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Silver experienced a systemic, algorithm-driven liquidation, with the AGQ ETF plunging 65% in a single session—this was not fundamentals-driven. Precious metals markets are dangerously over-leveraged, with 377 paper claims per physical silver ounce, creating a fragile, unstable structure.
The S&P 500 reached a new record high this week, even momentarily surpassing 7,000 for the first time. The index is now 0.56% off its all-time high from January 12, 2026.
The S&P 500 hit another all-time high but showed signs of fatigue, with momentum waning and technical cracks emerging. Energy outperformed, while gold, silver, and mining stocks faced sharp selloffs.
Warsh will thread the needle, lowering short-term rates while he downsizes the Fed's massive balance sheet.
Why stocks "care" about nominal GDP. More Stocks in Translation: https://youtu.be/NyDTEiB40ZA
Joe Cavatoni with the World Gold Council talks about the yellow metal itself and ways investors can navigate it in 2026. After gold's explosive 2025 uptrend into the start of the new year, Joe urges investors to look ahead to economic factors in the U.S. and abroad to determine how much exposure they want to gold.
Operator: Good morning, ladies and gentlemen, and welcome to the F&C Investment Trust PLC Shareholder Update. [Operator Instructions] Given the attendance on today's call, the company may not be in a position to answer every question received. However, the company can review all questions submitted and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to Fund Manager, Paul Niven. Paul, good morning. Paul Niven: Okay. Good morning, everyone, and thank you very much for your attendance. We've got quite a large number of shareholders on the line and I think some potential shareholders as well. What I propose to do is run through an overview of the trust. I'll keep that relatively brief because I think most of you will be familiar with our approach, but I'll give an update on that. Then I'll talk about the market perspective, the broad macro landscape, some of the issues that we are thinking about, some of the decisions that we are making, and then we'll get into Q&A. So there's quite a lot of content to get through. So I'll move through reasonably quickly, but hopefully, we have plenty of time at the end to address your questions. So just briefly, I think, as I said, many of you will be very familiar with the Trust. We've got a very long history, very consistent management approach and recent decades focused very much on growth assets, that's listed equity and private equity. We are around about now GBP 6 billion in terms of market capitalization. Therefore, we do have substantial scale. And we believe that we offer a cost-effective solution for investors looking for exposure to a diversified portfolio of equity and private equity holdings. Additional points, which I'll draw out in a few moments, very long track record in terms of not only paying dividends, which we have done every single year since launch back in 1968, but rising dividends through time ahead of inflation, and that remains an aspiration of the Board to continue. We do, as I said, focus on growth assets, the overriding objective is to grow capital and income. The way that we achieve that exposure is by investing in capabilities from within Columbia Threadneedle Investments. That's the company that I work for, but also drawing from expertise across the markets in terms of third-party exposure in listed areas such as JPMorgan, who run our large-cap growth portfolio, Barrow, Hanley, who run a value strategy for us. And a point that I'll get into as we go through is that we also have moved the management of our emerging markets assets to a third-party manager. We did that about a year ago. The outcome that we look to achieve is consistency in terms of performance delivery. So overriding objective growth in capital and income, as I said, but we look to deliver consistency in terms of performance outcomes as well as, as I said, delivering value for money for shareholders. So a few points. And I did note, we had some pre-submissions in terms of questions, and I'll try and, as I said, get through as many of them as we possibly can. But this gives a sense of the long-term perspective of global equities against U.K. equities. And as you be or as shareholders will be aware, we made a decision to globalize the portfolio to reduce that U.K. bias in terms of exposure back at the beginning of 2013 and take a much more global approach in terms of our exposure. And this chart really shows that since that decision was made, it's been a very profitable outcome for shareholders of global outperforming materially. We did receive some questions about exposure to the U.K., which I'll come on to in due course, but also about our relative performance against peers. And our primary peer group is obviously global trust, those invest with the global remit rather than necessarily those that are constrained by investing in the U.K. But it is noteworthy, I would say, that there has been an uptick in performance, particularly in the last 12 months from the U.K. market relative to the U.S. and global exposure. And that has been reflected actually in better performance from some of those U.K.-focused trusts and funds and particularly those with a value bias, those are essentially targeting value stocks or higher income. Just putting some numbers on that, I'll run through this reasonably quickly. But in the last year, we've seen the U.K. value index as measured by the MSCI up by about 30% last 3 years, 54%. Now you compare that to our returns, and we have delivered 9% and 52%, respectively. So longer time periods, certainly, when one looks at 10 years, you can see that global markets are delivering around twice the return achieved from the FTSE 100 Index. But if one looks at a shorter lens, it is clear that U.K. equities specifically have been performing better as have other regions. And U.K. value stocks, in particular, have been performing better. So there's been a bit of a catch-up in the short term from those areas. Again, I'll come back to that in terms of the Q&A because I think there are some more questions on that point specifically. Our exposure, just to remind you, we run a diversified portfolio, gaining exposure through both regional and global components to listed and private equity markets. And this shows the split of exposure as at the end of the year into underlying strategies, and I'll give a bit more granularity on this as we go through. Also with our top 10 listed holdings, you can see many familiar names in the top 10 U.S. stocks dominating and many of the leading technology and related disruptors in those top 10 holdings with NVIDIA being the largest single holding at the end of the year. And you want to compare us against the market indices in terms of exposure, we are moderately long of NVIDIA against the market indices, but typically actually slightly underweight most of the other magnets notably Apple. We've got low-cost fixed rate debt, a point that I've made repeatedly that tremendous advantage in terms of the structure that we have. Our blended average interest rate is about 2.4%. We've got GBP 580 million nominal debt outstanding, and that is well diversified across a range of different tenors as is shown here. So that's fixed rate debt. So we've been immunized from the rise in market interest rates that has occurred in recent years. And even though credit spreads remain tight, the borrowing rates that we have are very, very attractive against that, which will be available in the market today. In a sense, the way to think about this is we've taken that money that we borrowed, we've invested it into financial assets listed and unlisted. And if we can generate a return which is in excess of the cost of that debt, then that will be accretive to NAV returns, and that is a low hurdle of 2.4%, as I said. Repeating the point on dividends, long-term track record. We have a covered dividend or certainly, we've not reported our 2025 results yet. But 2024, we had a covered dividend. We're in a very good position in terms of revenue reserves, and it remains the aspiration of the Board to continue to deliver real rises in dividends for shareholders in the longer term. And performance outcomes, as I said, we're going to deliver strong and consistent performance outcomes. This shows that chart replicated from earlier on, but also adds in the performance of F&C over the long run. And you can see that we have -- our shareholder returns have exceeded the returns available from U.K. and global indices. So some significant strategic decisions clearly moving, as I said, from a U.K. biased portfolio towards global. That was very advantageous more than a decade ago. But performance has in the long run, been strong for shareholders. And also strong against the peer group. So this reflects the picture at the end of last year. We have not released the full year NAV. So this is essentially taken from publicly available data at this point. But the shareholder return was 14.6% last year. So strong in absolute terms. That compares to 14.2% from our benchmark index. That put us in the second quartile in shareholder return terms last year against that closed-ended peer group of global trust. In the longer term in shareholder return terms, we're typically first quartile. And over 5 years, we're actually delivering the strongest NAV return amongst our peers as at the end of 2025. So consistency, strong absolute returns and good returns against the peer group of global trust that we primarily measure ourselves against. And value for money. So again, repetition, 45 basis points is the OCF that is applied to the trust, which we think represents value for money. I wouldn't dwell on this slide other than to point out that this shows the exposure that we have in terms of underlying strategies. I, as you know, I'm not the stock picker on the trust, but essentially manage the overall exposure across and within regions, equities and private equity, allocating to different stylistic exposures. So growth exposure, value exposure and growth in the longer run has done very well clearly in the U.S., but value has actually been outperforming in non-U.S. markets. And notably, again, to the point in the U.K., notably outperforming in the U.K. and elsewhere. So we have diversified exposure between growth value, also taking account of momentum and behavioral factors. Essentially, our view is that if one has -- if one buys cheap stocks, which are good growth prospects and strong momentum, then typically, that's a good starting point in the pursuit of outperformance against market indices. The significant change that we made last year in terms of the lineup really relates to emerging markets and those that listened to webinars towards the end of last year may have heard me talk about this already, but we essentially made the decision to allocate our emerging market exposure to Invesco. They operate a value-based approach, but take account of quality of businesses, that means essentially low leverage high barriers to entry typically in terms of the franchises that we invest in. And it's very pleasing that they've got off to a good start in terms of absolute and relative returns for us on that component of the portfolio. Look through exposure here. So the majority, more than 50% of our assets are invested in North America. Other regions are represented in Europe, emerging markets, Japan and so on. And this also shows the listed sector exposure and portfolio with technology being a significant component of our underlying equity holdings. So let me move on, give some comments on the market perspective. I'll just give a lens on 2025, there's a lot of information on this chart. The numbers might be a little bit difficult to read, so apologies for that. But you can see on the left-hand side of this chart there that silver and gold are prominent in terms of leading the way in market returns in 2025. And obviously, that picture has continued in 2026 thus far with really quite extraordinary progress in terms of precious metals. But there's a few points I would draw from this chart beyond the focus on gold and silver. Firstly, it was an everything rally last year. You can see that credit markets, government bond markets, equity markets, commodity markets, if one looks in terms of precious metals, all performed well in absolute return terms. So most assets made positive returns. You may be able to see that the S&P500 is closer to the right-hand side of this chart than the left, which says that the S&P was actually one of the less highly performing areas last year. So in local currency terms, that's dollar terms, it returned close to 18%, which was a really strong outcome clearly, but it did underperform areas like the Euro Stoxx 600, obviously European Index, the TOPIX in Japan, FTSE100, which are closer to the left of this chart. So for the first time in a couple of decades, we had essentially concerted outperformance from developed and emerging markets against the U.S. So that was quite a change actually. We also, in global terms, saw very similar performance outcomes. This is towards the middle of the chart, very similar outcomes in terms of growth and value. Now growth outperformed slightly in the U.S. by 2 to 3 percentage points, but at the global level, it was pretty much little peggings, just under 22% from both of those indices. So the big gap that we have seen in recent years between those 2 areas narrowed materially actually last year. And that was true in the U.S. as well as globally. And globally, it tended to be value that was outperforming rather than -- sorry, global ex-U.S., it tend to be value is outperforming rather than growth. So some quite significant changes going on last year. An additional point, not obvious from this chart is that one asset or area that underperformed last year was obviously the U.S. dollar. And again, that picture has carried on thus far into 2026. And those that keep an eye on the short-term news flow will know that President Trump has almost given his blessing, although one never knows how permanent these statements are to dollar weakness in the short term. We didn't seem overly concerned with questions relating to dollar weakness, and that has prompted a slide in the dollar overnight against sterling and other currencies, and it was trading through $1.38 when I looked this morning against sterling. So dollar weakness obviously eroded returns for investors in dollar-based -- sorry, sterling investors in dollar-based assets last year. And that's one reason that the U.S. market was a laggard for us last year. And just putting some numbers on that, we started 2025 with around in terms of cable that sterling and dollar. We ended around $1.35. And as I said, we're now about $1.38. So dollar weakness has been eroding returns from the U.S. market. Moving on. Quite a lot of information on this slide. Key themes, what are we thinking about. Firstly, fundamentals, I think, remain pretty good actually in terms of the global economy. There are numerous risks that will come into the are point of concern. We've been having this conversation 10 days ago that we would have been or even a week ago, we would have been thinking about Greenland as a clear and present risk with respect to U.S. intentions there. That's not gone away, but certainly, the temperature with respect to negative outcomes there has diminished materially. But notwithstanding those risks and geopolitics, which are, global growth remains pretty resilient. We think the cycle extends. Growth is critical in terms of investment in growth assets like equities, and we think the environment remains reasonably constructive. Second, again, I think that we may have some questions on this. We're waiting for the Supreme Court to opine in terms of the legality of Trump's tariffs. And even if they are deemed illegal, I think that the administration, the U.S. administration, will find another way. They do have other powers other levers that they can apply. So in addition to Section 122, Section 301, the administration could use Section 338 of the Tariff Act of 1930 to impose tariffs of up to 50% for discriminatory foreign practices. So I don't think the Supreme Court's ruling whatever that is, and the expectation is that they will not rule the tariffs illegal. But even if they do, I don't think that the tariffs will disappear. The administration will find another way to impose tariffs. Third point, we're seeing an environment where inflation is slightly above target. Rates have been higher clearly than they were in recent years, but they are diminishing. We're going to see further rate cuts this year. We think it will come to that point with the notable exception of Japan and Europe where we think that things are on hold. So the U.S. and the U.K., probably we're going to see further rate cuts. Bond markets, look, bond markets may not be a point of attention for everyone on the call, but capital flows across asset globally and bond markets are really important in terms of pricing and dynamics impacting risk appetite across the board. And what we're seeing in credit markets is incredibly tight spreads. That tells you that investors are pretty sanguine with respect to corporate risk. But in terms of government bond markets, there is some unease with respect to the size of government debt, fiscal deficits. And we've had some wobbles, some sharp moves actually in terms of the Japanese government bond market in recent days. And also in gilts actually closer to home. I don't want to dwell too much on local politics, but the prospect of Andy Burnham's leadership challenge did seem to unsettle albeit for a short period, gilt markets and concern about further issuance there and perhaps more fiscal large in the U.K. So look, I think government bond markets remain a risk to equities and government debt remains a risk to equities overall, but not one that we see causing significant ruptions in the short term, albeit we might see some further action in terms of intervention from the Bank of Japan on the yen, which also might lead to a little bit of volatility in the near term. AI remains a big theme. Clearly, there's more differentiation between winners and losers across and within the market. There's numerous examples of that. And the market is really testing this on a day-by-day basis. In the last few weeks, we've had insurers in the U.K. and elsewhere hit by this digital insurance company Lemonade, launching products specifically for self-driving cars and talking about a 50% drop in insurance rates as a function of autonomous driving. So that may be impacting on conventional or traditional insurance models, certainly in terms of the auto sector. And again, reasons for that, the application of AI, Waymo, those that have been in San Francisco, Los Angeles or some of the other big U.S. cities and now in London, actually, although not fully live, Waymo self-driving taxis are on the way here as they are in the U.S. And the statistics suggest that these -- that technology is 80% to 93% or thereabouts more reliable in terms of driving, less accidents than humans. So that will have an impact on premiums. So my point is like the -- the market is moving in terms of discrimination between AI winners and losers and moving quickly. incorporating new information. And that's going to again be an ongoing theme, I think, as we move through this year. I'll talk about that in a bit more detail in terms of the AI dynamics. Geopolitics, tremendous uncertainty. Who knows what comes next? Question, does it impact markets? Of course, it does, but is it going to be a permanent impact on markets? Probably not, as I'll show in a moment. So fundamentally, we think the picture is reasonably constructive for equities. Fundamental backdrop is good. You got to think about what can go right as well as what can go wrong. Lots of things can go wrong, but lots of things in terms of growth backdrop, earnings, margins, rate cuts, they can all go right for equities actually despite some concerns that we have on valuations. So just a few points. Again, I think there's a few questions about potential setbacks, volatility and so on. I know there's lots of concern about the outlook. I would not in any way seek to diminish that concern and it's entirely possible, probable that we do have a correction as we go through this year. This chart just shows for the U.S. market intra-year declines, that's the red bars against calendar year returns. So declines that happen very, very frequently. Actually, last year, we had about an 18% drawdown in terms of the market in the U.S., obviously, around Liberation Day before we ended up 17%. So it's normal to get quite substantial often double-digit drawdowns in market on the market on an intra-year basis. So we have to go back to the late 2000s really to see that very material downturn in consecutive years, 3 consecutive years, big annual drawdowns 2008 into 2009, again, very, very big drawdowns, but ultimately, 2009 ended up being an up year. So again, I don't mean to diminish or seek to diminish the risk of downturn correction. In fact, this chart shows you that corrections and setbacks in equity markets are normal, happen frequently. But timing the markets can be a challenge. And that is we do employ active management. We do employee gearing on the portfolio. We do look to take advantage of tactical opportunities, but we are also long-term investors. And many of you will have seen similar charts to this before, and this shows the impact to our value of $10,000 invested in the S&P since 1995. And if you remain fully invested through that period, what you would have enjoyed in terms of returns, which I think is about $225,000 and then what the returns would have been if you missed some of the best days in terms of returns. So timing is difficult. And in addition, on the geopolitical side of things, again, there's a lot of noise, obviously, from the U.S. administration. I would not dispute Mark Carney's assertion that we're seeing a rupture in terms of the norms in terms of global relations. We're seeing fragmentation in terms of global alliances. Again, I wouldn't seek to downplay to spell those concerns. But on the other hand, geopolitical events generally tend not to have a lasting impact on markets. There are exceptions and the Gulf war back in the early '90s is one example of that. Oil prices were impacted and ultimately growth was hit. So there are examples, but more often than not. And with Trump, again, we can't dispel the pronouncements. But as we have seen in the case of Greenland, I think another example of perhaps exaggeration in terms of intent and then an element of climb down ultimately in terms of eventual policy. And we saw a similar picture there in terms of tariffs. And it's been threatening in Canada with tariffs and South Korea with tariffs over the last couple of days. Markets seem to be becoming somewhat more immune in terms of impact of those comment statements in terms of the market outturn. So again, I wouldn't dismiss or dispel those concerns, but the lesson from history is that geopolitics tends not to have a lasting influence. But again, I do think it's right to conclude that we are in a different world order than where we have been, and that will arguably increase volatility in terms of equity market performance. This just gives a long-term lens in terms of equity market returns, incorporating some significant events. So in a bit more detail, and running it through quite quickly, some of the points I made. The outlook is pretty good, I think, in terms of the growth profile, this gives you on the left-hand side for the economists on the call, the GDP forecast from consensus across the major regions. It's a pretty similar outcome that is expected in '26 to '25. And on the right-hand chart, you can see that actually in the U.S. The growth outcome in GDP terms ended up better than was expected this time last year despite big downgrades to expectations in and around Liberation Day. Conversely, we have seen inflation being slightly higher than had been expected. So it's been a good growth outturn in the U.S., broadly in line if we look at the beginning of 2025 expectations, better than was expected in 2024. And that picture is actually expected to continue. I'll come on to the earnings picture in a few moments. And then it's worthwhile noting that good growth outcome in the U.S. and elsewhere was delivered despite all the threats and imposition of tariffs, inflation a bit higher. Earnings, obviously critical in terms of equities. Lots of information on these 2 charts, I'm going to focus on the one on the right. What this shows is regional growth forecast. Obviously, we're in reporting season in the U.S. So we're going to get a sense from -- in the next few days of what actually 2025 growth rates in earnings terms ended up being, some big reports coming tonight, clearly, from some of those leading tech companies. But the picture on the right-hand side of this chart shows the solid bar there, what the expectations are for 2025 earnings per share. So the U.S. delivering EPS of around about 14% last year. That is not far off what was expected at the beginning of last year and is pretty similar to what is expected for this year. So I'd make the point that the U.S. broadly delivered on not only GDP expectations last year, but earnings expectations last year. That contrasts with Europe. So Europe, unfortunately, it looks like it delivered a modest decline in earnings last year, far worse than was expected by analysts at the beginning of '25, which is the gray dots. But there is hope and expectation for a substantial improvement in 2026 and as shown by the orange dot there. So Europe was disappointing. Japan was also disappointing, but positive. The U.K. was disappointing, pretty modest earnings growth. Emerging markets was pretty close to expectations and good growth expected in 2026 and so on. So the picture is the U.S. actually delivered in earnings terms last year. Most other regions ex emerging markets really disappointed. And if one interprets the earlier chart that I showed in terms of market performance, one can conclude the performance of Japan, performance of Europe, the performance of U.K. and outperformance against the U.S. was primarily driven by an upgrade in ratings or the market simply became more expensive in contrast to the U.S., where valuations expanded a little bit probably over the year, but it was primarily driven by earnings growth. Now looking into 2026, our view is that Europe is far more likely to deliver on the earnings expectations this year than last, maybe not as high as consensus expectations, but maybe double digit or close to double-digit earnings growth this year. So the fundamental picture for most markets actually looks pretty good in terms of the earnings expectations when we look into 2026. And that's really important because I would say Europe, Japan, the U.K. to varying degrees, enjoyed an uplift in multiples last year in the expectation of better earnings outcome. So they need to deliver on earnings while the U.S. has continued really to do so. Now just a few comments in terms of rates. So rates, as I said, are expected to come down, probably 2 cuts from the U.S. Federal Reserve. There won't be a rate cut today, we don't think, but a couple of rate cuts to come in the U.S., 2 in the U.K. core inflation remaining above target, hopefully moderating a little bit as we progress through the year. What does that mean for equities? Well, if we get weak cuts, typically, that is good news for equities, particularly if recession is avoided. So this takes U.S. rate cutting cycles since 1970, and it shows you the average outcome in terms of the first -- from the first rate cut of the cycle, what equity markets do on average, that's the orange line. And then what happens to equity markets when there's rate cuts, but a recession. And normally, rates are being cut when growth is slowing, right, and often into a recessionary environment. Clearly, equity markets perform better when rates are going down, but there is no recession. That's the blue line there. And the dotted blue line shows where we are in this cycle. So we're performing pretty much the type. And actually, the 12-month period after the first year of rate cuts, which we're in now, given the first rate cut happened in September '24, typically is slightly better than that first 12-month period actually. So one didn't know anything else and look at valuations or the macro backdrop beyond rate cuts, and you concluded that we were going to get rate cuts, but no recession, the lesson of history is this tends to be quite a good period for equity returns. That is what we've seen thus far. Now just a few comments on AI CapEx. So again, quite a lot of information on this chart, just showing the explosion in terms of training computers related products and then what's happening in terms of Magnificent 7 profits, cash flow, CapEx on the right-hand side there. CapEx, right-hand side chart, the blue line, free cash flow, the gray line, net profits, the orange line and related dots showing consensus expectations on a forward-looking basis. Now there's a few points I would draw out here. One, profits from Mag Seven are expected to grow strongly in the years ahead. We actually -- our analysts are pretty bullish on NVIDIA in particular. I think that they will continue to meet or exceed expectations. And therefore, what look optically like quite high valuations on a go-forward basis will diminish as the company essentially grows into those earnings. But there's no doubt that CapEx is picking up, picking up very markedly. Q2 run rate in terms of CapEx was $400 billion annualized. We're likely to get $450 billion from Mag Seven in terms of CapEx this year, thereabouts. That's having quite a big impact in terms of GDP numbers, overall growth rates in the U.S. economy, impacting other sectors, clearly, telcos, miners, energy, all benefiting from this explosion in CapEx and driving the AI build-out and data center rollout and so on. But for the Mag Seven, up until recently, the CapEx has been funded from free cash flow, as you can see. But the gap between the gray and the blue lines and dots is diminishing. And clearly, there's less headroom in terms of free cash flow in terms of funding CapEx, and that varies across the Magnificent Seven clearly. So these companies are moving from capital-light businesses towards more -- to a greater or less extent, towards more capital-intensive businesses. And again, that is a point of concern and note for the market. And interestingly also what's happening in terms of headcount in those businesses. I think this is quite interesting in terms of not just the Mag Seven kind of parochially, but the application of technology and replacement of labor with capital. The Magnificent workforce typically was growing in line with their profits and free cash flow. That actually -- that relationship broke down a few years ago, and they stopped adding headcount on a net basis. And that's true again to varying degrees across that cohort shown on the right-hand side with NVIDIA continuing to hire, but most other companies basically flatlining in terms of their employees. So this is about, in my view, substituting labor for capital, again, moving from capital-light businesses to more capital intensive. And that's a big shift. That is a big shift in terms of the composition for these companies. Valuations, I don't think the picture has changed that much since we last presented. But to repeat the earlier point, there's been quite a big uplift in terms of multiples on Japan, on Europe, even in the U.K. and emerging markets. So still big discounts against the U.S., but the U.S. has broadly tracked sideways depending upon what time period you're looking at here. U.S. is trading rich against history. Other markets are trading cheap, but certainly not as cheap as they were and that discount has narrowed against the U.S. for other developed markets and EM. On a forward basis, also show you the price earnings for the Mag Seven against the S&P, so they continue to trade at a premium. But that premium is actually not that high compared to history. Now to be fair, the premium growth rate that is expected in terms of earnings from Mag Seven is going to diminish in the year and years ahead, but it is going to be a premium nonetheless. But the actual premium rating for the Mag Seven against the wider S&P has diminished, and you can see that in the bottom right chart there on this slide. Just one word, 2 words on debt sustainability. Debt level is very high. Clearly, Japan is under a little bit of pressure with respect to potential policy, which the equity market likes in terms of further stimulus, obviously, focus on shareholder reforms and so on, but potentially more by way of fiscal expenditure. And this will periodically, I think, cause some angst in bond markets. We've seen, as I said, some mobs and gilts in the last week or so and also in the Japanese government bond market. debt level is very high as long as interest rates remain low, and there are many mechanisms that central banks and governments can use to control interest rates, market interest rates. We don't think that these levels are necessarily unsustainable, but I suspect it will remain in focus. So conclusions, I'm going to move on to questions in a moment. Conclusions, Rate cuts to come from the U.S. Federal Reserve, not today, but as we progress through the year, probably a couple in 2026 based upon current expectations. Earnings growth going to be pretty good actually in the U.S. We're going to see premium growth rates in terms of earnings from the Magnificent Seven, which are trading also at a premium to the rest of the market, but lower than has been the case historically. Geopolitics create volatility, noise, obviously, a concern for us as investors, U.S. shareholders. But we're looking through that generally into fundamentals and fundamentals remain strong. Credit markets are not signaling substantial concern in terms of defaults. We think that AI to state perhaps the obvious is going to remain a key theme in markets. We do think that the market is clearly becoming more discriminating in terms of winners and losers. That's not just within the technology sector, but elsewhere as well. And emerging markets, we think the environment for EM looks reasonably good actually. There has been a quite a big uplift in terms of valuations. They continue to trade at quite a big discount and developed, but weak dollar, cuts in interest rates, better fundamentals from EM, good self-help stories from a large number of countries in that space, all helping, we think, to drive returns. And the theme of broadening, which we really saw in 2025 when one looks to that earlier chart in terms of performance in Europe, performance in Japan, performance in emerging markets and performance in the U.S., which had a good year, a really good year actually, notwithstanding dollar weakness, we think that, that trend persists. I wouldn't predict certainly the kind of returns this year that we had last but nonetheless, we do think that the environment remains reasonably constructive, providing the growth backdrop, the positive growth backdrop remains intact, which we think it will and some of those left field geopolitical events, which do cause us concern, as I said, do not materialize. So I'm going to pause. I think I'm going to pass back to you, Peter, and we can open for questions. Peter Brown: Thank you very much, Paul. Yes, my name is Peter Brown. I'm partner of the Investment Trust team here at Columbia Threadneedle. Thank you for listening in, and thank you for your questions submitted. Please continue to add to them. We'll get to answer them either now or post the webinar. And Paul, you've been very detailed in your presentation, and you've answered most of the questions indirectly, but I would like to just throw a few at you, and I will, in the interest of time, try and merge a few together. A lot of it is about corrections, a lot about U.S. technology and valuations. So I'm going to, if you don't mind, sort of put 4 to you all with a similar theme. So it's basically, is the trust overexposed to U.S. technology companies where the share price is not supported by asset valuations or realistic future earnings mixed with, is there some speculation or there is some speculation amongst the investor community that stock markets may be in for a correction sometime in the coming year? What is F&C's view on this? With what is your view on suggestions that a correction is due to the higher tech stock valuations and the prominence of these in the portfolio? And finally, in the same theme, Cisco have predicted carnage in the U.S. tech sector. Consumer confidence is weakening, but the valuations are extremely stretched. Is it not time to reduce exposure to the U.S.? Paul Niven: Okay. Yes, there's a lot of very good, very relevant, very timely questions around this theme of excess valuation in the U.S. market and U.S. technology stocks in particular. I did see the comments from Cisco overnight. And those with long memories will recall, I think that Cisco was one of those stocks that fell by 90% -- sorry, 80% or thereabouts, maybe more actually. And the aftermath of the dot-com bust took a long -- I think also it had very, very high expectations in terms of earnings, ultimately delivered, but the valuation on that stock was at such a level that it took a long time -- even though expectations were ultimately met, it took a long time to "grow" into that multiple. So there's a big, big fall. I think let me try and answer it. So are we in a bubble? There's certainly an awful lot of talk with respect to risks of a bubble in the U.S. market and technology stocks and AI. For me, a bubble results in falls similar to that which we saw in the early 2000s, where we did see an 80% decline in terms of the NASDAQ. If you look at Japan, we saw an 80% decline in Japanese equities when that bubble burst. So I think there's a clear difference between defining a bubble and expecting a bubble to burst and the implications of that as opposed to a correction. As I showed, corrections are not uncommon. And would I be surprised that there's a correction this year? No, I wouldn't. Do I think that we are in a generalized bubble in terms of equity markets? No, I don't. I think that the valuations that we saw in the late 1990s or in other instances of episodes that turned out subsequent to be a bubble, valuations were far more extended than where we stand today. I think that there was a suspension of disbelief with respect to assumptions that were required to justify those multiples in terms of U.S. technology stocks in the late '90s, early 2000s. But I would not dispute the observation that valuations are relatively rich in the U.S. and in tech in particular. So I want to couch it in terms of, firstly, the valuation perspective is rich, but I don't think nosebleed territory that market is going to collapse under its own weight for reasons of valuations alone. I think that -- again, those with long memories, and I started my career in '96, and we have said this before, Greenspan gave the speech in '96 about irrational exuberance. The stock market responded negatively to that in the short term and subsequently went on to reach new highs, I think doubling the NASDAQ in the year prior to the peak in March 2000. So there's a long runway when we went from rich to very excessive a number of years actually. The Fed was raising interest rates in that environment as well in 1999 prior to the tech bust. There was also quite a widening in credit spreads in advance of that tech bust. And there was a big, big gap in terms of stock market performance and overall profits, profitability. So essentially, stock prices continue to go up very, very strongly, while profits were actually going down and there's a big gap in national accounts data as well. So I think there are quite a number of differences. But I wouldn't dispel concerns of valuation. And certainly, Cisco and other companies that have got a long history of operating in this space clearly have got valuable contributions to make in terms of their perspective. I think undoubtedly, there are pockets of excess. There are pockets of speculation. We have seen an upturn in terms of performance of unprofitable technology stocks. There are indices you can look at that, and that tells you that speculation is increasing. But I don't think that we're at a point really whereby valuation is going to be a constraint to performance on the U.S. market and technology stocks. I think we can get there and particularly with rates coming down further and what looks like a pretty benign backdrop, again, notwithstanding President Trump. So one could argue that we have the preconditions for a bubble in terms of the application of new technology, which I think will lead to profound and widespread changes. The market is obviously trying to discriminate more between winners and losers. I think you will see more of that. We're tending to pivot more towards where the capital is flowing in terms of beneficiaries from that CapEx spending rather than necessarily those that are spending per se. But I think the short answer is we're still relatively constructive on the market, notwithstanding some of the risks that I and others have outlined. And is now the time to pivot away from the U.S. Again, we will be disclosing our annual results in a month or so's time. But we were net sellers of U.S. equities last year. We're relatively high weighting in the U.S. I think, as I said, there's a good case to be made for the market broadening from here. But I think that's as much about other areas performing better than the U.S. necessarily diving. And if the U.S. really does fall out a bed in performance terms, that is an environment where other markets will certainly not be immune and the U.S. actually does tend, again, notwithstanding dollar performance tend to be a bit of a safe haven and also dollar tends to catch a bit in those risk off. So sorry, that's perhaps a bit long-winded. I think there's quite a lot to unpack in terms of the questions. I don't want to, in any way, appear complacent. But just to maybe add a couple of additional points. The way that I think about the world in simple terms is we've got a fundamental perspective. I think that's pretty good in terms of the growth, inflation rate backdrop, the valuation component, valuations are reasonably rich in equities, but not at levels, I think, that prevent further progress. And then you've got a behavioral sentiment component. I think there are some pockets of excess, but I don't think that excess is widespread in equity markets at the present time. So I think the fundamental component will continue to be the most important driver for equity returns in the near term. Peter, did I capture respect of what the questions were asking? Peter Brown: Yes, exactly. Yes, you did. So moving out of the U.S. then for change of tack. U.K. question here is that long-standing shareholder, slightly disappointed with the performance versus other investment trusts such as the City of London Investment Trust, Artemis, which I should say are U.K. income funds specifically. Would Paul be prepared to make some direct performance comparisons with competitors over 5, 3 and 1 year? And I'll add another to that question, which is about tariffs, and you've mentioned tariffs. We won't go into that. But basically, is there a case for increasing the weighting of U.K. equities in the portfolio should tariff risks reduce between the U.S. and the U.K.? Paul Niven: Okay. Yes. So on this first point about performance, look, I recognize that the U.S. shareholders, potential shareholders can invest into trust, can invest into open-ended funds, can buy active funds, passive funds and have a huge choice of opportunities to consider. The way that we think and the Board think about performance is obviously long-term growth in capital and income. I think we've got a good job there and ensuring the performance outcomes, performance against our benchmarks. And again, in the longer term, I think we've done a reasonably good job there in terms of keeping up with a market that's been incredibly concentrated in an environment where, frankly, active managers have struggled. And then against peer group. And different people on the call will have a different perspective about what our peer group is and who we should compare ourselves against. Our primary peer group that we and the Board discuss is the global sector. And there are now, I think, 10 or 11 trusts in there, and there'll be obviously Scottish Mortgage, Monks and Alliance Witan and others in there. But it's a relatively small cohort now, 10, 11, as I said. I showed the slide earlier on. We've delivered excess returns against the median of that cohort over 1, 3, 5, 10 years in NAV terms and shareholder return terms. So we've done well against our peers. And as I said, I think in shareholder return terms, we're top quartile over 3, 5, 10. Now I accept, as I said, that one can look more widely. If you look at U.K. trusts, and I did look at this in light of the question which was submitted yesterday, U.K. trusts on average have done far better in recent years, in the last 5 years, I think, than last year than the global sector on average. And those with an income or value buys have done better still. And that goes to the earlier point where I was trying to address part of this question about the performance of U.K. value holdings over the last 1, 3 and 5 years. So values tend to outperform in the U.K. So if you've chosen a value stock value approach in the U.K., you've done better in the wide market, so well done from that perspective. And if a U.K. value-oriented trust in the last year, you've done better than global. I think that is true in the last 5 years as well. Last 3 years, it's pretty much the same. And in the long run, as I showed, we've actually done considerably better. So I think there's a question about Horizon, a question of perspective about who our peers are. But undoubtedly, some of these competing trusts in the U.K. space have had a good period, and I've had a good period by focusing on value. So I don't regard our performance as disappointing. I think we've done very well in absolute terms. We've done very well against our immediate peer group. If you want to compare us against U.K. value trust, then clearly, there are time periods, not the 10-year period, but time periods where they have done better. And clearly, as I said, the market has broadened and performance in the U.K. has been far better in the last 12 months. On the U.K., so are we looking to allocate directly to the U.K.? The U.K. is a small part of the portfolio. It's a small part of global markets, and there's a lot of debate about that. That's just the way it is in terms of the overall reluctance of companies in recent years to list in the U.K. discount typically given to U.K. companies as opposed to their U.S. peers on a like-for-like basis. Is there scope for a catch-up? I'd rather allocate capital to other areas like emerging markets in the U.K. would be my answer to the direct question. We actually allocate on a pan-European basis. So just unfortunately, given that the U.K. is now such a small part of global markets, we allocate to U.K., Europe combined. Is there scope for an upgrade in allocation there? Probably in a medium-term perspective, yes, there is. Is there scope for a downgrade in the U.S. Probably, yes, there is, and I think there was related questions on that earlier. So I think the pivot probably and we started to move a little bit this way already, is a little bit more balanced in the portfolio. But nonetheless, I still see the U.S. being the majority of our assets for the time being, given the growth opportunities there, given the dominant position of many of those leading companies and again, notwithstanding this point on valuations. Peter Brown: Lovely. Moving on again to something different, private equity. Please, can you add some color on the private equity portfolio? Specifically, what is the split between the buyout venture, et cetera, and the size of the businesses, mid-market, large, et cetera? And I'll end that with another one regarding -- in today's environment, are you finding that genuine attractive private opportunities are scarce once return hurdles and liquidity risks are properly accounted for? And if so, where do you see the clearest evidence of outright mispricing across markets? Paul Niven: Okay. There's a lot to unpack in that. And just given time, I'm going to come back and post the specific answer to the segmentation of market opportunities set and the split the portfolio. I don't have those numbers directly to hand, and I don't want to misrepresent. So I'll come out with those numbers and then will be able to see the answer to that question. On private equity, just a few points. Private equity has been a laggard in the last 3 years. Again, we haven't reported our 2025 results, but there's a few points I'd make. Private equity returns have been really pretty respectable over the medium and longer term in absolute terms. But given the strength that we have seen in listed markets, it has, particularly in recent years, been difficult for private equity, our private equity and I think more widely exposure to keep pace with the strength of returns in listed equities. In addition, I think it's fair to conclude that there was a lot of capital that's been allocated to the private market space that pushed up particularly in terms of large buyouts, valuations to extended levels, maybe quite a lot of tourists in that space chasing returns as well and perhaps less value discipline that's been applied in terms of some of the underlying investment opportunities more widely. And that has created quite a lot of indigestion in the private equity market. There's been less activity in terms of distribution. There's been more by way of continuation vehicles, which are not necessarily a bad thing in and of themselves, but that's kind of recycling of capital into new private equity structures. And we've not had the distributions that we would have liked, frankly, in the last couple of years from our private equity allocation. We had reasonable returns, but as I said, lag those of the listed space. Further in answer to the question about mispricings, I'm not sure whether that's listed, unlisted, I would say we're in a world where value is relative. There are not many absolute value opportunities and certainly less value -- clear value opportunities than there were 12 months ago. Even the U.K. and emerging markets have seen a rerating such that I think we're in a relative game. Those 2 areas are probably one areas within listed that you'd say, well, there does look to be value there. Commodities, obviously, difficult to buy precious metals, but energy, unusual for a commodity bull market not to extend ultimately to energy. There's many reasons why that might not be the case now. But if that is the case, maybe there is some value there. In private market space, the value tends to be down the cap scale or down the size scale in terms of the opportunity set. So it tends to be more like mid-market opportunities where we're seeing better valuations. We do undertake co-investment deals, and we're very, very value focused. So more of the mid-market rather than the bigger deals is where value lies. Venture and growth but a bit more speculation, I would say. Valuation is perhaps less attractive in that space, albeit you're dealing with far more kind of nascent businesses in some instances is not really delivering profit. So valuation metrics is perhaps a little bit more subjective. I think we're pretty much at time, but I will come back with some specifics on the question that was asked with respect to composition of PE exposure. Peter Brown: Yes, that's fine. We'll finish with a couple of quick ones, if you don't mind, then just as we are on the time. Have you considered hedging your U.S. dollar exposure? Paul Niven: Yes, we have and periodically, we do. So essentially, risks are somewhat asymmetric in the sense that if dollar declines, then all else been equal, that will be negative for overall returns. So we don't have a hedge on right now. We have had periodically historically. And therefore, I would consider hedging dollar exposure. It's moved quite a long way already. Trump might be given a green light to some further weakness, but we don't have a position on at present. Peter Brown: I think we'll end here with this question as an active manager. Any views on passive investing now being a great portion of the market? Is it pumping valuations? There's been a huge increase in the last 10 years. Paul Niven: Yes. it's a good question. I mean there's -- so look, passive clearly got a role and low-cost beta solutions have been in the ascendancy in terms of equity markets, equity sectors, different forms of exposure. and that's put pressure on fees for active managers. So ultimately, it's been something of a win-win in terms of the consumer, more choice, lower fees and obviously helping to discriminate between winners and losers in terms of flows. Was it done to valuations? I'm not a big believer that the passive is driving valuations to extreme. I do tend to think that the market is relatively efficient in terms of allocation of capital. Now people on the line will be thinking, well, if that was the case, crashes and so on. But the market is rational in the sense of assigning what it perceives as the appropriate valuation at a point in time to a given opportunity. It doesn't mean it's right ultimately. But I'm not sure that passive is really driving the valuation picture personally. It's not obvious to me that, that is the case. But undoubtedly, it is a very big part of the market, dominant in terms of flows, really important in terms of overall dynamics, but I'm a little bit circumspect as to whether that is what's pushing valuations to extreme. Peter Brown: Okay. Thank you. We'll end it there. We've got some questions we haven't answered, but we will get to answer them now, and you'll see them on the website in a day or 2. So if I can just ask you for some closing conclusions, Paul, and then we'll hand back. Paul Niven: Firstly, thank you very much for taking the time to participate in the webinar. We do really appreciate your attendance. I hope you find it useful. And I'll leave you to enjoy the rest of your day. Thank you very much. Operator: That's great. Peter, Paul, thank you very much indeed for updating investors. If I could please ask investors not to close the session, and we'll now redirect you to provide your feedback. Thank you very much indeed for your time, and wish you all a good rest of your day.
