investors call, it was a pleasure, and hope to see you next quarter and hope Alarum will keep the delivery and the amazing achievements to achieve till now. Thank you very much. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
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