Operator: Good morning, and welcome to the ITM Power Plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to the team at ITM Power Plc. Good morning. Dennis Schulz: Good morning, and welcome. We are pleased to present a strong set of results for the first half of the financial year '26. We have yet again delivered our highest 6-month revenue performance while maintaining strict cash and operational discipline. Today, in order to set the scene, we will start with a look at the market environment, our operational and financial situation and our sales activity. I will then explain our business model, talk about operational progress achieved and provide an update on selected projects. Simon, our CTO, will shed light on our newest product, ALPHA 50, and give insights on the levers we have and use to lower the cost of hydrogen. He will then talk about ITM's future, our game-changing next stack platform, CHRONOS. After that, Amy, our CFO, will explain our financial results in more detail and provide guidance for the full year. Okay. Let's start with the market and our competition. Hydrogen will play an essential role in the decarbonization of industry and the energy mix, especially in hard-to-abate applications like refining, ammonia, heavy industry and industrial heat. While refineries undoubtedly show the biggest momentum right now, we start to see first hydrogen applications in cement, steel, paper and many other industries. Despite the known macroeconomic headwinds, the momentum is undeniable. The Hydrogen Council and McKinsey have tracked clean hydrogen project investments from 2020 to 2025 and recorded an 11-fold increase from USD 10 billion to USD 110 billion. The policy situation remains favorable for our industry. And the EU, Nordics and U.K. are making the most tangible progress, while the U.S. has unsurprisingly stalled. With market consolidation continuing to put pressure on many of our peers, we continue to see a healthy level of sales engagement and strong demand, in particular for NEPTUNE V and ALPHA 50. Let's move on to our operational situation. Commercial activity has progressed well in the first half of the financial year. We were awarded several equipment supply contracts, including for Westnetz in Germany and for cement producer in Spain. We also signed multiple engineering contracts, and we were selected for a number of small to large-scale projects, laying the foundation for future order intake. Importantly, RWE as a repeat blue-chip customer has reserved 150 megawatts of NEPTUNE V capacity with us, following on from our strong project progress on the 2 Lingen plants, each 100 megawatt in size. I will speak more about these projects later in the presentation. While we wish that some customer FIDs could be taken a bit quicker, we remain agile and exceptionally well positioned to capitalize on the market dynamics, be it based on our comprehensive and competitive product portfolio or through our new build-own-operate business, Hydropulse. Next up, our financial position, which remains strong, underpinned by capital discipline and our focus on operational improvements. Our balance sheet is increasingly seen as a competitive advantage by customers. Later, Simon will shed more light on this topic. Now I don't want to take Amy's part away, but despite record revenues, our firm contracted order backlog continued to grow and in it, the share of profitable contracts as we work through the few remaining legacy projects. As I already mentioned, sales activity has remained healthy with a notably increasing share of industrial customers in the mix. NEPTUNE V continues to be our most demanded product. And given very high early interest, we expect our new ALPHA 50 product to become just as successful. We are also pleased to see growing momentum in our home market, the U.K., where we were selected for a number of HAR1 and HAR2 government-backed projects already, including the Uniper Humber 120-megawatt project, which has been progressing well through FEED towards FID. We have also signed our first POSEIDON contract for the HAR1 MorGen Energy project, for which our customer expects to be able to take FID in the short term. Also post period end, we have seen continued momentum. Among other successes, we were selected for 2 grid balancing projects in Germany, totaling 710 megawatts in size, and we were awarded a 12.5-megawatt contract by Octopus Energy Generation, one of the first HAR1 projects in the U.K. to have taken FID. Our strategic priorities, you have seen them before, were shaped by a dynamically evolving market environment and unsteady macroeconomic conditions. They have served us well. And while many of our peers are struggling, they have helped us grow sustainably, steadily and with the necessary patience. And they remain fully valid. You can be assured that we will continue to closely observe the market environment and that we are staying adaptable and responsive. Now on this slide, I'd like to explain you our business model and take you on the journey of building an integrated hydrogen company with significant growth potential. It is the journey of becoming a one-stop shop for customers who need electrolyzer equipment, complete hydrogen plants or simply just hydrogen. Today, we are proudly looking back on 26 years of innovating, designing and manufacturing electrolyzers. Electrolyzer technology, we and many of our customers believe is the best in the world. We have learned to engineer these electrolyzers into full green hydrogen production plants. And over time, we have acquired the capability to perform the necessary EPC services by ourselves. Our newest product, ALPHA 50, is the culmination of that. We are also offering our customers comprehensive aftersales services to help them to best operate and maintain our plants and to maximize the value they can derive from the use of our products. The newest pillar of our business model, Hydropulse, is the logical next step on our growth path. Following in the footsteps of the big gas majors of our time, once you have the leading technology and the capability to deploy it competitively, then you have a solid foundation for a build, own and operate model. Hydropulse will buy the electrolyzers and related EPC services from ITM and operate plants to supply hydrogen to industrial customers under long-term offtake contracts. This increases the group's factory utilization, provides plannable recurring income streams and is highly cash generative. Hydropulse is poised to play a key role in creating shareholder value, and we'll be able to offer green hydrogen at a cost level not seen before in our industry. Our operations have been further strengthened. Besides countless day-to-day improvements, we were able to cut electrolysis time during end-of-line testing in half, saving precious energy costs and increasing throughput significantly. In our last update, we spoke about our planned NEPTUNE V assembly line in our adjacent second factory. It is now in full operation and the NEPTUNE containers move from build station to build station until they are completed. This efficient production line layout allows us to meet the growing demand for our best-selling product. The next and even bigger improvement is our new autostacker robot assembly line for our stacks. We took our time to develop a tailored machine and validated the process properly. The autostacker marks a major leap in factory automation and is capable of producing more than 2 gigawatt of stacks per year. Last time, I featured our 20-megawatt NEPTUNE V project for FDE in Norway. This time, I want to highlight a project we won just about a month ago. Octopus Energy Generation awarded us a 12.5-megawatt contract for their government-backed North Fleet project in the U.K. The green hydrogen will be used to decarbonize the papermaking process, a hard-to-abate industry at Kimberly-Clark's U.K. mill, which manufactures Andrex products. Hydrogen will replace natural gas in a new dual fuel boiler system, which can operate on either of the 2 gases, offering operational flexibility. The second project I want to highlight is in Germany. I already spoke about RWE reserving 150 megawatts of NEPTUNE V capacity with us following their satisfaction with our delivery against the world's biggest PEM electrolyzer in Lingen. So let's talk about the project. The 200-megawatt installation is divided into 2 100-megawatt plants, Lingen 1 and Lingen 2, which we are building with our partner, Linde Engineering. The installation of the first 100 megawatt, Lingen 1 was successfully completed at the end of 2025, marking the completion of the first plant of its size anywhere in the world. For ITM, this meant producing and shipping 50 TRIDENT skids and 150 stacks, which have all been successfully installed into the Linde [indiscernible] plant and pressure tested on site. Importantly, we have delivered everything on time for this massive plant. I hope the photos convey the scale. Lingen 2, the second 100-megawatt plant is in full construction swing with all skids and 40% of stacks already installed, yet again, all on time. With this, I would like to hand over to Simon to talk about ALPHA 50. Simon Bourne: Thank you, Dennis. Since the last market update, we've introduced another product to our portfolio, ALPHA 50, a full scope 50-megawatt green hydrogen plant. This was triggered by 2 key pieces of market feedback. The first was that a full scope offering from a single supplier is highly desirable. We've seen that with the success of the NEPTUNE product line, where everything from AC power and water, all of the way through to high-pressure and high-purity hydrogen is provided in one package. This minimizes integration complexities and split supplier responsibilities, making it a straightforward and more competitive deployment. The second was the demand for ever larger systems, which have previously been the domain of the EPC stick-built approach. ALPHA 50 fills a gap in the market, providing a skid-mounted, standardized and prefabricated solution compatible with scale. As is common to all ITM products, it has the state-of-the-art TRIDENT stack platform at its heart. It has a highly optimized footprint and is designed for outdoor operation over a very wide temperature range. Being modular, it can be adjusted in 10-megawatt blocks, providing flexibility for a range of project sizes without needing to reinvent the wheel. This means, for example, that ALPHA could be configured into a 60 or 70-megawatt plant. The product was introduced in October 2025 with a price of EUR 50 million for the 50-megawatt system. Just like NEPTUNE V that Dennis referred to earlier, it's landed very well in the market, and we are already pursuing several live opportunities. At this point, I'd like to take a step back and answer a question which we frequently get asked. Let's take a look at the factors that influence the cost of green hydrogen. I break this down into 3 categories: CapEx, how much does it cost to buy the necessary equipment? OpEx, how much does it cost to operate the equipment and customer confidence? How much risk is perceived that requires contingency in the project budget. Improvements in these areas have positive impacts on business cases, making green viable in more and more applications. CapEx first. The cost of an electrolyzer can be broken down relatively simply. The stacks account for approximately 1/3 of the cost and the balance of plant, including the power conversion system accounts for the rest. There are several levers available to ITM to address CapEx, and I'll give a few examples. From a technology perspective, increasing current density has a significant effect on stack cost reduction. Doubling current density doubles the hydrogen production rate from the same stack, meaning half the number of stacks are required for a given hydrogen demand. This is why ITM pioneered high current density and has been providing high current density stacks commercially for several years. I would add that in parallel to making the stacks work harder in this way, we've done so while both reducing the use of high-value precious metals and increasing stack efficiency at the same time, something that is a credit to our technical teams that continue to push the technology further. From a supply chain perspective, standardizing the product portfolio means fewer parts to manage and more efficient repetitive processes. Strategic relationships with key suppliers ensures priority access to the best equipment at a negotiated price. Working closely with suppliers in this way maximizes joint learning, builds trust and enables both sides to work together to drive down costs and optimize the offering. A high-quality manufacturing system minimizes waste and rework costs while enabling processes to be streamlined. This also saves energy and people cost for repeated end-of-line testing. On-site construction costs are minimized due to preassembly and containerization. Smaller footprint requirements and the full scope nature of products eliminates complex on-site works. OpEx. The operational cost of a green hydrogen plant is dominated by the consumption of electricity. While there are several power consumers in the system, the stacks account for over 90% of the electricity used. Therefore, improvements to stack efficiency have a disproportionate impact on reducing the molecule costs. Through our in-house IP and our joint research and development with Gore for membranes, our stacks benefit from a market-leading efficiency. We have also demonstrated and published extremely low rates of infield performance degradation, keeping operational costs low and predictable over long periods. The ability of the electrolyzer to modulate rapidly enables access to lower-cost electricity. The plant can also attract revenues for providing balancing services for the electricity grid and waste heat can be recovered and utilized in adjacent processes, further optimizing overall energy usage. Ongoing maintenance programs are lean and supported by a remote operating center that provides real-time support and helps maximize plant availability. Finally, customer confidence. Every customer business case builds in buffers for risk and the main risk questions for customers and their lenders are usually technology related. That's why the increasing availability of operating data from real industrial deployments is so important. Having gained data from real-world small and large-scale applications, we've been able to show customers performance data that they can build into their models with increasing confidence. This, in turn, has enabled ITM to develop specific product guarantees that help customers achieve the certainty they need. We are proud to have received repeat business from several blue-chip companies, and I personally see this as an important indicator of customer traction and trust. Combine this with the reference plants mentioned earlier and our strong balance sheet, the bankability dial is moving in the right direction. This is particularly important when project financing is required. From CapEx and OpEx minimization to maximizing customer confidence, ITM has been active in all these areas. Our continued development activities, focus on real-world deliveries and operational learnings are the foundation of tangible improvements that are driving down the cost of green hydrogen production for our customers. Let's take a look into the future. In due course, TRIDENT will be succeeded by CHRONOS, and this will be a genuine game changer. CHRONOS is our next-generation stack platform, and it benefits from all our experiences. It will be lower cost, higher performing and more compact. Now remember that the stack is the heart of all of our products, such as NEPTUNE and ALPHA. Therefore, improvements to the stack mean improvements to the full product range, making them even more competitive. Using the market-leading TRIDENT stack as a benchmark, let's take a look at some of the changes that CHRONOS will bring. We've reduced part count by over 50% and made it significantly easier and faster to build. And none of this comes from making slight tweaks. This is the result of a major exercise rethinking each element of the stack. We're targeting 40% cost reduction, and CHRONOS has been designed to maximize component reuse and recyclability up to 90%. A single stack will be rated at 2 megawatts in base operation, tripling the capacity compared to TRIDENT, and it's capable of up to 2.5 megawatts. We're targeting a 10% efficiency improvement despite further reducing precious metal loading. The footprint is reduced by over 50%, achieving an unmatched power density of 2.5 megawatts per square meter, making it compatible with even the most congested industrial sites. The weight has been reduced by over 50%, making it easier to handle and transport. All of these attributes are focused on further reducing the cost of green hydrogen production. CHRONOS represents a genuine step change, and we'll continue to innovate and improve. The development and validation of CHRONOS is well underway and progressing to plan. We've deliberately not guided for a specific release date because we are doing this thoroughly and ensuring that we get the most important technological foundation to all of our products right. Amy Grey: Thank you, Simon. Good morning to everybody, and thank you for joining us today. I will take you through a strong set of results for the half year ended 31st of October 2025 and then talk about our guidance for the year ended 30th of April 2026. We are pleased to report revenue of GBP 18 million, representing the highest half year revenue in ITM's history. This performance was driven primarily by equipment sales of GBP 15.5 million, with a further GBP 2.5 million generated from engineering studies, spare parts, maintenance and equipment upgrades. Historically, ITM has recognized revenue using the completed contracts method at specific milestones such as delivery, testing or commissioning. These are dependent on the individual contract terms. As our product portfolio continues to evolve, we have actively reviewed and refined this approach. While TRIDENT and standard NEPTUNE products are expected to remain under the completed contracts method, nonstandard NEPTUNEs, POSEIDONs and ALPHA projects are suited to the percentage of completion approach, allowing revenue to be recognized progressively over the life of a contract. This evolution is important. It better aligns revenue recognition with value creation, enhances revenue visibility and reduces reliance on endpoint customer actions. As a result, it supports a more predictable and higher quality financial profile as the business continues to scale. Of the equipment sales recognized during the period, GBP 13.9 million related to legacy contracts recognized at a point in time. In addition, we successfully recognized GBP 1.6 million of revenue from a NEPTUNE V contract under the percentage of completion method, marking an important milestone in the transition to overtime revenue recognition. The gross loss reduced to GBP 6.5 million, a significant improvement from the GBP 10.2 million in the first half of the previous financial year. This reflects both higher production volumes and continued discipline on cost control with overheads held broadly stable despite increasing operational activity. We have maintained strong focus on cash and cost discipline while continuing to enhance the capabilities and competencies and grow our level of production. These actions continue to support a clear path towards efficiency, scalability and profitability. We ended the first half of the year with a cash position of GBP 197.8 million, representing a reduction of only GBP 9.2 million in 12 months. This reduction reflects the continued manufacturer of customer commitments for which cash was received in prior periods and demonstrates ongoing execution against contracted orders. We expect cash outflows to increase in the second half as we continue to manufacture and deliver contracted projects. Importantly, our customer contracts are structured to provide cash ahead of or in line with production outflows, meaning that anticipated half 2 outflow is both expected and fully aligns with contractual milestone timings. The chart on the right illustrates continued progress in inventory management. As finished products are dispatched, overall inventory levels are reducing, and we have further improved the mix by lowering the proportion of raw materials relative to finished goods, which reflects tight operational control. Capital expenditure increased modestly to GBP 6.9 million, in line with our expectations. We continue to advance CHRONOS, and we have taken delivery and completed installation of the autostacker. As Dennis mentioned, our contracted order backlog increased to GBP 152 million despite delivering record revenues in the period. The backlog comprises only of fully contracted orders without any starting conditions. And therefore, it doesn't include MorGen energy contracts, which is still awaiting the customer to take final investment decision. Crucially, the quality of our contract backlog continues to improve. The proportion of profitable contracts has grown to 71%, increased from 60% in April 2025. This reflects the structural reset of pricing, risk allocation, project selection and execution. The remaining 29% of the backlog relates to legacy projects, and we expect to recognize this in revenue over the next 18 months. As we've previously stated, these contracts are fully provided for, but they do not contribute to margin. Turning now to our guidance for the year ending 30th of April 2026. We are maintaining revenue guidance of between GBP 35 million and GBP 40 million, which represents a growth of approximately 400% over 2 years and 600% over 3. The majority of our revenue this year will continue to be recognized on legacy contracts using the completed contracts method. Looking ahead, and as I've mentioned, we are pleased that POSEIDON, ALPHA and Bespoke NEPTUNE projects will increasingly be recognized over time, and we have already successfully implemented this approach in the first half of the year. EBITDA loss guidance stays unchanged at GBP 27 million to GBP 29 million, reflecting continued delivery of remaining legacy contracts. This represents an improvement of approximately GBP 4 million year-on-year. At this stage, remaining losses are primarily driven by factory loading, and we continue to maintain a strong control over production, project and overhead costs. We expect year-end cash to be in the range of GBP 170 million to GBP 175 million. The higher outflow in the second half reflects the timing of milestone receipts, which are typically received ahead of or sometimes alongside cash outflows. Strong progress on projects enabled certain receipts to be collected in the first half of the year with associated payments occurring in the second half. Therefore, and counterintuitively, the lower outflow number in this first half and the higher outflow number in the second half of the year are signs of ITM execution in a disciplined and cash positive manner. Bumpy cash inflows and outflows will never be avoidable in the business we are operating in, but will flatten over time with an increasing number of projects in delivery. That concludes our presentation. Thank you for your attention and your continued support. We are excited about what lies ahead of us in 2026. Operator: [Operator Instructions] I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q&A can be accessed via investor dashboard. I'd now like to hand you over to Justin Scarborough, Head of Investor Relations, to host the Q&A. Justin, as you can see, we've received a number of questions. Could I, therefore, please ask you just to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Justin Scarborough: Thank you, Paul, and welcome, everybody. Our first question is for Simon. Could you provide an update on CHRONOS, its development and your planned launch date? Simon Bourne: Absolutely. So the starting point for CHRONOS is TRIDENT, our existing stack platform. So it's a very good starting point because that is already performing exceptionally well. Now while there are a number of things that we can carry across from TRIDENT to CHRONOS, it's still very important to go through a very comprehensive and robust verification process, and that's exactly what we're going through at the moment. To put a bit of color on that, recent activities have included inspection of all of the full-scale components. We've been verifying the various manufacturing processes and reviewing long-term data from the components operating in the lab. And we've already built our first stack already. We did that last year. We used that as an exercise to check all of the assembly processes. And I'm very happy with the progress of the program. Now as I mentioned in the presentation, we've deliberately not guided towards a launch date. and that's primarily for 2 reasons. The first is that we don't want to inadvertently trigger customers to stop purchasing our existing stack, TRIDENT. That is what we're supplying today. And the second is that we will only launch CHRONOS when we have fully completed all of the validation steps that we need to go through. Justin Scarborough: As a follow-up for Simon, given the development of CHRONOS, where does TRIDENT fit in terms of ITM's product portfolio? Simon Bourne: Well, TRIDENT remains central to ITM. We continue to build and supply TRIDENT today for existing programs and for aftersales activities. And as you've seen from the presentation, we've continued to invest in production capability and quality for TRIDENT with the autostacker. And so that very much remains a product that we continue to manufacture, and we will maintain that capability because we have an existing fleet of products that we'll need to continue to support into the future. So in due course, at the right time, we will transition from TRIDENT to CHRONOS, but we will not get rid of the TRIDENT platform. And perhaps to add one more thing, some of the technology that we've developed for TRIDENT, we'll take a close look at that. And if it is feasible to transfer to TRIDENT, we will do so to make that available to existing TRIDENT customers. Justin Scarborough: Amy, a question for you. Regarding your adjusted EBITDA and the first half performance -- your midpoint guidance suggests a flat EBITDA loss in the second half of this year versus the second half of last year. Could you shed some light on this year-on-year expectation given the fact that the first half adjusted EBITDA loss reduced by around 30%? Amy Grey: Yes, sure. So firstly, our EBITDA is not achieved flatly across the year when you're comparing one half to another or even when you're comparing on a month-to-month basis. A couple of things make up that. Firstly, our revenue recognition being on completed contracts means that there are different margin levels in each period. Again, whether you're comparing a month-to-month or a half year to half year, we make every effort to flatten out manufacturing profile, but we can have variances in between different periods due to the level of production, how many hours needed on Neptune products, testing levels that can increase or reduce our electricity consumption. And then we also have some general cost increases that are probably going to affect half 2 more than half 1 as they do in any year while you're in an inflationary environment. I think what's important to remember is we take a really conservative approach to revenue, cash and EBITDA guidance, and we will only guide to what we are certain will be achieved. That's what we believe is going to be achievable at the moment. And if there are any differences, we will update market. Justin Scarborough: Thanks, Amy. Whilst we're on the subject of EBITDA, there's a follow-up question, which is when do you expect EBITDA to be positive for the company? Amy Grey: Okay. So I think I've probably said this before, but we never guide beyond our current financial year. But we are confident that we know the path to profitability. We need to do a lot of what we've been doing for the last few years. So we need to really focus on winning and then executing profitable contracts. We need to retain focus on quality manufacturing and quality of our supply chain, and we need to maintain the discipline on overheads and cost control in every area of the business. In addition, particularly important to our path is Hydropulse. So that's our build, own, operate model, which will bring recurring predictable revenues and increase our profitability. Justin Scarborough: Thank you, Amy. I think this question is probably for Dennis. The autostacker looks like it could be a game changer for your stack assembly. What redundancy have you built in, in the event of the autostacker not working for whatever reason? Dennis Schulz: That's a good question. So first, it is a very important leap in automation for our factory. I think it was one of the remaining parts, which still had quite manual involvement in the process. And I mean you've seen a little video as part of the presentation. It's quite impressive. It's quite an automated process now and proper manufacturing line, and it is definitely helping us in terms of consistency. It's helping us in repeatability, and it will minimize the risk of remaining human errors as part of the manufacturing process of stacks. Obviously, it will also save cost and increase capacity quite substantially. I mentioned the number already as part of my part of the presentation. The capacity of the robot alone is above 2 gigawatts of stacks. Now redundancy is important. You don't want to be too dependent on one machine alone. That's why we will retain the capability to produce our previous process, which I have to say was also not bad. I mean we spoke about very high factory acceptance test rates in the past, and these we had achieved with our previous process. Now the next leap, as I said, the autostacker will take that even further and improve repeatability. Justin Scarborough: Thank you, Dennis. I think that's probably the next question is for you as well. Regarding the RWE 150-megawatt NEPTUNE V capacity reservation, when do you expect the first call-offs to be? And could this create a potential bottleneck? Dennis Schulz: I guess you would have to ask RWE when they want to sign the first contract with us. But jokes aside, we are in active contract negotiation for the first call-off under that agreement. As always, we do not guide on specific timing, not just because we don't want to, mainly because it's not fully in our control. And I think it doesn't make sense to guide for something which is outside of your control. But the negotiation is going well. It's not the first contract we are negotiating, executing together. Maybe allow me a little bit to expand on the nature of the projects we are talking about here to give you a bit more color to the topic. The reservation agreement is aimed at, I would say, rather large contracts. And such a contract would always start with an engineering phase, usually with the aim to obtain the necessary building permits as well as government funding if applicable. In the case we are talking about here, the government funding was already granted. So it's mainly about permits. Then subsequently, the manufacturing and delivery phase would be triggered based on the permitting. And this is when we would start to manufacture. By the way, the Lingen contract we are executing right now is following the exact same pattern. So this is a proven model we have done in the past. With regards to bottlenecks, I think that was the other question, Justin? Correct? Justin Scarborough: That's correct. Dennis Schulz: I do not see an emerging issue at this point in time. It depends obviously how many other customers are ordering NEPTUNE V containers now. But I can tell you, there's always a way to expand container assembly. This is mainly labor-driven, and you need factory space, both not very difficult to increase, especially in the Sheffield region. We could also work with integrators if really needed. But at this point in time, I do not foresee a bottleneck. Justin Scarborough: Thank you, Dennis. A question for you, Amy. Based on your order book of GBP 152 million today and your midpoint revenue guidance range for the year, your book-to-bill ratio stands at just over 4x versus about 5.5x at the end of last year. With only 3 months of the current financial year remaining, do you expect your book-to-bill to increase by the end of the financial year? Amy Grey: Okay. So I think to be honest, keeping 4x revenue in the order book while delivering revenues that are 600% above 3 years ago and 400% above 2 years ago is something to be really very proud of and certainly something that our peers would love to achieve and the opposite here saying. I think the important thing on the order book is it has grown in value. And the most important part of that growth is the increase in the percentage of profitable contracts as we win orders, and we continue to deliver on the legacy contracts removing those from the order book as we go. Just to add as well that we only guide including contracted equipment sales orders. So they're fully contracted and are going to happen during the year. So in summary, I'm not going to give any guidance on how much I expect or not expect it to increase, but it's important we maintain the healthy ratios that I think we've absolutely got today. Justin Scarborough: Thank you, Amy. Simon, one for you, I think. In previous results announcements, we've spoken about FAT pass rates and how successful ITM has been in improving that. Could you provide some tangible insights on how the high pass rate translates into lower cost per stack? Simon Bourne: Yes. And I think that's right. Previously, we have reported first-time pass rates of around 99% -- and that's no small thing given that we do very extensive testing of our stacks at the end of line. We don't just do pressure tests and leak tests. We have third-party witness tests for various compliance reasons. We electrolyze the stacks and characterize their performance over the full operating range. So it's a whole suite of tests that we're looking to pass first time through. And that statistic is a result of a focused effort to improve our supply quality, introduce additional quality checks throughout our manufacturing processes and so on. And that drive was successful, and we've put in place lasting measures to make sure that we continue to benefit from that high at first-time pass rate. What does that mean? Well, it avoids us spending additional time examining stacks or retesting stacks that would otherwise find its way into the price of the stacks themselves. I'd perhaps add that we haven't stood still. In recent time, we have made big strides in our efficiency of our end-of-line testing. And in particular, we just over halved the amount of time we now spend doing our electrolysis testing of stacks as part of that process. So we still enjoy the high pass rate, and we're getting more efficient in parallel. Justin Scarborough: Thank you, Simon. A question for Amy again. Regarding revenue recognition, could you provide a split of your order book between completed contracts and the percentage of completion met? Amy Grey: Yes, of course. But before I do that, let me just take a little step through the changes that have happened in revenue recognition. So I'm really pleased that we've managed to review the recognition methods as our product portfolio grows and develops, it's really important to take that step back and make sure what we're doing is appropriate. And it's allowed us to implement different ways of recognizing revenue to the one that we've historically used. So the one that we've historically used is completed contracts. So that's where we recognize revenue at specific points in our contracts when performance obligations are met. They could be -- that could be delivery or commissioning, but generally towards the end of a contract's life. We will still use that method for TRIDENT, and we'll still use that method for our standard NEPTUNE products. The difference is that NEPTUNEs that contain a customer modification, POSEIDONs or ALPHAs will be recognized over time as we produce the equipment. And that's really important as we'll be able to see the revenue track through the profit and loss as we are actually manufacturing and leads to a lot more predictable revenue going forward. If I could give you a real-life example, if you take the Uniper 120-megawatt HAR project in the U.K. So that's currently at the FEED process. So under the old recognition methods, the completed contract method, we would recognize a small amount of revenue as we go through that FEED study. And then effectively, you would see nothing else for 2 to 3 financial periods until we get towards the end of that contract and revenue would be recognized in one lump sum. If we transfer that to the new version of percentage completion using ALPHA or POSEIDON, we get exactly the same revenue for the FEED study, which would be recognized at the same point in time. But the difference being that at the point that we signed the contract up until delivery, we'd be able to progressively recognize revenue. So in that first financial year, you would see revenue happening for that project and in the second and then at delivery until you get to the same point in time. So it will allow us to be able to see progress through the factory in the P&L. Dennis Schulz: I think that's a massive change, if I may add. In the past, when we signed a large contract, 100 megawatt, more than 100 megawatt, for example, you would not see relevant revenue from that contract for minimum 2, 3 years, right? And then everything would come at once. Under the new POC percentage of completion method from contract signature, you will see revenue coming in. That is important because it changes the financial profile of the company quite significantly. What it means is if we sign a new large contract during a year, now for the first time, you will see an immediate impact on guidance for the year, and you will see an immediate impact on the financial numbers of that particular year, which is something very different from the past. Amy Grey: Justin, if I could just answer the specific question because I realize I haven't answered it yet. The current order book is roughly speaking, 85% completed contracts and 15% percentage of completion. Justin Scarborough: Thank you very much. We've got another financial question. In the first half, admin expenses pretty exceptional and before depreciation and amortization stood at around about GBP 10 million versus just over GBP 9 million in the first half of last year. Do you expect the second half of this year to be at a similar level to that of the first half? Amy Grey: Okay. So as I mentioned earlier, we are in an inflationary environment. So costs are expected generally to go up a little bit one half to the other. And then we do certain things such as we don't award salary increases until partway through half 1. So there's a full year effect of that in half 2. And we've also been on a journey of increasing capability and competencies within ITM, which generally leads to a higher cost base and some of those vacancies are being filled towards the back end of half 1 and half -- into half 2. So in summary, I wouldn't expect it to be vastly different, but I would expect a slightly higher cost base in half 2 compared to half 1. Justin Scarborough: Thank you. We've had a number of questions through on Linde today. So this is trying to bucket it into a more general one and for all of you. Can you provide an update on ITM's relationship with Linde? Simon Bourne: The relationship with Linde is a productive one, right? I mean we are in the middle of executing some of the largest electrolyzer projects globally today. So as you might imagine, there are a lot of meetings, a lot of discussions and a very active and productive relationship. So interactions with Linde are daily. And I think the progress that's been presented today on those large projects is a testament to the 2 teams working together effectively. Amy Grey: Yes. I mean I think if I could just add, we're also looking forward, not just execution, but we are actively working with Linde to think about how we, contracts going forward and that kind of sales arrangements that we have with them and how we proactively work together. Dennis Schulz: Yes, I think nothing to add. All has been said. Justin Scarborough: Okay, Dennis. Amy, can you explain the significant rise in trade and other receivables, about 35% and trade number payables in the first half of about 19% since the end of April? Amy Grey: Yes, of course. So -- we'll have a general conversation about cash and how that might impact that. So just as a reminder, we structure our customer contracts to receive cash ahead of or at the same time as payments to suppliers. Those receipts are staged throughout the life of a contract. So they'll be generally based on milestones such as contract signature, purchase of significant equipment, factory acceptance testing, and there can be various different makeups through the contract. Each is individual, but the important point is getting the cash ahead of it's going out. We structure supplier payments in the same basis. So where we're buying a big piece of equipment, we'll have similar milestones in that contract as well. The result of that means that we can have swings in both trade receivables and trade payables, which is just normal part of the cash cycle of this business. As an example, we had some receivables in half 1 with payables going out in half 2. So you will see that balance shift in again in the full year results. But it's just a normal kind of course of a healthy way of managing cash. Dennis Schulz: And it's also very normal for our industry. I mean most of the contracts we do would foresee a down payment just at the beginning. So when you sign the contract, basically, you issue the first invoice for a down payment in order to be executing cash positively. And from contract signature within then 30 to 45 days, you would see a big spike because you have like 10%, 15% of contract value coming in at once. And then there is a time of spend phase where you then use up that money where you have cash out of the door. And depending on whether that lands now in the first half of the year, second half or slightly into the next half of the year, that is something which will always create some bumps, and that is a perfectly normal thing for an EPC type of company. That will be a bit more flatten as soon as Hydropulse becomes bigger in the mix there, we have a more stable cash in and cash out profile. Amy Grey: And the other thing which flattens it is the amount of contracts that we're doing at any one time. So the more that we grow and the more contracts that we have going on at one time, it will flatten itself. Justin Scarborough: Thank you. Next question for Dennis. Jurgen Nowicki has now taken over the role as ITM's Non-Executive Chairman. As your ex-boss, Dennis, what does Jurgen bring to ITM? Dennis Schulz: Well, what does he bring? Probably his excellent German humor. No. Jokes aside, he's actually quite funny. Jokes aside, I mean, he brings long-standing experience in the industrial gas segment, in particular, in plant engineering, procurement construction for EPC, but also in plant operations from the Hydropulse angle. In his role as CEO of Linde Engineering, he was basically in charge of managing thousands of people, hundreds of projects worldwide at the same time and billions in revenue every year. So I think that he will bring a lot of knowledge, which will help us to further grow the company. I spoke about the business model earlier in my presentation. And I think his knowledge and expertise adds very well to that. He also has known ITM and supported us for many years on the Linde side, and he joins us after a 6-month cool down period from his Linde job, which I think makes sure that we see that also as separate assignments. I think it's also worth mentioning that wasn't the question, Justin, I know, but I think it's worth mentioning that we had 2 more starters to the Board in October, who both significantly strengthened the Board further. The first one being Sir Warren East, former CEO of ARM and Rolls-Royce and the second one being John Howarth with -- bringing a lot of financial knowledge being an audit partner at S&W in the U.K. Justin Scarborough: Thank you, Dennis. Another one for Amy. Are you assuming any contract signings in your cash guidance for the rest of the year? Amy Grey: Okay. Simple answer is no. So we don't forecast any contract signings in the cash guidance. We forecast based on what we know is going to come in and what we know is going to go out, both in terms of contracted orders, OpEx and CapEx. And we do that because as we structure the customer contracts to be cash flow neutral at a base case position, and we hope for better, but we forecast them to be neutral. So actually, it wouldn't be cash generative. And that's a very prudent way of looking at the cash flow forecast. Again, just to reiterate, if we did believe we were going to be any different to guidance on a material basis, we would update the market. Justin Scarborough: Thank you, Amy. Back to you, Simon. How does the launch of CHRONOS impact your product portfolio in terms of NEPTUNE and ALPHA 50? Simon Bourne: Okay. Well, I think it's a good thing. And we've said earlier that the stack is the heart of the electrolyzer system. So if you have a higher-performing stack, you have a higher-performing product. So at the right time, CHRONOS gives us the opportunity to reenergize the entire product portfolio to take advantages of the improvements in the CHRONOS platform. So I think that's the first thing. The second thing is that CHRONOS has a much more compact footprint. So it's feasible to squeeze more stacks and get more capacity into the same space envelope. So from a product evolution perspective, CHRONOS arguably makes it easier for us to address larger and larger capacity products. Justin Scarborough: Thank you, Simon. Next question, I think, is for Dennis. You mentioned in the presentation and in the release this morning, the level of interest in ALPHA 50 and you're clearly very bullish on Hydropulse. Could you provide any context on the number of customers you are speaking with and when some of these engagements may convert into contracts? Dennis Schulz: So I think people know me by now. It's not my or our time to disclose detailed sales discussions. And as I said earlier on the RWE topic, it's very difficult to forecast when customers will take their part of the investment decision, right? But what I can tell you is that ALPHA 50 has landed similarly well to NEPTUNE V. And those of you who follow us a bit longer know that NEPTUNE V has quickly emerged to become our best-selling product. I think even the best-selling product in ITM's history actually. Seeing the very good early interest by customers, especially large-scale industrial customers on ALPHA 50, I would expect the product to be just as successful as NEPTUNE V, of course, on a much bigger scale because the product is 50 megawatt instead of 5, right? To give you a bit of a feel on timing, again, don't take that as a specific guidance now, but as a rough estimate, for NEPTUNE V. It took us around 3 quarters to be able to announce the first signed contract and sale. I think that's a typical time horizon you see from us launching a product, then having to go into the trenches with customers and explaining them what is the product, increasing their confidence, going through safety critical documents, making sure that they believe that we can actually pull that off. And that usually takes around 3 quarters. And the only difference being that for an ALPHA product, usually you would start a project with a FEED, less often straight directly into the EPC phase just because projects are much bigger. I would not expect to see ALPHA for anything smaller than 50 megawatt, although you could scale down in 10 megawatt, I think you said that earlier. But I think ALPHA really comes into play when it's above 50 megawatts in size and especially when you talk 100, 200, 500, then ALPHA is really interesting. And these projects usually need a bit of a FEED phase. The other question was on Hydropulse. Hydropulse. I mentioned Hydropulse as part of my presentation already. I think we are serving a real gap in the market here by eliminating CapEx and OpEx barriers to hydrogen adoption. Customer interest has also been great. I'm conscious I say that a lot, but it's actually true. Customer interest has been great since the launch. As I mentioned, I've not given a specific price, but I can tell you that we have now done a couple of plant configurations with customers. We really went deep into financial modeling of the full CapEx, OpEx, how much do we have to spend in terms of operational support, spare part exchange and everything. And even in the most conservative cases, the cost of hydrogen, which we can offer via Hydropulse is exceptionally competitive, something the industry has not seen on cost. And I can tell you that we have various very good project discussions ongoing with customers. But as always, projects take time to develop, especially under a build, own and operate model when we have to get confident on the site, on the site specifics, on the customer, on the specific use case. Is there a real believable long-term offtake contract in side? Are we talking 10 years plus, maybe 15 years? And then there's a permitting involved. So these projects take some time. So in my view, patience remains key. It's not so much a question of if Hydropulse, just when and how quickly it will scale. It will definitely become a very important pillar of ITM's growth story going forward. Justin Scarborough: Thank you, Dennis. The last question now, which is for Amy. You've been at ITM for just over a year now. Has the job worked out as you expected so far? Amy Grey: Okay. So I'll give you something that was absolutely expected to start with, which is that Dennis is just as hard work and demanding as I thought he would be. So that's perfect. I think there's lots of things I didn't expect. So I expected things to be really busy, but the amount of activity and opportunity that's out there in the market has really exceeded my expectations. The potential that we've got to grow shareholder value is vast, being part of kind of live customer negotiations and seeing what we can do and what value we can add and not just ITM, but the entire market, what the entire market can do for the energy transition has been eye-opening. The other thing I would say is that I think the ITM team has been amazing, and there's probably more knowledge than I ever thought was possible out there. We have a really dedicated and determined team who are going to drive this forward. And I think people always make the difference in these circumstances, and they certainly do with ITM. And then I think probably the final thing is like actually, I can exist on very little sleep, which is not something that I knew about myself. Dennis Schulz: Welcome to my world. Justin Scarborough: Thank you, Amy. And as Paul from IMC mentioned earlier, we will endeavor to work through any questions that weren't answered today over the coming week. Thank you for your attention, and have a nice day. Thank you very much. Operator: Justin, thank you, and thank you to the ITM management team for updating attendees today. Can I please ask investors not to close the session to be automatically redirected to provide your feedback in order that management can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of ITM Power Plc, I would like to thank you for attending today's presentation, and good morning to you all.
Joyce Kwock: Okay. So good afternoon, ladies and gentlemen. My name is Joyce Kwock, and I'm the General Manager of Investor Relations at Hang Lung. Welcome to the analyst presentation for FY '25 results announcement that were made earlier today for both Hang Lung Properties 101.HK and Hang Lung Group 10.HK. We welcome the audience who are at our Hong Kong headquarter and also the audience who are at our live webcast now. Our presentation pack is now available on our corporate website or through the these QR codes. There are English versions and simplified Chinese version for you to choose. Today, our senior management team is all here present to join the presentation. They include Mr. Adriel Chan, our Chair; Mr. Weber Lo, our CEO; and Mr. Kenneth Chiu, our CFO. This time, we would like to start the briefing with a quick video that visualizes the update on our latest strategic growth footprint, blueprint V3. [Presentation] Joyce Kwock: Hope you enjoyed the video. So now our Chair, Adriel, may start with a few words, and then our CEO, Weber, will also like to walk through some slides on the result highlights. And then our CFO, Kenneth, is going to go through our financial management and other slides as well. And then after that, we will address the questions from the audience from both the floor and the webcast. So Adriel, your turn now. Wenbwo Chan: Thanks, Joyce. Thanks for coming, everybody, and joining on the webcast for those of you who are joining online. The reason why we showed V.3 is because I think a lot of people understand sort of intellectually what this entails, but can't visualize it. And so this just helps fill in -- put some meat on the bones. What I would say about V.3 in particular, which is one of my key talking points today is that it really is a new page for us. It doesn't mean we're throwing out the old. We continue to invest in our existing properties. We still think that, that strategy works, but it will be with a different pace and a different scale going forward, whereas V.3 is a way for us to scale with a lot less CapEx. So it's doing what we do best without the capital outlay. And of course, one of my favorite parts about V.3 is the speed. So it's a lot faster when it comes to bringing a project from imagination to fruition. The hope is we can do it within just a couple of years. I think we can achieve that. Whereas if you remember, some of our asset-heavy projects under V.2, they took up to 10 years to go from buying the land, i.e., the first dollar out until the first dollar in. So you think about the cost of capital for 10 years, even though we have a very healthy cost of capital, which Kenneth will talk about a little bit later, but it's still a very long time. So what I'm really keen on is that additional GFA, the additional scale, and that's not just leasable area, that's also frontage, that's connection, that's a stronger community, that's a bigger footprint in every aspect, both physical but also in mind share of these cities. It's in our strongest cities. So we have Shanghai, Hangzhou, Wuxi and Kunming, which are among the four best performing cities. So increasing that mind share and increasing that market share is very meaningful for us. But of course, we're leveraging the teams that we already have. So not only is there a minimal CapEx, there's also minimal OpEx because the teams, the leasing team, the government relationships, the banking relationships, everything is already in place. And so this is a way for us to go with super speed into increasing -- everything from ROI and ROE. So V.3 is, I think it's not an understatement to say it's very exciting, and it's very meaningful for the company. And it should be meaningful on a time frame, which is much shorter than what you're used to. The second point I would talk about, maybe just very briefly, some views on Hong Kong and Mainland Chinese markets. I know Weber and Kenneth will talk about this later, so I'll just gloss over it. But there's a series of corrections taking place in the market, both in Hong Kong and in the Mainland across resi, office, retail. Some of them are structural. So those are the ones that we're very careful about. And some of them are cyclical. The question is, where do you think there's a structural shift and where do you think there's a cyclical shift? We can jump into that in a little bit. The third point is that when you see our numbers that Weber will -- or actually, maybe I should talk about this after Weber goes through the presentation. I think it will be more meaningful. So I'll leave the rest for a discussion a little bit later, and I'll let Weber take it away. Wai Lo: Thank you. So I don't repeat the numbers here. First of all, in terms of our core business, the leasing, you can see that the revenue, although down by 1%, mainly because there's still some depreciation of renminbi impact into 2025. But overall, operating profit and losses, we are up by plus 1% versus 2024 and underlying improved by 3%. So both the HLP and HLG, we delivered the same dividend, same HKD 0.52 and HKD 0.86 for HLG. Next one. I will focus more on the leasing revenue this time because this accounts for 94% of our revenue in 2025. So if you look at the Mainland revenue, especially for the rental revenue is at RMB 5,878 million, which is about 68% of our total rental, flat in terms of renminbi, minus 1% in terms of year-on-year on Hong Kong dollars, as I mentioned about the depreciation of the renminbi. However, if you look at Hong Kong, we managed to get down by 2%. If you remember in the first half, it was down by 4%. Now the overall down by 2%. That means we have done something okay in the second half to mitigate the overall year down by 2%. Property because of the less booking compared to 2024 in Aperture, but we will talk about the overall -- what we have done in 2025 to bring in more capital. Next one. Rental revenue in Mainland China, if you look at revenue total year-on-year flat. Focus, I would like to draw everyone's attention is on the plus 1% on retail. Office, we see the headwind. The headwind is not easy. I'm sure everyone knows that. We will explain a little bit more about what's going on, but we believe that this headwind will continue at least for 18 to 24 months. Overall, we believe that the good news is we were up by 1% in 2022, up by 7% in 2023 and '23 was our peak, and then it was down by minus 4% last year and is flat this year. So hopefully, we can stabilize and go again. Next page. So retail, I think this is really our core that account for 83% of our Mainland because office account for only 17%. So you see that first half, we were flat to 2024, but we see a plus 3% year-on-year in the second half and generate 1% overall in 2025. In a very tough year when you hear about the luxury goods having a soft year, but at the same time, we managed to get our revenue up by 1%. You see across the board, we managed to increase except 3. And Heartland and Forum will talk about it later, but we see still a headwind. But overall, all the other markets, we see a pretty good revenue growth in a very tough market. Next page. So I think this page, I think a lot of people ask in details. I think we show every details. When we were at the same place last year, we see already, say, minus 18% back to minus 11% in fourth quarter last year. But we told all of you that we see a little bit improvement. So when we meet each other in end of July, we said, hopefully, we see positive in second half to make the overall year become breakeven. But actually, this is better than what we expect. So plus 4% because we have 10% increase in Q3 and 18% in Q4. And by the way, to just give you a dimension, 18% year-on-year Q4, Q4 sales in our history is the record high. Because when you look at the Q4 in 2024, it was down by the record high of 2023 by 11%, but it's now more than offset the 11% and up by 18% in Q4. So across the board, you can see except the 2, you can see the sales are in a good growth, especially from the second half. Next one. So what we have done, I think a lot of the work behind the scene are coming from the active management with the tenant. So you can see that across the board, mostly all of our properties with the higher occupancy. The one that you might ask about why Plaza 66 was down because we need to build the rooftop, we have to build the tunnel -- sorry, the basement to the pavilion and we have to close some of the shops. Otherwise, it will not be 96%. But otherwise, if you see across the board, we managed to increase occupancy. So not only by managing the number increase, but also we increased the new letting. New letting increased by 15% and renewal increased by 5%. So a lot of work behind the scene to make this happen. And in the middle of it, you'll find that 200 of them are new to the Citi brands. So we continue our tradition by bringing first in the market kind of brands into respective cities. And at the bottom of the chart, you can see that also there will be some LFA changes in terms of category. So luxury remain the same. But if you see the personal care and beauty improved by 4%, even though you may hear from the market that this is a tough market, but we see we increased by 4%, the sales increased by 8%. And F&B increased by 3% and also the sales also increased as well as the others, including some of the service trade, experiential trade and all that. So I think this is the action behind the sales growth, especially we see from the 2025 starting from the first half, which getting some fruition in the second half. Next one. Happy to also report that this is in our history, the record high footfall. Together with our 65th anniversary, we run a lot of signature events, celebration events, IP events. So I think this is something working well. And especially last time when we talked about it, we discussed in a weekend when we have events, no problem. In a weekday without events, there's a problem. Now we get the tenant to improve. Once the tenant improve with more F&B with a full price range, we can also help the increase of footfall in the weekday as well. So I think that's helping. It used to be in Hang Lung discussion, everyone asking about luxury, but 2025 was led by a long luxury sales increase and long luxury effort that we have done over the years. So 2026, we look forward to celebrate our 66th anniversary. So it's very seldom to have a company to celebrate in consecutive years, 65th and the 66th, but because 66 means something to us, and that's why we will celebrate a lot this time more a B2C, last year, more a B2B, right? So we will celebrate a lot more activities, especially what we see, we have done a lot of things working in 2025. We believe that when we put together something meaningful and interesting and experiential customer will come. Next page. All right. This is the usual page, but all numbers at least looks healthy. Valid members -- valid members means members with spending. So increased by 24%. New members increased by 10%. Member sales increased by 7%. So even valid member increased, sales decreased -- increased, but in a lower magnitude because the average spend per customer decreased, right? I'm sure you understand the market dynamics of China. But overall, I think it's healthy. We managed to get more customers through the door, more active customer and therefore, the member sales increase. And the penetration also increased by 4 points. Next page. This is the tough part, which we have to tell all of you. The office, especially in the Mainland, we experienced 8% down. First half, 5%, and second half get a bit worse to 12%, partly because of a big tenant in Shanghai that we have to restructure with them to retain them for a longer period, right? So I don't want to name them, but at least that help us to maintain the occupancy, that help us to retain them. Otherwise, you may see even worse numbers when the contract expire. So in Mainland today, customers might have a better bargaining power today because they have a lot of supply in the market. So they may come to you and say, even though I have 2 more years with you, if you don't reduce the price, I will leave. And at the same time, I promise you, I will not renew. So you have to talk to them and negotiate and make sure that they will stay hopefully above the market price, but actually stay with us and therefore, they don't need to move. So I think that will have some impact. Someone asked me, how long do you think it will last? I think at least 18 more months to 24 months because we see the supply continue to pop up in the main city, especially like Shanghai. But for some other cities like Kunming, like Shenyang, when you are having a much dominant leader position, you might have lesser impact, but you still need to negotiate with the customers when the customers having a lot more options. For example, domestic players, most of them, they have their own office in the past. But because of our better office facilities as well as more, they would like to rent with us when their business is doing well. But now the business is tough. They want to go back to their own properties. So there's a lot of discussion like this. So that's why I will see this negative drag might being around for another 18 months to 24. But as we discussed in the earlier section, everyone talked about very bearish in Central a year ago. But now it seems like it's stabilized. So this is really something we need to look forward to, especially when the foreign investment will come back. I mentioned to the media, I see at least a few minister, Prime Minister from the other country visit China. And I hope a little bit of the movement going back into China and invest into China. And hopefully, with this kind of more collaboration, bilateral kind of agreement, more company will go back into China. So this is something we hope for, but at least we have to prepare this kind of trend. And hopefully, we can retain most of our existing tenant. Next one. Hong Kong, good news is we mitigate from a negative 9% to negative 2% in 2025. And the retail side, the reason why we have that is because of one single tenant in Causeway Bay expired at very high rent into a new market normal rent. That is the impact. Otherwise, retail is more or less quite stable. If you look at the second half, almost flat. So office, I think minus 1%, which is because we don't have much office in our portfolio. So that's why quite stable. For example, the Standard Chartered Bank building, we have over 90% of occupancy. So I think we are quite comfortable with our existing one. And the residential service and apartment is the really bright spot. I'm sure you heard about the rental market increase and improved over the years, and that will reap the benefit as well. So you can see that overall, we are minus 2% in Hong Kong. So I think this one is important. I want to highlight the difference. So total, 2025, the proceed that we get back from our properties is HKD 1.6 billion. I think this is really highest in the last 8 years. Out of that, we booked HKD 264 million in revenue and the remaining will be booked in basically 2026. So out of that HKD 1.2 billion and then HKD 700 million will be in Hong Kong and HKD 500 million will be in Mainland. And also, there will be disposal from the Summit as well as Blue Pool Road. The good news is the momentum seems like gather. So we sold another Blue Pool Road in January. So I think the good news is when the market improves, some of the property we can actually sell with positive margin, I think it's a great way for us to accelerate the sales proceeds. And hopefully, we can lower down our gearing continuously. Next one. All right. Not much news on this page. Residential, I think not much news. We continue to sell down the Blue Pool Road. Good news is this is on -- Blue Pool Road, we have 5 and sold. Now it's 4 and sold, right, because we sold another one in January. Wilson Road, we got most of the approval already. So demolition will start very, very soon. Hopefully, we can finalize everything. Shouson Hill, we're still waiting for some planning and final approval. And hopefully, we look for a premium from the land department. And hopefully, we can get it as soon as possible. Aperture, now we only have 90-something left for sales from 294. So we sold already over 200 units in the past 2 years. Mainland, Heartland and Grand Hyatt Residence in Kunming continue to be slow, but we believe that today, even though you drop the price, it may not help. So we continue to sell at the right price and hopefully, market improve, but we see a great traction in center residence. So we already sold 50-plus units at a very good price, the highest in Wuxi, above 40,000 per square meter. So I think this is really encouraging. I think that actually reflects the strength of our mall and our district. This is really the core center city -- city center. And hopefully, we will continue to sell down these properties. So I will pass on to Kenneth on the financial management numbers. Ka Kui Chiu: Thank you, Weber. In the coming two slides, I would like to share with you our financial management. I think the key points I would like to highlight is the net gearing ratio. By end of last year, it was 32.7%, lower than the gearing by end of 2024. I think the dividend adjustment and also the scrip dividend arrangement help us a bit. But I think more importantly, for CapEx, I think as we communicated earlier, we have already passed the peak of our CapEx cycle, which help us to further reduce our debt. Overall finance costs actually declined by 8% because of lower borrowing costs both the benchmark rate, for instance, HIBOR and Mainland LPL declined last year, but also on the margin, my team have worked very hard to get a very competitive pricing on our financing. And the net cost -- net finance cost increased a little bit by 3% is mainly because of a lower capitalization ratio, which result into higher net interest expense. Nonetheless, I think if you look at the interest cover, it has been improving last year to 3.1x. And for our overall debt profile, I think around 47%, if you look at the left-hand side of our debt, 47% are renminbi denominated debt. So I think in the long run, of course, there are still room for increase, but I think the current ratio, I would say, is optimal. In terms of debt maturity profile, only 9% of debt will be due within 1 year. And my team and I are working on various refinancing 1 year ahead. And so far, the progress is very encouraging and smooth. If you remember last year, we have done a HKD 10 billion syndicated loan in the Hong Kong market, which help us to increase our dry powder and also help us to build our war chest. For next, I pass it to Weber. Wai Lo: Yes. I think just -- I think, have a lot of score put up here. You see that on the left-hand side, ongoing effort, a lot of improvement in terms of the score, in terms of rating, very glad to mention we delivered our 2025 goals on ESG, which I think this is something we are very proud of. And now we are setting our journey into 2030, and then we are very committed to do well on this part, even though Western world now might not focus a lot, but we believe that we have to do the right thing. And China is leading the way to achieve this kind of sustainability target. On the right-hand side, decarbonization. Great to talk about our journey to net zero. This is really the first time. I think not many companies really having this kind of discussion. We issued our paper in March 2025, and the low carbon emission and procurement, the two projects that we mentioned, Westlake and Plaza 66 Pavilion, our carbon emission actually was down by 42%. And one thing I also want to mention, very proud, 8 out of our Mainland operating properties powered by renewable energy. It's not only about really the achievement in the ESG, but it's saving costs because the cost in this renewable energy is cheaper than the traditional one. I think we talked a lot about V.3, but I just want to capture not only the video, but this is really a strategic move that we would like to accelerate, involving much less capital, but more efficient and more strategic in terms of expanding our leadership. So other than other company talking about so-called asset-light, we focus on only the core city where we believe that we will either already command a leadership position or we will be the leader in the market, so with Shanghai, Hangzhou, Wuxi and Kunming. And from a customer perspective, we see that not only the area will be improved, but also the facade, the street level in terms of visibility will be improved. So you can see that from Hangzhou will be triple, from Shanghai will be plus 53% and from Wuxi will be plus 30%. And I think most importantly, which we disclosed this time, all these 4 projects, we will spend around RMB 1 billion only, right? Of course, not only. This is compared to the scale of what we used to be V.2 will be much less. But that gives us the additional GFA that give us opportunities to command the leadership. And that gives us leveraging on our existing resources, not only people, but also the existing team, as we mentioned, existing relationship with the government as well as the existing leadership already, which we command over the years. So if you have a chance to go to Kunming, it's a simple way, just I think other property developers have done in Causeway Bay, for example, outside of their mall, you just make the street more meaningful, more interesting and people will come through that into your mall, right? So we have done exactly the same at that. Plaza 66, which we are very efficient now. We are getting OP. And hopefully, we will be ready by Q2, and then we will launch and getting the first dollar, as Adriel mentioned in Q3. This will increase our Plaza 66 LFA by 13%. On the right-hand side, I stay with Nanjing Xi Lu, right? So 13% in the Pavilion. But if you include this project, this will increase our retail by another 67%. So 67% plus 13%, the Nanjing Xi Lu retail area will be increased by 80%. Not only that, we will have office, we will have hotel in this building. And the good news is this is a joint venture that we will own 60% of that. And then we will -- and the landlord will be responsible for the CapEx to improve the building. And then we are responsible 60% of that into our interior design as well as the internal fit-out. So I think that is the project. Same thing apply in the Wuxi. We will increase our facade, and we will have 40% close to retail space increase in Wuxi, which we are already undisputed leader in Wuxi. We want to be even stronger. And if you have a chance to go to Wuxi, used to be we are on the right side. So we are not in the crossroad between the main road. And once we have that, we have the best facade. We can put on LED, we can really illustrate a lot of brands with a high visibility. And the Westlake, a lot of people say, okay, this is the one that you have not done yet. Why you already expand before you do the first one. But I can tell you that we all know when we bought this land, we need a Phase 2. But this time, we don't need Phase 2 anymore with this expansion because we get the best angle and best corner of this particular juncture. So I think once we have this expansion, we will increase our facade triple and also increase the GFA by 40% for the retail. This one, I'm sure everyone will ask Office, we have 5 towers because the Tower A is not ready because we are still doing the internal fit-out. We only have B, C, D and E and E already we delivered to one tenant in November last year. And then if you only look at B, C, D, E, our leasing progress, pre-leasing is 38% -- right, 34% because Tower A account for 50% of the total GFA of office. So because that is not available. But as of today, we already increased to 40%, right? So once the Tower A will be ready for us to lease and then hopefully, we can ramp up. But again, at the backdrop of tough office market, we don't want to be rushed. But at the same time, we also want to make sure that we can lease at a reasonable price. So the team working very hard on this one. On the retail side, last time I recall, we're talking about 80-something percent re-leasing. As of today, we are 91%. So when we open in Q2, we will be ready with 80% opening rate and 90% by Q3. So this will be a one-stop shop and together with the expansion, hopefully, will be with luxury, with the retail, luxury and with the F&B and with the culture as well as with relics and with the museum below the ground. And together with the hotel on the left-hand side, the Mandarin Oriental, this will be opened in early 2027. That's all I have. And now open for discussion and questions. Joyce Kwock: [Operator Instructions] I've got some questions on the webcast, but Karl from JPMorgan, would you like to have your first question? Karl Chan: So my first question is about the CEO succession. So I guess the first part of the question is more for Weber because when we saw the announcement back in December, we were a bit -- a bit surprised, right? So just curious what's your thoughts behind your retirement because you're still very young, very energetic. So just curious your thoughts behind that. That's the first part of the question. And the second question is to Adriel. So I guess now we are in the stage of identifying the new CEO. From your perspective, what kind of qualities are you looking for in the new CEO? Are you going to find someone externally? Or are you going to promote someone internally? What's the direction? And is there any time line on when we will be able to appoint a new CEO? So that's the first question on CEO. And the second question is on the Mainland China retail. So last year, I remember that in the results briefing, you mentioned that your outlook for second half is cautiously optimistic, right? So looking ahead into 2026, just curious what's your general outlook? Do we expect tenant sales to still see a pretty good positive growth? And I guess, maybe if you have any colors on January so far? So that's my two questions. Wai Lo: Okay. I maybe answered 100 times already. I will repeat again. Hopefully, if this is not too boring to you. This is always my personal goal even when I was 35. I would like to retire by 55. So don't discriminate the age. I have been in the role for 8-plus years by the time when I leave my office. When -- of course, when I joined Hang Lung, I would not say I will retire by 55. But this is really always my goal to do that. In the media section, I already mentioned -- actually, Adriel mentioned already. My next job, which has been confirmed is my daughter's caddie. So I upgrade myself from daddy to caddie because my daughter is a competitive golfer and I want to spend more time with her, not because I can earn any money from her, but I think if I can afford it, I think family time for me is very important, especially before she move to overseas for university. I think by then, I will be redundant anyway. So I would like to spend more time with them. And also my parents also, they are old enough, and I just don't want to leave them alone by focusing only as a CEO role. So I have a son role, I have a husband role, I have my father's role, and then I would like to balance for that. So this is really not a tough decision for myself. I informed the Board and informed Adriel and Ronnie in January last year, but we can only announce by December. So I think in terms of the shock, maybe a shock to you, but not shock to the company and to the Board because they were informed 1 year ahead. I think I hope it will not create so much inconvenience. I work for a U.S. company for a long time. Everyone can be replaced. I don't believe that no one cannot be replaced. So I truly believe that Hang Lung will be able to find one person or my successor to understand the business and then to do well. So I will stay on, and I'm sure Adriel can talk about my role after my retirement. So -- but I'm happy to answer any question if I have not answered. So I have answered a few times. I hope that if you still say, okay, maybe you have a role. First of all, I want to clear some of the rumor. If someone spread the rumor irresponsibly, I have to say, I have no job. I will not go to another place for CEO role. And then if anyone believe that, I will put money on the table and bet with you. But overall, I'm happily to be retiring. Wenbwo Chan: So first of all, I do want to thank Weber here for his 8-plus years of contributions. And if you think about our previous CEO, Philip, he was on for about 8 years as well. So I don't think this should come as a surprise, frankly. And it's -- as he said, it's very common for companies to have to go through this. Everybody has their life plans. I think Weber's life plan facilitated by the both emotional, mental and financial freedom to do what he likes and to choose his path is very empowering, and I support that wholeheartedly. So as a company, obviously, that leaves us in a position where we have to find a CEO. Although as he mentioned, it's not a surprise. So we have been looking for some time. When we have something to announce, we will announce it. But for the time being, I don't have anything to announce. What I can say, though, is that the Boards have approved an advisory role for Weber, which will be similar to previous practice. And so there is absolutely no bad blood and absolutely nothing worth flagging in this transition. And so that will all be announced in due course as well, although it has already been approved by the Board. So I think on the succession, it's pretty standard. We'll work with what we have. On this China retail outlook, it's -- last year, we were cautiously -- not quite cautiously optimistic, but we were cautiously hopeful that the second half would bring us back to parity, and it's done that and more, as Weber just mentioned. And the Q4 for us was record-breaking on multiple levels, both total retail sales, foot traffic, occupancy or technically, maybe we were at a higher occupancy when we only had the 2 Shanghai malls, but that was sort of like 15 years ago. So we're at a record high occupancy, foot traffic and sales. So I think it's really a great way to start our 66th year. And with that 66th anniversary, obviously, we'll be pushing really hard into the consumer, the B2C side of that marketing. So what you saw in the V.3 video is our 66th anniversary logo, which we'll be pushing to consumers. But even though we've had a strong fourth quarter, I am still -- I still want to remain conservative and a little bit cautious, partly is because the luxury brands have not had a big uplift yet. They've been doing okay. By okay, that's, in some cases, maybe down low double digit or high single digit. In some cases, in our malls, maybe a little bit better than that. So maybe down single digit plus up single digit. And that is not where the growth in Q4 has come from. The growth in Q4, which I think is very gratifying, has come from non-luxury, has come from F&B, has come from jewelry, and that is what we've been trying to focus on for several years now to build a really compelling non-luxury offering in our malls, which means experience, it means entertainment, service, F&B. And so that's what we've done. And I think this is the pudding or rather we're eating the pudding now. So I am still cautious. If you look at LV's numbers, which just came out, obviously, they're down for the whole year, but Q4 again was also up like 1% for them. And so that sort of tracks for us as well. But it is not so confidence inspiring that I'm willing to say 2026, big numbers, luxury and non-luxury, I'm not ready to say that yet. But I think it's a great start. And I think that if we are able to execute all these things that we've been planning, including V.3, you might not see most of V.3's impact in '26, that will be in later years. But I think the signal, the canary in the coal mine is what we've done in Kunming, which is a simple 67-meter long section of the shop fronts across from our mall. That has brought significant increase in foot traffic from -- at least from that entrance. It has brought a lot of life back into the district -- and it has created a new buzz on social media and within government and within the community on what is happening around our mall. And that is really what we're leaning into as well. So retail, although I'm not yet willing to put my hand up and say back in a really big way, I am willing to say that it is confidence inspiring, and we need to work hard to make sure we capture that. Wai Lo: Just to answer you about January, our numbers, if you look at the first 28 days, more or less the same as last year. But the good news, this is a good news. The reason why it was Chinese New Year was in January last year. So this year will be in 17th of February. Last year was in January 27, right? So you can get my point, right? So if you have the similar sales of last year's CNY, then I'm pretty confident the 2 months will be good, right? So I think this is what I can share as of now. Whether that fully reflects the recovery, don't know yet. But I think I'm not saying that we were forward-looking enough. The reason why when we dropped so-called our luxury definition and non-luxury mall definition, a lot of people at that time say we worry about luxury and you are retreating from luxury. No. We already see the behavior change of customers. And that's why we don't want to label that particular mall as a luxury mall with only 15% LFA for luxury. We want to open it up and make sure everyone should come. That change of mindset, see our occupancy increase, our footfall increase, our non-luxury doing well, not because we just changed the definition. It's just because the behavior has changed. So that's why I want to correct some of the people say, oh, because we worry about luxury, no. We continue to rely on both luxury and non-luxury. But so happened in 2025 was driven by the non-luxury growth, which we were spot on in 2025. So there's a lot of continuous refinement. There's a lot of way that we need to engage with our customers. But when you look at our LFA of luxury, we did not reduce. We are more or less the same, but we focus on reshuffling the non-luxury to capture the growth opportunities for our mall. Wenbwo Chan: Maybe I'll take the opportunity just to expand that into Hong Kong. So when I look at China retail properties, I think what I'm seeing so far is that it's cyclical. If the economy comes back, which we expect it to do, if not immediately, at least in the medium term to long term, we're still bullish on China, then I think retail sales can come back and will come back. So I think that, that is a cycle. On the other hand, here in Hong Kong, as I'm sure we all know, retail has been hit very hard by people traveling to the Mainland, by the lowering in standards of service, the offerings. And so I think in Hong Kong, combined with the broader economic environment, I think Hong Kong is a little bit more structural when it comes to the retail landscape for landlords. And so in Hong Kong, I think we've done quite well considering all things considered. As Weber mentioned, there was sort of a one-off hit in Causeway Bay. But if not for that, then we would have been pretty much flat. So we seem to have found the bottom in Hong Kong retail. The question is how quickly will it return? And I'm not yet confident to say that it's going to come back very quickly. So I'm not holding my breath. So I think Hong Kong is a little bit more structural while the Mainland retail is more cyclical. Joyce Kwock: May I clear some questions from the webcast. There are some questions on the financial management. So what's been driving down the net gearing ratio? This is the first question. The second question is, what is the CapEx guidance for the next few years? Ka Kui Chiu: Let me give you some high-level figures for the CapEx first. So for this year, 2026, the CapEx will be around HKD 3.1 billion and 2027 would be around HKD 2.6 billion. And subsequent year, it will go down continuously. The figures I show you have already included the HKD 1 billion attributable CapEx that we have to spend going forward in the V.3 strategies. But substantially, those CapEx will be incurred, I think, from 2027 onwards. Wenbwo Chan: And sorry, just to add. And so for those of you who have watched us for a long time, you remember that for many, many, many years, our CapEx was like HKD 4 billion to HKD 5 billion per year. And so this is a meaningful reduction. Ka Kui Chiu: That's right. And for the gearing, the question is what are the factors which help us to bring down the CapEx -- sorry, the gearing. So as I mentioned, the scrip dividend arrangement in the past 2 years has helped a bit because the cash outlay was much less in terms of cash dividend. As you may know, our major shareholders, HLG elected opt for scrip dividend so that HLP can preserve more cash. I think more importantly, we spend less CapEx. And as highlighted by Weber, for contract sales, actually, even though you look at the P&L, the revenue recorded is not substantial. But actually, starting from Q4 2025, we had much more disposal in residential, particularly in Hong Kong. So we have already sold, I think, around 16 units in 1 quarter. And also, we have some disposal in Blue Pool Road as well. So I think the recovery of the Hong Kong residential market provide us a good window to accelerate this disposal. So hopefully, if the momentum continue, we should have more disposal for at least Hong Kong resi in the coming year. Joyce Kwock: Okay. There are 2 more questions related to dividend. The first question is about scrip dividend. Is it going to be the last time we are having a scrip dividend scheme. The second question is, will the management consider a special dividend for the 66th anniversary. Wenbwo Chan: So it's hard to say if this will be the last or not. That depends on the numbers when it come to midyear and end of year. But I think what we have been relatively consistent in saying is that this is not something that we necessarily want to do long term. The question is what's the right timing. And as we have new projects coming online in Hangzhou's opening, hopefully, April, midyear this year, then the hope is that there will be less pressure on the financial side. And therefore, we would not need to issue scrip or offer scrip dividends as a way to ease our interest payments or gearing. So there's a broad intention not for this to last too long, but specifics will have to be up to the Board when interim comes around. And on the special dividend, yes, maybe if you're in one of my [indiscernible], then there will be a lot of red packets going around. But in terms of special dividends, I'm not sure that, that's something the Board is really thinking about. Joyce Kwock: Xinyuan Li from Citi. Xinyuan Li: This is Xinyuan Li from Citi. I have three questions. First is a follow-up on China retail. So we mentioned non-luxury outperformed. Last year, we added a lot of lifestyle and beauty. So I'm just trying to think of what will be your leasing strategy into 2026. Will you continue to add on, experiential non-luxury space? And how do you think of the, say, temporary underperformance of luxury? Will you like say, I think Shanghai Mall retail sales kind of underperform that of Wuxi and Dalian. So is it because of the difference in the luxury positioning? Or what are the reasons behind? Second question is more on the underperformance of Wuhan and Shenyang. So those obviously has been undergoing the repositioning. I'm just wondering if the whole process is, say, aligned to your expectation? And when will we see the stabilization in the performance? Is it '26 or even '27? And what would be the shopping malls after the repositioning? Then the third question is actually also on dividend. So I'm just trying to think with gearing lower, with CapEx lower, with more rental incomes ahead, when would you start to consider maybe even increase dividend? Under what scenario when earnings back to what level we will start to consider that? Wai Lo: I think I believe which also get some information from the luxury tenant. Adriel and I went to Paris in December. Some sort of not brainstorming, but getting some feedback from the tenants. I think in general, overall, everyone is cautious, but they still look for mid-single-digit recovery from a tough year of 2025. So I believe that there's a lot of consolidation happening because a lot of maybe some brands, they overexpand themselves. So in terms of consolidation is happening, so lucky enough that they don't consolidate ours, but they consolidate the business to ours. And therefore, there will be hopefully some opportunities for us. So I think this is more about luxury. But the luxury side, I think the momentum continues. The athleisure, I'm sure everyone talked about. The good news now is that it's not only one brand. They have a lot of brands doing pretty well. So I think it's quite across the board. Not only athleisure, but if you look at Pop Mart, for example, some of the IP, Jellycat, they are doing pretty well. So I think we need to look for what today is what customers really want. F&B, we find out in a very tough market 2025 is that we have to offer various price range. We can't offer only Michelin 3-star and stop there. We have to offer something very cheap in order to attract tenant/customers as well as footfall. So I think I will not believe when the clock click from 2025 to '26, things will improve or change dramatically. The momentum will continue. The footfall is continuing. So I think we believe we still look for a single-digit increase on sales, which I think should be doable based on what I just mentioned, the first 2 months, if we hang on for January, but get an upside on February, at least we should have a good start. So I think this is first part of your question. Second part, about the I will not say struggling, but the repositioning one because of the competition. For Shenyang first, we are building a sports park next to Shenyang using the sites that we stopped constructing, but turn that into an urban park. We want to really leverage on the park facilities to make this become an urban hub for sports, for athleisure, for F&B, for some other places. So I think this is ongoing and then the park will be opened by Q3 next year -- this year, sorry, Q3 this year. And hopefully, with the park with a lot of interesting, you can name it, pickleball, basketball, whatever venue that we can offer. So pet friendly kind of facilities, we can attract different traffic into the mall, and that will facilitate more footfall into the shopping mall and speed up the trade mix improvement. Heartland, I can see -- you can see the second half already improved, partly because of one of the big competitor opened in 2024 July. So when you normalize it, the drop should be less. But nonetheless, we have to work very hard to improve our occupancy. So you can see we have 5 points jump in terms of occupancy. We are improving a lot more F&B offers. I can tell you the challenge in Heartland is not luxury. The challenge in Heartland is non-luxury because the one next to us suffocate us not allowing anyone to open with us. So the key for us is to how to break through to get the L luxury going. So we have some strategy. I cannot disclose to you. And hopefully, by the middle of the year, you can see we have some breakthrough. So when we get the non-luxury going, you will have a footfall. Once you have a footfall, everything will be improved. So I think it takes time. Of course, I don't want to always go back to those little brother need helps. But the good news is out of the 10, we have 7 good way, good ones. We have 2 a little bit struggle. We have one actually on the good foot with a high occupancy, and we just need to make sure that the reshuffling on tenant mix will be relevant to the customers. We have to be on top. on what's going on in the market and make sure that the tenant mix will be relevant. I think that is the key. The last one is the dividend. Yes -- again, I don't want to give a false hope. If you look at our gross and the net interest, we still have a bit of capitalized interest will be realized to be a real interest. That will drag us a bit even though if we have revenue increase. So I hope that maybe hopefully, we still need to go through the next 24 months. And once we get through that capital interest and then when we see the earning improvement, and then I'm sure we are more than happy to improve. So this is not really -- this is what we can mandate the team to do, but this is what the earning will tell the story. And then we are already paying up to 81% of our earnings. So I think if you look at even with the capitalized interest, we are more or less deliver almost all. So I think you can calculate your own mathematics. So I think we are trying our very best to maintain it. So again, go back to the tough decision that we have made by reducing dividend last time. So I think that a lot of you even asked me, should you cut more? I remember that you cut -- why do you cut to 0. And of course, we have to strike the balance. We have to make sure that we find the place that we'll be making the shareholders as well as the company, both can be a win-win. And hopefully, we can sail through the tough time. And we see a little bit of the KPI going into the right direction, the gearing now coming down, the borrowing coming down. The CapEx already peaked. So I think a few years ago, when we talked about we have to lower down the gearing, get the cycle -- recycle back, we are working it. We are doing really hard on that. And hopefully, you can see that. Wenbwo Chan: I would just add that we've previously said that the first priority was to deleverage. It still is. And so we do want to reduce our gearing and interest costs. But do we necessarily have to get to 0 borrowing before we start increasing -- thinking about increasing dividends? Not necessarily. So it may not be that long. It will be somewhere in between, and it will be a discussion. And obviously, it will depend on the trajectory that we see the business taking, especially in the Mainland. Joyce Kwock: Mark from UBS. Mark Leung: I got about three questions. I think the first question is regarding on some -- maybe the 2 Shanghai malls, we got excellent tenant sales. When do management expect that should be reflected in the rental income? Or should we expect the non-luxury sales growth will be more base rent focused -- it should reflected maybe 3 years later? I think that's the first question. The second question, I think it will be more on the net gearing side. So we definitely want to fasten the disposal for the Hong Kong DP, right? But how about for the China, do we expect maybe dispose of China office like the C-REIT or more innovative lower funding cost method, for example, like issuing CV, et cetera? That's the second question. And the third question will be more on Adriel. Do we see the current structure for HLP and HLG is optimal? Or do we have any plan to -- any change for the corporate structure? When will sales turn into rent? Wai Lo: I think in Plaza 66, it's quite optimal, I would say, because when you see the sales increase, you get the rent increase, which is more or less, I would say, when sales come up, you will get the impact of it. In Grand Gateway, it used to be always our fixed rent is much higher than the turnover rent, right? So in the down cycle, we're happy with the high fixed rent. But in the up cycle, we may not be able to capture all the upside. So I would say if our sales and footfall continue to improve, you can see the fixed rent will be improved, right? So if you really dig into the details of our Mainland this year, even with a very tough luxury sales, our fixed rent increased by 2%, right? Our sales rent basically flat, right? That's why our total increased almost by 1, right? So I would say, in a very tough time, we still managed to get the fixed rent increase because we always believe more at the fix will be beneficial to the landlord rather than leave everything on the variable, right? Now of course, on the other side, when the sales go up very, very quick, then you say, why don't you have more sales rent? I can't basically have both, right? It really depends on the nature of the properties as well as the competition next to you. I don't want to mention in Shanghai, the competition is very keen. That's why to us is that we have to make sure that we get the best offer for the customers. We have to get -- make sure that the occupancy cost will be reasonable. Yes, you can drill and get and milk the cow to the max, but you might push the tenant to the next door. So that's why we are very cautious about doing that, right? I'm sure you understand what I'm talking about, right? That's why, on one hand, we want to be more energetic in terms of more footfall in the market. But at the same time, we want to be reasonable, and therefore, we can get the best tenant mix. Once you have best tenant mix with the best footfall, this is the best defense for any competition. So the second, I'll pass to Kenneth. Ka Kui Chiu: Maybe I have to answer your second question about gearing and you mentioned about C-REIT. First of all, don't speculate Hang Lung is working on any C-REIT. Some of you write paper like this, which was misleading, okay? But definitely, we -- my team keep monitoring the latest development of the C-REIT market. As far as I know, last year, there were 11 C-REIT listed in Mainland. Most of them are either those mass market outlet mall and some of them are community malls and so forth. So this is interesting, and I've noticed the yield has compressed from the IPO price. But nonetheless, for us, we are still -- the key challenges that we have observed is even the CSRC and the two exchange in Mainland, they spend a lot of effort to promote the C-REIT product. The -- we have not yet seen a very clear or clarity on the capital flow from offshore -- from onshore to offshore, very little clarity. And I think as a Hong Kong-based listed developers, it's very difficult for us to do something without a clarity, not mention the tax implication all this. So I think for us, we will keep learning and monitoring the market. And of course, you mentioned office, if there is a very active -- now they call commercial REIT because previously, they call consumption REIT, right? If there are investors who are interested in Mainland office, we are happy to explore. But as far as I know, the regulators, they encourage the sponsors to do retail-related REIT. Of course, you can have some office element or even hotel, but the majority are still retail related as far as I know. So I think give us some time to study and feel free to share with us if you have any insight on it. Wenbwo Chan: Yes. And I think tying into that, with our priorities still firstly, to deleverage, to degear. We will naturally look at opportunities to sell down. We'd prefer to start with noncore. As we have said many times before, noncore property disposals are something we look at on a regular basis. But of course, when push comes to shove, the prices are never great. So we've not been able to move maybe as quickly as we would have liked on some of them. But as our gearing starts to come down, as our interest expenses start to come down, the pressure to do so is a little lower. And at the same time, the market seems to be returning at least a little bit. And so the opportunities may increase. So it's always a balance, how much do you need to sell. And frankly, we don't need to sell. It's just a matter of preference. But then also how does the market look that we're trying to sell into. We've been able to move residential relatively well, I think, over the past 12 months, and we'll be able to book a lot of that this year and not rather than last year when they were contracted, and we hope to continue that. So we're still looking at all options, but hopefully, the market comes back and works in our favor. On the structure, it's something that we look at, again, on a regular basis, what is the optimal structure? Obviously, we have a lot of -- not a lot, but several peers who have been making adjustments and tweaking. Some of them have done quite well in adjusting their approach to the governance and the holding structures. And so it's worthwhile for us to look -- to watch and learn, but we don't have anything to talk about specifically. Joyce Kwock: Okay. So let me clear one question from webcast regarding Westlake 66. It's a positive sign, a positive number to see 91% of commitment rate. So the opening should be 3 months from now. So how is the opening strategy as is it going to be event driven? Or is it going to be CRM driven, especially on the VIP segment? And also on the tenant profile, anyone to highlight here? Wai Lo: I think you name them all. We have to do events. We have to do good tenants. We have to push on sales. So we already recruit quite a decent number of members already around the areas. So the preheat has been done since the middle of last year. I think we are working very hard now. We hand over 90% of the space to our tenant, and then they are submitting drawing, start to renovate. And then this is really the last mile every single mall when we open, we need to push and making sure that they open on time. So we will come up with some incentive. Hopefully, everyone will be according to our timing. So I think overall, to start with, I think this mall will be a one-stop shop, including luxury, including non-luxury, including culture with a beautiful fourth floor as a garden. We call it Oasis and then relics on the B2 to really have a museum down there. And then we will have arts. We will have hotel. And then with the expansion, we have a lot more space. So I think it will not be different from what we have done in Kunming and what we have done in Wuxi and most likely similar to Grand Gateway to start with, right? Because at the end of the day, there's no more Plaza 66. You can't only do luxury because Plaza is the one that we really first in the market, and then this is special. This is home to luxury. But on the other hand, I think with the space and with the expansion that in a few years' time, I think we will be able to do one-stop shop in that area. So I think overall, I think we are pushing very hard on every step on promotion, on even have artist coming at the launch, everything, right? So hopefully, we can invite you to come in 2026 second half. Joyce Kwock: May I take one more question from webcast and I send the last question to Karl from Bank of America. So there's a question from webcast, which congratulate us on a strong year of contracted sales in 2025. So any guidance for '26 in terms of the sales, whether it's from the DP or from our IP disposal? Wenbwo Chan: Well, I mean, if you look at our inventory, we don't have that much left to sell. So I mean we have a little in China -- sorry, so in the Mainland of China, we have a reasonable stock. I don't expect that all to sell like hot cakes. Some cities, as you've seen, are much stronger than others. Wuxi is doing particularly well. Wuhan is doing a lot less well, and that's a function of the various economies and the regional economies. In Hong Kong, obviously, we do have a couple -- we have Jardine's Lookout , we have Shouson Hill. And then, of course, we have the remainder of Aperture. And those are all things that we're going to work on. But in terms of total number, it's relatively limited. Wai Lo: I think our imagination, we have some IP to dispose. We just disposed one in a very top building. Hopefully, we can dispose more. That we have 50-something units. So I think with the market improvement, I hope and I wish we can dispose more. We have 4 more Blue Pool out of 18. So if we can sell 4 more, that will be great. And the Wilson Road as well as the Shouson Hill, we will work hard at least to get all the master layout plan done first. So if someone want to take it, take it. So I think there's a lot of way we can speed up. But of course, I want to also strike the balance between the shareholder return, right? If, of course, we need the money for survival, of course, we can sell at cost. But if we have some briefing space, I want to make good money for the shareholders. So I think overall, in Mainland, again, Wuxi doing pretty well. We want to continue to do that. And then Wuhan and Kunming are a little bit tougher because the market is not up there to the price and then we are really premium in the market. We just need to wait a little bit until the sentiment improve. So overall, I think, of course, if there is any long call available, which the price is attractive, of course, we will look at it. So I think overall, there are some, but there will not be a lot. And also, we have 94 Aperture left, and then we would like to dispose as much as we can. If we can ride on the momentum of 60 in the last quarter of 2024 -- sorry, 2025. I think if I just do the straight line, we should be able to sell 94 in 2026, easier for me to say when I retire, right? So I think overall -- I think if the market continue to improve like what everyone said, I think we have good chance to dispose a lot more. But of course, we don't have a guidance because I don't want to give you a false hope. I just want to sell at the right price. If the price is right, we want to sell as quick as possible. Joyce Kwock: Karl from Bank of America. Karl Choi: Yes. Actually, one of my questions was going to be about the Summit. And given the very hot luxury residential sales market, are we having some discussions there? Is it just a matter of just pricing? And that sounds like we are willing to sell if the price is right. And second question is, we touched on Hong Kong retail a little bit, but can you give us a little bit more color on the rental income outlook for Hong Kong, presumably still relatively stable. Just want to give you -- give -- ask a little bit about Hong Kong. Ka Kui Chiu: Maybe I help to answer the Summit first. I think, first of all, other than the disposal that we have announced last year at HKD 160 million, something like that for unit. We have also leased out one unit at a very good price. I think if you look at the news, it's HKD 300,000 per month. So again, I would like to emphasize, it is still an investment property. At the right price, if you are interested, no matter lease or buy, please come to me. Okay. But please don't lowball me, okay? You know where I come from, I come from investment background. So I am quite demanding on the price. But nonetheless, my team and I are working hard to strategize overall how to put the asset into the market. The second question is on the... Wai Lo: Hong Kong, I think as Adriel just mentioned, I think we are cautious. If this is structural, I think we need to wait and see whether the behavior of customer will come back a little bit more back to Hong Kong because last year, I'm sure everyone talked about everyone goes to Shenzhen, right? It seems like it dialed down a little bit now. For our neighborhood mall, the impact is minimal. Now we see a little bit more tourists coming back. So that should be beneficial to our commercial district. So I think we will have some reshuffling of tenant mix in Causeway Bay. That will have some why period, and that hopefully will be very short. That hopefully also give an uplift of the tenant mix for Causeway Bay and hopefully, that will bring the sales increase and bring excitement to our Fashion Walk. So I think overall, we are cautious. I can't say cautious, optimistic because whether this is structural or not, we still need to wait and see. But hopefully, really the peak of people leaving Hong Kong and go to the north a little bit, I would say, the peak has been passed. Whether it will dial down back, everyone come back and shop here, wait and see. Ka Kui Chiu: Just one supplemental question. Actually, we have seen a very good improvement on the footfall in Hong Kong. So if you go to Causeway Bay, go to the Peak, Mongkok, very crowded. So I think the challenge to not only Hang Lung, but all the landlord, how to translate the footfall into the sales is key. And as mentioned by Weber and Adriel, actually, we are working on very hard to reshuffle some of the tenant, particularly in Causeway Bay and Peak, so please give us some time. We are working on this. Joyce Kwock: So ladies and gentlemen, this wraps up the analyst presentation for our FY '25 final results. Thank you very much for your participation. We'll see you next time. Ka Kui Chiu: Thank you.
Operator: Good morning, ladies and gentlemen, and welcome to the F&C Investment Trust PLC Shareholder Update. [Operator Instructions] Given the attendance on today's call, the company may not be in a position to answer every question received. However, the company can review all questions submitted and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to Fund Manager, Paul Niven. Paul, good morning. Paul Niven: Okay. Good morning, everyone, and thank you very much for your attendance. We've got quite a large number of shareholders on the line and I think some potential shareholders as well. What I propose to do is run through an overview of the trust. I'll keep that relatively brief because I think most of you will be familiar with our approach, but I'll give an update on that. Then I'll talk about the market perspective, the broad macro landscape, some of the issues that we are thinking about, some of the decisions that we are making, and then we'll get into Q&A. So there's quite a lot of content to get through. So I'll move through reasonably quickly, but hopefully, we have plenty of time at the end to address your questions. So just briefly, I think, as I said, many of you will be very familiar with the Trust. We've got a very long history, very consistent management approach and recent decades focused very much on growth assets, that's listed equity and private equity. We are around about now GBP 6 billion in terms of market capitalization. Therefore, we do have substantial scale. And we believe that we offer a cost-effective solution for investors looking for exposure to a diversified portfolio of equity and private equity holdings. Additional points, which I'll draw out in a few moments, very long track record in terms of not only paying dividends, which we have done every single year since launch back in 1968, but rising dividends through time ahead of inflation, and that remains an aspiration of the Board to continue. We do, as I said, focus on growth assets, the overriding objective is to grow capital and income. The way that we achieve that exposure is by investing in capabilities from within Columbia Threadneedle Investments. That's the company that I work for, but also drawing from expertise across the markets in terms of third-party exposure in listed areas such as JPMorgan, who run our large-cap growth portfolio, Barrow, Hanley, who run a value strategy for us. And a point that I'll get into as we go through is that we also have moved the management of our emerging markets assets to a third-party manager. We did that about a year ago. The outcome that we look to achieve is consistency in terms of performance delivery. So overriding objective growth in capital and income, as I said, but we look to deliver consistency in terms of performance outcomes as well as, as I said, delivering value for money for shareholders. So a few points. And I did note, we had some pre-submissions in terms of questions, and I'll try and, as I said, get through as many of them as we possibly can. But this gives a sense of the long-term perspective of global equities against U.K. equities. And as you be or as shareholders will be aware, we made a decision to globalize the portfolio to reduce that U.K. bias in terms of exposure back at the beginning of 2013 and take a much more global approach in terms of our exposure. And this chart really shows that since that decision was made, it's been a very profitable outcome for shareholders of global outperforming materially. We did receive some questions about exposure to the U.K., which I'll come on to in due course, but also about our relative performance against peers. And our primary peer group is obviously global trust, those invest with the global remit rather than necessarily those that are constrained by investing in the U.K. But it is noteworthy, I would say, that there has been an uptick in performance, particularly in the last 12 months from the U.K. market relative to the U.S. and global exposure. And that has been reflected actually in better performance from some of those U.K.-focused trusts and funds and particularly those with a value bias, those are essentially targeting value stocks or higher income. Just putting some numbers on that, I'll run through this reasonably quickly. But in the last year, we've seen the U.K. value index as measured by the MSCI up by about 30% last 3 years, 54%. Now you compare that to our returns, and we have delivered 9% and 52%, respectively. So longer time periods, certainly, when one looks at 10 years, you can see that global markets are delivering around twice the return achieved from the FTSE 100 Index. But if one looks at a shorter lens, it is clear that U.K. equities specifically have been performing better as have other regions. And U.K. value stocks, in particular, have been performing better. So there's been a bit of a catch-up in the short term from those areas. Again, I'll come back to that in terms of the Q&A because I think there are some more questions on that point specifically. Our exposure, just to remind you, we run a diversified portfolio, gaining exposure through both regional and global components to listed and private equity markets. And this shows the split of exposure as at the end of the year into underlying strategies, and I'll give a bit more granularity on this as we go through. Also with our top 10 listed holdings, you can see many familiar names in the top 10 U.S. stocks dominating and many of the leading technology and related disruptors in those top 10 holdings with NVIDIA being the largest single holding at the end of the year. And you want to compare us against the market indices in terms of exposure, we are moderately long of NVIDIA against the market indices, but typically actually slightly underweight most of the other magnets notably Apple. We've got low-cost fixed rate debt, a point that I've made repeatedly that tremendous advantage in terms of the structure that we have. Our blended average interest rate is about 2.4%. We've got GBP 580 million nominal debt outstanding, and that is well diversified across a range of different tenors as is shown here. So that's fixed rate debt. So we've been immunized from the rise in market interest rates that has occurred in recent years. And even though credit spreads remain tight, the borrowing rates that we have are very, very attractive against that, which will be available in the market today. In a sense, the way to think about this is we've taken that money that we borrowed, we've invested it into financial assets listed and unlisted. And if we can generate a return which is in excess of the cost of that debt, then that will be accretive to NAV returns, and that is a low hurdle of 2.4%, as I said. Repeating the point on dividends, long-term track record. We have a covered dividend or certainly, we've not reported our 2025 results yet. But 2024, we had a covered dividend. We're in a very good position in terms of revenue reserves, and it remains the aspiration of the Board to continue to deliver real rises in dividends for shareholders in the longer term. And performance outcomes, as I said, we're going to deliver strong and consistent performance outcomes. This shows that chart replicated from earlier on, but also adds in the performance of F&C over the long run. And you can see that we have -- our shareholder returns have exceeded the returns available from U.K. and global indices. So some significant strategic decisions clearly moving, as I said, from a U.K. biased portfolio towards global. That was very advantageous more than a decade ago. But performance has in the long run, been strong for shareholders. And also strong against the peer group. So this reflects the picture at the end of last year. We have not released the full year NAV. So this is essentially taken from publicly available data at this point. But the shareholder return was 14.6% last year. So strong in absolute terms. That compares to 14.2% from our benchmark index. That put us in the second quartile in shareholder return terms last year against that closed-ended peer group of global trust. In the longer term in shareholder return terms, we're typically first quartile. And over 5 years, we're actually delivering the strongest NAV return amongst our peers as at the end of 2025. So consistency, strong absolute returns and good returns against the peer group of global trust that we primarily measure ourselves against. And value for money. So again, repetition, 45 basis points is the OCF that is applied to the trust, which we think represents value for money. I wouldn't dwell on this slide other than to point out that this shows the exposure that we have in terms of underlying strategies. I, as you know, I'm not the stock picker on the trust, but essentially manage the overall exposure across and within regions, equities and private equity, allocating to different stylistic exposures. So growth exposure, value exposure and growth in the longer run has done very well clearly in the U.S., but value has actually been outperforming in non-U.S. markets. And notably, again, to the point in the U.K., notably outperforming in the U.K. and elsewhere. So we have diversified exposure between growth value, also taking account of momentum and behavioral factors. Essentially, our view is that if one has -- if one buys cheap stocks, which are good growth prospects and strong momentum, then typically, that's a good starting point in the pursuit of outperformance against market indices. The significant change that we made last year in terms of the lineup really relates to emerging markets and those that listened to webinars towards the end of last year may have heard me talk about this already, but we essentially made the decision to allocate our emerging market exposure to Invesco. They operate a value-based approach, but take account of quality of businesses, that means essentially low leverage high barriers to entry typically in terms of the franchises that we invest in. And it's very pleasing that they've got off to a good start in terms of absolute and relative returns for us on that component of the portfolio. Look through exposure here. So the majority, more than 50% of our assets are invested in North America. Other regions are represented in Europe, emerging markets, Japan and so on. And this also shows the listed sector exposure and portfolio with technology being a significant component of our underlying equity holdings. So let me move on, give some comments on the market perspective. I'll just give a lens on 2025, there's a lot of information on this chart. The numbers might be a little bit difficult to read, so apologies for that. But you can see on the left-hand side of this chart there that silver and gold are prominent in terms of leading the way in market returns in 2025. And obviously, that picture has continued in 2026 thus far with really quite extraordinary progress in terms of precious metals. But there's a few points I would draw from this chart beyond the focus on gold and silver. Firstly, it was an everything rally last year. You can see that credit markets, government bond markets, equity markets, commodity markets, if one looks in terms of precious metals, all performed well in absolute return terms. So most assets made positive returns. You may be able to see that the S&P500 is closer to the right-hand side of this chart than the left, which says that the S&P was actually one of the less highly performing areas last year. So in local currency terms, that's dollar terms, it returned close to 18%, which was a really strong outcome clearly, but it did underperform areas like the Euro Stoxx 600, obviously European Index, the TOPIX in Japan, FTSE100, which are closer to the left of this chart. So for the first time in a couple of decades, we had essentially concerted outperformance from developed and emerging markets against the U.S. So that was quite a change actually. We also, in global terms, saw very similar performance outcomes. This is towards the middle of the chart, very similar outcomes in terms of growth and value. Now growth outperformed slightly in the U.S. by 2 to 3 percentage points, but at the global level, it was pretty much little peggings, just under 22% from both of those indices. So the big gap that we have seen in recent years between those 2 areas narrowed materially actually last year. And that was true in the U.S. as well as globally. And globally, it tended to be value that was outperforming rather than -- sorry, global ex-U.S., it tend to be value is outperforming rather than growth. So some quite significant changes going on last year. An additional point, not obvious from this chart is that one asset or area that underperformed last year was obviously the U.S. dollar. And again, that picture has carried on thus far into 2026. And those that keep an eye on the short-term news flow will know that President Trump has almost given his blessing, although one never knows how permanent these statements are to dollar weakness in the short term. We didn't seem overly concerned with questions relating to dollar weakness, and that has prompted a slide in the dollar overnight against sterling and other currencies, and it was trading through $1.38 when I looked this morning against sterling. So dollar weakness obviously eroded returns for investors in dollar-based -- sorry, sterling investors in dollar-based assets last year. And that's one reason that the U.S. market was a laggard for us last year. And just putting some numbers on that, we started 2025 with around in terms of cable that sterling and dollar. We ended around $1.35. And as I said, we're now about $1.38. So dollar weakness has been eroding returns from the U.S. market. Moving on. Quite a lot of information on this slide. Key themes, what are we thinking about. Firstly, fundamentals, I think, remain pretty good actually in terms of the global economy. There are numerous risks that will come into the are point of concern. We've been having this conversation 10 days ago that we would have been or even a week ago, we would have been thinking about Greenland as a clear and present risk with respect to U.S. intentions there. That's not gone away, but certainly, the temperature with respect to negative outcomes there has diminished materially. But notwithstanding those risks and geopolitics, which are, global growth remains pretty resilient. We think the cycle extends. Growth is critical in terms of investment in growth assets like equities, and we think the environment remains reasonably constructive. Second, again, I think that we may have some questions on this. We're waiting for the Supreme Court to opine in terms of the legality of Trump's tariffs. And even if they are deemed illegal, I think that the administration, the U.S. administration, will find another way. They do have other powers other levers that they can apply. So in addition to Section 122, Section 301, the administration could use Section 338 of the Tariff Act of 1930 to impose tariffs of up to 50% for discriminatory foreign practices. So I don't think the Supreme Court's ruling whatever that is, and the expectation is that they will not rule the tariffs illegal. But even if they do, I don't think that the tariffs will disappear. The administration will find another way to impose tariffs. Third point, we're seeing an environment where inflation is slightly above target. Rates have been higher clearly than they were in recent years, but they are diminishing. We're going to see further rate cuts this year. We think it will come to that point with the notable exception of Japan and Europe where we think that things are on hold. So the U.S. and the U.K., probably we're going to see further rate cuts. Bond markets, look, bond markets may not be a point of attention for everyone on the call, but capital flows across asset globally and bond markets are really important in terms of pricing and dynamics impacting risk appetite across the board. And what we're seeing in credit markets is incredibly tight spreads. That tells you that investors are pretty sanguine with respect to corporate risk. But in terms of government bond markets, there is some unease with respect to the size of government debt, fiscal deficits. And we've had some wobbles, some sharp moves actually in terms of the Japanese government bond market in recent days. And also in gilts actually closer to home. I don't want to dwell too much on local politics, but the prospect of Andy Burnham's leadership challenge did seem to unsettle albeit for a short period, gilt markets and concern about further issuance there and perhaps more fiscal large in the U.K. So look, I think government bond markets remain a risk to equities and government debt remains a risk to equities overall, but not one that we see causing significant ruptions in the short term, albeit we might see some further action in terms of intervention from the Bank of Japan on the yen, which also might lead to a little bit of volatility in the near term. AI remains a big theme. Clearly, there's more differentiation between winners and losers across and within the market. There's numerous examples of that. And the market is really testing this on a day-by-day basis. In the last few weeks, we've had insurers in the U.K. and elsewhere hit by this digital insurance company Lemonade, launching products specifically for self-driving cars and talking about a 50% drop in insurance rates as a function of autonomous driving. So that may be impacting on conventional or traditional insurance models, certainly in terms of the auto sector. And again, reasons for that, the application of AI, Waymo, those that have been in San Francisco, Los Angeles or some of the other big U.S. cities and now in London, actually, although not fully live, Waymo self-driving taxis are on the way here as they are in the U.S. And the statistics suggest that these -- that technology is 80% to 93% or thereabouts more reliable in terms of driving, less accidents than humans. So that will have an impact on premiums. So my point is like the -- the market is moving in terms of discrimination between AI winners and losers and moving quickly. incorporating new information. And that's going to again be an ongoing theme, I think, as we move through this year. I'll talk about that in a bit more detail in terms of the AI dynamics. Geopolitics, tremendous uncertainty. Who knows what comes next? Question, does it impact markets? Of course, it does, but is it going to be a permanent impact on markets? Probably not, as I'll show in a moment. So fundamentally, we think the picture is reasonably constructive for equities. Fundamental backdrop is good. You got to think about what can go right as well as what can go wrong. Lots of things can go wrong, but lots of things in terms of growth backdrop, earnings, margins, rate cuts, they can all go right for equities actually despite some concerns that we have on valuations. So just a few points. Again, I think there's a few questions about potential setbacks, volatility and so on. I know there's lots of concern about the outlook. I would not in any way seek to diminish that concern and it's entirely possible, probable that we do have a correction as we go through this year. This chart just shows for the U.S. market intra-year declines, that's the red bars against calendar year returns. So declines that happen very, very frequently. Actually, last year, we had about an 18% drawdown in terms of the market in the U.S., obviously, around Liberation Day before we ended up 17%. So it's normal to get quite substantial often double-digit drawdowns in market on the market on an intra-year basis. So we have to go back to the late 2000s really to see that very material downturn in consecutive years, 3 consecutive years, big annual drawdowns 2008 into 2009, again, very, very big drawdowns, but ultimately, 2009 ended up being an up year. So again, I don't mean to diminish or seek to diminish the risk of downturn correction. In fact, this chart shows you that corrections and setbacks in equity markets are normal, happen frequently. But timing the markets can be a challenge. And that is we do employ active management. We do employee gearing on the portfolio. We do look to take advantage of tactical opportunities, but we are also long-term investors. And many of you will have seen similar charts to this before, and this shows the impact to our value of $10,000 invested in the S&P since 1995. And if you remain fully invested through that period, what you would have enjoyed in terms of returns, which I think is about $225,000 and then what the returns would have been if you missed some of the best days in terms of returns. So timing is difficult. And in addition, on the geopolitical side of things, again, there's a lot of noise, obviously, from the U.S. administration. I would not dispute Mark Carney's assertion that we're seeing a rupture in terms of the norms in terms of global relations. We're seeing fragmentation in terms of global alliances. Again, I wouldn't seek to downplay to spell those concerns. But on the other hand, geopolitical events generally tend not to have a lasting impact on markets. There are exceptions and the Gulf war back in the early '90s is one example of that. Oil prices were impacted and ultimately growth was hit. So there are examples, but more often than not. And with Trump, again, we can't dispel the pronouncements. But as we have seen in the case of Greenland, I think another example of perhaps exaggeration in terms of intent and then an element of climb down ultimately in terms of eventual policy. And we saw a similar picture there in terms of tariffs. And it's been threatening in Canada with tariffs and South Korea with tariffs over the last couple of days. Markets seem to be becoming somewhat more immune in terms of impact of those comment statements in terms of the market outturn. So again, I wouldn't dismiss or dispel those concerns, but the lesson from history is that geopolitics tends not to have a lasting influence. But again, I do think it's right to conclude that we are in a different world order than where we have been, and that will arguably increase volatility in terms of equity market performance. This just gives a long-term lens in terms of equity market returns, incorporating some significant events. So in a bit more detail, and running it through quite quickly, some of the points I made. The outlook is pretty good, I think, in terms of the growth profile, this gives you on the left-hand side for the economists on the call, the GDP forecast from consensus across the major regions. It's a pretty similar outcome that is expected in '26 to '25. And on the right-hand chart, you can see that actually in the U.S. The growth outcome in GDP terms ended up better than was expected this time last year despite big downgrades to expectations in and around Liberation Day. Conversely, we have seen inflation being slightly higher than had been expected. So it's been a good growth outturn in the U.S., broadly in line if we look at the beginning of 2025 expectations, better than was expected in 2024. And that picture is actually expected to continue. I'll come on to the earnings picture in a few moments. And then it's worthwhile noting that good growth outcome in the U.S. and elsewhere was delivered despite all the threats and imposition of tariffs, inflation a bit higher. Earnings, obviously critical in terms of equities. Lots of information on these 2 charts, I'm going to focus on the one on the right. What this shows is regional growth forecast. Obviously, we're in reporting season in the U.S. So we're going to get a sense from -- in the next few days of what actually 2025 growth rates in earnings terms ended up being, some big reports coming tonight, clearly, from some of those leading tech companies. But the picture on the right-hand side of this chart shows the solid bar there, what the expectations are for 2025 earnings per share. So the U.S. delivering EPS of around about 14% last year. That is not far off what was expected at the beginning of last year and is pretty similar to what is expected for this year. So I'd make the point that the U.S. broadly delivered on not only GDP expectations last year, but earnings expectations last year. That contrasts with Europe. So Europe, unfortunately, it looks like it delivered a modest decline in earnings last year, far worse than was expected by analysts at the beginning of '25, which is the gray dots. But there is hope and expectation for a substantial improvement in 2026 and as shown by the orange dot there. So Europe was disappointing. Japan was also disappointing, but positive. The U.K. was disappointing, pretty modest earnings growth. Emerging markets was pretty close to expectations and good growth expected in 2026 and so on. So the picture is the U.S. actually delivered in earnings terms last year. Most other regions ex emerging markets really disappointed. And if one interprets the earlier chart that I showed in terms of market performance, one can conclude the performance of Japan, performance of Europe, the performance of U.K. and outperformance against the U.S. was primarily driven by an upgrade in ratings or the market simply became more expensive in contrast to the U.S., where valuations expanded a little bit probably over the year, but it was primarily driven by earnings growth. Now looking into 2026, our view is that Europe is far more likely to deliver on the earnings expectations this year than last, maybe not as high as consensus expectations, but maybe double digit or close to double-digit earnings growth this year. So the fundamental picture for most markets actually looks pretty good in terms of the earnings expectations when we look into 2026. And that's really important because I would say Europe, Japan, the U.K. to varying degrees, enjoyed an uplift in multiples last year in the expectation of better earnings outcome. So they need to deliver on earnings while the U.S. has continued really to do so. Now just a few comments in terms of rates. So rates, as I said, are expected to come down, probably 2 cuts from the U.S. Federal Reserve. There won't be a rate cut today, we don't think, but a couple of rate cuts to come in the U.S., 2 in the U.K. core inflation remaining above target, hopefully moderating a little bit as we progress through the year. What does that mean for equities? Well, if we get weak cuts, typically, that is good news for equities, particularly if recession is avoided. So this takes U.S. rate cutting cycles since 1970, and it shows you the average outcome in terms of the first -- from the first rate cut of the cycle, what equity markets do on average, that's the orange line. And then what happens to equity markets when there's rate cuts, but a recession. And normally, rates are being cut when growth is slowing, right, and often into a recessionary environment. Clearly, equity markets perform better when rates are going down, but there is no recession. That's the blue line there. And the dotted blue line shows where we are in this cycle. So we're performing pretty much the type. And actually, the 12-month period after the first year of rate cuts, which we're in now, given the first rate cut happened in September '24, typically is slightly better than that first 12-month period actually. So one didn't know anything else and look at valuations or the macro backdrop beyond rate cuts, and you concluded that we were going to get rate cuts, but no recession, the lesson of history is this tends to be quite a good period for equity returns. That is what we've seen thus far. Now just a few comments on AI CapEx. So again, quite a lot of information on this chart, just showing the explosion in terms of training computers related products and then what's happening in terms of Magnificent 7 profits, cash flow, CapEx on the right-hand side there. CapEx, right-hand side chart, the blue line, free cash flow, the gray line, net profits, the orange line and related dots showing consensus expectations on a forward-looking basis. Now there's a few points I would draw out here. One, profits from Mag Seven are expected to grow strongly in the years ahead. We actually -- our analysts are pretty bullish on NVIDIA in particular. I think that they will continue to meet or exceed expectations. And therefore, what look optically like quite high valuations on a go-forward basis will diminish as the company essentially grows into those earnings. But there's no doubt that CapEx is picking up, picking up very markedly. Q2 run rate in terms of CapEx was $400 billion annualized. We're likely to get $450 billion from Mag Seven in terms of CapEx this year, thereabouts. That's having quite a big impact in terms of GDP numbers, overall growth rates in the U.S. economy, impacting other sectors, clearly, telcos, miners, energy, all benefiting from this explosion in CapEx and driving the AI build-out and data center rollout and so on. But for the Mag Seven, up until recently, the CapEx has been funded from free cash flow, as you can see. But the gap between the gray and the blue lines and dots is diminishing. And clearly, there's less headroom in terms of free cash flow in terms of funding CapEx, and that varies across the Magnificent Seven clearly. So these companies are moving from capital-light businesses towards more -- to a greater or less extent, towards more capital-intensive businesses. And again, that is a point of concern and note for the market. And interestingly also what's happening in terms of headcount in those businesses. I think this is quite interesting in terms of not just the Mag Seven kind of parochially, but the application of technology and replacement of labor with capital. The Magnificent workforce typically was growing in line with their profits and free cash flow. That actually -- that relationship broke down a few years ago, and they stopped adding headcount on a net basis. And that's true again to varying degrees across that cohort shown on the right-hand side with NVIDIA continuing to hire, but most other companies basically flatlining in terms of their employees. So this is about, in my view, substituting labor for capital, again, moving from capital-light businesses to more capital intensive. And that's a big shift. That is a big shift in terms of the composition for these companies. Valuations, I don't think the picture has changed that much since we last presented. But to repeat the earlier point, there's been quite a big uplift in terms of multiples on Japan, on Europe, even in the U.K. and emerging markets. So still big discounts against the U.S., but the U.S. has broadly tracked sideways depending upon what time period you're looking at here. U.S. is trading rich against history. Other markets are trading cheap, but certainly not as cheap as they were and that discount has narrowed against the U.S. for other developed markets and EM. On a forward basis, also show you the price earnings for the Mag Seven against the S&P, so they continue to trade at a premium. But that premium is actually not that high compared to history. Now to be fair, the premium growth rate that is expected in terms of earnings from Mag Seven is going to diminish in the year and years ahead, but it is going to be a premium nonetheless. But the actual premium rating for the Mag Seven against the wider S&P has diminished, and you can see that in the bottom right chart there on this slide. Just one word, 2 words on debt sustainability. Debt level is very high. Clearly, Japan is under a little bit of pressure with respect to potential policy, which the equity market likes in terms of further stimulus, obviously, focus on shareholder reforms and so on, but potentially more by way of fiscal expenditure. And this will periodically, I think, cause some angst in bond markets. We've seen, as I said, some mobs and gilts in the last week or so and also in the Japanese government bond market. debt level is very high as long as interest rates remain low, and there are many mechanisms that central banks and governments can use to control interest rates, market interest rates. We don't think that these levels are necessarily unsustainable, but I suspect it will remain in focus. So conclusions, I'm going to move on to questions in a moment. Conclusions, Rate cuts to come from the U.S. Federal Reserve, not today, but as we progress through the year, probably a couple in 2026 based upon current expectations. Earnings growth going to be pretty good actually in the U.S. We're going to see premium growth rates in terms of earnings from the Magnificent Seven, which are trading also at a premium to the rest of the market, but lower than has been the case historically. Geopolitics create volatility, noise, obviously, a concern for us as investors, U.S. shareholders. But we're looking through that generally into fundamentals and fundamentals remain strong. Credit markets are not signaling substantial concern in terms of defaults. We think that AI to state perhaps the obvious is going to remain a key theme in markets. We do think that the market is clearly becoming more discriminating in terms of winners and losers. That's not just within the technology sector, but elsewhere as well. And emerging markets, we think the environment for EM looks reasonably good actually. There has been a quite a big uplift in terms of valuations. They continue to trade at quite a big discount and developed, but weak dollar, cuts in interest rates, better fundamentals from EM, good self-help stories from a large number of countries in that space, all helping, we think, to drive returns. And the theme of broadening, which we really saw in 2025 when one looks to that earlier chart in terms of performance in Europe, performance in Japan, performance in emerging markets and performance in the U.S., which had a good year, a really good year actually, notwithstanding dollar weakness, we think that, that trend persists. I wouldn't predict certainly the kind of returns this year that we had last but nonetheless, we do think that the environment remains reasonably constructive, providing the growth backdrop, the positive growth backdrop remains intact, which we think it will and some of those left field geopolitical events, which do cause us concern, as I said, do not materialize. So I'm going to pause. I think I'm going to pass back to you, Peter, and we can open for questions. Peter Brown: Thank you very much, Paul. Yes, my name is Peter Brown. I'm partner of the Investment Trust team here at Columbia Threadneedle. Thank you for listening in, and thank you for your questions submitted. Please continue to add to them. We'll get to answer them either now or post the webinar. And Paul, you've been very detailed in your presentation, and you've answered most of the questions indirectly, but I would like to just throw a few at you, and I will, in the interest of time, try and merge a few together. A lot of it is about corrections, a lot about U.S. technology and valuations. So I'm going to, if you don't mind, sort of put 4 to you all with a similar theme. So it's basically, is the trust overexposed to U.S. technology companies where the share price is not supported by asset valuations or realistic future earnings mixed with, is there some speculation or there is some speculation amongst the investor community that stock markets may be in for a correction sometime in the coming year? What is F&C's view on this? With what is your view on suggestions that a correction is due to the higher tech stock valuations and the prominence of these in the portfolio? And finally, in the same theme, Cisco have predicted carnage in the U.S. tech sector. Consumer confidence is weakening, but the valuations are extremely stretched. Is it not time to reduce exposure to the U.S.? Paul Niven: Okay. Yes, there's a lot of very good, very relevant, very timely questions around this theme of excess valuation in the U.S. market and U.S. technology stocks in particular. I did see the comments from Cisco overnight. And those with long memories will recall, I think that Cisco was one of those stocks that fell by 90% -- sorry, 80% or thereabouts, maybe more actually. And the aftermath of the dot-com bust took a long -- I think also it had very, very high expectations in terms of earnings, ultimately delivered, but the valuation on that stock was at such a level that it took a long time -- even though expectations were ultimately met, it took a long time to "grow" into that multiple. So there's a big, big fall. I think let me try and answer it. So are we in a bubble? There's certainly an awful lot of talk with respect to risks of a bubble in the U.S. market and technology stocks and AI. For me, a bubble results in falls similar to that which we saw in the early 2000s, where we did see an 80% decline in terms of the NASDAQ. If you look at Japan, we saw an 80% decline in Japanese equities when that bubble burst. So I think there's a clear difference between defining a bubble and expecting a bubble to burst and the implications of that as opposed to a correction. As I showed, corrections are not uncommon. And would I be surprised that there's a correction this year? No, I wouldn't. Do I think that we are in a generalized bubble in terms of equity markets? No, I don't. I think that the valuations that we saw in the late 1990s or in other instances of episodes that turned out subsequent to be a bubble, valuations were far more extended than where we stand today. I think that there was a suspension of disbelief with respect to assumptions that were required to justify those multiples in terms of U.S. technology stocks in the late '90s, early 2000s. But I would not dispute the observation that valuations are relatively rich in the U.S. and in tech in particular. So I want to couch it in terms of, firstly, the valuation perspective is rich, but I don't think nosebleed territory that market is going to collapse under its own weight for reasons of valuations alone. I think that -- again, those with long memories, and I started my career in '96, and we have said this before, Greenspan gave the speech in '96 about irrational exuberance. The stock market responded negatively to that in the short term and subsequently went on to reach new highs, I think doubling the NASDAQ in the year prior to the peak in March 2000. So there's a long runway when we went from rich to very excessive a number of years actually. The Fed was raising interest rates in that environment as well in 1999 prior to the tech bust. There was also quite a widening in credit spreads in advance of that tech bust. And there was a big, big gap in terms of stock market performance and overall profits, profitability. So essentially, stock prices continue to go up very, very strongly, while profits were actually going down and there's a big gap in national accounts data as well. So I think there are quite a number of differences. But I wouldn't dispel concerns of valuation. And certainly, Cisco and other companies that have got a long history of operating in this space clearly have got valuable contributions to make in terms of their perspective. I think undoubtedly, there are pockets of excess. There are pockets of speculation. We have seen an upturn in terms of performance of unprofitable technology stocks. There are indices you can look at that, and that tells you that speculation is increasing. But I don't think that we're at a point really whereby valuation is going to be a constraint to performance on the U.S. market and technology stocks. I think we can get there and particularly with rates coming down further and what looks like a pretty benign backdrop, again, notwithstanding President Trump. So one could argue that we have the preconditions for a bubble in terms of the application of new technology, which I think will lead to profound and widespread changes. The market is obviously trying to discriminate more between winners and losers. I think you will see more of that. We're tending to pivot more towards where the capital is flowing in terms of beneficiaries from that CapEx spending rather than necessarily those that are spending per se. But I think the short answer is we're still relatively constructive on the market, notwithstanding some of the risks that I and others have outlined. And is now the time to pivot away from the U.S. Again, we will be disclosing our annual results in a month or so's time. But we were net sellers of U.S. equities last year. We're relatively high weighting in the U.S. I think, as I said, there's a good case to be made for the market broadening from here. But I think that's as much about other areas performing better than the U.S. necessarily diving. And if the U.S. really does fall out a bed in performance terms, that is an environment where other markets will certainly not be immune and the U.S. actually does tend, again, notwithstanding dollar performance tend to be a bit of a safe haven and also dollar tends to catch a bit in those risk off. So sorry, that's perhaps a bit long-winded. I think there's quite a lot to unpack in terms of the questions. I don't want to, in any way, appear complacent. But just to maybe add a couple of additional points. The way that I think about the world in simple terms is we've got a fundamental perspective. I think that's pretty good in terms of the growth, inflation rate backdrop, the valuation component, valuations are reasonably rich in equities, but not at levels, I think, that prevent further progress. And then you've got a behavioral sentiment component. I think there are some pockets of excess, but I don't think that excess is widespread in equity markets at the present time. So I think the fundamental component will continue to be the most important driver for equity returns in the near term. Peter, did I capture respect of what the questions were asking? Peter Brown: Yes, exactly. Yes, you did. So moving out of the U.S. then for change of tack. U.K. question here is that long-standing shareholder, slightly disappointed with the performance versus other investment trusts such as the City of London Investment Trust, Artemis, which I should say are U.K. income funds specifically. Would Paul be prepared to make some direct performance comparisons with competitors over 5, 3 and 1 year? And I'll add another to that question, which is about tariffs, and you've mentioned tariffs. We won't go into that. But basically, is there a case for increasing the weighting of U.K. equities in the portfolio should tariff risks reduce between the U.S. and the U.K.? Paul Niven: Okay. Yes. So on this first point about performance, look, I recognize that the U.S. shareholders, potential shareholders can invest into trust, can invest into open-ended funds, can buy active funds, passive funds and have a huge choice of opportunities to consider. The way that we think and the Board think about performance is obviously long-term growth in capital and income. I think we've got a good job there and ensuring the performance outcomes, performance against our benchmarks. And again, in the longer term, I think we've done a reasonably good job there in terms of keeping up with a market that's been incredibly concentrated in an environment where, frankly, active managers have struggled. And then against peer group. And different people on the call will have a different perspective about what our peer group is and who we should compare ourselves against. Our primary peer group that we and the Board discuss is the global sector. And there are now, I think, 10 or 11 trusts in there, and there'll be obviously Scottish Mortgage, Monks and Alliance Witan and others in there. But it's a relatively small cohort now, 10, 11, as I said. I showed the slide earlier on. We've delivered excess returns against the median of that cohort over 1, 3, 5, 10 years in NAV terms and shareholder return terms. So we've done well against our peers. And as I said, I think in shareholder return terms, we're top quartile over 3, 5, 10. Now I accept, as I said, that one can look more widely. If you look at U.K. trusts, and I did look at this in light of the question which was submitted yesterday, U.K. trusts on average have done far better in recent years, in the last 5 years, I think, than last year than the global sector on average. And those with an income or value buys have done better still. And that goes to the earlier point where I was trying to address part of this question about the performance of U.K. value holdings over the last 1, 3 and 5 years. So values tend to outperform in the U.K. So if you've chosen a value stock value approach in the U.K., you've done better in the wide market, so well done from that perspective. And if a U.K. value-oriented trust in the last year, you've done better than global. I think that is true in the last 5 years as well. Last 3 years, it's pretty much the same. And in the long run, as I showed, we've actually done considerably better. So I think there's a question about Horizon, a question of perspective about who our peers are. But undoubtedly, some of these competing trusts in the U.K. space have had a good period, and I've had a good period by focusing on value. So I don't regard our performance as disappointing. I think we've done very well in absolute terms. We've done very well against our immediate peer group. If you want to compare us against U.K. value trust, then clearly, there are time periods, not the 10-year period, but time periods where they have done better. And clearly, as I said, the market has broadened and performance in the U.K. has been far better in the last 12 months. On the U.K., so are we looking to allocate directly to the U.K.? The U.K. is a small part of the portfolio. It's a small part of global markets, and there's a lot of debate about that. That's just the way it is in terms of the overall reluctance of companies in recent years to list in the U.K. discount typically given to U.K. companies as opposed to their U.S. peers on a like-for-like basis. Is there scope for a catch-up? I'd rather allocate capital to other areas like emerging markets in the U.K. would be my answer to the direct question. We actually allocate on a pan-European basis. So just unfortunately, given that the U.K. is now such a small part of global markets, we allocate to U.K., Europe combined. Is there scope for an upgrade in allocation there? Probably in a medium-term perspective, yes, there is. Is there scope for a downgrade in the U.S. Probably, yes, there is, and I think there was related questions on that earlier. So I think the pivot probably and we started to move a little bit this way already, is a little bit more balanced in the portfolio. But nonetheless, I still see the U.S. being the majority of our assets for the time being, given the growth opportunities there, given the dominant position of many of those leading companies and again, notwithstanding this point on valuations. Peter Brown: Lovely. Moving on again to something different, private equity. Please, can you add some color on the private equity portfolio? Specifically, what is the split between the buyout venture, et cetera, and the size of the businesses, mid-market, large, et cetera? And I'll end that with another one regarding -- in today's environment, are you finding that genuine attractive private opportunities are scarce once return hurdles and liquidity risks are properly accounted for? And if so, where do you see the clearest evidence of outright mispricing across markets? Paul Niven: Okay. There's a lot to unpack in that. And just given time, I'm going to come back and post the specific answer to the segmentation of market opportunities set and the split the portfolio. I don't have those numbers directly to hand, and I don't want to misrepresent. So I'll come out with those numbers and then will be able to see the answer to that question. On private equity, just a few points. Private equity has been a laggard in the last 3 years. Again, we haven't reported our 2025 results, but there's a few points I'd make. Private equity returns have been really pretty respectable over the medium and longer term in absolute terms. But given the strength that we have seen in listed markets, it has, particularly in recent years, been difficult for private equity, our private equity and I think more widely exposure to keep pace with the strength of returns in listed equities. In addition, I think it's fair to conclude that there was a lot of capital that's been allocated to the private market space that pushed up particularly in terms of large buyouts, valuations to extended levels, maybe quite a lot of tourists in that space chasing returns as well and perhaps less value discipline that's been applied in terms of some of the underlying investment opportunities more widely. And that has created quite a lot of indigestion in the private equity market. There's been less activity in terms of distribution. There's been more by way of continuation vehicles, which are not necessarily a bad thing in and of themselves, but that's kind of recycling of capital into new private equity structures. And we've not had the distributions that we would have liked, frankly, in the last couple of years from our private equity allocation. We had reasonable returns, but as I said, lag those of the listed space. Further in answer to the question about mispricings, I'm not sure whether that's listed, unlisted, I would say we're in a world where value is relative. There are not many absolute value opportunities and certainly less value -- clear value opportunities than there were 12 months ago. Even the U.K. and emerging markets have seen a rerating such that I think we're in a relative game. Those 2 areas are probably one areas within listed that you'd say, well, there does look to be value there. Commodities, obviously, difficult to buy precious metals, but energy, unusual for a commodity bull market not to extend ultimately to energy. There's many reasons why that might not be the case now. But if that is the case, maybe there is some value there. In private market space, the value tends to be down the cap scale or down the size scale in terms of the opportunity set. So it tends to be more like mid-market opportunities where we're seeing better valuations. We do undertake co-investment deals, and we're very, very value focused. So more of the mid-market rather than the bigger deals is where value lies. Venture and growth but a bit more speculation, I would say. Valuation is perhaps less attractive in that space, albeit you're dealing with far more kind of nascent businesses in some instances is not really delivering profit. So valuation metrics is perhaps a little bit more subjective. I think we're pretty much at time, but I will come back with some specifics on the question that was asked with respect to composition of PE exposure. Peter Brown: Yes, that's fine. We'll finish with a couple of quick ones, if you don't mind, then just as we are on the time. Have you considered hedging your U.S. dollar exposure? Paul Niven: Yes, we have and periodically, we do. So essentially, risks are somewhat asymmetric in the sense that if dollar declines, then all else been equal, that will be negative for overall returns. So we don't have a hedge on right now. We have had periodically historically. And therefore, I would consider hedging dollar exposure. It's moved quite a long way already. Trump might be given a green light to some further weakness, but we don't have a position on at present. Peter Brown: I think we'll end here with this question as an active manager. Any views on passive investing now being a great portion of the market? Is it pumping valuations? There's been a huge increase in the last 10 years. Paul Niven: Yes. it's a good question. I mean there's -- so look, passive clearly got a role and low-cost beta solutions have been in the ascendancy in terms of equity markets, equity sectors, different forms of exposure. and that's put pressure on fees for active managers. So ultimately, it's been something of a win-win in terms of the consumer, more choice, lower fees and obviously helping to discriminate between winners and losers in terms of flows. Was it done to valuations? I'm not a big believer that the passive is driving valuations to extreme. I do tend to think that the market is relatively efficient in terms of allocation of capital. Now people on the line will be thinking, well, if that was the case, crashes and so on. But the market is rational in the sense of assigning what it perceives as the appropriate valuation at a point in time to a given opportunity. It doesn't mean it's right ultimately. But I'm not sure that passive is really driving the valuation picture personally. It's not obvious to me that, that is the case. But undoubtedly, it is a very big part of the market, dominant in terms of flows, really important in terms of overall dynamics, but I'm a little bit circumspect as to whether that is what's pushing valuations to extreme. Peter Brown: Okay. Thank you. We'll end it there. We've got some questions we haven't answered, but we will get to answer them now, and you'll see them on the website in a day or 2. So if I can just ask you for some closing conclusions, Paul, and then we'll hand back. Paul Niven: Firstly, thank you very much for taking the time to participate in the webinar. We do really appreciate your attendance. I hope you find it useful. And I'll leave you to enjoy the rest of your day. Thank you very much. Operator: That's great. Peter, Paul, thank you very much indeed for updating investors. If I could please ask investors not to close the session, and we'll now redirect you to provide your feedback. Thank you very much indeed for your time, and wish you all a good rest of your day.
Joyce Kwock: Okay. So good afternoon, ladies and gentlemen. My name is Joyce Kwock, and I'm the General Manager of Investor Relations at Hang Lung. Welcome to the analyst presentation for FY '25 results announcement that were made earlier today for both Hang Lung Properties 101.HK and Hang Lung Group 10.HK. We welcome the audience who are at our Hong Kong headquarter and also the audience who are at our live webcast now. Our presentation pack is now available on our corporate website or through the these QR codes. There are English versions and simplified Chinese version for you to choose. Today, our senior management team is all here present to join the presentation. They include Mr. Adriel Chan, our Chair; Mr. Weber Lo, our CEO; and Mr. Kenneth Chiu, our CFO. This time, we would like to start the briefing with a quick video that visualizes the update on our latest strategic growth footprint, blueprint V3. [Presentation] Joyce Kwock: Hope you enjoyed the video. So now our Chair, Adriel, may start with a few words, and then our CEO, Weber, will also like to walk through some slides on the result highlights. And then our CFO, Kenneth, is going to go through our financial management and other slides as well. And then after that, we will address the questions from the audience from both the floor and the webcast. So Adriel, your turn now. Wenbwo Chan: Thanks, Joyce. Thanks for coming, everybody, and joining on the webcast for those of you who are joining online. The reason why we showed V.3 is because I think a lot of people understand sort of intellectually what this entails, but can't visualize it. And so this just helps fill in -- put some meat on the bones. What I would say about V.3 in particular, which is one of my key talking points today is that it really is a new page for us. It doesn't mean we're throwing out the old. We continue to invest in our existing properties. We still think that, that strategy works, but it will be with a different pace and a different scale going forward, whereas V.3 is a way for us to scale with a lot less CapEx. So it's doing what we do best without the capital outlay. And of course, one of my favorite parts about V.3 is the speed. So it's a lot faster when it comes to bringing a project from imagination to fruition. The hope is we can do it within just a couple of years. I think we can achieve that. Whereas if you remember, some of our asset-heavy projects under V.2, they took up to 10 years to go from buying the land, i.e., the first dollar out until the first dollar in. So you think about the cost of capital for 10 years, even though we have a very healthy cost of capital, which Kenneth will talk about a little bit later, but it's still a very long time. So what I'm really keen on is that additional GFA, the additional scale, and that's not just leasable area, that's also frontage, that's connection, that's a stronger community, that's a bigger footprint in every aspect, both physical but also in mind share of these cities. It's in our strongest cities. So we have Shanghai, Hangzhou, Wuxi and Kunming, which are among the four best performing cities. So increasing that mind share and increasing that market share is very meaningful for us. But of course, we're leveraging the teams that we already have. So not only is there a minimal CapEx, there's also minimal OpEx because the teams, the leasing team, the government relationships, the banking relationships, everything is already in place. And so this is a way for us to go with super speed into increasing -- everything from ROI and ROE. So V.3 is, I think it's not an understatement to say it's very exciting, and it's very meaningful for the company. And it should be meaningful on a time frame, which is much shorter than what you're used to. The second point I would talk about, maybe just very briefly, some views on Hong Kong and Mainland Chinese markets. I know Weber and Kenneth will talk about this later, so I'll just gloss over it. But there's a series of corrections taking place in the market, both in Hong Kong and in the Mainland across resi, office, retail. Some of them are structural. So those are the ones that we're very careful about. And some of them are cyclical. The question is, where do you think there's a structural shift and where do you think there's a cyclical shift? We can jump into that in a little bit. The third point is that when you see our numbers that Weber will -- or actually, maybe I should talk about this after Weber goes through the presentation. I think it will be more meaningful. So I'll leave the rest for a discussion a little bit later, and I'll let Weber take it away. Wai Lo: Thank you. So I don't repeat the numbers here. First of all, in terms of our core business, the leasing, you can see that the revenue, although down by 1%, mainly because there's still some depreciation of renminbi impact into 2025. But overall, operating profit and losses, we are up by plus 1% versus 2024 and underlying improved by 3%. So both the HLP and HLG, we delivered the same dividend, same HKD 0.52 and HKD 0.86 for HLG. Next one. I will focus more on the leasing revenue this time because this accounts for 94% of our revenue in 2025. So if you look at the Mainland revenue, especially for the rental revenue is at RMB 5,878 million, which is about 68% of our total rental, flat in terms of renminbi, minus 1% in terms of year-on-year on Hong Kong dollars, as I mentioned about the depreciation of the renminbi. However, if you look at Hong Kong, we managed to get down by 2%. If you remember in the first half, it was down by 4%. Now the overall down by 2%. That means we have done something okay in the second half to mitigate the overall year down by 2%. Property because of the less booking compared to 2024 in Aperture, but we will talk about the overall -- what we have done in 2025 to bring in more capital. Next one. Rental revenue in Mainland China, if you look at revenue total year-on-year flat. Focus, I would like to draw everyone's attention is on the plus 1% on retail. Office, we see the headwind. The headwind is not easy. I'm sure everyone knows that. We will explain a little bit more about what's going on, but we believe that this headwind will continue at least for 18 to 24 months. Overall, we believe that the good news is we were up by 1% in 2022, up by 7% in 2023 and '23 was our peak, and then it was down by minus 4% last year and is flat this year. So hopefully, we can stabilize and go again. Next page. So retail, I think this is really our core that account for 83% of our Mainland because office account for only 17%. So you see that first half, we were flat to 2024, but we see a plus 3% year-on-year in the second half and generate 1% overall in 2025. In a very tough year when you hear about the luxury goods having a soft year, but at the same time, we managed to get our revenue up by 1%. You see across the board, we managed to increase except 3. And Heartland and Forum will talk about it later, but we see still a headwind. But overall, all the other markets, we see a pretty good revenue growth in a very tough market. Next page. So I think this page, I think a lot of people ask in details. I think we show every details. When we were at the same place last year, we see already, say, minus 18% back to minus 11% in fourth quarter last year. But we told all of you that we see a little bit improvement. So when we meet each other in end of July, we said, hopefully, we see positive in second half to make the overall year become breakeven. But actually, this is better than what we expect. So plus 4% because we have 10% increase in Q3 and 18% in Q4. And by the way, to just give you a dimension, 18% year-on-year Q4, Q4 sales in our history is the record high. Because when you look at the Q4 in 2024, it was down by the record high of 2023 by 11%, but it's now more than offset the 11% and up by 18% in Q4. So across the board, you can see except the 2, you can see the sales are in a good growth, especially from the second half. Next one. So what we have done, I think a lot of the work behind the scene are coming from the active management with the tenant. So you can see that across the board, mostly all of our properties with the higher occupancy. The one that you might ask about why Plaza 66 was down because we need to build the rooftop, we have to build the tunnel -- sorry, the basement to the pavilion and we have to close some of the shops. Otherwise, it will not be 96%. But otherwise, if you see across the board, we managed to increase occupancy. So not only by managing the number increase, but also we increased the new letting. New letting increased by 15% and renewal increased by 5%. So a lot of work behind the scene to make this happen. And in the middle of it, you'll find that 200 of them are new to the Citi brands. So we continue our tradition by bringing first in the market kind of brands into respective cities. And at the bottom of the chart, you can see that also there will be some LFA changes in terms of category. So luxury remain the same. But if you see the personal care and beauty improved by 4%, even though you may hear from the market that this is a tough market, but we see we increased by 4%, the sales increased by 8%. And F&B increased by 3% and also the sales also increased as well as the others, including some of the service trade, experiential trade and all that. So I think this is the action behind the sales growth, especially we see from the 2025 starting from the first half, which getting some fruition in the second half. Next one. Happy to also report that this is in our history, the record high footfall. Together with our 65th anniversary, we run a lot of signature events, celebration events, IP events. So I think this is something working well. And especially last time when we talked about it, we discussed in a weekend when we have events, no problem. In a weekday without events, there's a problem. Now we get the tenant to improve. Once the tenant improve with more F&B with a full price range, we can also help the increase of footfall in the weekday as well. So I think that's helping. It used to be in Hang Lung discussion, everyone asking about luxury, but 2025 was led by a long luxury sales increase and long luxury effort that we have done over the years. So 2026, we look forward to celebrate our 66th anniversary. So it's very seldom to have a company to celebrate in consecutive years, 65th and the 66th, but because 66 means something to us, and that's why we will celebrate a lot this time more a B2C, last year, more a B2B, right? So we will celebrate a lot more activities, especially what we see, we have done a lot of things working in 2025. We believe that when we put together something meaningful and interesting and experiential customer will come. Next page. All right. This is the usual page, but all numbers at least looks healthy. Valid members -- valid members means members with spending. So increased by 24%. New members increased by 10%. Member sales increased by 7%. So even valid member increased, sales decreased -- increased, but in a lower magnitude because the average spend per customer decreased, right? I'm sure you understand the market dynamics of China. But overall, I think it's healthy. We managed to get more customers through the door, more active customer and therefore, the member sales increase. And the penetration also increased by 4 points. Next page. This is the tough part, which we have to tell all of you. The office, especially in the Mainland, we experienced 8% down. First half, 5%, and second half get a bit worse to 12%, partly because of a big tenant in Shanghai that we have to restructure with them to retain them for a longer period, right? So I don't want to name them, but at least that help us to maintain the occupancy, that help us to retain them. Otherwise, you may see even worse numbers when the contract expire. So in Mainland today, customers might have a better bargaining power today because they have a lot of supply in the market. So they may come to you and say, even though I have 2 more years with you, if you don't reduce the price, I will leave. And at the same time, I promise you, I will not renew. So you have to talk to them and negotiate and make sure that they will stay hopefully above the market price, but actually stay with us and therefore, they don't need to move. So I think that will have some impact. Someone asked me, how long do you think it will last? I think at least 18 more months to 24 months because we see the supply continue to pop up in the main city, especially like Shanghai. But for some other cities like Kunming, like Shenyang, when you are having a much dominant leader position, you might have lesser impact, but you still need to negotiate with the customers when the customers having a lot more options. For example, domestic players, most of them, they have their own office in the past. But because of our better office facilities as well as more, they would like to rent with us when their business is doing well. But now the business is tough. They want to go back to their own properties. So there's a lot of discussion like this. So that's why I will see this negative drag might being around for another 18 months to 24. But as we discussed in the earlier section, everyone talked about very bearish in Central a year ago. But now it seems like it's stabilized. So this is really something we need to look forward to, especially when the foreign investment will come back. I mentioned to the media, I see at least a few minister, Prime Minister from the other country visit China. And I hope a little bit of the movement going back into China and invest into China. And hopefully, with this kind of more collaboration, bilateral kind of agreement, more company will go back into China. So this is something we hope for, but at least we have to prepare this kind of trend. And hopefully, we can retain most of our existing tenant. Next one. Hong Kong, good news is we mitigate from a negative 9% to negative 2% in 2025. And the retail side, the reason why we have that is because of one single tenant in Causeway Bay expired at very high rent into a new market normal rent. That is the impact. Otherwise, retail is more or less quite stable. If you look at the second half, almost flat. So office, I think minus 1%, which is because we don't have much office in our portfolio. So that's why quite stable. For example, the Standard Chartered Bank building, we have over 90% of occupancy. So I think we are quite comfortable with our existing one. And the residential service and apartment is the really bright spot. I'm sure you heard about the rental market increase and improved over the years, and that will reap the benefit as well. So you can see that overall, we are minus 2% in Hong Kong. So I think this one is important. I want to highlight the difference. So total, 2025, the proceed that we get back from our properties is HKD 1.6 billion. I think this is really highest in the last 8 years. Out of that, we booked HKD 264 million in revenue and the remaining will be booked in basically 2026. So out of that HKD 1.2 billion and then HKD 700 million will be in Hong Kong and HKD 500 million will be in Mainland. And also, there will be disposal from the Summit as well as Blue Pool Road. The good news is the momentum seems like gather. So we sold another Blue Pool Road in January. So I think the good news is when the market improves, some of the property we can actually sell with positive margin, I think it's a great way for us to accelerate the sales proceeds. And hopefully, we can lower down our gearing continuously. Next one. All right. Not much news on this page. Residential, I think not much news. We continue to sell down the Blue Pool Road. Good news is this is on -- Blue Pool Road, we have 5 and sold. Now it's 4 and sold, right, because we sold another one in January. Wilson Road, we got most of the approval already. So demolition will start very, very soon. Hopefully, we can finalize everything. Shouson Hill, we're still waiting for some planning and final approval. And hopefully, we look for a premium from the land department. And hopefully, we can get it as soon as possible. Aperture, now we only have 90-something left for sales from 294. So we sold already over 200 units in the past 2 years. Mainland, Heartland and Grand Hyatt Residence in Kunming continue to be slow, but we believe that today, even though you drop the price, it may not help. So we continue to sell at the right price and hopefully, market improve, but we see a great traction in center residence. So we already sold 50-plus units at a very good price, the highest in Wuxi, above 40,000 per square meter. So I think this is really encouraging. I think that actually reflects the strength of our mall and our district. This is really the core center city -- city center. And hopefully, we will continue to sell down these properties. So I will pass on to Kenneth on the financial management numbers. Ka Kui Chiu: Thank you, Weber. In the coming two slides, I would like to share with you our financial management. I think the key points I would like to highlight is the net gearing ratio. By end of last year, it was 32.7%, lower than the gearing by end of 2024. I think the dividend adjustment and also the scrip dividend arrangement help us a bit. But I think more importantly, for CapEx, I think as we communicated earlier, we have already passed the peak of our CapEx cycle, which help us to further reduce our debt. Overall finance costs actually declined by 8% because of lower borrowing costs both the benchmark rate, for instance, HIBOR and Mainland LPL declined last year, but also on the margin, my team have worked very hard to get a very competitive pricing on our financing. And the net cost -- net finance cost increased a little bit by 3% is mainly because of a lower capitalization ratio, which result into higher net interest expense. Nonetheless, I think if you look at the interest cover, it has been improving last year to 3.1x. And for our overall debt profile, I think around 47%, if you look at the left-hand side of our debt, 47% are renminbi denominated debt. So I think in the long run, of course, there are still room for increase, but I think the current ratio, I would say, is optimal. In terms of debt maturity profile, only 9% of debt will be due within 1 year. And my team and I are working on various refinancing 1 year ahead. And so far, the progress is very encouraging and smooth. If you remember last year, we have done a HKD 10 billion syndicated loan in the Hong Kong market, which help us to increase our dry powder and also help us to build our war chest. For next, I pass it to Weber. Wai Lo: Yes. I think just -- I think, have a lot of score put up here. You see that on the left-hand side, ongoing effort, a lot of improvement in terms of the score, in terms of rating, very glad to mention we delivered our 2025 goals on ESG, which I think this is something we are very proud of. And now we are setting our journey into 2030, and then we are very committed to do well on this part, even though Western world now might not focus a lot, but we believe that we have to do the right thing. And China is leading the way to achieve this kind of sustainability target. On the right-hand side, decarbonization. Great to talk about our journey to net zero. This is really the first time. I think not many companies really having this kind of discussion. We issued our paper in March 2025, and the low carbon emission and procurement, the two projects that we mentioned, Westlake and Plaza 66 Pavilion, our carbon emission actually was down by 42%. And one thing I also want to mention, very proud, 8 out of our Mainland operating properties powered by renewable energy. It's not only about really the achievement in the ESG, but it's saving costs because the cost in this renewable energy is cheaper than the traditional one. I think we talked a lot about V.3, but I just want to capture not only the video, but this is really a strategic move that we would like to accelerate, involving much less capital, but more efficient and more strategic in terms of expanding our leadership. So other than other company talking about so-called asset-light, we focus on only the core city where we believe that we will either already command a leadership position or we will be the leader in the market, so with Shanghai, Hangzhou, Wuxi and Kunming. And from a customer perspective, we see that not only the area will be improved, but also the facade, the street level in terms of visibility will be improved. So you can see that from Hangzhou will be triple, from Shanghai will be plus 53% and from Wuxi will be plus 30%. And I think most importantly, which we disclosed this time, all these 4 projects, we will spend around RMB 1 billion only, right? Of course, not only. This is compared to the scale of what we used to be V.2 will be much less. But that gives us the additional GFA that give us opportunities to command the leadership. And that gives us leveraging on our existing resources, not only people, but also the existing team, as we mentioned, existing relationship with the government as well as the existing leadership already, which we command over the years. So if you have a chance to go to Kunming, it's a simple way, just I think other property developers have done in Causeway Bay, for example, outside of their mall, you just make the street more meaningful, more interesting and people will come through that into your mall, right? So we have done exactly the same at that. Plaza 66, which we are very efficient now. We are getting OP. And hopefully, we will be ready by Q2, and then we will launch and getting the first dollar, as Adriel mentioned in Q3. This will increase our Plaza 66 LFA by 13%. On the right-hand side, I stay with Nanjing Xi Lu, right? So 13% in the Pavilion. But if you include this project, this will increase our retail by another 67%. So 67% plus 13%, the Nanjing Xi Lu retail area will be increased by 80%. Not only that, we will have office, we will have hotel in this building. And the good news is this is a joint venture that we will own 60% of that. And then we will -- and the landlord will be responsible for the CapEx to improve the building. And then we are responsible 60% of that into our interior design as well as the internal fit-out. So I think that is the project. Same thing apply in the Wuxi. We will increase our facade, and we will have 40% close to retail space increase in Wuxi, which we are already undisputed leader in Wuxi. We want to be even stronger. And if you have a chance to go to Wuxi, used to be we are on the right side. So we are not in the crossroad between the main road. And once we have that, we have the best facade. We can put on LED, we can really illustrate a lot of brands with a high visibility. And the Westlake, a lot of people say, okay, this is the one that you have not done yet. Why you already expand before you do the first one. But I can tell you that we all know when we bought this land, we need a Phase 2. But this time, we don't need Phase 2 anymore with this expansion because we get the best angle and best corner of this particular juncture. So I think once we have this expansion, we will increase our facade triple and also increase the GFA by 40% for the retail. This one, I'm sure everyone will ask Office, we have 5 towers because the Tower A is not ready because we are still doing the internal fit-out. We only have B, C, D and E and E already we delivered to one tenant in November last year. And then if you only look at B, C, D, E, our leasing progress, pre-leasing is 38% -- right, 34% because Tower A account for 50% of the total GFA of office. So because that is not available. But as of today, we already increased to 40%, right? So once the Tower A will be ready for us to lease and then hopefully, we can ramp up. But again, at the backdrop of tough office market, we don't want to be rushed. But at the same time, we also want to make sure that we can lease at a reasonable price. So the team working very hard on this one. On the retail side, last time I recall, we're talking about 80-something percent re-leasing. As of today, we are 91%. So when we open in Q2, we will be ready with 80% opening rate and 90% by Q3. So this will be a one-stop shop and together with the expansion, hopefully, will be with luxury, with the retail, luxury and with the F&B and with the culture as well as with relics and with the museum below the ground. And together with the hotel on the left-hand side, the Mandarin Oriental, this will be opened in early 2027. That's all I have. And now open for discussion and questions. Joyce Kwock: [Operator Instructions] I've got some questions on the webcast, but Karl from JPMorgan, would you like to have your first question? Karl Chan: So my first question is about the CEO succession. So I guess the first part of the question is more for Weber because when we saw the announcement back in December, we were a bit -- a bit surprised, right? So just curious what's your thoughts behind your retirement because you're still very young, very energetic. So just curious your thoughts behind that. That's the first part of the question. And the second question is to Adriel. So I guess now we are in the stage of identifying the new CEO. From your perspective, what kind of qualities are you looking for in the new CEO? Are you going to find someone externally? Or are you going to promote someone internally? What's the direction? And is there any time line on when we will be able to appoint a new CEO? So that's the first question on CEO. And the second question is on the Mainland China retail. So last year, I remember that in the results briefing, you mentioned that your outlook for second half is cautiously optimistic, right? So looking ahead into 2026, just curious what's your general outlook? Do we expect tenant sales to still see a pretty good positive growth? And I guess, maybe if you have any colors on January so far? So that's my two questions. Wai Lo: Okay. I maybe answered 100 times already. I will repeat again. Hopefully, if this is not too boring to you. This is always my personal goal even when I was 35. I would like to retire by 55. So don't discriminate the age. I have been in the role for 8-plus years by the time when I leave my office. When -- of course, when I joined Hang Lung, I would not say I will retire by 55. But this is really always my goal to do that. In the media section, I already mentioned -- actually, Adriel mentioned already. My next job, which has been confirmed is my daughter's caddie. So I upgrade myself from daddy to caddie because my daughter is a competitive golfer and I want to spend more time with her, not because I can earn any money from her, but I think if I can afford it, I think family time for me is very important, especially before she move to overseas for university. I think by then, I will be redundant anyway. So I would like to spend more time with them. And also my parents also, they are old enough, and I just don't want to leave them alone by focusing only as a CEO role. So I have a son role, I have a husband role, I have my father's role, and then I would like to balance for that. So this is really not a tough decision for myself. I informed the Board and informed Adriel and Ronnie in January last year, but we can only announce by December. So I think in terms of the shock, maybe a shock to you, but not shock to the company and to the Board because they were informed 1 year ahead. I think I hope it will not create so much inconvenience. I work for a U.S. company for a long time. Everyone can be replaced. I don't believe that no one cannot be replaced. So I truly believe that Hang Lung will be able to find one person or my successor to understand the business and then to do well. So I will stay on, and I'm sure Adriel can talk about my role after my retirement. So -- but I'm happy to answer any question if I have not answered. So I have answered a few times. I hope that if you still say, okay, maybe you have a role. First of all, I want to clear some of the rumor. If someone spread the rumor irresponsibly, I have to say, I have no job. I will not go to another place for CEO role. And then if anyone believe that, I will put money on the table and bet with you. But overall, I'm happily to be retiring. Wenbwo Chan: So first of all, I do want to thank Weber here for his 8-plus years of contributions. And if you think about our previous CEO, Philip, he was on for about 8 years as well. So I don't think this should come as a surprise, frankly. And it's -- as he said, it's very common for companies to have to go through this. Everybody has their life plans. I think Weber's life plan facilitated by the both emotional, mental and financial freedom to do what he likes and to choose his path is very empowering, and I support that wholeheartedly. So as a company, obviously, that leaves us in a position where we have to find a CEO. Although as he mentioned, it's not a surprise. So we have been looking for some time. When we have something to announce, we will announce it. But for the time being, I don't have anything to announce. What I can say, though, is that the Boards have approved an advisory role for Weber, which will be similar to previous practice. And so there is absolutely no bad blood and absolutely nothing worth flagging in this transition. And so that will all be announced in due course as well, although it has already been approved by the Board. So I think on the succession, it's pretty standard. We'll work with what we have. On this China retail outlook, it's -- last year, we were cautiously -- not quite cautiously optimistic, but we were cautiously hopeful that the second half would bring us back to parity, and it's done that and more, as Weber just mentioned. And the Q4 for us was record-breaking on multiple levels, both total retail sales, foot traffic, occupancy or technically, maybe we were at a higher occupancy when we only had the 2 Shanghai malls, but that was sort of like 15 years ago. So we're at a record high occupancy, foot traffic and sales. So I think it's really a great way to start our 66th year. And with that 66th anniversary, obviously, we'll be pushing really hard into the consumer, the B2C side of that marketing. So what you saw in the V.3 video is our 66th anniversary logo, which we'll be pushing to consumers. But even though we've had a strong fourth quarter, I am still -- I still want to remain conservative and a little bit cautious, partly is because the luxury brands have not had a big uplift yet. They've been doing okay. By okay, that's, in some cases, maybe down low double digit or high single digit. In some cases, in our malls, maybe a little bit better than that. So maybe down single digit plus up single digit. And that is not where the growth in Q4 has come from. The growth in Q4, which I think is very gratifying, has come from non-luxury, has come from F&B, has come from jewelry, and that is what we've been trying to focus on for several years now to build a really compelling non-luxury offering in our malls, which means experience, it means entertainment, service, F&B. And so that's what we've done. And I think this is the pudding or rather we're eating the pudding now. So I am still cautious. If you look at LV's numbers, which just came out, obviously, they're down for the whole year, but Q4 again was also up like 1% for them. And so that sort of tracks for us as well. But it is not so confidence inspiring that I'm willing to say 2026, big numbers, luxury and non-luxury, I'm not ready to say that yet. But I think it's a great start. And I think that if we are able to execute all these things that we've been planning, including V.3, you might not see most of V.3's impact in '26, that will be in later years. But I think the signal, the canary in the coal mine is what we've done in Kunming, which is a simple 67-meter long section of the shop fronts across from our mall. That has brought significant increase in foot traffic from -- at least from that entrance. It has brought a lot of life back into the district -- and it has created a new buzz on social media and within government and within the community on what is happening around our mall. And that is really what we're leaning into as well. So retail, although I'm not yet willing to put my hand up and say back in a really big way, I am willing to say that it is confidence inspiring, and we need to work hard to make sure we capture that. Wai Lo: Just to answer you about January, our numbers, if you look at the first 28 days, more or less the same as last year. But the good news, this is a good news. The reason why it was Chinese New Year was in January last year. So this year will be in 17th of February. Last year was in January 27, right? So you can get my point, right? So if you have the similar sales of last year's CNY, then I'm pretty confident the 2 months will be good, right? So I think this is what I can share as of now. Whether that fully reflects the recovery, don't know yet. But I think I'm not saying that we were forward-looking enough. The reason why when we dropped so-called our luxury definition and non-luxury mall definition, a lot of people at that time say we worry about luxury and you are retreating from luxury. No. We already see the behavior change of customers. And that's why we don't want to label that particular mall as a luxury mall with only 15% LFA for luxury. We want to open it up and make sure everyone should come. That change of mindset, see our occupancy increase, our footfall increase, our non-luxury doing well, not because we just changed the definition. It's just because the behavior has changed. So that's why I want to correct some of the people say, oh, because we worry about luxury, no. We continue to rely on both luxury and non-luxury. But so happened in 2025 was driven by the non-luxury growth, which we were spot on in 2025. So there's a lot of continuous refinement. There's a lot of way that we need to engage with our customers. But when you look at our LFA of luxury, we did not reduce. We are more or less the same, but we focus on reshuffling the non-luxury to capture the growth opportunities for our mall. Wenbwo Chan: Maybe I'll take the opportunity just to expand that into Hong Kong. So when I look at China retail properties, I think what I'm seeing so far is that it's cyclical. If the economy comes back, which we expect it to do, if not immediately, at least in the medium term to long term, we're still bullish on China, then I think retail sales can come back and will come back. So I think that, that is a cycle. On the other hand, here in Hong Kong, as I'm sure we all know, retail has been hit very hard by people traveling to the Mainland, by the lowering in standards of service, the offerings. And so I think in Hong Kong, combined with the broader economic environment, I think Hong Kong is a little bit more structural when it comes to the retail landscape for landlords. And so in Hong Kong, I think we've done quite well considering all things considered. As Weber mentioned, there was sort of a one-off hit in Causeway Bay. But if not for that, then we would have been pretty much flat. So we seem to have found the bottom in Hong Kong retail. The question is how quickly will it return? And I'm not yet confident to say that it's going to come back very quickly. So I'm not holding my breath. So I think Hong Kong is a little bit more structural while the Mainland retail is more cyclical. Joyce Kwock: May I clear some questions from the webcast. There are some questions on the financial management. So what's been driving down the net gearing ratio? This is the first question. The second question is, what is the CapEx guidance for the next few years? Ka Kui Chiu: Let me give you some high-level figures for the CapEx first. So for this year, 2026, the CapEx will be around HKD 3.1 billion and 2027 would be around HKD 2.6 billion. And subsequent year, it will go down continuously. The figures I show you have already included the HKD 1 billion attributable CapEx that we have to spend going forward in the V.3 strategies. But substantially, those CapEx will be incurred, I think, from 2027 onwards. Wenbwo Chan: And sorry, just to add. And so for those of you who have watched us for a long time, you remember that for many, many, many years, our CapEx was like HKD 4 billion to HKD 5 billion per year. And so this is a meaningful reduction. Ka Kui Chiu: That's right. And for the gearing, the question is what are the factors which help us to bring down the CapEx -- sorry, the gearing. So as I mentioned, the scrip dividend arrangement in the past 2 years has helped a bit because the cash outlay was much less in terms of cash dividend. As you may know, our major shareholders, HLG elected opt for scrip dividend so that HLP can preserve more cash. I think more importantly, we spend less CapEx. And as highlighted by Weber, for contract sales, actually, even though you look at the P&L, the revenue recorded is not substantial. But actually, starting from Q4 2025, we had much more disposal in residential, particularly in Hong Kong. So we have already sold, I think, around 16 units in 1 quarter. And also, we have some disposal in Blue Pool Road as well. So I think the recovery of the Hong Kong residential market provide us a good window to accelerate this disposal. So hopefully, if the momentum continue, we should have more disposal for at least Hong Kong resi in the coming year. Joyce Kwock: Okay. There are 2 more questions related to dividend. The first question is about scrip dividend. Is it going to be the last time we are having a scrip dividend scheme. The second question is, will the management consider a special dividend for the 66th anniversary. Wenbwo Chan: So it's hard to say if this will be the last or not. That depends on the numbers when it come to midyear and end of year. But I think what we have been relatively consistent in saying is that this is not something that we necessarily want to do long term. The question is what's the right timing. And as we have new projects coming online in Hangzhou's opening, hopefully, April, midyear this year, then the hope is that there will be less pressure on the financial side. And therefore, we would not need to issue scrip or offer scrip dividends as a way to ease our interest payments or gearing. So there's a broad intention not for this to last too long, but specifics will have to be up to the Board when interim comes around. And on the special dividend, yes, maybe if you're in one of my [indiscernible], then there will be a lot of red packets going around. But in terms of special dividends, I'm not sure that, that's something the Board is really thinking about. Joyce Kwock: Xinyuan Li from Citi. Xinyuan Li: This is Xinyuan Li from Citi. I have three questions. First is a follow-up on China retail. So we mentioned non-luxury outperformed. Last year, we added a lot of lifestyle and beauty. So I'm just trying to think of what will be your leasing strategy into 2026. Will you continue to add on, experiential non-luxury space? And how do you think of the, say, temporary underperformance of luxury? Will you like say, I think Shanghai Mall retail sales kind of underperform that of Wuxi and Dalian. So is it because of the difference in the luxury positioning? Or what are the reasons behind? Second question is more on the underperformance of Wuhan and Shenyang. So those obviously has been undergoing the repositioning. I'm just wondering if the whole process is, say, aligned to your expectation? And when will we see the stabilization in the performance? Is it '26 or even '27? And what would be the shopping malls after the repositioning? Then the third question is actually also on dividend. So I'm just trying to think with gearing lower, with CapEx lower, with more rental incomes ahead, when would you start to consider maybe even increase dividend? Under what scenario when earnings back to what level we will start to consider that? Wai Lo: I think I believe which also get some information from the luxury tenant. Adriel and I went to Paris in December. Some sort of not brainstorming, but getting some feedback from the tenants. I think in general, overall, everyone is cautious, but they still look for mid-single-digit recovery from a tough year of 2025. So I believe that there's a lot of consolidation happening because a lot of maybe some brands, they overexpand themselves. So in terms of consolidation is happening, so lucky enough that they don't consolidate ours, but they consolidate the business to ours. And therefore, there will be hopefully some opportunities for us. So I think this is more about luxury. But the luxury side, I think the momentum continues. The athleisure, I'm sure everyone talked about. The good news now is that it's not only one brand. They have a lot of brands doing pretty well. So I think it's quite across the board. Not only athleisure, but if you look at Pop Mart, for example, some of the IP, Jellycat, they are doing pretty well. So I think we need to look for what today is what customers really want. F&B, we find out in a very tough market 2025 is that we have to offer various price range. We can't offer only Michelin 3-star and stop there. We have to offer something very cheap in order to attract tenant/customers as well as footfall. So I think I will not believe when the clock click from 2025 to '26, things will improve or change dramatically. The momentum will continue. The footfall is continuing. So I think we believe we still look for a single-digit increase on sales, which I think should be doable based on what I just mentioned, the first 2 months, if we hang on for January, but get an upside on February, at least we should have a good start. So I think this is first part of your question. Second part, about the I will not say struggling, but the repositioning one because of the competition. For Shenyang first, we are building a sports park next to Shenyang using the sites that we stopped constructing, but turn that into an urban park. We want to really leverage on the park facilities to make this become an urban hub for sports, for athleisure, for F&B, for some other places. So I think this is ongoing and then the park will be opened by Q3 next year -- this year, sorry, Q3 this year. And hopefully, with the park with a lot of interesting, you can name it, pickleball, basketball, whatever venue that we can offer. So pet friendly kind of facilities, we can attract different traffic into the mall, and that will facilitate more footfall into the shopping mall and speed up the trade mix improvement. Heartland, I can see -- you can see the second half already improved, partly because of one of the big competitor opened in 2024 July. So when you normalize it, the drop should be less. But nonetheless, we have to work very hard to improve our occupancy. So you can see we have 5 points jump in terms of occupancy. We are improving a lot more F&B offers. I can tell you the challenge in Heartland is not luxury. The challenge in Heartland is non-luxury because the one next to us suffocate us not allowing anyone to open with us. So the key for us is to how to break through to get the L luxury going. So we have some strategy. I cannot disclose to you. And hopefully, by the middle of the year, you can see we have some breakthrough. So when we get the non-luxury going, you will have a footfall. Once you have a footfall, everything will be improved. So I think it takes time. Of course, I don't want to always go back to those little brother need helps. But the good news is out of the 10, we have 7 good way, good ones. We have 2 a little bit struggle. We have one actually on the good foot with a high occupancy, and we just need to make sure that the reshuffling on tenant mix will be relevant to the customers. We have to be on top. on what's going on in the market and make sure that the tenant mix will be relevant. I think that is the key. The last one is the dividend. Yes -- again, I don't want to give a false hope. If you look at our gross and the net interest, we still have a bit of capitalized interest will be realized to be a real interest. That will drag us a bit even though if we have revenue increase. So I hope that maybe hopefully, we still need to go through the next 24 months. And once we get through that capital interest and then when we see the earning improvement, and then I'm sure we are more than happy to improve. So this is not really -- this is what we can mandate the team to do, but this is what the earning will tell the story. And then we are already paying up to 81% of our earnings. So I think if you look at even with the capitalized interest, we are more or less deliver almost all. So I think you can calculate your own mathematics. So I think we are trying our very best to maintain it. So again, go back to the tough decision that we have made by reducing dividend last time. So I think that a lot of you even asked me, should you cut more? I remember that you cut -- why do you cut to 0. And of course, we have to strike the balance. We have to make sure that we find the place that we'll be making the shareholders as well as the company, both can be a win-win. And hopefully, we can sail through the tough time. And we see a little bit of the KPI going into the right direction, the gearing now coming down, the borrowing coming down. The CapEx already peaked. So I think a few years ago, when we talked about we have to lower down the gearing, get the cycle -- recycle back, we are working it. We are doing really hard on that. And hopefully, you can see that. Wenbwo Chan: I would just add that we've previously said that the first priority was to deleverage. It still is. And so we do want to reduce our gearing and interest costs. But do we necessarily have to get to 0 borrowing before we start increasing -- thinking about increasing dividends? Not necessarily. So it may not be that long. It will be somewhere in between, and it will be a discussion. And obviously, it will depend on the trajectory that we see the business taking, especially in the Mainland. Joyce Kwock: Mark from UBS. Mark Leung: I got about three questions. I think the first question is regarding on some -- maybe the 2 Shanghai malls, we got excellent tenant sales. When do management expect that should be reflected in the rental income? Or should we expect the non-luxury sales growth will be more base rent focused -- it should reflected maybe 3 years later? I think that's the first question. The second question, I think it will be more on the net gearing side. So we definitely want to fasten the disposal for the Hong Kong DP, right? But how about for the China, do we expect maybe dispose of China office like the C-REIT or more innovative lower funding cost method, for example, like issuing CV, et cetera? That's the second question. And the third question will be more on Adriel. Do we see the current structure for HLP and HLG is optimal? Or do we have any plan to -- any change for the corporate structure? When will sales turn into rent? Wai Lo: I think in Plaza 66, it's quite optimal, I would say, because when you see the sales increase, you get the rent increase, which is more or less, I would say, when sales come up, you will get the impact of it. In Grand Gateway, it used to be always our fixed rent is much higher than the turnover rent, right? So in the down cycle, we're happy with the high fixed rent. But in the up cycle, we may not be able to capture all the upside. So I would say if our sales and footfall continue to improve, you can see the fixed rent will be improved, right? So if you really dig into the details of our Mainland this year, even with a very tough luxury sales, our fixed rent increased by 2%, right? Our sales rent basically flat, right? That's why our total increased almost by 1, right? So I would say, in a very tough time, we still managed to get the fixed rent increase because we always believe more at the fix will be beneficial to the landlord rather than leave everything on the variable, right? Now of course, on the other side, when the sales go up very, very quick, then you say, why don't you have more sales rent? I can't basically have both, right? It really depends on the nature of the properties as well as the competition next to you. I don't want to mention in Shanghai, the competition is very keen. That's why to us is that we have to make sure that we get the best offer for the customers. We have to get -- make sure that the occupancy cost will be reasonable. Yes, you can drill and get and milk the cow to the max, but you might push the tenant to the next door. So that's why we are very cautious about doing that, right? I'm sure you understand what I'm talking about, right? That's why, on one hand, we want to be more energetic in terms of more footfall in the market. But at the same time, we want to be reasonable, and therefore, we can get the best tenant mix. Once you have best tenant mix with the best footfall, this is the best defense for any competition. So the second, I'll pass to Kenneth. Ka Kui Chiu: Maybe I have to answer your second question about gearing and you mentioned about C-REIT. First of all, don't speculate Hang Lung is working on any C-REIT. Some of you write paper like this, which was misleading, okay? But definitely, we -- my team keep monitoring the latest development of the C-REIT market. As far as I know, last year, there were 11 C-REIT listed in Mainland. Most of them are either those mass market outlet mall and some of them are community malls and so forth. So this is interesting, and I've noticed the yield has compressed from the IPO price. But nonetheless, for us, we are still -- the key challenges that we have observed is even the CSRC and the two exchange in Mainland, they spend a lot of effort to promote the C-REIT product. The -- we have not yet seen a very clear or clarity on the capital flow from offshore -- from onshore to offshore, very little clarity. And I think as a Hong Kong-based listed developers, it's very difficult for us to do something without a clarity, not mention the tax implication all this. So I think for us, we will keep learning and monitoring the market. And of course, you mentioned office, if there is a very active -- now they call commercial REIT because previously, they call consumption REIT, right? If there are investors who are interested in Mainland office, we are happy to explore. But as far as I know, the regulators, they encourage the sponsors to do retail-related REIT. Of course, you can have some office element or even hotel, but the majority are still retail related as far as I know. So I think give us some time to study and feel free to share with us if you have any insight on it. Wenbwo Chan: Yes. And I think tying into that, with our priorities still firstly, to deleverage, to degear. We will naturally look at opportunities to sell down. We'd prefer to start with noncore. As we have said many times before, noncore property disposals are something we look at on a regular basis. But of course, when push comes to shove, the prices are never great. So we've not been able to move maybe as quickly as we would have liked on some of them. But as our gearing starts to come down, as our interest expenses start to come down, the pressure to do so is a little lower. And at the same time, the market seems to be returning at least a little bit. And so the opportunities may increase. So it's always a balance, how much do you need to sell. And frankly, we don't need to sell. It's just a matter of preference. But then also how does the market look that we're trying to sell into. We've been able to move residential relatively well, I think, over the past 12 months, and we'll be able to book a lot of that this year and not rather than last year when they were contracted, and we hope to continue that. So we're still looking at all options, but hopefully, the market comes back and works in our favor. On the structure, it's something that we look at, again, on a regular basis, what is the optimal structure? Obviously, we have a lot of -- not a lot, but several peers who have been making adjustments and tweaking. Some of them have done quite well in adjusting their approach to the governance and the holding structures. And so it's worthwhile for us to look -- to watch and learn, but we don't have anything to talk about specifically. Joyce Kwock: Okay. So let me clear one question from webcast regarding Westlake 66. It's a positive sign, a positive number to see 91% of commitment rate. So the opening should be 3 months from now. So how is the opening strategy as is it going to be event driven? Or is it going to be CRM driven, especially on the VIP segment? And also on the tenant profile, anyone to highlight here? Wai Lo: I think you name them all. We have to do events. We have to do good tenants. We have to push on sales. So we already recruit quite a decent number of members already around the areas. So the preheat has been done since the middle of last year. I think we are working very hard now. We hand over 90% of the space to our tenant, and then they are submitting drawing, start to renovate. And then this is really the last mile every single mall when we open, we need to push and making sure that they open on time. So we will come up with some incentive. Hopefully, everyone will be according to our timing. So I think overall, to start with, I think this mall will be a one-stop shop, including luxury, including non-luxury, including culture with a beautiful fourth floor as a garden. We call it Oasis and then relics on the B2 to really have a museum down there. And then we will have arts. We will have hotel. And then with the expansion, we have a lot more space. So I think it will not be different from what we have done in Kunming and what we have done in Wuxi and most likely similar to Grand Gateway to start with, right? Because at the end of the day, there's no more Plaza 66. You can't only do luxury because Plaza is the one that we really first in the market, and then this is special. This is home to luxury. But on the other hand, I think with the space and with the expansion that in a few years' time, I think we will be able to do one-stop shop in that area. So I think overall, I think we are pushing very hard on every step on promotion, on even have artist coming at the launch, everything, right? So hopefully, we can invite you to come in 2026 second half. Joyce Kwock: May I take one more question from webcast and I send the last question to Karl from Bank of America. So there's a question from webcast, which congratulate us on a strong year of contracted sales in 2025. So any guidance for '26 in terms of the sales, whether it's from the DP or from our IP disposal? Wenbwo Chan: Well, I mean, if you look at our inventory, we don't have that much left to sell. So I mean we have a little in China -- sorry, so in the Mainland of China, we have a reasonable stock. I don't expect that all to sell like hot cakes. Some cities, as you've seen, are much stronger than others. Wuxi is doing particularly well. Wuhan is doing a lot less well, and that's a function of the various economies and the regional economies. In Hong Kong, obviously, we do have a couple -- we have Jardine's Lookout , we have Shouson Hill. And then, of course, we have the remainder of Aperture. And those are all things that we're going to work on. But in terms of total number, it's relatively limited. Wai Lo: I think our imagination, we have some IP to dispose. We just disposed one in a very top building. Hopefully, we can dispose more. That we have 50-something units. So I think with the market improvement, I hope and I wish we can dispose more. We have 4 more Blue Pool out of 18. So if we can sell 4 more, that will be great. And the Wilson Road as well as the Shouson Hill, we will work hard at least to get all the master layout plan done first. So if someone want to take it, take it. So I think there's a lot of way we can speed up. But of course, I want to also strike the balance between the shareholder return, right? If, of course, we need the money for survival, of course, we can sell at cost. But if we have some briefing space, I want to make good money for the shareholders. So I think overall, in Mainland, again, Wuxi doing pretty well. We want to continue to do that. And then Wuhan and Kunming are a little bit tougher because the market is not up there to the price and then we are really premium in the market. We just need to wait a little bit until the sentiment improve. So overall, I think, of course, if there is any long call available, which the price is attractive, of course, we will look at it. So I think overall, there are some, but there will not be a lot. And also, we have 94 Aperture left, and then we would like to dispose as much as we can. If we can ride on the momentum of 60 in the last quarter of 2024 -- sorry, 2025. I think if I just do the straight line, we should be able to sell 94 in 2026, easier for me to say when I retire, right? So I think overall -- I think if the market continue to improve like what everyone said, I think we have good chance to dispose a lot more. But of course, we don't have a guidance because I don't want to give you a false hope. I just want to sell at the right price. If the price is right, we want to sell as quick as possible. Joyce Kwock: Karl from Bank of America. Karl Choi: Yes. Actually, one of my questions was going to be about the Summit. And given the very hot luxury residential sales market, are we having some discussions there? Is it just a matter of just pricing? And that sounds like we are willing to sell if the price is right. And second question is, we touched on Hong Kong retail a little bit, but can you give us a little bit more color on the rental income outlook for Hong Kong, presumably still relatively stable. Just want to give you -- give -- ask a little bit about Hong Kong. Ka Kui Chiu: Maybe I help to answer the Summit first. I think, first of all, other than the disposal that we have announced last year at HKD 160 million, something like that for unit. We have also leased out one unit at a very good price. I think if you look at the news, it's HKD 300,000 per month. So again, I would like to emphasize, it is still an investment property. At the right price, if you are interested, no matter lease or buy, please come to me. Okay. But please don't lowball me, okay? You know where I come from, I come from investment background. So I am quite demanding on the price. But nonetheless, my team and I are working hard to strategize overall how to put the asset into the market. The second question is on the... Wai Lo: Hong Kong, I think as Adriel just mentioned, I think we are cautious. If this is structural, I think we need to wait and see whether the behavior of customer will come back a little bit more back to Hong Kong because last year, I'm sure everyone talked about everyone goes to Shenzhen, right? It seems like it dialed down a little bit now. For our neighborhood mall, the impact is minimal. Now we see a little bit more tourists coming back. So that should be beneficial to our commercial district. So I think we will have some reshuffling of tenant mix in Causeway Bay. That will have some why period, and that hopefully will be very short. That hopefully also give an uplift of the tenant mix for Causeway Bay and hopefully, that will bring the sales increase and bring excitement to our Fashion Walk. So I think overall, we are cautious. I can't say cautious, optimistic because whether this is structural or not, we still need to wait and see. But hopefully, really the peak of people leaving Hong Kong and go to the north a little bit, I would say, the peak has been passed. Whether it will dial down back, everyone come back and shop here, wait and see. Ka Kui Chiu: Just one supplemental question. Actually, we have seen a very good improvement on the footfall in Hong Kong. So if you go to Causeway Bay, go to the Peak, Mongkok, very crowded. So I think the challenge to not only Hang Lung, but all the landlord, how to translate the footfall into the sales is key. And as mentioned by Weber and Adriel, actually, we are working on very hard to reshuffle some of the tenant, particularly in Causeway Bay and Peak, so please give us some time. We are working on this. Joyce Kwock: So ladies and gentlemen, this wraps up the analyst presentation for our FY '25 final results. Thank you very much for your participation. We'll see you next time. Ka Kui Chiu: Thank you.
Operator: Good morning. I would like to welcome everyone to the Jupiter Mines Q2 Call. Today, we have Jupiter Managing Director and Chief Executive Officer, Brad Rogers; and Chief Financial Officer, Melissa North, to provide a brief update on the second quarter of the 2026 financial year, and then we will open up for questions from callers. Thanks, Brad. Please go ahead. Brad Rogers: Thank you very much, and good morning. Thanks for joining the call this morning. So we released our December quarterly to the market this morning, and I'll just provide, as usual, a few overview remarks, try and tease out what I think are the key points that are contained within that quarterly activities report. And then at the end of the remarks, I'll turn the line over to any questions. So those who have had the opportunity to review our quarterly will see that the second quarter of the 2026 financial year reflected another strong operating result. Sales and production both up quarter-on-quarter and in line with our full year targets. Unit costs in U.S. dollars slightly better as well quarter-on-quarter, and that was a great result, particularly because the rand against the longer-term trend actually continued to strengthen in this December quarter, which was obviously a headwind for USD reported costs. Cash also was steady quarter-on-quarter at quite healthy levels, notwithstanding we had the usual semiannual payment of taxes and royalties in the December quarter. So that was a good result as well. From a safety perspective, we unfortunately had 2 minor lost time injuries in the quarter. Both of those injuries were in the nature of slips and trips. One worker tripping over an exposed rock and spraining his ankle and a cleaner sustaining some lower leg injuries while slipping as well whilst conducting her duties. Both of them, as I said, lower leg soft tissue injuries and our team at site, as you'd imagine, is responding with appropriate mitigations and communications around those injuries, which unfortunately remain a risk in any mining environment. And so a lot of that is about remaining diligent about those risks and having proper lighting and those sorts of things. From an operations perspective, our sales for the quarter were 867,619 tonnes sold, and that figure was 4% up on the previous quarter and 27% up on the prior corresponding period in the previous financial year. Production also was quite strong, 840,688 tonnes, and that was slightly up quarter-on-quarter and 13% up on the prior corresponding period. But there was a lean towards high-grade ore production. So less low-grade ore production in the quarter, more high-grade ore production. Obviously, that sets us up for a good mix of sales in the forward-looking quarters. The high-grade ore production was actually 10% up quarter-on-quarter, whilst as I said, overall production was about 1% up quarter-on-quarter. Operating costs, as I mentioned a moment ago, were good. We're sort of in range and the costs were USD 2.24 FOB per dmtu for the quarter. And that's about where we were sort of guiding that we expected to be. However, we have had a strengthening rand, which is a major factor in reported U.S. dollar costs. And so actually being slightly down as we were quarter-on-quarter with our cost is a particularly good result in view of the strengthening rand. Land logistics were basically flat quarter-on-quarter. Mining was slightly down, 5% down quarter-on-quarter. And part of that was seasonal rain that we expect to see in the December quarter, and we usually see it around this time of the year. Manganese prices and market prices more broadly were quite supportive during the December quarter. As we sit here today, FOB spot for the grade of ore that Tshipi sells is $3.68 per dmtu. And at the end of the December quarter, it was $3.46. So we improved spot 30 September $3.36 to 31 December, $3.46 and today, $3.68. So we've seen a strengthening of manganese market prices through that period of time, and that's continued post quarter end, and I'll come back to why that has been the case for a moment. You'll see in the quarterly activities report that average realized prices were 6% up for the December quarter compared to the September quarter. Freight rates also slightly lower, USD25 per ton on 31 December, USD 23.40. Today we've been range trading for the last sort of 3 or 4 months in a reasonably tight range of about $23.5 to $26 a tonne, and that's where we'd expect to be or hope to be in this sort of market, so also quite favorable. Manganese ore stockpiles in China, which we've talked about are a good leading indicator for where prices might be going, hence, why we include a tracking of that particular metric in our quarterly activities report, remained at around 4.4 million tonnes of manganese ore at Chinese ports in stockpile today. We have been at around that level for much of the last 6 or 9 months or so. And so you'll see in our quarterly activities report averaging around that number, and it's still that number today at the end of January. You'll also recall in some of our previous communications that we have called out that the, call it, 5-year average preceding the last 9 months or so has been about 5.8 million tonnes of manganese ore at stockpile at port in China. And so that 4.4 million tonnes remains quite a bit lower than the recent average that we have tended to see. And that's also supportive given manganese prices have been a bit higher. And given over the last few months, exports of manganese ore have been reasonably elevated from some countries. That ore has been consumed by downstream alloy demand, which has been relatively robust for this last period of time. There's a few things going on there. The stronger Chinese yuan against the U.S. dollar obviously is supportive for USD reported manganese prices. So that's part of what's going on. There's also some newer renewable energy-powered alloy plants in China that have greater levels of efficiency, and that's also been supportive and we think why there's been quite robust downstream alloy demand recently. And then very recently, there's the usual pre-Chinese New Year stocking perhaps going on. So even though prices have been up and from Tshipi's cost position, we think reasonably supportive. We're quite happy of the trend and where they sit today. And at times, overall market supply has been reasonably elevated as well. That ore has been consumed in the market, and that's quite evident when you have a look at the levels of manganese ore at stockpile in China. So I think you'd say a balanced market at the moment, notwithstanding prices have ticked up quite nicely, albeit fairly gradually over the last month or so, the trend is pleasing. On to financials. Tshipi's EBITDA was down 19% quarter-on-quarter, and that was mostly due to FX losses with the strengthening rand, as you can imagine. Whilst it's down quarter-on-quarter, the actual dollar figure isn't that material. If you have a look at the EBITDA dollars, it's sort of within the range of where Tshipi trades in this sort of pricing environment. Cash at Tshipi, as I mentioned earlier on, basically steady quarter-on-quarter and at healthy levels, around AUD 137 million at the end of December, and that's down 2% from the from the end of the September quarter, but we did have to pay taxes and royalties in the period. It's a semiannual payment. So there was good operating cash generation, and that resulted in good ending cash at Tshipi, notwithstanding the payment of taxes and royalties in the period. And cash at the Jupiter level also basically steady quarter-on-quarter. You will have also seen this morning perhaps that we updated the market referencing a market announcement by Exxaro yesterday in South Africa that Exxaro is now unconditional in respect of the acquisition of certain manganese interests from Ntsimbintle Holdings and from OM Holdings. And so what that means according to the Exxaro announcement, as reflected in our announcement this morning is that Exxaro expects to complete the acquisition of those interests on or before the 27th of February, so a little under a month away. On that date of completion, what that means from a Jupiter perspective is that Exxaro will join Jupiter as our co-investor at Tshipi under the same shareholders' agreement that's always been in place there. Exxaro is just buying into the same shareholders' agreement and taking out the existing shareholders in Ntsimbintle and OM Holdings. So that's what it means. At an asset level, Jupiter continues with Exxaro from that date to exercise joint control over the asset and the way that the asset has been governed very successfully over the period of its operation will continue to be the case. At Jupiter, what it means, as summarized in our announcement is that Exxaro will join Jupiter as our largest shareholder. They will be acquiring 19.99% of Jupiter's shares from Ntsimbintle Holdings, and that trade will complete on that same date, 27th of February or earlier. That's also unconditional. The price that Exxaro has agreed with Ntsimbintle to pay for those Jupiter shares is in rands, ZAR 3.69 per share. And obviously, it's exposed to the foreign exchange rate. But as an indication, the Australian dollar price today is a little over $0.33 a share, and that compares to our trading share price today when I last looked at about $0.285 per share. So in summary, just bringing it back before I open the line for questions, strong operating result from Tshipi, sales up, production up, unit costs slightly down and cash at steady, healthy levels. Our interim dividend 31 December will be decided in the next month. You'll be familiar that it goes through a 2-step process of Tshipi first recommending a dividend to shareholders. And once we have that, Jupiter will communicate that to the market. So that's also to come in the next month. We have seen and we continue to see a relatively supportive market in terms of manganese prices, levels of manganese ore at stockpile in China and also freight rates. So supportive through the December quarter relative to the preceding quarter and continuing that trend post quarter end. And then finally, Exxaro communicating that important news yesterday and relevant for Jupiter in the ways that I've mentioned a moment ago that in a little under a month, they will be joining Jupiter as a co-investor at Tshipi and also joining Jupiter as our largest shareholder. And as we've continued to say, Jupiter is very welcoming of that development. We see that as being really supportive in terms of value growth at Tshipi, but also we share a view with Exxaro around growth through consolidation in the Kalahari. And so we're looking forward to welcoming Exxaro as a co-investor and working to them, given that shared view strategically. Hopefully, that overview has been useful. I'll turn the call open to see whether there are any questions on the line. Operator: [Operator Instructions] Your first question comes from Jon Scholtz with Argonaut. Jon Scholtz: Quick question on Tshipi. Obviously, it has its own management structure within place. With Exxaro coming in, has there been a change to that management structure? Or is it all running as per normal? Brad Rogers: Jon, thanks for the question. No change at all. The same team that's been in place there will continue. And there is, as I mentioned, no change in the shareholders' agreement and the way that Tshipi is governed, and that also pertains to key management appointments. So the way that it is run, where both shareholders at Tshipi need to agree on important matters like key management personnel, will continue to be the case. So there are ways that we absolutely foresee that Exxaro can add value to Tshipi's operation and Jupiter will be absolutely supportive of that. And an obvious one is around group procurement prices, things like that. But the key point here is that the partners need to agree. That's been the case to date, and it will continue to be the case. And to answer your question directly, there's no change in the management personnel, and there's no change that we're anticipating. There will obviously be a change at the Board level with Exxaro people coming in at completion, replacing previous Ntsimbintle appointments. But as you'd also imagine, in anticipation of this change coming, and we'll provide some more information at completion, we are working closely and well both with Ntsimbintle and with Exxaro to make sure that's a smooth change. But the operation itself will continue to be led by Ezekiel Lotlhare, who's been doing a great job up until now. And with his team, they will be continuing unchanged. Jon Scholtz: Excellent. And then I guess I get they keys at the end of Feb, but there's a Board meeting before that to discuss the distributions, which will lead into Jupiter's first half divi as well. So that will all be in the existing structure with Ntsimbintle instead of Exxaro. Is that correct? Brad Rogers: That's correct. Yes. So that's -- as I think I might have mentioned when we first talked about this deal in May of last year. Dividends, as is ordinarily the case in this sort of situation are a permitted leakage. And so since any dividend that's declared by Tshipi will be a 31 December pre-completion matter, that will be something that's decided within Ntsimbintle just as every other dividend has been. Operator: [Operator Instructions] Your next question comes from Adam Baker with Macquarie. Adam Baker: Jon got a couple of my questions there. But wondering if you could just touch on the manganese market at the moment, noting that you're seeing spot prices increase to $432 at the end -- towards the end of January. And you noted the stockpiles from China are pretty low at the moment. Do you think this positive momentum can continue throughout the year? And what else are you seeing on the market side of things? Brad Rogers: Yes. Adam, thanks for your question. So I'd say that downstream demand has been a bit more robust than market participants probably anticipated, and that's been a good thing. And it's meant that as I made in my opening remarks that even though supply at times from major market participants, including ourselves, has been quite high through that period of time, the market's has just eaten it up. And the clear evidence of that is that the stockpiles have traded in this very tight range of 4.4 million tonnes from about April, May of last year. So most of the forecast that I look at are forecasting the usual sort of ups and downs that you might see. And I mentioned that right now, you would typically see some restocking or stocking ahead of Chinese New Year, and that's a temporary demand factor, for example. And then you can have that easing off post-Chinese New Year as the market consumes that manganese ore. It's an open question around whether that's actually going on right now. It is a typical seasonal effect. But I think if you take out those normal slight seasonalities, most forecasts that I'm looking at have been revised upwards from where they were previously. And part of that is the factors that we've mentioned, stronger Chinese yuan is supportive. Lower manganese ore stockpiles in China, also supportive. There has also been some supply impacts which have lowered supply out of certain countries over the last 6 months or so. So that's an open factor. There's some conjecture about downstream silica manganese alloy stocks, although we don't have any data on that. I think some people think that there is unidentified, unquantified stocks of alloys downstream beyond the plants themselves, perhaps in factories. So that's a potential downside factor. But I think if I boil all of that up and have a look at the market analyst forecasts for the next 6 months or so, they're higher than they were previously, and that's partly informed by the factors that I've mentioned and partly informed, I'd say also that prices that have prevailed and have continued to tick up have outperformed those previous forecasts. So I think people have gone back and reviewed that. We, with our level of costs are pretty happy with where things are right now. CIF and FOB prices have gone up. And although there's been certain months where ore supply has been higher, it hasn't gotten overall on average out of control. So it feels reasonably balanced both on the supply and the demand side, and you've got some FX factors factoring in. And then shipping rates have been quite good as well. They've traded in a desired range, I'd say, but in a fairly tight range as well. So yes, we like the trends. We like where it sits right now. And I'd say there's on balance, probably supporting factors for around about where we are right now, but also noting you do have some temporary factors of pre-Chinese New Year, post-Chinese New Year, et cetera, but the overall trend is more positive than perhaps people would have thought 6 months or so ago. Operator: [Operator Instructions] There are no further questions at this time. I'll now hand it to Brad for closing remarks. Brad Rogers: Thank you very much. Thanks all for your participation today. Hopefully, those remarks have been helpful. And as I said, it's a very strong operating quarter for December, helpful market as we've just discussed and the important development that we've all picked up on in relation to Exxaro as a fairly near-term completion as communicated by the company yesterday. So thanks again for your time. Look forward to talking to you soon. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Good morning, and welcome to the ITM Power Plc investor presentation. [Operator Instructions] The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to the team at ITM Power Plc. Good morning. Dennis Schulz: Good morning, and welcome. We are pleased to present a strong set of results for the first half of the financial year '26. We have yet again delivered our highest 6-month revenue performance while maintaining strict cash and operational discipline. Today, in order to set the scene, we will start with a look at the market environment, our operational and financial situation and our sales activity. I will then explain our business model, talk about operational progress achieved and provide an update on selected projects. Simon, our CTO, will shed light on our newest product, ALPHA 50, and give insights on the levers we have and use to lower the cost of hydrogen. He will then talk about ITM's future, our game-changing next stack platform, CHRONOS. After that, Amy, our CFO, will explain our financial results in more detail and provide guidance for the full year. Okay. Let's start with the market and our competition. Hydrogen will play an essential role in the decarbonization of industry and the energy mix, especially in hard-to-abate applications like refining, ammonia, heavy industry and industrial heat. While refineries undoubtedly show the biggest momentum right now, we start to see first hydrogen applications in cement, steel, paper and many other industries. Despite the known macroeconomic headwinds, the momentum is undeniable. The Hydrogen Council and McKinsey have tracked clean hydrogen project investments from 2020 to 2025 and recorded an 11-fold increase from USD 10 billion to USD 110 billion. The policy situation remains favorable for our industry. And the EU, Nordics and U.K. are making the most tangible progress, while the U.S. has unsurprisingly stalled. With market consolidation continuing to put pressure on many of our peers, we continue to see a healthy level of sales engagement and strong demand, in particular for NEPTUNE V and ALPHA 50. Let's move on to our operational situation. Commercial activity has progressed well in the first half of the financial year. We were awarded several equipment supply contracts, including for Westnetz in Germany and for cement producer in Spain. We also signed multiple engineering contracts, and we were selected for a number of small to large-scale projects, laying the foundation for future order intake. Importantly, RWE as a repeat blue-chip customer has reserved 150 megawatts of NEPTUNE V capacity with us, following on from our strong project progress on the 2 Lingen plants, each 100 megawatt in size. I will speak more about these projects later in the presentation. While we wish that some customer FIDs could be taken a bit quicker, we remain agile and exceptionally well positioned to capitalize on the market dynamics, be it based on our comprehensive and competitive product portfolio or through our new build-own-operate business, Hydropulse. Next up, our financial position, which remains strong, underpinned by capital discipline and our focus on operational improvements. Our balance sheet is increasingly seen as a competitive advantage by customers. Later, Simon will shed more light on this topic. Now I don't want to take Amy's part away, but despite record revenues, our firm contracted order backlog continued to grow and in it, the share of profitable contracts as we work through the few remaining legacy projects. As I already mentioned, sales activity has remained healthy with a notably increasing share of industrial customers in the mix. NEPTUNE V continues to be our most demanded product. And given very high early interest, we expect our new ALPHA 50 product to become just as successful. We are also pleased to see growing momentum in our home market, the U.K., where we were selected for a number of HAR1 and HAR2 government-backed projects already, including the Uniper Humber 120-megawatt project, which has been progressing well through FEED towards FID. We have also signed our first POSEIDON contract for the HAR1 MorGen Energy project, for which our customer expects to be able to take FID in the short term. Also post period end, we have seen continued momentum. Among other successes, we were selected for 2 grid balancing projects in Germany, totaling 710 megawatts in size, and we were awarded a 12.5-megawatt contract by Octopus Energy Generation, one of the first HAR1 projects in the U.K. to have taken FID. Our strategic priorities, you have seen them before, were shaped by a dynamically evolving market environment and unsteady macroeconomic conditions. They have served us well. And while many of our peers are struggling, they have helped us grow sustainably, steadily and with the necessary patience. And they remain fully valid. You can be assured that we will continue to closely observe the market environment and that we are staying adaptable and responsive. Now on this slide, I'd like to explain you our business model and take you on the journey of building an integrated hydrogen company with significant growth potential. It is the journey of becoming a one-stop shop for customers who need electrolyzer equipment, complete hydrogen plants or simply just hydrogen. Today, we are proudly looking back on 26 years of innovating, designing and manufacturing electrolyzers. Electrolyzer technology, we and many of our customers believe is the best in the world. We have learned to engineer these electrolyzers into full green hydrogen production plants. And over time, we have acquired the capability to perform the necessary EPC services by ourselves. Our newest product, ALPHA 50, is the culmination of that. We are also offering our customers comprehensive aftersales services to help them to best operate and maintain our plants and to maximize the value they can derive from the use of our products. The newest pillar of our business model, Hydropulse, is the logical next step on our growth path. Following in the footsteps of the big gas majors of our time, once you have the leading technology and the capability to deploy it competitively, then you have a solid foundation for a build, own and operate model. Hydropulse will buy the electrolyzers and related EPC services from ITM and operate plants to supply hydrogen to industrial customers under long-term offtake contracts. This increases the group's factory utilization, provides plannable recurring income streams and is highly cash generative. Hydropulse is poised to play a key role in creating shareholder value, and we'll be able to offer green hydrogen at a cost level not seen before in our industry. Our operations have been further strengthened. Besides countless day-to-day improvements, we were able to cut electrolysis time during end-of-line testing in half, saving precious energy costs and increasing throughput significantly. In our last update, we spoke about our planned NEPTUNE V assembly line in our adjacent second factory. It is now in full operation and the NEPTUNE containers move from build station to build station until they are completed. This efficient production line layout allows us to meet the growing demand for our best-selling product. The next and even bigger improvement is our new autostacker robot assembly line for our stacks. We took our time to develop a tailored machine and validated the process properly. The autostacker marks a major leap in factory automation and is capable of producing more than 2 gigawatt of stacks per year. Last time, I featured our 20-megawatt NEPTUNE V project for FDE in Norway. This time, I want to highlight a project we won just about a month ago. Octopus Energy Generation awarded us a 12.5-megawatt contract for their government-backed North Fleet project in the U.K. The green hydrogen will be used to decarbonize the papermaking process, a hard-to-abate industry at Kimberly-Clark's U.K. mill, which manufactures Andrex products. Hydrogen will replace natural gas in a new dual fuel boiler system, which can operate on either of the 2 gases, offering operational flexibility. The second project I want to highlight is in Germany. I already spoke about RWE reserving 150 megawatts of NEPTUNE V capacity with us following their satisfaction with our delivery against the world's biggest PEM electrolyzer in Lingen. So let's talk about the project. The 200-megawatt installation is divided into 2 100-megawatt plants, Lingen 1 and Lingen 2, which we are building with our partner, Linde Engineering. The installation of the first 100 megawatt, Lingen 1 was successfully completed at the end of 2025, marking the completion of the first plant of its size anywhere in the world. For ITM, this meant producing and shipping 50 TRIDENT skids and 150 stacks, which have all been successfully installed into the Linde [indiscernible] plant and pressure tested on site. Importantly, we have delivered everything on time for this massive plant. I hope the photos convey the scale. Lingen 2, the second 100-megawatt plant is in full construction swing with all skids and 40% of stacks already installed, yet again, all on time. With this, I would like to hand over to Simon to talk about ALPHA 50. Simon Bourne: Thank you, Dennis. Since the last market update, we've introduced another product to our portfolio, ALPHA 50, a full scope 50-megawatt green hydrogen plant. This was triggered by 2 key pieces of market feedback. The first was that a full scope offering from a single supplier is highly desirable. We've seen that with the success of the NEPTUNE product line, where everything from AC power and water, all of the way through to high-pressure and high-purity hydrogen is provided in one package. This minimizes integration complexities and split supplier responsibilities, making it a straightforward and more competitive deployment. The second was the demand for ever larger systems, which have previously been the domain of the EPC stick-built approach. ALPHA 50 fills a gap in the market, providing a skid-mounted, standardized and prefabricated solution compatible with scale. As is common to all ITM products, it has the state-of-the-art TRIDENT stack platform at its heart. It has a highly optimized footprint and is designed for outdoor operation over a very wide temperature range. Being modular, it can be adjusted in 10-megawatt blocks, providing flexibility for a range of project sizes without needing to reinvent the wheel. This means, for example, that ALPHA could be configured into a 60 or 70-megawatt plant. The product was introduced in October 2025 with a price of EUR 50 million for the 50-megawatt system. Just like NEPTUNE V that Dennis referred to earlier, it's landed very well in the market, and we are already pursuing several live opportunities. At this point, I'd like to take a step back and answer a question which we frequently get asked. Let's take a look at the factors that influence the cost of green hydrogen. I break this down into 3 categories: CapEx, how much does it cost to buy the necessary equipment? OpEx, how much does it cost to operate the equipment and customer confidence? How much risk is perceived that requires contingency in the project budget. Improvements in these areas have positive impacts on business cases, making green viable in more and more applications. CapEx first. The cost of an electrolyzer can be broken down relatively simply. The stacks account for approximately 1/3 of the cost and the balance of plant, including the power conversion system accounts for the rest. There are several levers available to ITM to address CapEx, and I'll give a few examples. From a technology perspective, increasing current density has a significant effect on stack cost reduction. Doubling current density doubles the hydrogen production rate from the same stack, meaning half the number of stacks are required for a given hydrogen demand. This is why ITM pioneered high current density and has been providing high current density stacks commercially for several years. I would add that in parallel to making the stacks work harder in this way, we've done so while both reducing the use of high-value precious metals and increasing stack efficiency at the same time, something that is a credit to our technical teams that continue to push the technology further. From a supply chain perspective, standardizing the product portfolio means fewer parts to manage and more efficient repetitive processes. Strategic relationships with key suppliers ensures priority access to the best equipment at a negotiated price. Working closely with suppliers in this way maximizes joint learning, builds trust and enables both sides to work together to drive down costs and optimize the offering. A high-quality manufacturing system minimizes waste and rework costs while enabling processes to be streamlined. This also saves energy and people cost for repeated end-of-line testing. On-site construction costs are minimized due to preassembly and containerization. Smaller footprint requirements and the full scope nature of products eliminates complex on-site works. OpEx. The operational cost of a green hydrogen plant is dominated by the consumption of electricity. While there are several power consumers in the system, the stacks account for over 90% of the electricity used. Therefore, improvements to stack efficiency have a disproportionate impact on reducing the molecule costs. Through our in-house IP and our joint research and development with Gore for membranes, our stacks benefit from a market-leading efficiency. We have also demonstrated and published extremely low rates of infield performance degradation, keeping operational costs low and predictable over long periods. The ability of the electrolyzer to modulate rapidly enables access to lower-cost electricity. The plant can also attract revenues for providing balancing services for the electricity grid and waste heat can be recovered and utilized in adjacent processes, further optimizing overall energy usage. Ongoing maintenance programs are lean and supported by a remote operating center that provides real-time support and helps maximize plant availability. Finally, customer confidence. Every customer business case builds in buffers for risk and the main risk questions for customers and their lenders are usually technology related. That's why the increasing availability of operating data from real industrial deployments is so important. Having gained data from real-world small and large-scale applications, we've been able to show customers performance data that they can build into their models with increasing confidence. This, in turn, has enabled ITM to develop specific product guarantees that help customers achieve the certainty they need. We are proud to have received repeat business from several blue-chip companies, and I personally see this as an important indicator of customer traction and trust. Combine this with the reference plants mentioned earlier and our strong balance sheet, the bankability dial is moving in the right direction. This is particularly important when project financing is required. From CapEx and OpEx minimization to maximizing customer confidence, ITM has been active in all these areas. Our continued development activities, focus on real-world deliveries and operational learnings are the foundation of tangible improvements that are driving down the cost of green hydrogen production for our customers. Let's take a look into the future. In due course, TRIDENT will be succeeded by CHRONOS, and this will be a genuine game changer. CHRONOS is our next-generation stack platform, and it benefits from all our experiences. It will be lower cost, higher performing and more compact. Now remember that the stack is the heart of all of our products, such as NEPTUNE and ALPHA. Therefore, improvements to the stack mean improvements to the full product range, making them even more competitive. Using the market-leading TRIDENT stack as a benchmark, let's take a look at some of the changes that CHRONOS will bring. We've reduced part count by over 50% and made it significantly easier and faster to build. And none of this comes from making slight tweaks. This is the result of a major exercise rethinking each element of the stack. We're targeting 40% cost reduction, and CHRONOS has been designed to maximize component reuse and recyclability up to 90%. A single stack will be rated at 2 megawatts in base operation, tripling the capacity compared to TRIDENT, and it's capable of up to 2.5 megawatts. We're targeting a 10% efficiency improvement despite further reducing precious metal loading. The footprint is reduced by over 50%, achieving an unmatched power density of 2.5 megawatts per square meter, making it compatible with even the most congested industrial sites. The weight has been reduced by over 50%, making it easier to handle and transport. All of these attributes are focused on further reducing the cost of green hydrogen production. CHRONOS represents a genuine step change, and we'll continue to innovate and improve. The development and validation of CHRONOS is well underway and progressing to plan. We've deliberately not guided for a specific release date because we are doing this thoroughly and ensuring that we get the most important technological foundation to all of our products right. Amy Grey: Thank you, Simon. Good morning to everybody, and thank you for joining us today. I will take you through a strong set of results for the half year ended 31st of October 2025 and then talk about our guidance for the year ended 30th of April 2026. We are pleased to report revenue of GBP 18 million, representing the highest half year revenue in ITM's history. This performance was driven primarily by equipment sales of GBP 15.5 million, with a further GBP 2.5 million generated from engineering studies, spare parts, maintenance and equipment upgrades. Historically, ITM has recognized revenue using the completed contracts method at specific milestones such as delivery, testing or commissioning. These are dependent on the individual contract terms. As our product portfolio continues to evolve, we have actively reviewed and refined this approach. While TRIDENT and standard NEPTUNE products are expected to remain under the completed contracts method, nonstandard NEPTUNEs, POSEIDONs and ALPHA projects are suited to the percentage of completion approach, allowing revenue to be recognized progressively over the life of a contract. This evolution is important. It better aligns revenue recognition with value creation, enhances revenue visibility and reduces reliance on endpoint customer actions. As a result, it supports a more predictable and higher quality financial profile as the business continues to scale. Of the equipment sales recognized during the period, GBP 13.9 million related to legacy contracts recognized at a point in time. In addition, we successfully recognized GBP 1.6 million of revenue from a NEPTUNE V contract under the percentage of completion method, marking an important milestone in the transition to overtime revenue recognition. The gross loss reduced to GBP 6.5 million, a significant improvement from the GBP 10.2 million in the first half of the previous financial year. This reflects both higher production volumes and continued discipline on cost control with overheads held broadly stable despite increasing operational activity. We have maintained strong focus on cash and cost discipline while continuing to enhance the capabilities and competencies and grow our level of production. These actions continue to support a clear path towards efficiency, scalability and profitability. We ended the first half of the year with a cash position of GBP 197.8 million, representing a reduction of only GBP 9.2 million in 12 months. This reduction reflects the continued manufacturer of customer commitments for which cash was received in prior periods and demonstrates ongoing execution against contracted orders. We expect cash outflows to increase in the second half as we continue to manufacture and deliver contracted projects. Importantly, our customer contracts are structured to provide cash ahead of or in line with production outflows, meaning that anticipated half 2 outflow is both expected and fully aligns with contractual milestone timings. The chart on the right illustrates continued progress in inventory management. As finished products are dispatched, overall inventory levels are reducing, and we have further improved the mix by lowering the proportion of raw materials relative to finished goods, which reflects tight operational control. Capital expenditure increased modestly to GBP 6.9 million, in line with our expectations. We continue to advance CHRONOS, and we have taken delivery and completed installation of the autostacker. As Dennis mentioned, our contracted order backlog increased to GBP 152 million despite delivering record revenues in the period. The backlog comprises only of fully contracted orders without any starting conditions. And therefore, it doesn't include MorGen energy contracts, which is still awaiting the customer to take final investment decision. Crucially, the quality of our contract backlog continues to improve. The proportion of profitable contracts has grown to 71%, increased from 60% in April 2025. This reflects the structural reset of pricing, risk allocation, project selection and execution. The remaining 29% of the backlog relates to legacy projects, and we expect to recognize this in revenue over the next 18 months. As we've previously stated, these contracts are fully provided for, but they do not contribute to margin. Turning now to our guidance for the year ending 30th of April 2026. We are maintaining revenue guidance of between GBP 35 million and GBP 40 million, which represents a growth of approximately 400% over 2 years and 600% over 3. The majority of our revenue this year will continue to be recognized on legacy contracts using the completed contracts method. Looking ahead, and as I've mentioned, we are pleased that POSEIDON, ALPHA and Bespoke NEPTUNE projects will increasingly be recognized over time, and we have already successfully implemented this approach in the first half of the year. EBITDA loss guidance stays unchanged at GBP 27 million to GBP 29 million, reflecting continued delivery of remaining legacy contracts. This represents an improvement of approximately GBP 4 million year-on-year. At this stage, remaining losses are primarily driven by factory loading, and we continue to maintain a strong control over production, project and overhead costs. We expect year-end cash to be in the range of GBP 170 million to GBP 175 million. The higher outflow in the second half reflects the timing of milestone receipts, which are typically received ahead of or sometimes alongside cash outflows. Strong progress on projects enabled certain receipts to be collected in the first half of the year with associated payments occurring in the second half. Therefore, and counterintuitively, the lower outflow number in this first half and the higher outflow number in the second half of the year are signs of ITM execution in a disciplined and cash positive manner. Bumpy cash inflows and outflows will never be avoidable in the business we are operating in, but will flatten over time with an increasing number of projects in delivery. That concludes our presentation. Thank you for your attention and your continued support. We are excited about what lies ahead of us in 2026. Operator: [Operator Instructions] I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q&A can be accessed via investor dashboard. I'd now like to hand you over to Justin Scarborough, Head of Investor Relations, to host the Q&A. Justin, as you can see, we've received a number of questions. Could I, therefore, please ask you just to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Justin Scarborough: Thank you, Paul, and welcome, everybody. Our first question is for Simon. Could you provide an update on CHRONOS, its development and your planned launch date? Simon Bourne: Absolutely. So the starting point for CHRONOS is TRIDENT, our existing stack platform. So it's a very good starting point because that is already performing exceptionally well. Now while there are a number of things that we can carry across from TRIDENT to CHRONOS, it's still very important to go through a very comprehensive and robust verification process, and that's exactly what we're going through at the moment. To put a bit of color on that, recent activities have included inspection of all of the full-scale components. We've been verifying the various manufacturing processes and reviewing long-term data from the components operating in the lab. And we've already built our first stack already. We did that last year. We used that as an exercise to check all of the assembly processes. And I'm very happy with the progress of the program. Now as I mentioned in the presentation, we've deliberately not guided towards a launch date. and that's primarily for 2 reasons. The first is that we don't want to inadvertently trigger customers to stop purchasing our existing stack, TRIDENT. That is what we're supplying today. And the second is that we will only launch CHRONOS when we have fully completed all of the validation steps that we need to go through. Justin Scarborough: As a follow-up for Simon, given the development of CHRONOS, where does TRIDENT fit in terms of ITM's product portfolio? Simon Bourne: Well, TRIDENT remains central to ITM. We continue to build and supply TRIDENT today for existing programs and for aftersales activities. And as you've seen from the presentation, we've continued to invest in production capability and quality for TRIDENT with the autostacker. And so that very much remains a product that we continue to manufacture, and we will maintain that capability because we have an existing fleet of products that we'll need to continue to support into the future. So in due course, at the right time, we will transition from TRIDENT to CHRONOS, but we will not get rid of the TRIDENT platform. And perhaps to add one more thing, some of the technology that we've developed for TRIDENT, we'll take a close look at that. And if it is feasible to transfer to TRIDENT, we will do so to make that available to existing TRIDENT customers. Justin Scarborough: Amy, a question for you. Regarding your adjusted EBITDA and the first half performance -- your midpoint guidance suggests a flat EBITDA loss in the second half of this year versus the second half of last year. Could you shed some light on this year-on-year expectation given the fact that the first half adjusted EBITDA loss reduced by around 30%? Amy Grey: Yes, sure. So firstly, our EBITDA is not achieved flatly across the year when you're comparing one half to another or even when you're comparing on a month-to-month basis. A couple of things make up that. Firstly, our revenue recognition being on completed contracts means that there are different margin levels in each period. Again, whether you're comparing a month-to-month or a half year to half year, we make every effort to flatten out manufacturing profile, but we can have variances in between different periods due to the level of production, how many hours needed on Neptune products, testing levels that can increase or reduce our electricity consumption. And then we also have some general cost increases that are probably going to affect half 2 more than half 1 as they do in any year while you're in an inflationary environment. I think what's important to remember is we take a really conservative approach to revenue, cash and EBITDA guidance, and we will only guide to what we are certain will be achieved. That's what we believe is going to be achievable at the moment. And if there are any differences, we will update market. Justin Scarborough: Thanks, Amy. Whilst we're on the subject of EBITDA, there's a follow-up question, which is when do you expect EBITDA to be positive for the company? Amy Grey: Okay. So I think I've probably said this before, but we never guide beyond our current financial year. But we are confident that we know the path to profitability. We need to do a lot of what we've been doing for the last few years. So we need to really focus on winning and then executing profitable contracts. We need to retain focus on quality manufacturing and quality of our supply chain, and we need to maintain the discipline on overheads and cost control in every area of the business. In addition, particularly important to our path is Hydropulse. So that's our build, own, operate model, which will bring recurring predictable revenues and increase our profitability. Justin Scarborough: Thank you, Amy. I think this question is probably for Dennis. The autostacker looks like it could be a game changer for your stack assembly. What redundancy have you built in, in the event of the autostacker not working for whatever reason? Dennis Schulz: That's a good question. So first, it is a very important leap in automation for our factory. I think it was one of the remaining parts, which still had quite manual involvement in the process. And I mean you've seen a little video as part of the presentation. It's quite impressive. It's quite an automated process now and proper manufacturing line, and it is definitely helping us in terms of consistency. It's helping us in repeatability, and it will minimize the risk of remaining human errors as part of the manufacturing process of stacks. Obviously, it will also save cost and increase capacity quite substantially. I mentioned the number already as part of my part of the presentation. The capacity of the robot alone is above 2 gigawatts of stacks. Now redundancy is important. You don't want to be too dependent on one machine alone. That's why we will retain the capability to produce our previous process, which I have to say was also not bad. I mean we spoke about very high factory acceptance test rates in the past, and these we had achieved with our previous process. Now the next leap, as I said, the autostacker will take that even further and improve repeatability. Justin Scarborough: Thank you, Dennis. I think that's probably the next question is for you as well. Regarding the RWE 150-megawatt NEPTUNE V capacity reservation, when do you expect the first call-offs to be? And could this create a potential bottleneck? Dennis Schulz: I guess you would have to ask RWE when they want to sign the first contract with us. But jokes aside, we are in active contract negotiation for the first call-off under that agreement. As always, we do not guide on specific timing, not just because we don't want to, mainly because it's not fully in our control. And I think it doesn't make sense to guide for something which is outside of your control. But the negotiation is going well. It's not the first contract we are negotiating, executing together. Maybe allow me a little bit to expand on the nature of the projects we are talking about here to give you a bit more color to the topic. The reservation agreement is aimed at, I would say, rather large contracts. And such a contract would always start with an engineering phase, usually with the aim to obtain the necessary building permits as well as government funding if applicable. In the case we are talking about here, the government funding was already granted. So it's mainly about permits. Then subsequently, the manufacturing and delivery phase would be triggered based on the permitting. And this is when we would start to manufacture. By the way, the Lingen contract we are executing right now is following the exact same pattern. So this is a proven model we have done in the past. With regards to bottlenecks, I think that was the other question, Justin? Correct? Justin Scarborough: That's correct. Dennis Schulz: I do not see an emerging issue at this point in time. It depends obviously how many other customers are ordering NEPTUNE V containers now. But I can tell you, there's always a way to expand container assembly. This is mainly labor-driven, and you need factory space, both not very difficult to increase, especially in the Sheffield region. We could also work with integrators if really needed. But at this point in time, I do not foresee a bottleneck. Justin Scarborough: Thank you, Dennis. A question for you, Amy. Based on your order book of GBP 152 million today and your midpoint revenue guidance range for the year, your book-to-bill ratio stands at just over 4x versus about 5.5x at the end of last year. With only 3 months of the current financial year remaining, do you expect your book-to-bill to increase by the end of the financial year? Amy Grey: Okay. So I think to be honest, keeping 4x revenue in the order book while delivering revenues that are 600% above 3 years ago and 400% above 2 years ago is something to be really very proud of and certainly something that our peers would love to achieve and the opposite here saying. I think the important thing on the order book is it has grown in value. And the most important part of that growth is the increase in the percentage of profitable contracts as we win orders, and we continue to deliver on the legacy contracts removing those from the order book as we go. Just to add as well that we only guide including contracted equipment sales orders. So they're fully contracted and are going to happen during the year. So in summary, I'm not going to give any guidance on how much I expect or not expect it to increase, but it's important we maintain the healthy ratios that I think we've absolutely got today. Justin Scarborough: Thank you, Amy. Simon, one for you, I think. In previous results announcements, we've spoken about FAT pass rates and how successful ITM has been in improving that. Could you provide some tangible insights on how the high pass rate translates into lower cost per stack? Simon Bourne: Yes. And I think that's right. Previously, we have reported first-time pass rates of around 99% -- and that's no small thing given that we do very extensive testing of our stacks at the end of line. We don't just do pressure tests and leak tests. We have third-party witness tests for various compliance reasons. We electrolyze the stacks and characterize their performance over the full operating range. So it's a whole suite of tests that we're looking to pass first time through. And that statistic is a result of a focused effort to improve our supply quality, introduce additional quality checks throughout our manufacturing processes and so on. And that drive was successful, and we've put in place lasting measures to make sure that we continue to benefit from that high at first-time pass rate. What does that mean? Well, it avoids us spending additional time examining stacks or retesting stacks that would otherwise find its way into the price of the stacks themselves. I'd perhaps add that we haven't stood still. In recent time, we have made big strides in our efficiency of our end-of-line testing. And in particular, we just over halved the amount of time we now spend doing our electrolysis testing of stacks as part of that process. So we still enjoy the high pass rate, and we're getting more efficient in parallel. Justin Scarborough: Thank you, Simon. A question for Amy again. Regarding revenue recognition, could you provide a split of your order book between completed contracts and the percentage of completion met? Amy Grey: Yes, of course. But before I do that, let me just take a little step through the changes that have happened in revenue recognition. So I'm really pleased that we've managed to review the recognition methods as our product portfolio grows and develops, it's really important to take that step back and make sure what we're doing is appropriate. And it's allowed us to implement different ways of recognizing revenue to the one that we've historically used. So the one that we've historically used is completed contracts. So that's where we recognize revenue at specific points in our contracts when performance obligations are met. They could be -- that could be delivery or commissioning, but generally towards the end of a contract's life. We will still use that method for TRIDENT, and we'll still use that method for our standard NEPTUNE products. The difference is that NEPTUNEs that contain a customer modification, POSEIDONs or ALPHAs will be recognized over time as we produce the equipment. And that's really important as we'll be able to see the revenue track through the profit and loss as we are actually manufacturing and leads to a lot more predictable revenue going forward. If I could give you a real-life example, if you take the Uniper 120-megawatt HAR project in the U.K. So that's currently at the FEED process. So under the old recognition methods, the completed contract method, we would recognize a small amount of revenue as we go through that FEED study. And then effectively, you would see nothing else for 2 to 3 financial periods until we get towards the end of that contract and revenue would be recognized in one lump sum. If we transfer that to the new version of percentage completion using ALPHA or POSEIDON, we get exactly the same revenue for the FEED study, which would be recognized at the same point in time. But the difference being that at the point that we signed the contract up until delivery, we'd be able to progressively recognize revenue. So in that first financial year, you would see revenue happening for that project and in the second and then at delivery until you get to the same point in time. So it will allow us to be able to see progress through the factory in the P&L. Dennis Schulz: I think that's a massive change, if I may add. In the past, when we signed a large contract, 100 megawatt, more than 100 megawatt, for example, you would not see relevant revenue from that contract for minimum 2, 3 years, right? And then everything would come at once. Under the new POC percentage of completion method from contract signature, you will see revenue coming in. That is important because it changes the financial profile of the company quite significantly. What it means is if we sign a new large contract during a year, now for the first time, you will see an immediate impact on guidance for the year, and you will see an immediate impact on the financial numbers of that particular year, which is something very different from the past. Amy Grey: Justin, if I could just answer the specific question because I realize I haven't answered it yet. The current order book is roughly speaking, 85% completed contracts and 15% percentage of completion. Justin Scarborough: Thank you very much. We've got another financial question. In the first half, admin expenses pretty exceptional and before depreciation and amortization stood at around about GBP 10 million versus just over GBP 9 million in the first half of last year. Do you expect the second half of this year to be at a similar level to that of the first half? Amy Grey: Okay. So as I mentioned earlier, we are in an inflationary environment. So costs are expected generally to go up a little bit one half to the other. And then we do certain things such as we don't award salary increases until partway through half 1. So there's a full year effect of that in half 2. And we've also been on a journey of increasing capability and competencies within ITM, which generally leads to a higher cost base and some of those vacancies are being filled towards the back end of half 1 and half -- into half 2. So in summary, I wouldn't expect it to be vastly different, but I would expect a slightly higher cost base in half 2 compared to half 1. Justin Scarborough: Thank you. We've had a number of questions through on Linde today. So this is trying to bucket it into a more general one and for all of you. Can you provide an update on ITM's relationship with Linde? Simon Bourne: The relationship with Linde is a productive one, right? I mean we are in the middle of executing some of the largest electrolyzer projects globally today. So as you might imagine, there are a lot of meetings, a lot of discussions and a very active and productive relationship. So interactions with Linde are daily. And I think the progress that's been presented today on those large projects is a testament to the 2 teams working together effectively. Amy Grey: Yes. I mean I think if I could just add, we're also looking forward, not just execution, but we are actively working with Linde to think about how we, contracts going forward and that kind of sales arrangements that we have with them and how we proactively work together. Dennis Schulz: Yes, I think nothing to add. All has been said. Justin Scarborough: Okay, Dennis. Amy, can you explain the significant rise in trade and other receivables, about 35% and trade number payables in the first half of about 19% since the end of April? Amy Grey: Yes, of course. So -- we'll have a general conversation about cash and how that might impact that. So just as a reminder, we structure our customer contracts to receive cash ahead of or at the same time as payments to suppliers. Those receipts are staged throughout the life of a contract. So they'll be generally based on milestones such as contract signature, purchase of significant equipment, factory acceptance testing, and there can be various different makeups through the contract. Each is individual, but the important point is getting the cash ahead of it's going out. We structure supplier payments in the same basis. So where we're buying a big piece of equipment, we'll have similar milestones in that contract as well. The result of that means that we can have swings in both trade receivables and trade payables, which is just normal part of the cash cycle of this business. As an example, we had some receivables in half 1 with payables going out in half 2. So you will see that balance shift in again in the full year results. But it's just a normal kind of course of a healthy way of managing cash. Dennis Schulz: And it's also very normal for our industry. I mean most of the contracts we do would foresee a down payment just at the beginning. So when you sign the contract, basically, you issue the first invoice for a down payment in order to be executing cash positively. And from contract signature within then 30 to 45 days, you would see a big spike because you have like 10%, 15% of contract value coming in at once. And then there is a time of spend phase where you then use up that money where you have cash out of the door. And depending on whether that lands now in the first half of the year, second half or slightly into the next half of the year, that is something which will always create some bumps, and that is a perfectly normal thing for an EPC type of company. That will be a bit more flatten as soon as Hydropulse becomes bigger in the mix there, we have a more stable cash in and cash out profile. Amy Grey: And the other thing which flattens it is the amount of contracts that we're doing at any one time. So the more that we grow and the more contracts that we have going on at one time, it will flatten itself. Justin Scarborough: Thank you. Next question for Dennis. Jurgen Nowicki has now taken over the role as ITM's Non-Executive Chairman. As your ex-boss, Dennis, what does Jurgen bring to ITM? Dennis Schulz: Well, what does he bring? Probably his excellent German humor. No. Jokes aside, he's actually quite funny. Jokes aside, I mean, he brings long-standing experience in the industrial gas segment, in particular, in plant engineering, procurement construction for EPC, but also in plant operations from the Hydropulse angle. In his role as CEO of Linde Engineering, he was basically in charge of managing thousands of people, hundreds of projects worldwide at the same time and billions in revenue every year. So I think that he will bring a lot of knowledge, which will help us to further grow the company. I spoke about the business model earlier in my presentation. And I think his knowledge and expertise adds very well to that. He also has known ITM and supported us for many years on the Linde side, and he joins us after a 6-month cool down period from his Linde job, which I think makes sure that we see that also as separate assignments. I think it's also worth mentioning that wasn't the question, Justin, I know, but I think it's worth mentioning that we had 2 more starters to the Board in October, who both significantly strengthened the Board further. The first one being Sir Warren East, former CEO of ARM and Rolls-Royce and the second one being John Howarth with -- bringing a lot of financial knowledge being an audit partner at S&W in the U.K. Justin Scarborough: Thank you, Dennis. Another one for Amy. Are you assuming any contract signings in your cash guidance for the rest of the year? Amy Grey: Okay. Simple answer is no. So we don't forecast any contract signings in the cash guidance. We forecast based on what we know is going to come in and what we know is going to go out, both in terms of contracted orders, OpEx and CapEx. And we do that because as we structure the customer contracts to be cash flow neutral at a base case position, and we hope for better, but we forecast them to be neutral. So actually, it wouldn't be cash generative. And that's a very prudent way of looking at the cash flow forecast. Again, just to reiterate, if we did believe we were going to be any different to guidance on a material basis, we would update the market. Justin Scarborough: Thank you, Amy. Back to you, Simon. How does the launch of CHRONOS impact your product portfolio in terms of NEPTUNE and ALPHA 50? Simon Bourne: Okay. Well, I think it's a good thing. And we've said earlier that the stack is the heart of the electrolyzer system. So if you have a higher-performing stack, you have a higher-performing product. So at the right time, CHRONOS gives us the opportunity to reenergize the entire product portfolio to take advantages of the improvements in the CHRONOS platform. So I think that's the first thing. The second thing is that CHRONOS has a much more compact footprint. So it's feasible to squeeze more stacks and get more capacity into the same space envelope. So from a product evolution perspective, CHRONOS arguably makes it easier for us to address larger and larger capacity products. Justin Scarborough: Thank you, Simon. Next question, I think, is for Dennis. You mentioned in the presentation and in the release this morning, the level of interest in ALPHA 50 and you're clearly very bullish on Hydropulse. Could you provide any context on the number of customers you are speaking with and when some of these engagements may convert into contracts? Dennis Schulz: So I think people know me by now. It's not my or our time to disclose detailed sales discussions. And as I said earlier on the RWE topic, it's very difficult to forecast when customers will take their part of the investment decision, right? But what I can tell you is that ALPHA 50 has landed similarly well to NEPTUNE V. And those of you who follow us a bit longer know that NEPTUNE V has quickly emerged to become our best-selling product. I think even the best-selling product in ITM's history actually. Seeing the very good early interest by customers, especially large-scale industrial customers on ALPHA 50, I would expect the product to be just as successful as NEPTUNE V, of course, on a much bigger scale because the product is 50 megawatt instead of 5, right? To give you a bit of a feel on timing, again, don't take that as a specific guidance now, but as a rough estimate, for NEPTUNE V. It took us around 3 quarters to be able to announce the first signed contract and sale. I think that's a typical time horizon you see from us launching a product, then having to go into the trenches with customers and explaining them what is the product, increasing their confidence, going through safety critical documents, making sure that they believe that we can actually pull that off. And that usually takes around 3 quarters. And the only difference being that for an ALPHA product, usually you would start a project with a FEED, less often straight directly into the EPC phase just because projects are much bigger. I would not expect to see ALPHA for anything smaller than 50 megawatt, although you could scale down in 10 megawatt, I think you said that earlier. But I think ALPHA really comes into play when it's above 50 megawatts in size and especially when you talk 100, 200, 500, then ALPHA is really interesting. And these projects usually need a bit of a FEED phase. The other question was on Hydropulse. Hydropulse. I mentioned Hydropulse as part of my presentation already. I think we are serving a real gap in the market here by eliminating CapEx and OpEx barriers to hydrogen adoption. Customer interest has also been great. I'm conscious I say that a lot, but it's actually true. Customer interest has been great since the launch. As I mentioned, I've not given a specific price, but I can tell you that we have now done a couple of plant configurations with customers. We really went deep into financial modeling of the full CapEx, OpEx, how much do we have to spend in terms of operational support, spare part exchange and everything. And even in the most conservative cases, the cost of hydrogen, which we can offer via Hydropulse is exceptionally competitive, something the industry has not seen on cost. And I can tell you that we have various very good project discussions ongoing with customers. But as always, projects take time to develop, especially under a build, own and operate model when we have to get confident on the site, on the site specifics, on the customer, on the specific use case. Is there a real believable long-term offtake contract in side? Are we talking 10 years plus, maybe 15 years? And then there's a permitting involved. So these projects take some time. So in my view, patience remains key. It's not so much a question of if Hydropulse, just when and how quickly it will scale. It will definitely become a very important pillar of ITM's growth story going forward. Justin Scarborough: Thank you, Dennis. The last question now, which is for Amy. You've been at ITM for just over a year now. Has the job worked out as you expected so far? Amy Grey: Okay. So I'll give you something that was absolutely expected to start with, which is that Dennis is just as hard work and demanding as I thought he would be. So that's perfect. I think there's lots of things I didn't expect. So I expected things to be really busy, but the amount of activity and opportunity that's out there in the market has really exceeded my expectations. The potential that we've got to grow shareholder value is vast, being part of kind of live customer negotiations and seeing what we can do and what value we can add and not just ITM, but the entire market, what the entire market can do for the energy transition has been eye-opening. The other thing I would say is that I think the ITM team has been amazing, and there's probably more knowledge than I ever thought was possible out there. We have a really dedicated and determined team who are going to drive this forward. And I think people always make the difference in these circumstances, and they certainly do with ITM. And then I think probably the final thing is like actually, I can exist on very little sleep, which is not something that I knew about myself. Dennis Schulz: Welcome to my world. Justin Scarborough: Thank you, Amy. And as Paul from IMC mentioned earlier, we will endeavor to work through any questions that weren't answered today over the coming week. Thank you for your attention, and have a nice day. Thank you very much. Operator: Justin, thank you, and thank you to the ITM management team for updating attendees today. Can I please ask investors not to close the session to be automatically redirected to provide your feedback in order that management can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of ITM Power Plc, I would like to thank you for attending today's presentation, and good morning to you all.
Operator: Good morning. I would like to welcome everyone to the Jupiter Mines Q2 Call. Today, we have Jupiter Managing Director and Chief Executive Officer, Brad Rogers; and Chief Financial Officer, Melissa North, to provide a brief update on the second quarter of the 2026 financial year, and then we will open up for questions from callers. Thanks, Brad. Please go ahead. Brad Rogers: Thank you very much, and good morning. Thanks for joining the call this morning. So we released our December quarterly to the market this morning, and I'll just provide, as usual, a few overview remarks, try and tease out what I think are the key points that are contained within that quarterly activities report. And then at the end of the remarks, I'll turn the line over to any questions. So those who have had the opportunity to review our quarterly will see that the second quarter of the 2026 financial year reflected another strong operating result. Sales and production both up quarter-on-quarter and in line with our full year targets. Unit costs in U.S. dollars slightly better as well quarter-on-quarter, and that was a great result, particularly because the rand against the longer-term trend actually continued to strengthen in this December quarter, which was obviously a headwind for USD reported costs. Cash also was steady quarter-on-quarter at quite healthy levels, notwithstanding we had the usual semiannual payment of taxes and royalties in the December quarter. So that was a good result as well. From a safety perspective, we unfortunately had 2 minor lost time injuries in the quarter. Both of those injuries were in the nature of slips and trips. One worker tripping over an exposed rock and spraining his ankle and a cleaner sustaining some lower leg injuries while slipping as well whilst conducting her duties. Both of them, as I said, lower leg soft tissue injuries and our team at site, as you'd imagine, is responding with appropriate mitigations and communications around those injuries, which unfortunately remain a risk in any mining environment. And so a lot of that is about remaining diligent about those risks and having proper lighting and those sorts of things. From an operations perspective, our sales for the quarter were 867,619 tonnes sold, and that figure was 4% up on the previous quarter and 27% up on the prior corresponding period in the previous financial year. Production also was quite strong, 840,688 tonnes, and that was slightly up quarter-on-quarter and 13% up on the prior corresponding period. But there was a lean towards high-grade ore production. So less low-grade ore production in the quarter, more high-grade ore production. Obviously, that sets us up for a good mix of sales in the forward-looking quarters. The high-grade ore production was actually 10% up quarter-on-quarter, whilst as I said, overall production was about 1% up quarter-on-quarter. Operating costs, as I mentioned a moment ago, were good. We're sort of in range and the costs were USD 2.24 FOB per dmtu for the quarter. And that's about where we were sort of guiding that we expected to be. However, we have had a strengthening rand, which is a major factor in reported U.S. dollar costs. And so actually being slightly down as we were quarter-on-quarter with our cost is a particularly good result in view of the strengthening rand. Land logistics were basically flat quarter-on-quarter. Mining was slightly down, 5% down quarter-on-quarter. And part of that was seasonal rain that we expect to see in the December quarter, and we usually see it around this time of the year. Manganese prices and market prices more broadly were quite supportive during the December quarter. As we sit here today, FOB spot for the grade of ore that Tshipi sells is $3.68 per dmtu. And at the end of the December quarter, it was $3.46. So we improved spot 30 September $3.36 to 31 December, $3.46 and today, $3.68. So we've seen a strengthening of manganese market prices through that period of time, and that's continued post quarter end, and I'll come back to why that has been the case for a moment. You'll see in the quarterly activities report that average realized prices were 6% up for the December quarter compared to the September quarter. Freight rates also slightly lower, USD25 per ton on 31 December, USD 23.40. Today we've been range trading for the last sort of 3 or 4 months in a reasonably tight range of about $23.5 to $26 a tonne, and that's where we'd expect to be or hope to be in this sort of market, so also quite favorable. Manganese ore stockpiles in China, which we've talked about are a good leading indicator for where prices might be going, hence, why we include a tracking of that particular metric in our quarterly activities report, remained at around 4.4 million tonnes of manganese ore at Chinese ports in stockpile today. We have been at around that level for much of the last 6 or 9 months or so. And so you'll see in our quarterly activities report averaging around that number, and it's still that number today at the end of January. You'll also recall in some of our previous communications that we have called out that the, call it, 5-year average preceding the last 9 months or so has been about 5.8 million tonnes of manganese ore at stockpile at port in China. And so that 4.4 million tonnes remains quite a bit lower than the recent average that we have tended to see. And that's also supportive given manganese prices have been a bit higher. And given over the last few months, exports of manganese ore have been reasonably elevated from some countries. That ore has been consumed by downstream alloy demand, which has been relatively robust for this last period of time. There's a few things going on there. The stronger Chinese yuan against the U.S. dollar obviously is supportive for USD reported manganese prices. So that's part of what's going on. There's also some newer renewable energy-powered alloy plants in China that have greater levels of efficiency, and that's also been supportive and we think why there's been quite robust downstream alloy demand recently. And then very recently, there's the usual pre-Chinese New Year stocking perhaps going on. So even though prices have been up and from Tshipi's cost position, we think reasonably supportive. We're quite happy of the trend and where they sit today. And at times, overall market supply has been reasonably elevated as well. That ore has been consumed in the market, and that's quite evident when you have a look at the levels of manganese ore at stockpile in China. So I think you'd say a balanced market at the moment, notwithstanding prices have ticked up quite nicely, albeit fairly gradually over the last month or so, the trend is pleasing. On to financials. Tshipi's EBITDA was down 19% quarter-on-quarter, and that was mostly due to FX losses with the strengthening rand, as you can imagine. Whilst it's down quarter-on-quarter, the actual dollar figure isn't that material. If you have a look at the EBITDA dollars, it's sort of within the range of where Tshipi trades in this sort of pricing environment. Cash at Tshipi, as I mentioned earlier on, basically steady quarter-on-quarter and at healthy levels, around AUD 137 million at the end of December, and that's down 2% from the from the end of the September quarter, but we did have to pay taxes and royalties in the period. It's a semiannual payment. So there was good operating cash generation, and that resulted in good ending cash at Tshipi, notwithstanding the payment of taxes and royalties in the period. And cash at the Jupiter level also basically steady quarter-on-quarter. You will have also seen this morning perhaps that we updated the market referencing a market announcement by Exxaro yesterday in South Africa that Exxaro is now unconditional in respect of the acquisition of certain manganese interests from Ntsimbintle Holdings and from OM Holdings. And so what that means according to the Exxaro announcement, as reflected in our announcement this morning is that Exxaro expects to complete the acquisition of those interests on or before the 27th of February, so a little under a month away. On that date of completion, what that means from a Jupiter perspective is that Exxaro will join Jupiter as our co-investor at Tshipi under the same shareholders' agreement that's always been in place there. Exxaro is just buying into the same shareholders' agreement and taking out the existing shareholders in Ntsimbintle and OM Holdings. So that's what it means. At an asset level, Jupiter continues with Exxaro from that date to exercise joint control over the asset and the way that the asset has been governed very successfully over the period of its operation will continue to be the case. At Jupiter, what it means, as summarized in our announcement is that Exxaro will join Jupiter as our largest shareholder. They will be acquiring 19.99% of Jupiter's shares from Ntsimbintle Holdings, and that trade will complete on that same date, 27th of February or earlier. That's also unconditional. The price that Exxaro has agreed with Ntsimbintle to pay for those Jupiter shares is in rands, ZAR 3.69 per share. And obviously, it's exposed to the foreign exchange rate. But as an indication, the Australian dollar price today is a little over $0.33 a share, and that compares to our trading share price today when I last looked at about $0.285 per share. So in summary, just bringing it back before I open the line for questions, strong operating result from Tshipi, sales up, production up, unit costs slightly down and cash at steady, healthy levels. Our interim dividend 31 December will be decided in the next month. You'll be familiar that it goes through a 2-step process of Tshipi first recommending a dividend to shareholders. And once we have that, Jupiter will communicate that to the market. So that's also to come in the next month. We have seen and we continue to see a relatively supportive market in terms of manganese prices, levels of manganese ore at stockpile in China and also freight rates. So supportive through the December quarter relative to the preceding quarter and continuing that trend post quarter end. And then finally, Exxaro communicating that important news yesterday and relevant for Jupiter in the ways that I've mentioned a moment ago that in a little under a month, they will be joining Jupiter as a co-investor at Tshipi and also joining Jupiter as our largest shareholder. And as we've continued to say, Jupiter is very welcoming of that development. We see that as being really supportive in terms of value growth at Tshipi, but also we share a view with Exxaro around growth through consolidation in the Kalahari. And so we're looking forward to welcoming Exxaro as a co-investor and working to them, given that shared view strategically. Hopefully, that overview has been useful. I'll turn the call open to see whether there are any questions on the line. Operator: [Operator Instructions] Your first question comes from Jon Scholtz with Argonaut. Jon Scholtz: Quick question on Tshipi. Obviously, it has its own management structure within place. With Exxaro coming in, has there been a change to that management structure? Or is it all running as per normal? Brad Rogers: Jon, thanks for the question. No change at all. The same team that's been in place there will continue. And there is, as I mentioned, no change in the shareholders' agreement and the way that Tshipi is governed, and that also pertains to key management appointments. So the way that it is run, where both shareholders at Tshipi need to agree on important matters like key management personnel, will continue to be the case. So there are ways that we absolutely foresee that Exxaro can add value to Tshipi's operation and Jupiter will be absolutely supportive of that. And an obvious one is around group procurement prices, things like that. But the key point here is that the partners need to agree. That's been the case to date, and it will continue to be the case. And to answer your question directly, there's no change in the management personnel, and there's no change that we're anticipating. There will obviously be a change at the Board level with Exxaro people coming in at completion, replacing previous Ntsimbintle appointments. But as you'd also imagine, in anticipation of this change coming, and we'll provide some more information at completion, we are working closely and well both with Ntsimbintle and with Exxaro to make sure that's a smooth change. But the operation itself will continue to be led by Ezekiel Lotlhare, who's been doing a great job up until now. And with his team, they will be continuing unchanged. Jon Scholtz: Excellent. And then I guess I get they keys at the end of Feb, but there's a Board meeting before that to discuss the distributions, which will lead into Jupiter's first half divi as well. So that will all be in the existing structure with Ntsimbintle instead of Exxaro. Is that correct? Brad Rogers: That's correct. Yes. So that's -- as I think I might have mentioned when we first talked about this deal in May of last year. Dividends, as is ordinarily the case in this sort of situation are a permitted leakage. And so since any dividend that's declared by Tshipi will be a 31 December pre-completion matter, that will be something that's decided within Ntsimbintle just as every other dividend has been. Operator: [Operator Instructions] Your next question comes from Adam Baker with Macquarie. Adam Baker: Jon got a couple of my questions there. But wondering if you could just touch on the manganese market at the moment, noting that you're seeing spot prices increase to $432 at the end -- towards the end of January. And you noted the stockpiles from China are pretty low at the moment. Do you think this positive momentum can continue throughout the year? And what else are you seeing on the market side of things? Brad Rogers: Yes. Adam, thanks for your question. So I'd say that downstream demand has been a bit more robust than market participants probably anticipated, and that's been a good thing. And it's meant that as I made in my opening remarks that even though supply at times from major market participants, including ourselves, has been quite high through that period of time, the market's has just eaten it up. And the clear evidence of that is that the stockpiles have traded in this very tight range of 4.4 million tonnes from about April, May of last year. So most of the forecast that I look at are forecasting the usual sort of ups and downs that you might see. And I mentioned that right now, you would typically see some restocking or stocking ahead of Chinese New Year, and that's a temporary demand factor, for example. And then you can have that easing off post-Chinese New Year as the market consumes that manganese ore. It's an open question around whether that's actually going on right now. It is a typical seasonal effect. But I think if you take out those normal slight seasonalities, most forecasts that I'm looking at have been revised upwards from where they were previously. And part of that is the factors that we've mentioned, stronger Chinese yuan is supportive. Lower manganese ore stockpiles in China, also supportive. There has also been some supply impacts which have lowered supply out of certain countries over the last 6 months or so. So that's an open factor. There's some conjecture about downstream silica manganese alloy stocks, although we don't have any data on that. I think some people think that there is unidentified, unquantified stocks of alloys downstream beyond the plants themselves, perhaps in factories. So that's a potential downside factor. But I think if I boil all of that up and have a look at the market analyst forecasts for the next 6 months or so, they're higher than they were previously, and that's partly informed by the factors that I've mentioned and partly informed, I'd say also that prices that have prevailed and have continued to tick up have outperformed those previous forecasts. So I think people have gone back and reviewed that. We, with our level of costs are pretty happy with where things are right now. CIF and FOB prices have gone up. And although there's been certain months where ore supply has been higher, it hasn't gotten overall on average out of control. So it feels reasonably balanced both on the supply and the demand side, and you've got some FX factors factoring in. And then shipping rates have been quite good as well. They've traded in a desired range, I'd say, but in a fairly tight range as well. So yes, we like the trends. We like where it sits right now. And I'd say there's on balance, probably supporting factors for around about where we are right now, but also noting you do have some temporary factors of pre-Chinese New Year, post-Chinese New Year, et cetera, but the overall trend is more positive than perhaps people would have thought 6 months or so ago. Operator: [Operator Instructions] There are no further questions at this time. I'll now hand it to Brad for closing remarks. Brad Rogers: Thank you very much. Thanks all for your participation today. Hopefully, those remarks have been helpful. And as I said, it's a very strong operating quarter for December, helpful market as we've just discussed and the important development that we've all picked up on in relation to Exxaro as a fairly near-term completion as communicated by the company yesterday. So thanks again for your time. Look forward to talking to you soon. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
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